Brill: Why We Should Pay for the New York Times

After a year of surveys and internal conversations The New York Times confirmed that it will charge for some of its online content starting in early 2011. Their meter system will allow readers to view a certain number of articles for free before asking them to pay a flat fee to read whatever else they like. The exception is print subscribers, who will receive Web access at no additional cost. The move isn't what you might call new. The Financial Times and The Wall Street Journal have taken on similar systems, but the argument has generally been that they can get away with it because of their exclusive financial reporting.

The Times has gone down this road before with the TimesSelect program. That wall came crumbling down after Maureen Dowd and Thomas Friedman complained about the drop in traffic to their columns since people couldn't link to them. Media mogul Steven Brill, who has been building his own metered service, Journalism Online LLC, and who authored the memo on how to save The New York Times and journalism itself, talked to NEWSWEEK's Jessica Ramirez about what this new move means. Excerpts:

NEWSWEEK: How significant is the Times 's move?
Brill: It's great whenever any significant publisher of journalism reaffirms the idea that journalism has value—whether it's online or in print—but it's especially significant when The New York Times does it because, as far as I'm concerned, they're still the leading journalism organization in the world.

You had some talks with the Times regarding your own program. What happened?
It was just about a year ago that I wrote a memo to Arthur Sulzberger Jr. that subsequently got leaked by someone to Romenesko that suggested the Times start charging or start charging their most engaged customers first so as not to give up on ad revenue. So it's great to see them going for it.

Did that include talks about you working with the Times?

I'm sure you've read David Carr's piece on the Times 's decision. He says the choice to build their own e-commerce system comes from the fact that they feel the middleman makes the gold. As a middleman yourself, what do you think?
They're right, and we've stressed to them that the reason we've been able to convince so many publishers to sign letters of intent and launch their beta versions with us is that we don't take that approach. We don't control the customer. We don't act as middlemen in terms of setting prices or anything like that. We do get a revenue share in return for the three key services we provide. One is the platform, and as you now know, they estimate it will take them a year to build that platform and God knows how many millions of dollars. That's one service. The second is the ability to have a common account, a common identification and password across thousands of Web sites, which makes it a lot easier for the customer. And third, the ability to share market intelligence in terms of what kinds of offers and experiments that publishers around the world are going to be doing. For example, we have one affiliate that's going to be starting its effort by charging people who live outside the country where this newspaper publishes but who read the publication regularly. But as I said, it's an enormously complicated, complex system to build the right way.

So what do you make of news organizations trying to build their own systems?
It's their choice. Listen, they could've decided that the revenue share they would pay us would be more than the cost in millions of dollars in building it, and that's a perfectly reasonable choice, even though our terms of agreement are you can cancel every year. So they could start with us and then they could go to their own system once they built it and we'd be fine with that. But I'm happy that they're doing what they're doing, and the fact that we have one less affiliate—albeit a very important and prestigious one—is certainly secondary to the overall impetus that this gives this movement to reclaim the value of journalism.

A November 2009 Forrester Research report suggests that 80 percent of Americans won't pay for online newspaper or magazine subscriptions. Your thoughts?
Among the things I've seen in the last year, that was the single dumbest analysis I've read. First of all it uses the term 'pay wall,' which I think is a 2007 term. We don't use it. It implies you just put a wall up and you lose all your ad revenue. The numbers in that were completely wrong. It's as if this guy's living on another planet.

So this idea that only about 20 percent of Americans will pay for some form of online subscriptions seems wrong to you?
That's the best news I've ever heard, because our model says The New York Times and every other publication you can think of will do fabulously if only 10 percent pay. Only 20 percent will pay, that's like saying, 'I have an idea to sell BMWs, but unfortunately only 20 percent of Americans will buy one.' It's absurd.

Does that mean that in a couple of years you see everyone paying for some online news content?
Yes, steadily more of it. I think there are two things that are going to go on at once: ultimately the meter will get dialed down so that what might be 20 articles a month for free might be four articles a month for free. Second, I think that everybody assumes whether it's five years from now or 10 years from now, daily newspapers are not going to be printing copies every day. They may not be printing copies at all or they may be printing just their Sunday edition. But they want to keep daily customers, and the only way they can start to make that transition is if they have customers online buying something from them. Let's say you pay $200 a year for your newspaper subscription. And let's say they want to charge $80 a year for their online subscription. They might charge $225 a year for the bundled subscription. That is important because gradually the value will shift to where they will be able to get $150 for the online subscription and $50 for the print subscription because the print may only happen once a week.

I can think of at least three ways to get around a metered system like the one The New York Times is considering. How does an industry that is hoping to make up lost ad revenue via these models deal with those kinds of issues?
Sure, you can get around it, but the point is most people won't. The Financial Times, which has been doing this for three years, says maybe 1 percent of people try to do it. Sure, it will happen. But it's like saying you won't open a store because there might be shoplifting.

There's also the broader question of what exactly the industry is trying to preserve. One of the things Clay Shirky said in his essay on journalism is that maybe instead of trying to save newspapers or magazines we should be trying to keep the actual journalism part going. Think that's something the industry gets?
Well, they need to. It's sort of like the old saw: if you were selling horses and buggies, were you in the horse-and-buggy business or the transportation business? Let's say you were the dominant horse-and-buggy maker in the United States and you had some kid come to you and say, 'We really ought to buy into this car thing that [Henry] Ford wants to do.' And you say, 'We're not going to do that because cars will cannibalize horses and buggies.' So you don't do it. Then what you do is you let someone else cannibalize you instead of you cannibalizing you. So the answer to your question is yeah, you've got to figure out what business you're in. Are you in the business of printing newspapers and paying trucks to deliver them to newsstands and kids to deliver them to doorsteps, or are you in the business of informing your community.

What happens if the ad market rebounds?
It may change things at the margins, but there's a difference between the ad market rebounding generally and the ad market for newspaper and magazine Web sites rebounding because the problem with Web advertising is there's an infinite amount of supply that just keeps expanding. If I said to you, 'I'm starting a new fashion magazine and I'm going to go to Ralph Lauren and convince him this is a great magazine and he needs to be in it,' and two hours later someone else came to him and said he's starting a new magazine, and two hours later someone else, and the next day six other people, and the next day seven other people, what Ralph Lauren would know is he can pay a lot less for his advertising because there are so many alternatives. Well, think about that in terms of Web pages and Web sites: the inventory just keeps expanding exponentially.

Some news organizations see revenue in the pay walls, some see it in the meter system, and then others see it in an e-reader download. What form do you think successful content will take in the future?
I think that publishers make a huge mistake if they try to bet on one. What we're designing is the ability for a publisher on its Web site to engage readers to buy their product however they want it delivered. 'I want to pay $6 a month for it to be on my browser.' And then I can check another box and pay another $3 for an Apple tablet version and another $2 for a Blackberry version another $2 for my cell-phone version. But the relationship should be between the creator of the content and the publisher of the content and the customer, not the hardware vendor. When I subscribe to HBO, I don't call up Howard Stringer and say, 'I want to watch HBO on my Sony television.'