How do we get people to pay for their news on the web?

What was once a desperate mirage now shows the hard outlines of a plan.

• Rupert Murdoch has threatened to dump Google and is flirting with Microsoft over selling his content to their upstart Bing search engine [1].
• Steven Brill’s much-hyped Journalism Online [2] has a network of more than 1,200 publishers ready to collaborate on paid content.
• And Time Inc. is considering an iTunes-like application to charge for its magazines’ content, either via subscription or on a “per song” basis [3].

 

What else has to happen? With the news business on the cusp of change or collapse, TheWrap visits the stations of the cross on the path to paid content.

1. CRITICAL MASS

There are plenty of publishers talking about paid content. But enough major players have to move to a paid model simultaneously, or it won’t work.

The main reason for this is obvious. If the New York Times goes behind a pay wall, most consumers will simply go to the Washington Post or Los Angeles Times for free. But if a critical mass of sites decide to go to some form of a pay system -- at once -- consumers would have no choice but to pay.

"You need a perfect storm," says Elizabeth Osder, principal at Osdergroup.com [4], a digital strategy consultancy.

The New York Times [5], which once had a pay wall – TimesSelect – in place, before abandoning it in 2007 [6], says a decision on how it will proceed with the paid content issue is imminent. “It’s a much tougher, more complicated decision than it seems to all the armchair experts,” executive editor Bill Keller told the paper’s public editor recently [7]. “There is no clear consensus on the right way to go.”

But a growing number of publishers have looked at the bottom line. According to the American Press Institute, 60 percent of newspaper executives say they're considering paid content options. This despite the fact that 90 percent don't charge for any content online.

2. WILLINGNESS OF CONSUMERS TO PAY

If you build it, will they come?

So far, it doesn’t look good.

A new Forrester Research report [8] shows that 80 percent of nearly 5,000 consumers polled say they “wouldn't bother” to access newspaper and magazine content online if it were no longer free.

“It's especially notable that, while publishers talk about micropayments so much you could design a drinking game around the word,” the report reads, “only 3 percent of consumers say they'd prefer this method of payment for newspaper and magazine content.”

Another recent study was not so gloomy: Of 5,000 internet users polled globally by Boston Consulting Group, 48 percent in the United States said they were willing to pay to access online news and would pay an average of $3 per month to do so [9]. 

The bad news is that the U.S. tied with the U.K. for lowest percentage among the nine countries surveyed -- and Italians said they’d pay an average of $7 a month to access news.

3. THE RUPE FACTOR

If News Corp were to switch over to a paid model unilaterally, perhaps that could do it – and its boss Rupert Murdoch is definitely on the move.

Murdoch in recent weeks has accused Google of “stealing” his stories [10] -- and Sunday it was reported [1] by the Financial Times that News Corp. and Microsoft are in talks about a landscape-changing deal.

News Corp. would make its content invisible to Google and give Microsoft’s Bing search engine exclusive access to content from all of its news sites, including the New York Post and Wall Street Journal.

And Murdoch doesn’t intend to stop there. A strong proponent of paid content, he has said publicly [11] that the success of WSJ.com [12] has proven to him that he can charge for content online and that he plans to put a pay wall around all News Corp.-owned content.

News Corp. is said to be working on its own back-end system to execute Murdoch's plans to charge for content across all of its news sites.

4. FINDING THE RIGHT MODEL

Last April, media entrepreneur Steven Brill, along with former Wall Street Journal publisher L. Gordon Crovitz, launched Journalism Online [13], a company dedicated to helping publishers figure out how to charge for content.

By mid-November, more than 1,200 publications representing more than 90 million unique monthly visitors had signed on.

The company has offered few details, but basically it has developed software that will help its members set up the pay model that best fits their needs, offering up to 16 different levels of subscription.

A beta group of affiliates will receive the software within the next few weeks to test internally, and then with readers, Brill told TheWrap. Affiliates are encouraged to experiment with different models, Brill said. “What we say is, ‘We don’t know,’ and they don’t know, either, but we’re going to find out soon.”

According to a source, Brill will soon announce a partner to handle consumer transactions across its growing network of content publishers.

5. MAKE PAYING EASY

The success of Apple’s iTunes is a common refrain used in the paid-content debate. And it’s a salient point. Much like music lovers in search of legal MP3s, consumers willing to buy content online need an easy, secure way pay for it -- and, ideally, pay for it only once, no matter who they were buying from.

“We’re not unrealistic about the challenge,” Time Inc. senior vice president John Squires told the Wall Street Journal in June [3]. “But iTunes showed people will pay for something attractively packaged and fairly priced that they once got for free.”

And easy to pay for: According to Apple, there are more 75 million iTunes Store accounts with credit cards on file. (According to the New York Observer [14], Squires' project has generated interest among rival publishers including Hearst and Condé Nast, and he may wind up leaving Time Inc. to head up the consortium.)

Another paid content idea being mulled by publishers is a link-up with cable operators.

Newsday, the Long Island, New York-based tabloid, said it would put most of its content behind a pay wall [15]. “Content will only be available to subscribers of Optimum Online, Newsday or those willing to pay for it,” the Cablevision-owned paper said. Those who are not subscribers to Optimum Online or the newspaper are charged a $5 weekly fee to access the entire site.

And executives have hinted that what Time Inc. is testing with its iTunes-like service could eventually be part of TV Everywhere, Time Warner chief Jeff Bewkes’ ambitious project.

6. MOBILE READERS

At a recent magazine summit, Josh Quittner, former editor of Business 2.0 and an editor-at-large at Time magazine, said [16]: “We all know it’s coming. When Apple’s device is announced, there will be a mass ascension, and everyone will go to media heaven.”

He was talking about the rumored Apple tablet, but news junkies already are reading the Wall Street Journal ($14.99 a month), the New York Times ($9.99 ) and others on Amazon’s Kindle. In fact, the large-size Kindle DX was designed to replicate the look, if not the feel, of an actual newspaper.

Plus, Condé Nast is building a digital version of Wired magazine [17] for electronic reading devices with the help of Adobe Systems -- slated to be available next year, followed by Condé’s other magazines.