New Denver News Startup Discovering (Again) People Aren't So Interested In Paying For News

from the let's-try-this-again... dept

While we thought it was great that a group of former reporters from the suddenly-closed Rocky Mountain News were trying to form a new online venture called the InDenver Times, we thought it was quite unlikely that the group would actually be able to get 50,000 people to agree to pay them $5/month by April 23rd. That was the self-appointed deadline set by the group. And, in fact, as we approach the 23rd, Romenesko alerts us that the group is is struggling to even find 10,000 people willing to subscribe. That isn't too surprising. There remain other (free) sources of news, and they're trying to get people to agree to pay for a product that doesn't even exist. The fact that they've got almost 10,000 is impressive enough. That said... while the group still clings to the idea of a subscription model, they're also saying that they'll move forward even without the necessary subscribers. Hopefully that gets them exploring more reasonable business models, because $50,000 a month from subscribers isn't going to go very far.


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  1.  
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    Anonymous Coward, Apr 17th, 2009 @ 3:16pm

    As I see it, somebody is eventually going to pay for news, or else news is going to go away. But let's assume that someone is going to pay for it.

    The problem isn't in assuming that people aren't going to pay for news, it's that assuming that individual subscribers are going to pay for news. That's probably not going to happen.

    What's happened in the past is that aggregators paid for news. At that time, those aggregators were newspapers and TV stations, but let's look at newspapers for the purposes of this discussion.

    Newspapers bundled a number of services together. They paid for news directly, by hiring reporters. They then took that news and monetized it, by aggregating it and selling it. They also monetized it through advertising, which turned out to be where the real money was. They didn't, however, get their news for free.

    Well, news-gathering and news monetization are both very different and hard problems, and so what did that mean? Specialization.

    The newspapers moved away from news-gathering, and outsourced much of that to the AP and wire services, who optimized news-gathering by centralizing it. The newspapers then shifted their focus to their old profit centers, monetizing news through aggregation and advertising. So you have the AP who specialized in newsgathering in a symbiotic relationship with the newspapers, who specialize in monetizing that news. The market set the price that the newspapers paid for the news, and all was well.

    Except, whoops, here comes Google, and bloggers, and everyone else. Google is in the same business as the newspapers: aggregation. Google doesn't currently monetize news, but you can bet it's gonna.

    Well, Google is a better aggregator than the newspapers. And so newspapers are getting cut out of the loop. This is natural in a market: if you do someone else's business better than they do, you will eventually drive them off.

    What's interesting is that Google is double-dipping here: it is getting its news for free, and then it's centralizing aggregation. It is, perhaps rightfully so, putting newspapers out of business by doing what newspapers do (news aggregation and, in the future, selling ads) better than newspapers do.

    But it's also cheating by not paying for its news. It just gets it for free right now via the newspapers, who are still paying for it (by hiring a few reporters and getting the rest from the AP), but they're losing money every day they do.

    The free ride can't last forever. What shocked me recently was an interview with Eric Schmidt (the CEO of Google), where he more or less asserted that Google will not pay for news. Well, when Google kills off all the newspapers who ARE paying for the news, they're going to have to. But Google isn't going to be generous until there's a need, so they will happily graze their sheep in the common paid for by the newspapers largesse until there isn't any more grass, and then they'll have to start planting their own.

    So, as far as I can see, Google will become the new newspaper.

    It's OK. They're better at it than your local paper anyway. They will centralize aggregation like the AP centralized newsgathering, and they'll just deliver you a custom "package" of news that replaces your local paper. They're already better at advertising than any print media, so they won't have any trouble monetizing it that way (or if they do, it'll be because it can't be monetized at all).

    Whether this will result in more or less news, or better or worse news, I can't say. Instead of being indirectly beholden to newspaper advertisers, they will be beholden to Google, who is beholden to its own advertisers. Meet the new boss...same as the old boss?

     

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  2.  
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    Guy One, Apr 17th, 2009 @ 3:54pm

    Re:

    "As I see it, somebody is eventually going to pay for news, or else news is going to go away. "


    HUH? sorry cant get past that... News can just go away? If that is possible, please make it happen NOW!

     

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  3.  
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    Anonymous Poster, Apr 17th, 2009 @ 4:06pm

    Re:

    tl;dr

    Also, news isn't going to go away just because people stop paying for it. Please stop being a dumb shill for the newspaper industry.

     

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  4.  
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    Nasty Butler, Apr 17th, 2009 @ 4:20pm

    Re:

    Your theory has several flaws. The most glaring being that Google is undercutting newspapers by ripping them off. The newspapers choose to let Google link to their site. Also Google does get ad revenue. What do you think all those words are on the right side of Google's site? How do you think they make money? You obviously spent a lot of time on your post, and all you did is make yourself look like a moron. Good jeeaoorb.

     

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  5.  
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    Anonymous Coward, Apr 17th, 2009 @ 5:47pm

    Re: Re:

    The most glaring being that Google is undercutting newspapers by ripping them off. The newspapers choose to let Google link to their site.

    Google is undercutting newspapers AND it is ripping them off, it is not necessarily undercutting newspapers BY ripping them off. The undercutting is legitimate: Google's aggregation is more efficient and better than the newspapers'. Any individual newspaper could cut off their links from Google, but since they're all mostly getting their news from the same source (e.g., the AP), Google wouldn't even notice. If they ALL cut off their links to Google, Google might have a problem, but that would require unprecedented cooperation between competitors, and even if they could do it, would likely be seen as collusion or restraint-of-trade.

    Also Google does get ad revenue. What do you think all those words are on the right side of Google's site? How do you think they make money? You obviously spent a lot of time on your post, and all you did is make yourself look like a moron. Good jeeaoorb.

    Be careful before calling me a moron.

    Google is very, very careful with where it puts its ads. I was mistaken in one respect: Google now does display ads on Google News results, but this only happened four weeks ago. I missed it, apparently. Before that, the news site was ad-free.

    Why would Google have run an ad-free news site? Two reasons, both well documented here. First, Google News filters enough people to OTHER, non-Google-News properties that make Google $100M a year. Second, plausible deniability: by not making any money off the news part of the site, newspapers and news-gathering organizations couldn't easily demand a cut. After all, Google was operating the news site at a loss, right?

    I'm not sure what shifted the attitude at Google, but you can imagine they thought very carefully before they put ads on the news site. Maybe it was their victory in the book search lawsuit. Google is very cagey about where it puts those ads, especially when it's not clear what they're doing is legally legitimate. Consider this from their book search FAQ:

    We don't place ads on a specific book result unless the copyright holder has given us permission to display portions of the book and wants to show ads. When we do show ads, the majority of the revenue is given back to the copyright holder. In other words, we profit from Google Book Search ads only to the extent that our publishing partners do as well.

    There's also no ads on the image search, as far as I can tell. This is another area where they've had questions about copyright and fair use.

    Google has also been careful with advertising on YouTube, probably for similar reasons. I'm not sure how long it's displayed AdWords, but certainly Google has had to have made some money from the ads that run next to the illegitimate copy of "Never Gonna Give You Up" that's on there and has been viewed a scant 10-20 million times.

    Newspapers, even on the Web, are probably doomed one way or the other because, as aggregators, they cannot compete with Google. I don't have any problem with that, really. However, there's a little inequity here: the Washington Post makes money by aggregating news and putting ads next to it. Google (now) also makes money by aggregating news and putting ads next to it. The difference is that the Post pays the AP and reporters for its news, while Google just links to the Post.

    People don't need two levels of aggregation, though. Why should I read the Washington Post's copy of an AP article when I can read the same thing at the Podunk Times site, or from the AP site directly? I don't really care if Google links me to the Post or the Podunk Times, and most times I probably don't even notice. And a lot of times I read the auto-summary on Google and don't even click through to the full article. Who has time these days, amirite?

    What's becoming increasingly clear is that we DON'T need 1,000 different local aggregators (i.e., newspapers) to get news in the age of the Internet. They are still around, but they're gliding downward, and eventually they will disappear (we are seeing the beginnings of this).

    Maybe some will reappear in a fundamentally different form.

    Maybe they will eventually shrink enough that they can actually survive on the trickle of money they get from Google sending visitors their way capriciously.

    Maybe they will start acting as full-net-news aggregators and try to compete with Google directly (although since Google already has all the eyeballs and the ads it's gonna be hard to get into that business).

    Either way, Google is making money off of news, and the newspapers aren't. But the newspapers are the ones paying for the news right now. I just figure that's going to stop one way or the other, and then Google will have to start paying for news directly. So Google will have to take a tiny fraction of the $100s of millions it will make serving ads on news and pony it up to the AP, and Reuters, and smaller news bureaus and individual reporters. It's OK, they'll still be making money hand over fist.

    Good thing they aren't evil.

     

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  6.  
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    Uday Shankar, Apr 17th, 2009 @ 6:19pm

    Fark Did It

    Fark gets more than 50k people to give them 5 dollars a month... and I am one of them. Why would you pay 5 dollars for a news aggregation site that is already available for free everywhere else?

    It's not for the news.

     

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  7.  
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    Anonymous Coward, Apr 17th, 2009 @ 6:37pm

    Re: Fark Did It

    Fark gets more than 50k people to give them 5 dollars a month... and I am one of them. Why would you pay 5 dollars for a news aggregation site that is already available for free everywhere else?

    It's not for the news.


    Absolutely. Fark has figured out the magic of the Internet: aggregation is (much) more valuable than content creation. Google knows this. Slashdot knows this. Techdirt knows this.

    How much of that $250,000 a month goes to the news sites that Fark links, or the people who actually create the content on those sites? Oh, $0.00, right. Yes, they throw traffic to the content creators and hosters, but will that sustain them? It doesn't look like it will sustain the newspapers.

    Although you're correct that people don't come to Fark PRIMARILY for the news, it's disingenuous to imply that Fark doesn't need the news. If I flipped a magic switch tomorrow and blocked all outbound links from Fark to articles, I'm betting the number of TotalFark subscribers would drop precipitously in short order.

    As more and more people figure out that there's no money in content creation and gold in the streets in aggregation, what's going to happen to content creation?

    It could go blog journalist style, where content is created in an ad-hoc manner. It could go ProPublica style, where some wealthy philanthropists subsidize it out of something else that makes real money. Or, my guess, the aggregators will pay for it (again), just like they did the last time.

    The difference between hobbyists, philanthropists, and aggregators is that only one of those needs a steady stream of news to continue making money. Since that one is the aggregators, I assume they'll end up paying for the news, one way or the other, eventually.

     

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  8.  
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    Uday Shankar, Apr 17th, 2009 @ 7:55pm

    Re: Fark Did It

    How much of that $250,000 a month goes to the news sites that Fark links, or the people who actually create the content on those sites? Oh, $0.00, right. Yes, they throw traffic to the content creators and hosters, but will that sustain them? It doesn't look like it will sustain the newspapers.

    Why should someone else sustain the newspapers. Isn't that the newspapers' job?

    As more and more people figure out that there's no money in content creation and gold in the streets in aggregation, what's going to happen to content creation?

    Mike has been addressing this for years and not just regarding the news media. The content alone has little value. Content is only one part of the business model. You have to present that content to someone in a meaningful way. This meaningful way is what is valued by the consumer.

    You are clearly overvaluing the content, and undervaluing the delivery. Suppose my city had two competing newspapers, each with the same content (aggregators). One of the newspapers was delivered to my doorstep (presentation) whereas the other one was delivered at the bottom of driveway. I would rather choose the one that was delivered to my doorstep.

    Where does the content come into play in that scenario? Why do some people choose Digg instead of Fark?

    People are not going to just give you money. You have to give them an incentive to give you money. If the incentive you provide isn't bringing in the money... perhaps you should try a different incentive instead of just flailing your arms and screaming.

     

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  9.  
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    Anonymous Coward, Apr 17th, 2009 @ 9:02pm

    Re: Re: Fark Did It

    Why should someone else sustain the newspapers. Isn't that the newspapers' job?

    I never said that anyone else should sustain the newspapers. I said that newspapers, even online, are probably fundamentally unsustainable. To make them sustainable would mean they would need to turn into something else that's not what we'd call a newspaper (even an online newspaper).

    You are clearly overvaluing the content, and undervaluing the delivery.

    What part of "the magic of the Internet [is that] aggregation is (much) more valuable than content creation." indicates that I overvalue content and undervalue delivery?

    Aggregators need something to aggregate. Fark is a meta-aggregator right now: it aggregates content from other aggregators. Fark's problem in the long term will be that the other aggregators, not Fark, are the ones paying for the raw content at this point. But this is not a big problem, because eventually the free ride will be over, and Fark (and others) will have to pay for the raw content themselves (or else get some other sucker to pay for it).

    I get the impression that you think that aggregators create content, or that there's all this content just sitting around and the aggregators just pick it up. If that were true newspapers wouldn't have to pay the AP for news feeds, and nobody including the AP would have to hire reporters.

    Suppose my city had two competing newspapers, each with the same content (aggregators). One of the newspapers was delivered to my doorstep (presentation) whereas the other one was delivered at the bottom of driveway. I would rather choose the one that was delivered to my doorstep.

    Where does the content come into play in that scenario?


    Uh, the content is in those two newspapers. I presume if both newspapers had no content at all, or shitty low quality content, you would just ignore them both.

    Why do some people choose Digg instead of Fark

    I presume that some people like to read dozens of Ron Paul articles and other people like to look at pictures of ugly-ass baby animals, and that both groups really enjoy the endless stream of dubious-quality uninformed meme-filled posts attached to the articles.

    I have no beef about the increasing diversity and quality of aggregators on the Net. I rather enjoy them. But I also know that Fark didn't send someone to the Podunk Zoo to take a picture of that ugly-ass baby Panda, and they didn't have anybody write the article about the birth of the ugly-ass Panda, and that it's unlikely that the person who took the picture and wrote the article was the one who submitted it to Fark. I doubt they even know who Fark is. In fact, I'd venture it wasn't even the Zoo itself that published the article. It was a local newspaper. And I'd bet that the person who saw the article and submitted it to Fark didn't get the information from the Zoo, I bet they got it while they were reading the newspaper's site.

    You have to give them an incentive to give you money. If the incentive you provide isn't bringing in the money... perhaps you should try a different incentive instead of just flailing your arms and screaming.

    Right, and what's that alternative incentive for newspapers? I think the answer is: they probably don't have one, and they probably won't be able to come up with one before the money runs out. Flailing and screaming seems like a perfectly reasonable reaction. It's OK, the money will run out sooner or later, and that'll stop the flailing and screaming.

    My hypothesis, though, is that Fark and Digg and Google News, which do have such incentives, don't have a sustainable business model right now, because the suppliers of a critical component (news and other content) of their working business model are likely to go belly-up. If some cataclysm or crisis suddenly caused 80% of steel suppliers to go out of business, and you're Toyota or GM, you'd better be worried. You'd probably be worried enough that you'd actually consider buying a steel company.

     

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  10.  
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    yogi, Apr 18th, 2009 @ 1:41am

    What's News?

    If news is defined as "information that someone does not want to be published" then most newspapers are completely devoid of news. Mostly they are re-writing (at best) PR releases, advertisements and political propaganda.

    When newspapers began there was some novelty in reporting stuff from all over the world and eventually a myth of journalism was created. That myth is dissipating -it has been for decades. The reliability of journalists has gone down the drain and without that the newspapers are worthless.

    Since most of the content in the papers is just BS, the only reason to buy was habit and for entertainment, something to fill your spare time and talk about with friends.

    As the possibilities of entertainment increased, the value of newspapers went down, and it is closing in on zero value.

    However, people will still pay for information if it is relevant to their needs, accurate and timely.That is why professional magazines are prospering.

    I also think that freelance journalists that specialize in certain areas can make money with a new business model.
    For instance, how about a reliable reporter based in Iraq or Israel? Someone who does not have to rely on local stringers and has a good crap detector? Someone with just one agenda: find out the truth and pass it on?

    Now that would be worth paying for! (although it wouldn't be dying for. Such a journalist probably would not be allowed to live too long in the Middle East...)

     

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  11.  
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    Anonymous Coward, Apr 19th, 2009 @ 3:31am

    How Google Can Live with Everyone

    Adopt the old NYT/WSJ model. Give the news away for a limited amount of time so everyone on the interwebs can know what's going on, and you can also get featured on Google. But if someone at the same IP address reads the same news article say 10 times, look at ways to convert that person to a paying customer.

    WSJ is seemingly backwards. At WSJ, you need to be a member to contribute, and feedback is important in the newsroom for additional news leads, as even WaPO recently discovered.

    Obviously, if they are accessing the same content 5-10 times, they like what you wrote, they probably wouldn't mind ponying up $10/mo to get access to the same story.

    But most importantly, don't jeopardize contributor trust. Often, contributor commentary is done in the moment. As such, perhaps it should be available for a limited amount of time, say 14 days, and then after that, it can be accessed for a fee. Say $1,000 per article. As part of the offer, the requester can receive city/state of each commentary, but that's it. Keep commentary private after the 14 days.

     

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  12.  
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    Anonymous Coward, Apr 19th, 2009 @ 4:52pm

    Re:

    How does this make any sense at all? Google is ripping off newspapers? Google gives them FREE TRAFFIC. Google isn't undercutting anyone - they just make it easier for customers to find up-to-date news online. Even if all newspapers were to block themselves from Google News, it would hurt those companies far more than it would hurt Google, I'll tell you that much. You're over-valuing the content. I'm sure if the big news sources backed down, there would be plenty more glad to pony-back off Google's successes.

     

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