Steve Brill, the man who actually think he can put people pay for the news
As I said before, I don’t believe in paying for online news. First of all, it’s the wrong focus. You don’t have to put me pay for news when I can find the news anywhere else. Everywhere, actually. It’s actually simple to find alternatives. If Washington Post wants me to pay to read the news, I’m sure there’s going to be some other news website to pay Washington Post for that news and give me a summary of the article. Why should I bother paying?
Journalism Online. Right.
Steve Brill wants to create a service of news distribution. Basically, he will aggregate news from publications all over the world and will serve me the articles I’m interested in. He hopes to reach 10 percent of web readers, users that are willing to pay Journalism Online – that’s the name of his start-up -, so he could actually share the revenues with the publishers.
The idea is not bad, actually. If you could actually reach your core target, then JO could actually get some good money. Still, it’s hard to believe people are willing to pay for content. Why? Because regular people have lots of news sources. Now let me copy/paste a paragraph from Washington Post’s original article:
Under a hypothetical scenario presented to reporters Wednesday, Journalism Online predicted a large daily newspaper with a print circulation of 1 million and an online audience of 20 million would collect more than $110 million in new revenue during the first two years of its service. No revenue projections were offered for smaller newspapers during Wednesday’s meeting.
That’s hypothetical, OK? 20 million users for one big online news website. Am I stupid or this guy is crazy? Take “crazy” however you want: the good way, the bad way, I don’t care. He actually believes that 2 million people “might” pay for news. OK, now please go back to the first paragraph of this article and click the link, then read my previous post.
It’s actually a stupid idea
In theory, that sounds good. 2 million people that might pay for news. But what about Digg.com? What about StumbleUpon.com? What about HuffingtonPost.com? The first and the second are news aggregators, they serve the news to the reader and send traffic to the news websites. More traffic means more pageviews, more pageviews means more money from advertisments.
In order JO subscriptions to be possible, newspapers should introduce subscriptions just as well. Well now. If you add paid subscriptions to your website, your traffic will grow negative. That means less pageviews and less page views means… less advertising money. Now, which of them do you prefer? Guaranteed money from advertising or, hopefully, revenues from JO subscriptions? And are you sure JO will get at least 2 million subscribers? Are you willing to take that chance?
Let’s make a simple calculation
I don’t know what’s JO’s business model, but I bet Brill’s start-up would like to pay the publishers for each news view. How much could a news view cost? 2 cents? Because if he would like to collect $110 million in two years from 2 million subscribers, that means $55 million a year. For 20 million users a day, OK? Good.
New York Times has somewhere around 4 million visitors a day. That should be somewhere around 50-60 million uniques a month. If you have a daily online audience of 20 million, you should earn about $4,5 million dollars a month. Right? Right. For the New York Times, that means somewhere around $1,1 million. But if payed subscriptions would be introduces on NYTimes.com, the traffic would probably go down with at least 30 percent. That’s like 20 million uniques a month that can generate at least 80 million pageviews/month.
I don’t know the ratecards, but for a single leadboard, at 80 million pageviews a month, considering the CPM at 5 dollars, that means $400.000 a month from one single ad space. I use AdBlock, so I have no idea how many ad spaces NYTimes.com has. But if there are four, that means two million a month.
Is the New York Times ready to lose 0.9 million dollars? I know, the calculation is irrelevant, NYTimes could get it’s own subscribers, but most probably, it would be about the same money. So why pay Journalism Online? Hell, I don’t get it. Oh, and don’t forget: as irrelevant as it might be, the calculation above is really optimistic.
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Image source: The Observer.
