Payment for Online Content is Far From Dead, Despite TimesSelect's Demise

Many commentators are hailing the demise of The New York Times‘ TimesSelect service as the demise of paid content online. I hate to rain on their parade, but paid content isn’t dead. Consumer Reports, Zagat, Playboy and other premier brands prove everyday that paying for the premier content in a topical category is very much alive.

So why did the premier brand of The New York Times fail at paid content with Times Select? Because The New York Times and other traditional newspapers don’t provide premier content in a topical category. Traditional newspapers provide a package of news that attempts to satisfy everyone’s interests in all categories— an endeavor that is doomed to fail online and that is increasingly failing in print, too.

The demise of TimesSelect is notable only because it’s the last major gasp of newspaper publishers’ attempts to charge for providing everybody online with the exactly the same package of content. Not only won’t online consumers pay to receive exactly the same package as everyone else gets from a newspaper brand, but they won’t pay for even the best slice of that package.

That doesn’t mean that online consumers aren’t willing to pay; they just aren’t willing to pay to receive exactly the same package as everyone else gets. Unfortunately, most media executives don’t seem capable of conceiving that their companies can produce anything else at once but the same package of content for every consumers. Those executives are stuck thinking in what academics call ‘one-to-many’ or mass media terms.

People would be willing to pay a subscription fee for a service that delivers news to them online; but not for a service that doesn’t exactly meet their needs and interests, that sends exactly the same package of news to everyone. Paid content isn’t dead; just payment for the traditional ‘one-to-many’ package of content is.

There is a three-step process towards understanding why TimesSelect and other similar newspaper projects are doomed from the start. The steps are to understand why more than one billion people worldwide have gravitated onto the Internet; why traditional newspapers fail to match the reason why those people gravitated there; and why the traditional packaging of newspapers needs to radically change if that industry is to survive.

The fact is that, while everyone shares a few common interests (the weather, for example) and some people share some common interests (such as fans of the Red Sox), each person has many specific interests (a fan of Patrick McGoohan, knitting, Malaysian cuisine, etc.) and each individual is a quite unique mix of those common and specific interests.

To satisfy her mix of interests, an individual will use whatever media is available to her. Thirty years ago, her only choices in media were the three or four general-interest TV networks (ABC, CBS, NBC, and maybe PBS) she could receive via antenna, one or two dozen magazines (mostly general interests ones such as Time, Newsweek, USN&WR, Life, Look, etc.) available on her local newsstands, and one or perhaps two (unless she lived in a metropolis) daily newspapers that were delivered in her town. While those would likely certainly her common interests each day, she’d have to glean them for the very occasional that might satisfy her mix of specific interests.

Then came cable (and later satellite) TV, which gave her dozens of specifically topical channels 24/7/365. Then came developments in offset lithography that made publication and distribution of topical (‘niche’) magazines economical, and hundreds appeared on newsstands. And then she got access to the Internet, which gave her access to millions of topical webpages. Usage of all of these satisfies her – and a billion other people’s — unique mix of commons and individual interests better than any general-interest newspaper or news program can. People’s use of the Internet to satisfy their individual mixes of interests caused the growth of the search engines. They didn’t gravitate to online to read general-interest newspapers and news magazines (things that later followed them online).

Because people now have better means of satisfying their unique mixes of common and individual interests, general-interest newspapers’ circulation and readership are declining, as are general-interest news program’s listenership and viewership. For the past 30 years, you can track those declines to match the rise of CATV, ‘niche’ magazines, and Internet access (the recent plummet in newspaper circulation began almost exactly when the majority of Americans got broadband access, ‘always-on’ access to this better way satisfying their individual mixes of interests).

Traditional newspapers are obsolete. The reason why the traditional newspaper deliver exactly the same package of stories to all readers isn’t because all readers want exactly the same package. It’s due to a limitation of the Industrial Era technologies still used to produce those newspapers: an analog press (like an analog broadcast transmitter) can only produce the same edition at one time. That’s the latent reason why a newspaper editor picks for publication mainly the stories that are of most common interest. For example, I’m a New York Times subscriber who’s a soccer and Formula One racing fan but I rarely see stories about those sports in that newspaper. Yet I know NYT receives entire wires devoted to daily events those sports (even the Swiss Intercantonal league, Turkish Third Div., etc.) because I was the Reuters executive in charge of delivering those to the Times. The NYT newsroom has the soccer stories I want, but doesn’t print them and instead prints baseball and American football stories, because its analog presses simply can’t produce editions that match each individual subscriber’s interests.

Though that limitation of analog presses doesn’t exist online, almost every newspaper is inadvertently transplanting it there. For most of the past ten years, I couldn’t get those soccer stories from NYTimes.com either, because it would publish online only the stories that appeared in print. (For the past four years I’ve been able to find the soccer wire on NYTimes.com but had to click half a dozen levels down into the site to find them.) Shoveling into online the same package of content for everyone doesn’t add value in a medium that people are using to satisfy their individual interests and needs.

Moreover, people ‘unpackage’ the traditional newspaper’s package of content online. A person who might have read the printed Willimantic Chronicle for national news because it’s the only printed daily available in Willimantic aren’t likely to read that paper’s website for national news, because they’ve got now access to NYTimes.com, CNN.com, etc. Ditto with national sports, business, international news, etc. They’ll use a newspaper’s website only for whatever that newspaper can uniquely do (which is local news in the most cases). This means that only a fraction of the traditional newspaper’s package of content has value online. That means people might be willing to pay, at most, only a fraction of the traditional price for it online (which fits within surveys that indicate people are willing to pay online for newspaper content, but no more than about $1 per mo.)

So if providing the same package of content for everyone doesn’t add value in a medium that people are using to satisfy their individual mixes of interests and that package is worth only a fraction online of what (fewer and fewer) people are willing pay for it in print, why do so many newspaper publishers still hope people will pay the same for it online as in print? Or pay something for just a slice of that traditional package?

The NYT at least realized that its columnists were a unique part of its traditional package, but wildly miscalculated the people would pay $50 per year for that. Some 227,000 people did, producing $10 milion per year in revenue for NYT, but they were only 1.6% of NYTimes.com’s 13M registered users and that revenue wasn’t much compared to its $300M in revenues. Pluse, lack of access meanwhile displeased the other 12.7M registered users.

The reason I mentioned soccer is that the stories exist that can satisfy each person’s unique mix of common and specific, but traditionally produced newspapers — in print and online — don’t deliver the right match to each person’s mix. It’s a distribution problem: the stories exist but aren’t getting to the right people. So, people are using new media to hunt for the mix that satisfies them, visiting many sites and using many different mechanisms. Eliminating their need to hunt is the business opportunity here for media companies. Google and Yahoo! know that, which is why they’re beginning to offer customizable services that can deliver from all sources stories that can match each user’s unique mix of common and specific interests.

Although services like that can be subsidized entirely by advertising, if people are willing to pay for anything online, it’s likely that they’d be willing to pay for a daily news service that uniquely matches each of their mix of common and specific interest. Would you be willing to pay $5 to $3 per month for a service that each day delivers exactly what you want from all news sources, trade journals, blogs, etc.? The technologies (structured data, etc.) to do this online already exist, but the problem is the news industry’s infrastructure is still based on the Industrial Era practices of producing the same thing for every users and producing it from only one brand.

Therein also lies the problem with most micropayment systems. You’d need a universal one to satisfy most people’s needs and interests. People aren’t going to use a different one for each site (even if it might serve a number sites). It’ll need to either be build into the infrastructure, not layered atop the status quo, or exist upstream of the consumer and built into whatever service ultimately delivers the customized service to her. In other words, the aggregation of micropayments would be done wholesale by whatever service charges the consumer the monthly macro-price.

A paid service for custom content would likely also feature advertising, except it would be advertising to match the person’s unique mix of interests. Such a service would be more valuable to both consumer and advertiser. [How to remedy the way that online marketers have blown consumers’ trust during the past 15 years is another matter.]

A unique printed edition for each user can also now be produced. Agfa and Oce are now manufacturing digital presses (i.e., giant inkjet printers) for newspapers that, when coupled to a database and templates, can produce an edition uniquely customized for each subscriber. (For example, the Agfa Dotrix press costs a fraction what an analog press does, requires only one operator, and can produce 20,000 newspaper copies per hour. That speed is fine for about 1,000 of the nation’s 1,450 dailies; larger ones need only buy multiple digital presses.) I know that MAN Roland and other manufacturers of traditional presses are likewise developing digital presses that would service larger newspapers. [Whether printed editions will soon be supplanted by e-paper is another matter.]

So, the era of one-to-many, of each person getting the same thing daily, is over. People aren’t going to pay for that online. Fewer and fewer people are continuing to pay for it in print. And if soon nobody’s going to pay for that package, then nobody’s going to pay much or anything for just a portion of that package.

Paid content isn’t dead; just payment for one-to-many content is. The problem is most people in the industry still think in only one-to-many terms, including those pundits who are hailing TimesSelect’s demise as the demise of paid content online.

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