Brill Gets More Delusional: Now Thinks 10 to 15% Of Online Newspaper Readers Will Pay

from the good-luck-with-that dept

Earlier this summer, we noted that it was something of a pipedream by Stephen Brill to believe that 5 to 10% of online newspaper readers would pony up for a subscription to the online site. Having spent time looking at plenty of "free" websites that have tried to charge, the numbers are significantly lower in almost all cases. We're talking 1% tops -- unless there's a really really good reason to pay, and then you're talking 2 to 3%. In many cases, the number is even lower than 1%. At the same time, I pointed out that Brill was making the classic mistake that makes any venture capitalist laugh you out of the room: "if we just get x% of this market, we'll be huge!" But that's top-down thinking, and markets don't work that way. You need to be bottom up and explain not why x% will buy, but why the first person will buy, and the second person will buy and so on.

However, as the Nieman Lab points out, not only is Brill still playing the top down game, he's now increasing the number of "paid" subs he thinks he can get from the "5 to 10%" he was claiming a couple months ago to "10 to 15%" now:

The idea is that a newspaper probably has 10 or 15 percent of its audience who are the most engaged, who come to that Web site all the time. Those are the people who will be asked to pay a small portion.

They'll be asked, but they won't pay. Brill even tries to go through some numbers, but again, he does it top down, rather than bottom up:

Let's say that a newspaper in a given month has 1 million visitors. It might be that 850,000 of those people just came there casually through a Google News search, came there once or twice, but aren't particularly devoted to, let's say, The Washington Post.

On the other hand, there might 100,000 or 150,000 of those people who absolutely, positively have to see The Washington Post every day. They want to read your column. They want to read the stuff about lobbying.

They want to read the stuff that really makes The Washington Post The Washington Post.

Those people will be asked to pay something, typically getting a big discount if they already have a print subscription.

They'll be asked to pay... but will they? Fat chance. Now we run a website that has content that is viewed by over a million visitors per month (between RSS and the site itself). And, many of our readers are quite loyal and have certainly built a connection with the site. But I'll be the first to admit that the likelihood of 10 to 15% of our visitors agreeing to pay for the content is ludicrous. I'd argue that even thinking that 1% would pay is highly unlikely. There's too much "competition" for attention, and pissing people off with paywall doesn't make them more likely to stick around. Brill is way overestimating the willingness of online readers to pay for certain content.

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Brill's Pipedream: 10% Of Current News Consumers Will Pay

from the good-luck-with-that dept

There's a pretty simple rule of thumb in figuring out if a new business doesn't know how to approach its market. It's when it claims something along the lines of "well, this is an $x billion market, and we just need y% to be successful." That's someone taking a top down wishful thinking approach. It's a recipe for failure. What you want to hear is the bottom up explanation: how is this business going to get the first customer to sign up, and then the second and third and so on. Claiming you just need y% of a market makes it sound "easy" to get customers, rather than recognizing you have to work at getting customers and actually provide them with something of real value.

So, while we were already really skeptical of Stephen Brill's Journalism Online venture, where he's trying to get people to pay for online news, consider us even more skeptical after hearing that he's going around telling people that he's hoping to get 10% of today's news readers to start paying. Of course, as is noted at that link, most studies have shown you're lucky if you can get 2% of people to pay for something that was previously free. So the 10% number is pure fantasy. But the bigger point is that Brill seems to be making the "we just need y%" mistake, rather than giving anyone a reason to buy.

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What Happens To All That Personal Data Clear Holds? It's Unclear

from the that's-a-problem dept

I have to admit, there was one part of the "Clear" airport "fast pass" program created by Stephen Brill that I never fully understood. In order to join Clear, you had to submit all sorts of personal info -- which raised a lot of questions when the company behind Clear, Verified Identity Pass, lost a laptop with all that data last year. But what's never been clear to me is why this data was needed. If you had a Clear card, it wasn't like you went through any less of a security check. You just got to cut the line. That's it. You still ended up needing to go through the same security check. So why did Verified Identity Pass -- or the Department of Homeland Security who VIP passed the data on to -- need your personal info in the first place?

Either way, that's now raising a lot more questions because no one seems entirely sure what happens to all that data now that the company has gone out of business. While the company insists that airport kiosks and employee computers are being wiped clean, there are still plenty of questions about just who still has access to the data, and what happens to it if someone else buy's up VIP's assets or if the company declares bankruptcy and creditors get access to their assets.

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Airport FastPass 'Clear' Shutting Down

from the not-so-speedy-any-more dept

I have some friends who have used Clear, the "verified passenger speedlane" for frequent travelers, that let you basically cut the security line. For the most part, they all loved it. Despite the fact that I do a lot of flying, it never really seemed worth it to me. Plus there were security questions, such as when a laptop containing applicant data got lost last year. Oops. In the end, though, I have to admit almost never seeing anyone making use of the Clear shortcut at the airport, suggesting the private company that operated it wasn't making very much money. That now seems confirmed, as apparently the program is shutting down.

The company's founder, Stephen Brill, has already moved on to his next company -- a misguided attempt to make people pay for online news content. While Brill certainly has a big name reputation, it seems like he's had a lot of companies go sour in a row at this point. There was Brill's Content and then Contentville. Now there's Clear (whose official name was "Verified Identity Pass"). And the whole "iTunes for news" concept seems pretty questionable as well...

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You Can't Raise The Price For News If You Don't Actually Add Value

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

It's no secret that plenty of folks tend to confuse price and value, falsely thinking that if price = $0 then it means that the value is also 0. That's not true at all, as we've discussed multiple times. But, there's a flip side to that discussion that many in the news business seem to be struggling with as well: they believe that if they raise the price of their product, then by that very same equation, they've somehow increased the value, and people will suddenly pay for the news. Except... that's obviously a fallacy. Just because you raise the price on something it doesn't mean that people will suddenly pay.

Yet, Stephen Brill's new operation is based on this very premise. The fine folks at NPR's Planet Money spoke to Brill about his new venture, but what was frustrating was that they didn't directly challenge a number of his highly questionable assertions. They did bring on someone afterwards who disagreed with Brill, but it could have been a lot more powerful. For example, Brill claims that readers have always paid for a share of the news -- while the truth is subscribers usually barely (if at all) covered the costs of printing/delivering the physical paper, but not for the reporting itself. Brill claims that the decision by newspapers to go online was "group suicide," but neglects to note that almost everyone (with a very few exceptions) who tried to charge online -- including Brill himself -- found that people just didn't want to pay. It wasn't "group suicide," it was economic survival to recognize that charging wasn't working. He also claims that giving away content for free online is why newspapers are in trouble, which is shown as wrong later in the program, when it's pointed out that most newspapers are still profitable -- but the real problem was how much debt the papers took out. It's not about getting readers to pay, it's about how screwed up management has been.

Brill also seems to totally misunderstand iTunes, saying that it works because it's simple and cheap, so his Journalism Online project will be that way too. He leaves out the key point of why iTunes worked: the iPod. People wanted to fill up their iPods and iTunes made that easy. But in the case of news, there are already lots of other options that are easier and more efficient.

Yet, at the same time, folks like Alan Mutter (who will be on the "news" panel at The Free Summit), are suggesting that newspapers should raise their prices. But, again, this seems to be mistaking price for value, assuming that if you just raise the price, people are more than willing to pay.

Instead, the opposite seems to be true. Mark Potts recently pointed out how the online price of the Wall Street Journal (usually held up as the example of online news people will pay for) has gone up so much that he's reconsidered subscribing. Every time they raise the price, it just becomes an increasingly questionable expense, for no added value.

In contrast, however, Potts points to the Cedar Rapids Gazette in Iowa, who unlike most of these other papers, actually does seem focused on actually providing more value, not just talking about how everyone should value the paper, or nostalgically reminiscing about the "good old days" before there was competition. Instead, the paper has absolutely everyone talking and thinking about ways to really become the central hub for everyone in their community. They recognize that they can't rest on their laurels and be the voice of the community because there's no one else. Instead, they know they need to work at it, embrace new technologies, and actually strive to provide a better solution than what else is out there. That's a paper that's focused on value first, rather than complaining about price. Who knows if it will work, but it's a much better strategy than just focusing on price, like so many others.

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Media Dinosaurs Look To Set Up iTunes For News

from the haven't-we-seen-this-before? dept

Well, there they go again. Three big "media" names, who have been trying to convince themselves that there are enough people out there clamoring for someone to give them a way to pay for news, have decided to put together a company that will do just that. Stephen Brill, L. Gordon Crovitz and Leo Hindery Jr. have teamed up to create a system to charge for news, with the idea that any newspaper can sign up and use their system. Clay Shirky calls this an RIAA for news, while Mathew Ingram points out that it may be more accurate to call it an iTunes for news.

The problem, of course, is that this is all based on the faulty theory that people want an iTunes for news. This, of course, is great for other newspapers who know better, and decide to skip out on this plan, and get all the traffic that these newspapers give up. As Jeff Jarvis points out, in looking for news about this very venture, he was blocked by the paywall at some sites, and found the best coverage at a free site.

And, of course, it's especially ironic that Stephen Brill is behind this. That's because he's tried this before and it failed. Miserably. Meanwhile, Hindery in the past has shown that he also is one of those guys who tends to overvalue content and undervalue everything else people do online (communicate, share, discuss). This whole model is based on this single faulty assumption: that it's the news itself that's important to people. It's not. The news is important, but people want to be able to share the news, spread the news and discuss the news -- and you can't do that when it's behind a paywall. The very act of putting up a paywall diminishes the value of the content.

Still, it's a great opportunity for competitors of any newspaper short-sighted enough to sign up for this program.

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