Gordon's Republic

Gordon Macmillan

I'm pretty sure that digital bosses at the UK's national newspapers are already thinking this, but as the managing director of Guardian News & Media, Tim Brooks, says in an interview today -- quality newspapers are "not profitable", is it time for publishers to reverse the trend of free content and start charging (again)?

Brooks, in an interview published today in Print Week, told the magazine that business models for the UK's leading newspapers "do not make any sense".

He said that due to declining circulations and the advent of online news, the quality press is being forced to re-evaluate its operations to make them sustainable.

"The real issue is that the quality press, in aggregate, is not profitable… The days when you can trade in just words are gone."

Brooks went on to say that he will never launch another printed newspaper and has pitched the company's future on multimedia and guardian.co.uk, announcing "All future investments will be digital".

Everyone knows this will be a tough year for print and Brooks has not ruled out making editorial cuts ("I am not saying we would never make editorial cuts because in 2009 all bets are off -- this is the worst year of my life in terms of trading."), but no one in the British newspaper market has put it quite as bluntly as Brooks.

It is refreshing in a way to hear and adds to the wider debate about how the industry will pay for this digital future.

We reached this point a while ago, but in early weeks of 2009 the issue of giving content away freely on the web has come into sharp focus as the newspaper industry (not to mention publishing generally) stares down the plug hole.

It was never meant to be a hole. It was going to work like this -- large investments in digital operations would pay off with large amounts of advertising revenues and traffic.

Well it half worked. Traffic for many newspaper sites like The Guardian has absolutely rocketed. Guardian.co.uk pulls in 26m unique users but revenues have proved less elusive.

I was thinking about this repeatedly over the last couple of weeks as 1) I auto renewed my £110 subscription to WSJ.com; 3) the rumblings continued over Google (again) following Robert Thomson's comments; and 3) as the debate raged over micro payments.

Retaining the subscription fee of the WSJ.com was clearly a smart move by Rupert Murdoch, who originally said he planned to ditch it. Having seen the numbers, why would anyone throw away the cash generated by 1m plus subscribers?

As the digital news business desperately seeks a business model why throw away one that works?

It is the business model in part that Robert Thomson, the managing editor of the Wall Street Journal, was talking about when he let rip at Google, claiming the search giant devalues everything it touches, "Google is great for Google, but it's terrible for content providers, because it divides that content quantitatively rather than qualitatively. And if you are going to get people to pay for content, you have to encourage them to make qualitative decisions about that content."

This is an old argument (not without merit) and the industry seems to go through phases with Google with a mixture of grudging acceptance and resignation.

It is certainly true that Google has not led to any riches for the publishers it works with, but in defending his company the head of Google UK, Matt Brittin, has a bit of a point (40% of a point maybe?) when he says "it is not Google that is taking advertisers away. It is consumers changing their behaviour. And that presents challenges for all of us".

Consumers have been educated in part by publishers who gave them great content for free after early efforts to charge subscription models by the national press (New York Times Select for instance used to pull in $10m) and trade press alike, were ditched. Ditched because the future appeared to be an advertising led future, but (at the moment) it isn't working.

As Gary Kamiya on Salon put it, it is leading in some quarters to "The death of the news" as there is currently no business model making online reporting financially viable.

From a business perspective, reporting is a loser. There are good financial reasons why the biggest content-driven web business success story of the last few years, the Huffington Post, does very little original reporting. Reported pieces take a lot of time and cost a lot of money.

And then there are the newspapers, including the Seattle Times and Hearst's Seattle Post Intelligencer, who asked US lawmakers on Wednesday for a temporary tax, saying that some of the state's papers are "holding on by our fingertips", which brings us to payment and micropayments.

Much is written about this and I'm not going to rehash it other than to say there are some good pieces out there to read, both for and against. Walter Isaacson former managing editor of Time had a much quoted Time cover piece suggesting an iTunes-like micropayment system.

Others have joined the micropayments bandwagon, but as far as my 50 cents worth goes micropayments are a total non starter. I do not see it working. News is not like buying a track on iTunes. Music is something you own forever and news is pretty much disposable, gone in a day.

Take a look at Charles Arthur's Guardian piece "The micropayments argument: do we want to turn the web into Zimbabwe?" it’s definitely worth a read.

So, if not micropayments it has to be some form of subscription. Bill Keller, executive editor of The New York Times, gave this a serious airing recently when answering readers’ questions.

Talking about the lessons of Times Select, Keller said that the lessons of that experiment "was not that readers won't pay for content", people in the news business "don't buy as a matter of theology that information wants to be free".

He said there was a deadly serious discussion continuing within The Times about ways to get consumers to pay for newspapers’ content and they were looking at a list of options.

Top of the list is the subscription model. What he says he is key to whether newspapers can get subs models to work again and use them as one plank of a viable future.

"Times Select was not the answer, but it's possible we just put the wrong stuff behind the wall. Maybe we should put it all there, or some different slice of it", as well as pointing out one of the inherent problems with paid content, which is that it limits traffic and ad revenues because it tends not to show up in searches.

"But if web advertising takes a long dive -- or if some clever engineer figures out how to decouple a paid Web site from the search function -- a subscription model might be worth a closer look".

I have no idea what the subscription answer is, but the idea of putting it all behind a wall (if you can solve the search conundrum) with a moderate annual charge is certainly once again an appealing one, but it would only work if this was an industry wide move.

And shouldn't it be? If the economic crises has taught us anything recently it is that collective action is needed to save a number of industries. Why should newspapers be any different?

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