idio Platform

After the secretive meeting of newspaper executives a few weeks ago, at which the economic future of the industry was discussed in depth (see my thoughts here), there has been a splurge of coverage about the companies that are positioning themselves as the newspapers’ saviour.

The Guardian recently reviewed the startup ecosystem that is forming around providing paid-content revenue streams to newspapers, which is worth a read. But to go beyond the startups mentioned there, I have created a summary of the various approaches.

Donations – These services (like Kachingle, but see this article for more examples) hope to supplement revenues for newspapers by encouraging readers to donate voluntarily for articles they find useful. At least this concept still allows for content to be free, but I can’t imagine that many people will choose to pay. If the fact that you pay for a piece of content is broadcast subtlely to your friends, these services could provide a foundation for a more powerful content recommendation system. If I knew a friend had paid for something she recommended to me, I would be more interested in reading it.

Paywalls - Although most publishers are looking at this option as a bespoke development project, Journalism Online is looking to sign up newspapers to use a unified system which charges users to read any content within the network. This provides a ready-built system for publishers, and allows users to only pay through one gateway, and to get discounts for purchasing across all sites. I just can’t see why people won’t go elsewhere for free.

Targeting - These systems are very similar to Journalism Online, but instead of just relying on paid content, they collect and use data about user interactions (which we think is smart). ViewPass plans to use the data to target higher performing advertising, and Circulate takes a similar approach to idio by actually targeting content based on user preferences.

I hope all of the above startups manage to successfully carve out a niche and help publishers navigate the next few years. However, the fundamental problem remains: there are scant few examples where paid content is working online, with the main examples being in business news, which is often seen as a commercial necessity. And for all the talk, including a variety of strongly worded statements from leading figures like Rupert Murdoch, launch plans for mass-market paid news services still seem vague. The risk in erecting a paywall and then seeing the audience dissipate is just so high.

I have heard many people discuss Facebook or Twitter’s revenue model, and ask why they don’t just charge people a small amount for their services. And the answer is that although it might drive a lot of revenue in the short-term, it would likely end their long-term revenue potential. The audience would quickly move to competing services that are free. News organisations face exactly the same issue – it is very hard to compete with free. Or as Clay Shirky puts it: “as the drunks say, you can’t fall off the floor.”

If all newspapers charge for their online content, without offering anything of more value, online-only media outlets from AOL and Huffington Post to new startups, would rub their hands in glee, and watch their traffic and influence grow rapidly.

I do like the halfway-house that is being proposed by several news sites, where content is free, until you consume a lot of it, and then you are asked to pay a monthly fee to continue accessing it in volume. It charges those who are getting the most value from your content. But the problem is, from a user perspective, you are penalising your most loyal readers. By driving even a minority of them to find other sources for their news, you will lose a disproportionate amount of your pageviews and reader interactions.

I understand that any newspaper exec will say that charging for content is absolutely vital and also fair. I’m just concerned that it doesn’t fit the way the online audience behaves, and no newspaper exec is going to be able to force users to open their wallets against their will.