Holding On to a Dream

The SIIA hosted another stimulating “brown bag” seminar in Manhattan yesterday, with former WSJ publisher Gordon Crovitz, Thomson Reuters’ head of consumer publishing Alisa Bowen, and Chris Kenneally of Copyright Clearance Center, moderated by the indispensable John Blossom of Shore Communications. Nominally, the subject was “how to leverage hot content delivery platforms,” but not surprisingly the real focus was on business models that transcended particular platforms and technology trends.

 Alisa Bowen described how Thomson Reuters is moving toward a freemium strategy for “prosumers” on the iPhone and Blackberry (interestingly, each of these represents about half of the initial downloads of the company’s News Pro app), with a currently un-monetized service expected to evolve toward subscription services. Chris Keneally described how CCC’s services have evolved with new platforms (photocopiers to digital media) and noted its most recent new offering, the Ozmo.com service designed to help  manage rights related to user-generated content.

The centerpiece presentation, though, was that of Gordon Crovitz, in his new role as co-founder of Journalism Online, the new venture that is seeking to provide the newspaper industry with a common platform, and in effect to catalyze a “movement” to add online subscriptions to that struggling industry’s revenue base. Crovitz noted some of the user-experience problems of the current model, in which, for example a Wall Street Journal print and online subscriber still has to pay separately for a Kindle subscription or an iPhone App. And he mooted a number of interesting concepts, such as subscription bundles of “all you can read” on a single topic from multiple publishers, and the negotiation of industry-level wholesale licensing and royalty fees with intermediaries such as Google. I wish him and the new venture well, as must anyone who values daily journalism and the community-binding value of local newspapers. Unfortunately, I found much of his presentation unpersuasive.

Among the most startling pieces of evidence he presented were the findings of a Penn, Schoen & Berland survey released at the recent All Things D conference, purporting to show that 92% of American consumers would be willing to pay something for online news – an average of $25 / month. This suggests that the American news industry is leaving well upwards of $50 billion on the table – which would be wonderful news, if it were credible. (It wasn’t that long ago that Penn, Schoen principal Mark Penn embarrassed himself with a Wall Street Journal piece arguing that almost 2 million American bloggers were getting paid for their work, with 452,000 using blogging as their primary source of income. These figures were quickly debunked and shown to be drawn from a remarkably sloppy amalgam of sources, and heavily skewed by a few outliers. Whatever one thinks of Penn’s contribution to the Clinton campaign, his reputation isn’t riding too high in the digital media world.) Journalism Online is using a more conservative percentage of 10%, which Crovitz notes would generate on the order of $100 million a year for a large newspaper. This still flies in the face of the experience to date of not only newspapers, but nearly all consumer publishers, with the exception of WSJ.com, Consumerreports.com and very few others.

Crovitz also presented two “myths” about consumer-paid online news: 1) that it is an either/or proposition (i.e., the WSJ has used a hybrid model, paid subscribers draw higher CPMs) and 2) that ‘it’s only about online revenue” (i.e., online can support the value proposition of print, reduce acquisition/retention costs, etc.). These struck me as particularly fragile straw-men from the vantage point of anyone who has observed the digital arena over the past years and decades – which, make no mistake, includes a good number of intelligent newspaper executives.

A number of good questions were asked by the audience:  How does the consumer experience change in a multi-newspaper service?  Where does the consumer branding expertise come from?  What about structural approaches to cost control?  Again, I wish the venture well – but if I were to invest, I would need considerably more reason to believe.