Show me the money!

Artículo publicado en El Cronista traducido al inglés.

The crisis of the newspapers in Internet

Show me the money!

In the movie “Jerry Maguire” an American football player screams in defiance at his representative with a very clear premise: “Show me the money!” The success and the adulation of his fans are not enough to conform this sportsman, who feels himself worthless unless he has millions in his bank account.

While visitors to the online versions of newspapers are multiplying, the time spent online and the involvement of users grows and the news is everyday a more highly valued asset (although unpaid), the digital newspapers begin to ask themselves that very same question. All very well but, “where’s the money?

The business model of the online newspapers just like that of the major part of the Web industry is to provide their content for free. The content is freely consulted by millions of users and the income from advertising is responsible for resolving the equation.

This is the reason for much concern about a model that still hasn’t taken off and the fear that has been brought about by the recent crisis. To charge or not to charge for digital content, and in what form to do so, that is the question.

Jeff Segal analyses this subject in an article published in the Madrid newspaper El País. In the article he affirms that “today everyone has a plan to save the press”. While many defend the current 100% free system with the conviction that advertising investment will grow sufficiently to cover the media’s needs, others assure that the model to follow is that of iTunes that charges small amounts for specific information content, or alternatively that of paid subscriptions.

A study realized by The Bivings Group has shown that the online newspapers in the U.S that require a prior registration (totally free but with the requirement of some minimal personal data and an e-mail address) have diminished from 29% to 11% in the past year. An ample majority of readers, when confronted with a minimum registration requirement, prefer to switch news provider and as a consequence the news media have chosen to lift their restrictions.

If The New York Times (whose online version represents just 12% of its total sales) should decide to charge its users just one cent to find out what Obama said in his speech to Congress, and the New York Post offers the same information for free the migration would be instantaneous. It is an impossible mission to convince somebody who has always received a service for free to now pay for it, especially if our competitor is offering the same or a very similar product totally free.

The possibility of the media grouping together and starting to charge simultaneously for their content would avoid this “unfair competition” but this doesn’t appear to be an easy path to follow.

Somewhat different is the case for specialized content. The Wall Street Journal for example earns € 92 million annually from online subscribers of its financial coverage. This would appear to indicate that in the case of detailed content, well differentiated from that offered by the competition (for example the economics column by Paul Krugman), that readers are prepared to pay.

Even so, the vast majority of the media with specialized content continue to offer everything in exchange for nothing. The technology magazine Wired, the most popular in the U.S, can be read in its entirety from their web site without paying a single cent.

The written press is going through perhaps the most critical period in its history. The News Corp group, owner of The Sun, New York Post & The Wall Street Journal has announced record losses of $6,400 million in the last quarter of 2008. And Internet, which grew up as a solution, is at least for now part of the problem.

While the online audience and consumers of news content continue to grow, the only thing that still needs to be found is the money.