An Online Subscription Model for News Organizations…

…which were formerly known as newspapers. A recent column by Frank Rich makes me think that news organizations can be viable using a paid subscription model–in fact, I think they can be very successful. The problem is that they might not be very widely read. Rich, discussing the looming demise of many newspapers, writes (italics mine):

But opinions, however insightful or provocative and whether expressed online or in print or in prime time, are cheap. Reporting the news can be expensive. Some of it — monitoring the local school board, say — can and is being done by voluntary “citizen journalists” with time on their hands, integrity and a Web site. But we can’t have serious opinions about America’s role in combating the Taliban in Pakistan unless brave and knowledgeable correspondents (with security to protect them) tell us in real time what is actually going on there. We can’t know what is happening behind closed doors at corrupt, hard-to-penetrate institutions in Washington or Wall Street unless teams of reporters armed with the appropriate technical expertise and assiduously developed contacts are digging night and day. Those reporters have to eat and pay rent, whether they work for print, a TV network, a Web operation or some new bottom-up news organism we can’t yet imagine….
Just because information wants to be free on the Internet doesn’t mean it can always be free. Web advertising will never be profitable enough to support ambitious news gathering. If a public that thinks nothing of spending money on texting or pornography doesn’t foot the bill for such reportage, it won’t happen….
The real question is for the public, not journalists: Does it want to pony up for news, whatever the media that prevail?

Well, we’re all about the porn. We’ll get to that in a bit. I keep reading about how people won’t pay for news, information wants to be free (and I want a fucking magick pony…), and so on. But I don’t think that’s actually true. Lots of people would be willing to subscribe to online news. Why do I think this?
Because lots of people already subscribe to newspapers. The question is then, would an online, subscription newspaper be commercially viable? If a subscription service were to have 100,000 customers, each of whom paid $15 per month (which is far cheaper than most newspaper subscriptions), that would generate $30 million annually. If we then assume that it costs ~$200,000 annually to pay for a reporter/journalist–this would include all of the overhead costs, benefits, and administration–then an online subscription organization could afford well over 100 full-time journalists.
This ‘newspaper’ would be missing one key feature: straight opinion. As Rich notes, any asshole with a blog (including this one) can offer opinion. But the stories could be a mix of short news wire-like updates along with much longer investigative reporting (which could have opinion thrown in). The writing would have to be good–and interesting. You probably wouldn’t get much in the way of Compulsive Centrist Disorder (although considering people will pay money to watch bugs getting stepped on, who knows?).
Onto the porn. Remember that article about porn-using habits in the U.S.? While it’s not explicitly stated in the article, my best conservative guess is that about 0.15% of households with internet access have one or more porn subscriptions (since the data are from only one large provider, it’s probably much higher). I don’t think it’s a reach to argue that the potential market for news would be larger than the market for porn: there’s money to be had. It shouldn’t be that hard for regional and national news organizations to get 100,000+ subscribers, as long as their products are good.
A sharp business person could make this financially successful. The problem is that ‘national’ news organizations might cover national affairs (and international affairs too), but they wouldn’t have a national readership (and that’s before you consider the information divide based on economic class).
In other words, subscriptions could work, but this successful model most likely means that most people will never read the news. That’s not good for the Coalition of the Sane.

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7 Responses to An Online Subscription Model for News Organizations…

  1. Joshua says:

    Well, if we saw these kinds of subscription news services pop up, I think the interesting reporting would trickle out as bloggers who do subscribe to the services would quote the stories that they’re reading behind the pay walls. That might actually drive new subscriptions. Maybe.
    Actual subscriptions to the service might be a niche thing, but it’s not ridiculous as a business model. When you get down to it, this is not dissimilar to what AP and Reuters already do and, more importantly, already make money doing. Provided that the new “News Organisations” producing the reporting are willing to operate under licenses that allow republishing of large excerpts of their content (or even the full content, with attribution, also like AP and Reuters already do), the big bloggers would be all too happy to subscribe so they have something to write about.

  2. Dave Munger says:

    I wouldn’t pay $15 per month for local news, and I don’t believe it would take 100 journalists to cover local news. I’d say 30 or 40 would do the trick — and that would be worth $5 per month for me.
    Maybe the journalists would be divided as follows: about 5 for sports, 15 for local news/features/government/education, 5 for local business, 5 for state government, and 1 or 2 national correspondents (for national issues affecting our region). I’d get national and international news via separate subscriptions to larger organizations like the NY Times.
    Perhaps I’d pay $15 for *all* paid news subscriptions, just not local.

  3. Joshua says:

    I’m also reminded of the tiered newspaper structure of the neo-Victorian Atlantis Clave in Neal Stephenson’s The Diamond Age (highly recommended, even if you’re only marginally interested in sci fi and post-cyberpunk fiction). Basically, due to advances in nanotechnology they have both functional e-paper and ubiquitous wireless networking, thus most Atlantans get their news in an electronic format. These electronic news feeds are filtered according to the individual’s interests as one either focuses on or ignores various stories, such that eventually no two people are reading the same news.
    However, by a quirk of their neo-Victorian aesthetics, handmade physical items are prized over technological novelties; thus, as one rises in Atlantan society, one begins subscribing to physical newspapers. Therefore, the higher in society you are the more likely you are to be reading the same news as everybody else. Or, more to the point, nothing is explicitly denied to anyone, it’s just that the nature of the distribution systems mean that those with higher social rank are more likely to be exposed to information they wouldn’t ordinarily seek out.
    This isn’t an endorsement of such a system, mind you. It’s just an interesting fictional example of what a tiered information structure might look like, as well as a fictional example of how a culture similar to our own might adapt to information overload. Because, let’s be honest, even relatively well-informed middle class folk like ourselves, with all the time we spend absorbing information, can’t absorb all the information out there, even if it’s all completely free for the taking. It’s inevitably going to be trickled down to us somehow, whether by conscious self-selection or by Google-like intelligent algorithms.

  4. Kevin says:

    “But we can’t have serious opinions about America’s role in combating the Taliban in Pakistan unless brave and knowledgeable correspondents (with security to protect them) tell us in real time what is actually going on there.”
    If that were actually true then the rest of the analysis might make be valid–but doing a broadcast from inside a secured perimeter doesn’t actually qualify as reporting. The sad reality is that Jon Stewart is the Walter Cronkite of the modern age. What does it say about the state of news in America, when a comedy channel satirist is the most trusted voice in news.

  5. oscar zoalaster says:

    “Newspapers are the first draft of history”. I’m not particularly willing to pay very much – if anything – for simple day to day information (partly a side-effect of being broke for a long time). However ‘value-added’ to something I ‘already get for free’ would be very useful. Newspapers have lots and lots of articles that their reporters have written that chronicle various events. A ‘value-added’ product that newspapers are missing is compiling all of the articles on a particular topic into a ‘second draft of history’. They could charge for the ‘second draft’ in ways that they would not always charge for the ‘first draft’, and the quality of their ‘first draft’ serves as advertising for the ‘second draft’.
    Another option is to sell ‘topic subscriptions’ and ‘more like this’ subscriptions. If I want ‘more’ stories on a particular topic I subscribe to that topic and the newspaper has incrementally more funds to devote to that topic. If I want ‘more like this’ I can subscribe to a particular writer, topic, or some other characteristic of a story, and so on.
    Once the various ‘pay’ models show some reliability they could also add an ‘investment subscription’ in which your profit is a lower price for news access – whether as a regular subscription or intermittent purchases. (A similar model might work for volunteer reporters – if they do good work they get cheaper/free access.)

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