The Only Sensible Model for News Publishers: Usage

Leading news publishers met in Chicago last week to hear the business models of the future -- the paths they should take back to profitability. Some of the proceedings have been reported by the Nieman Journalism Lab at Harvard. The problem is that most of what they heard is the same old tired models with new, Web 3.o-sounding names, like Journalism Online, Fair Syndication Consortium, Kachingle, and ViewPass. They all miss the mark by a huge margin. They are all seriously flawed and don't stand a prayer's chance in hell of working for most news publishers.

These models appeal to news publishers on some level because they all tout the old ways of making money: pay walls, subscriptions, user registration, demographic profiling, ad targeting, and, somewhat new, extorting money out of those who have figured out how to make it (namely Google). These are old models for a new paradigm in publishing, rather than a new model for a new paradigm in publishing. In all but a few cases, users are not going to pay to view online news content, period. They are not going to register. They are not going to allow themselves to be tracked and profiled and "behaviorally targeted" with advertisements. There are all kinds of reasons why these models won't work, but allow me to highlight just a few:

1. Pay walls: why would people pay for content on Journalism Online or any publisher site when the same story (or a reasonably good version thereof) can be viewed for free on Google, Yahoo, MSN, CNN, Moreover, Factiva, Lexis-Nexis, and hundreds of other aggregator websites? Are publishers going to stop selling their feeds to these aggregators? I think not.

2. User Registration: I once had to register with NYT.com in order to read their stories (thankfully they did away with that). I registered as a 35 year-old female with two kids and an income of $85,000 per year, using an anonymous email address from Hotmail. I am still getting email offers for Vogue Magazine at that email address, which I keep just for these lame registration sites. There is no system that can verify that the data entered by users is remotely accurate, and if there was, few would register.

3. Demographic Profiling/Ad Targeting: Read #2. Need I say more? Okay, I'll say a little more. Like many users, I have my browser set to reject cookies. On the rare occasion that I accept a cookie in order to view a site or buy something online, the cookies are automatically deleted by another nifty utility that came with my PC. Additionally, some studies suggest that as much as 60% of the data collected by sites and sold to advertisers to justify ad rates is grossly inaccurate.

4. Making Google and the other Ad Networks Pay a "fair compensation" toll: ha ha ha ha ha ha ha ha ha ha ha. Good luck with that. (By the way, there are ways that Google and the other search engines will pay publishers for the pages they index and cache, but this is not it. I'll save that nugget for another post).

There are LOTS more reasons why none of the models proposed thus far will work for most news publishers. The underlying reason is because people do not "view" the news like they use to, nor do they "consume" the news like they use to. So it follows that news publishers can not monetize like they use to. None of the old models apply, no matter how they are made to look like new models. I propose the only sensible model is "usage," for want of a better, cooler, Web 3.0-sounding term.

I suggest that the model for how content will be monetized on the web has been turned on its head. It's an upside down world of news publishing in the digital age. What do I mean by that? In the good ole days, most of the money was made by newspapers from subscription, or from CPM advertising. It was an all-or-none proposition. A little money was made on actual "usage," like when someone bought a reprint, a photo, or a permission. People paid for a newspaper whether they read all the articles or not. It was worth it to get the business section, or sports section, or whatever we were interested in. Occasionally, we would buy a poster of the front page, or a plaque version of a wedding announcement. Publishers made a little money on "uses." The reverse is now true.

Today, people don't want to buy a newspaper to get just the sports section. They can get JUST the sports stories they want by doing a search or visiting any number of free sites that publish sports news and only sports news. They subscribe to Google Alerts or Clip&Copy to get just the articles they want. They will "pay" for what they use, but not for the privilege of seeing a bunch of headlines and stories they won't read. In the old model, publishers got paid for everything. In the new model, publishers will get paid for what people use (or "consume," if you like that term better). With this model, a "view" is NOT a use. People won't pay to view a headline or a story, anymore than an iTunes user will pay to sample a song. Users will pay to "take" an article, just like an iTunes user will pay to "take" a song. And no, this is not a pay-per-view model either.

The usage model concedes that all news stories are free -- to look at. View them to your heart's content. News is a commodity. If a publisher wants you to pay before you can view a story, get a similar one from another source that is happy to supply it free-of-charge, free-of-registration, free of stupid Kachingle badges or ViewPasses. Odds are you will find that same story, or ones very similar, on lots of aggregator sites. Just Google it. However, the second you click to email, print, save, post, download, share, or otherwise "use" the story (and millions of people do this every day), Bingo! That's money in the bank for the publisher. The cash register rings when content is used and shared, not because of the mere fact that it has been published.

This news usage monetization model should not be a huge leap for publishers. In some respects it mirrors the evolution of the advertising model. In the old days, advertisers paid for placement on an all-or-nothing basis. They paid on a CPM basis, not really knowing how effective their ads were. The old adage was, "Half the money I spend on advertising is wasted, I just don't know which half." Google changed all that. Advertising became "actionable." Advertisers pay for click ads because they deliver better, more accountable results. The same is true for content. Publishers can make money from content that is "actionable."

Publishers have learned that they can make more money from click ads (actionable) then they can make from old fashion impression ads. In fact, advertisers won't pay them as much for old fashion impression ads as they will pay them for new-age click ads. The same is true for content. Users won't pay to view articles, but they will pay -- or advertisers will pay -- when users email, print, post, or otherwise "use" articles. In fact, publishers can make lots more money from usage than they can make from articles that are merely viewed. Unfortunately, they are still giving away uses and trying to make money on views. Page views have been reduced to remnant CPM ad rates. Publishers have things backward. They are trying to make money on views no one cares about, and they give away the uses that their audience values the most.

Old ad model -- CPM. (not actionable)
New ad model -- Pay-per-Click, Pay-per-Call and Pay-per-Sale. (actionable)

Old content model -- all or nothing subscription and pay-per-view. (not actionable)
New content model -- ad-supported usage and pay-per-usage. (actionable)

How publishers make money from advertising has forever changed. It's a new advertising paradigm. The same is true for how money is made from the content itself. It's an upside-down model. Some money in views (remnant advertising), lots of money in usage (targeted contextual advertising and paid usage). How the "usage" model works exactly and what publishers need to do to implement it, has been covered in other posts and white papers published on iCopyright.com. I won't belabor it here.

Long live the news and news publishers -- so long as the news is useful (not just viewable).