NPR Recognizes It Makes Business Sense To Give Up Content Cash Cow And Go Free

from the good-for-them dept

A few months ago, Newsweek ran an excellent interview with NPR CEO Vivian Schiller, who only recently joined the organization, after leaving the NY Times. The interview showed that Schiller totally understands the problems and issues facing journalism today. She’s embracing better web interaction, recognizing that NPR isn’t a “radio” operation, but a news operation, that NPR has strong advantages in terms of having local reporters on the ground around the country — and, perhaps most interesting of all, that “free” is not a bad thing:

While employed by The New York Times, you helped the newspaper stop charging for online content. Now it’s reconsidering. Generally, why do you oppose paying for content?
I am a staunch believer that people will not in large numbers pay for news content online. It’s almost like there’s mass delusion going on in the industry–They’re saying we really really need it, that we didn’t put up a pay wall 15 years ago, so let’s do it now. In other words, they think that wanting it so badly will automatically actually change the behavior of the audience. The world doesn’t work that way. Frankly, if all the news organizations locked pinkies, and said we’re all going to put up a big fat pay wall, you know what, more traffic for us. News is a commodity; I’m sorry to say.

But the Times did get people to pay, right?
We far exceeded our expectation–225,000 subscribers paid $50 a year, in addition to the home delivery subscribers, who got all of the Web for free. But guess what, that’s $10 million. Instead of 225,000 who pay the $50, let’s say it’s one million subscribers. OK. That’s $50 million a year. That’s not going to save any newspaper. It’s going to kill your advertising base. The numbers don’t work.

It appears that she’s putting this realization to work in other ways, a bunch of readers have been submitting an NPR blog post explaining why it has stopped charging for transcripts of programs, and started offering them for free on its website. Despite being something of a cash cow for NPR, the organization realized that it was short-sighted to lock up the content, and went against what people wanted:

Why did we give up this revenue stream? First and foremost, the users expect to be able to come to our site and read the story they heard on the air. As rich as the radio stories are, reading is faster than listening, our users told us. Although we were writing Web versions of many radio stories, a number of stories still didn’t have much text. Making transcripts free solved that.

But a bigger realization was recognizing the basic trendlines. Paying for transcripts is a shrinking business. Getting more people to the website and making money in other ways? That’s an opportunity:

There are solid business reasons for making transcripts free. Sales have been dropping over the years. As people search for, discover and share content, offering free transcripts will boost the traffic to, traffic that can be monetized with sponsorship. Finally, search engines like text. Many of our stories could not be found by the search engines because they did not have enough text. Now it will be easier for the search engines — and ultimately the users — to find and enjoy NPR’s stories.

Now, of course, as a partially gov’t supported non-profit, NPR has some different issues in how it operates, but those differences aren’t nearly as big as many people might think. The gov’t support only goes so far (hence the annoying pledge drives and pushes for corporate sponsorship). It’ll be interesting to see what other business model ideas NPR and its new leadership comes up with in the future, and it’ll be fun to see if the big newspapers put up paywalls, allowing NPR to increase its traffic, as planned.

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Comments on “NPR Recognizes It Makes Business Sense To Give Up Content Cash Cow And Go Free”

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Trigeia Twins (user link) says:

Information should be free

Information and news should be free. But the delivery is what is the key. The company that figures out how to deliver content directly to the person where they dont have to put in any effort to read it or sort through the crap to find what they want to read will make its mark…

Freefall: Newspaper Revenues Crash By 29%

ChurchHatesTucker (profile) says:

Re: Crowd source

“If they want to cut costs, just crowd-source the transcripts. “

I don’t know. The big thing with transcripts is the second pass. You can’t really outsource that, so all you’re saving is the cost of the original transcripter but with the potential complication of many of them.

Nah, NPR has got the lean model going on (I think.)

David (profile) says:

Problems with their approach

I see problems in NPR’s approach, in fact in anyone’s approach that relies on giving stuff away for free. Not saying that a paywall is the way to go, just that not having a paywall is probably not going to be much better. So here are some quotes to start off with.

“In the United States, the top 50 Web sites accounted for more than 90 percent of the revenue from online ads in the first half of 2007. The top 10 sites accounted for 70 percent of the revenue.”

From that, I get that you kind of have to be a “top site” to really get much money from online ads.

Here are some quotes from an article in Techcrunch:

“Online advertising cannot deliver all that is asked of it. It is going to be smaller, not larger, than it is today. It cannot support all the applications and all the content we want on the internet.

* People don’t trust ads. …
* People don’t want ads. …
* People don’t need ads. …
* There is no shortage of places to put ads. Competition among them will be brutal. Prices will be driven lower and lower, for everyone but Google.”

There’s a bunch more in the article, the upshot being that just having ads doesn’t do much. One point (made on Techdirt often) is that you have to have some content, not just ads.

So what caught my attention on this from the NPR quote: “traffic that can be monetized with sponsorship”. That is basically saying they are going to put ads online. They may call them “sponsership”, but face it, they’re ads. And ads probably aren’t going to do it.

I don’t think selling mugs with “The News Hour” printed on them is going to make up the difference. In fact, I don’t think much of anything can really make up the difference. Is NPR going to raffle off a lunch with Big Bird?

I don’t think there is a business model that is going to do much for NPR or anyone else. You have to get there first (like that guy with a million pixels at $1 per), and there aren’t many “firsts” left. NPR, and anyone else is going to have problems. The Superbowl is having trouble selling spots. Nobody really watches most ads on TV, and it’s easy to use Tivo to fast forward over them. I rarely see ads in my browser any more.

Basically, there just aren’t that many ways for people with “content” to make money any more. So there is going to start being less content. Sure, there are a bunch of people that don’t mind giving stuff away free expecting nothing in return. But that’s going to farther and fewer between. “Information wants to be free” has two meanings. Nobody wants to pay, and rarely will if giving a free alternative.

mobiGeek (profile) says:

Re: Problems with their approach

“In the United States, the top 50 Web sites accounted for more than 90 percent of the revenue from online ads in the first half of 2007. The top 10 sites accounted for 70 percent of the revenue.”

And how much online ad revenue is there. According to the above, 10% still exists for all other sites. If the amount is large enough (and it is pretty large…just look at Google), then a small portion of 10% of a very large portion is likely enough to run a decent business.

“traffic that can be monetized with sponsorship”. That is basically saying they are going to put ads online

No, not at all. It means they recognize they have an audience and that means an opportunity to sell. Build a community and people will have pride in being a part of that community (pay for “badges”, t-shirts, mugs (yes, mugs), tickets to events (why not lunch with Big Bird, or with Ira Glass??), and MANY other possibilities).

In sales, we’d call these opportunities qualified leads meaning “they came to us for something, now let’s upsell them”.

I don’t think there is a business model that is going to do much for NPR or anyone else.

Your issue is that you limit the possibilities of the upsell. No one has the perfect model now, no one ever has in the past either. Marketing and sales is a constantly changing game, but the economic basics remain the same.

People will come up with ways to monetize well beyond the t-shirt and lunch-with approaches. But you need to have an audience to upsell to. Upsetting and losing that audience today will not help you upsell tomorrow. Upsell what you can now, and your customers will tell you how to upsell them!

Anonymous Coward says:

Somewhere in the middle

The debate is often posed as a false choice “between” a paywall and free. People will pay if they see the value. But a paywall prevents them from seeing the value resulting in a chicken-and-egg problem. The paywall also kills linking from blogs because 99% of your subscribers won’t know what the heck you are talking about.

I think the best option is somewhere in the middle between paywall and free where subscribers are annoyed but allowed to access the content. Something like a preroll video ad, removing photographs, using ugly style, etc. I would certainly pay for good content, but I need proof first. Once a month goes by and I see three or four articles of interest, I have no problem paying for online content.

Davey says:

Very partially supported.

The article is misleading re government support. According to Wikipedia,

“About 2% of NPR’s funding comes from bidding on government grants and programs, chiefly the Corporation for Public Broadcasting”.

That’s certainly partial, but “negligible” would be a better description. But yeah, the gov support certainly does go only so far.

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