Friday, August 07, 2009

If at first you don't suceed...

...then fail and fail again. This seems to be the mantra of the Schenectady Daily Gazette’s business model, which is sort of like watching a 12-beer drunk stagger home after a long night of imbibing. The drunk has enough primal cognition to realize they must affect a change in their surroundings immediately before happening upon an inhospitable circumstance; but they lack the coordination to navigate and therefore make the same flawed decisions with almost comical repetition. Take two steps, fall down. Take two more steps, fall down again. Fiddle with the keys. Drop the keys. Take another two steps, fall down; repeat.

The whole scene isn’t one that anyone can correct. From afar, an observer can chuckle, maybe even chortle at the bloke. But anyone with a conscience will feel a twinge of remorse for this schadenfreude; a sense that this somewhat humorous spectacle is indicative of a greater looming problem that will foment tragic circumstance as the failed attempts at navigation mount.

This week, the Gazette’s leadership took a bold step into a dark and perilous forest by abruptly clipping off their freely published Web content. The paper’s leadership claims the sudden shift in was necessary to remain viable in an otherwise hostile market, which has hemorrhaged profits at an unsustainable rate. Without ad revenue coming in from its free content and with circulation dwindling, the paper needed to do something to move toward sustainability, Editor Judy Patrick claimed in a column published shortly before the switch Monday.

To date, the paper has clipped off free-access to everything except its small collection of blogs and a generic classifieds search engine. Articles posted online contain about 20 words of the lead, which the papers’ brass dangles like a carrot in an attempt to lure online subscribers. The bold move came shortly less than two years after the Gazette first stepped into the light of online publication and at a time when its Web presence had fallen to a very distant second to the Albany Times Union, which virtually presides over the Capital Region’s slice of cyberspace.

The Gazette’s new format charges $4 per week for a print and online subscription, which is a penny less than it costs to receive the paper delivered to your doorstep. Online only subscribers can expect to pay $2.95 per week for full access to the Gazette’s content. Print-only subscribers pay $3.99, thereby reducing the monthly cost by a whopping nickel.

Needless to say, the Gazette’s online readership was not pleased. The general feeling among these readers was that they’d gladly take up reading the TU online for free and gleefully watch the Gazette spiral into insignificance and anonymity. And an informal survey conducted by the paper affirmed these attitudes. Of the 928 readers that cast a vote, only 127 said that papers should charge for online content.

“I think this signals the [Daily Gazette] going back into the ‘dark ages’ and will not help the long term outlook of the Daily Gazette and the potential it had in its hands that the stuffed suits let go,” wrote one online reader. “Are you telling me that the 1,200 paid online subscribers you might get back at $4 each are really worth it?”

Others noted that the paper chose one of the worst times in the industry to shift to online readership and an even worse economic time to be demanding cash from the readers now accustomed to getting the paper for free. Some offered the Gazette’s decision as further indication of its inability to change with the times; something that has been a hallmark for just about everything that is associated with Schenectady.

“I can imagine the management team of the Gazette in the 1870s telling [its] customers and employees that there's no need to cater to these newfound railroads, or a few years later explaining to their board that telephones will never be necessary for businesses,” wrote another poster.

Not surprisingly, the Gazette’s move sent ripples throughout the publishing industry. Most notably, the change prompted a response from the all-free-content New York Times, which is struggling with its own financial issues. David Carr, the writer who pens the Times’ Media Decoder column, tried to log onto the Gazette’s Web site to read about the switch, but was asked to subscribe to receive the full content of the editor’s letter to readers. Not being that interested in Schenectady, Carr attempted to gain access to just Patrick’s column and was asked to pay $2 –half the amount for receiving a full week of coverage.

“Here at Decoder, we’re still deciding whether to pony up the two bucks to find out the rest of the story,” he wrote. “Sure, we could pick up the phone, but that is so old media.”

Carr brings up a remarkably interesting point, even if it’s at the expense of poking fun at one of the many loopholes in the Gazette’s logic. There is always a way to package and market online content, but it’s not in the same manner that one markets something tangible. Just ask the recording industry about that.

Less than a decade ago, the free proliferation of music via Napster and other peer-to-peer sites threatened to decimate the recording industry. In response, a select group of money-grubbing musicians decided to hire a team the most expensive lawyers the world had to offer and go after Napster’s jugular. And when they dispensed of Napster, they went after the scores of college students and housewives download the free content.

The whole affair drew the musicians, the recording industry and the lawyers more bad press than any of them ever imagined. The legal battle fanned the flames of the fire Napster lit, prompting a veritable revolution of open source software aimed at subverting the wrath of those who demanded penance for their creative property. So whenever the lawyers nailed one site, another four would pop up.

Reason finally reached the industry with the rise of Apple’s iPod. The creation somehow convinced producers to see beyond the money they were making with tangible compact discs and understand that the online format wasn’t nearly as valuable as they had originally figured. Suddenly, songs were being sold by iTunes for less than a dollar. And suddenly, paying for a song didn’t seem that far out. The American consumer rationalized that paying what amounted to a third less than a Double Mochachino at Starbucks was worth it to know the product they were getting was genuine and received through legal channels.

Now imagine if the news industry adopted a similar model. Imagine if the news industry understood that not all readers want to read every last detail about Schenectady or even the Capital Region. Would readers pay a nickel to read the text below a salacious headline? How about buy five for a quarter and get the sixth free? Reader accounts could be billed monthly via credit card, which would allow them to click away feverishly if they wanted. At the end of the month, settle up.

Still, the whole approach to balancing the waning ability of ad departments on the backs of readers is ill thought out to say the very least. Entire papers once sold for an infinitesimal fraction of the cost to produce them. Oddly enough, people stopped buying them around the same time the industry started raising the newsstand price. First, prices were raised from a nickel to a quarter, then from a quarter to 50 cents, and to nearly a dollar now. So it shouldn’t come as a surprise that people aren’t reading them anymore.

Yet the industry as a whole refuses to address these issues. And pretty soon, the only alternative will be wholesale changes in the product itself. Take for instance a recent move by the Times Union to seed community-based blogs throughout its coverage area. They started with Bethlehem, a large suburb that the paper has seemed wholly unwilling to devote its coverage. The experiment was wildly successful and now the effort has spun blogs to East Greenbush, Albany, Scotia-Glenville and yes, Saratoga Springs; all with limited success. Given the recent layoffs at the TU, this could very well end up becoming the future of their local coverage.

The bottom line is there are no easy fixes to the ailing media. To credit of both the TU, they’re trying something new, even if that something seems like a poor substitute to the professionalism of modern journalism. The Gazette, on the other hand, is showing exactly how long in the tooth its thinkers truly are. And they’re bringing new life to the axiom, you can’t teach an old dog new tricks.

20 Comments:

Blogger Andrew J. Bernstein said...

Horatio, when colleagues and I have strictly informal conversations around the water cooler about transitioning to a paid model for our web site (this, to my knowledge, is NOT being contemplated as a real possibility by decision-makers), we invariably decide that a pay-as-you-go model such as the one you suggest is the most-likely to succeed model.

The other thing we usually "decide" around the break room table is that it's crazy that we give away so much content virtually for free. 10-15 years ago, getting print news for free was unheard of, and people willingly paid $2.50 a week for five days of papers, plus $2 on Sundays. Many people spent a lot more than that (growing up, my family had three and sometimes four daily papers delivered).

Readers have now become accustomed to getting news for free, and will have to be re-trained that being informed is worth the price of admission.

It's becoming abundantly clear that the current model of free online content is not sustainable, at least not the kind of coverage readers are now used to. After all, do those TU blogs really serve as an adequate substitute for news coverage? Doesn't seem like it to me.

To that end, I think the Gazette is doing the right thing for the industry -- BUT, they may doing it too soon. For readers to become re-accustomed to paying for news, the new models for paid online content will likely have to start with the big dogs, the New York Times, Washington Post, the Times Union, etc...

Once the big dogs start it, the smaller players will be able to follow.

11:22 AM  
Blogger Andrew J. Bernstein said...

Steve has written about this too: http://tangled-in-wires.blogspot.com/2009/05/internet-paradigm-shift.html

11:23 AM  
Blogger muldoonmedia said...

In order to retrain the american people into paying for news, you must provide them with credible reporters that can actually write well.

The model we have now isnt worth the money, so on some level you lose your audience from the get-go.

Although there is no shortage of reporters there is a shortage of editors who care and are willing to financially care for their writers.

The newspaper business has gone bust, its not going to change....oh wait, yes it is it is just going to get worse.

Writers have to wean themselves of
of the editors and corporations who currently control them and quite frankly underpay them.

5:20 AM  
Anonymous Anonymous said...

Today's Huffington Post...

"The Financial Times is to introduce a full "pay-per-view" model for accessing online articles by next summer and is reviewing whether any content on FT.com will remain free to access.

Pearson's business and financial broadsheet is exploring online payment systems that offer a user-friendly "one-click" process, such as Amazon and Apple's iTunes."

5:26 AM  
Blogger Faulkner said...

Didn't newspapers used to be delivered by kids in the neighborhood? It is much more difficult to cancel a subscription from Timmy than the current version: the ever changing truck drone.

And regarding online news – any content provider, be it a newspaper or broadcast network, should thank their lucky stars if they are still receiving enough interest that the problem is "giving it away." Use the numbers of unique hits on your website as fodder, throw in survey requests to find out demos and shake the hell out of your sales department to make it profitable. You know, the basics.

The only reason why certain models aren't sustainable is because publishers and sales managers don't have the creative foresight to cash in on what is actually a good opportunity. Maintaining a website is relatively cheap, and newspapers aren't dead yet.

7:04 AM  
Anonymous Anonymous said...

Dear Ho,
I would like to respond to your previous comment about the termination of disutopia:

"In my relatively abbreviated correspondence with various stakeholders, these rumors have been neither confirmed or denied. Inasmuch, I will not be publishing any posts containing such speculation for the time being, as it would breach my overarching policy to protect the anonymity of my readers and posters alike. If someone has a compelling reason reason to change this policy, please feel free to contact me via iSaragoa's bustling mail server. I'll certainly reconsider, but don't get your hopes up."

Although I do not disagree with your statement, I do find it odd that all of a sudden you are requiring a certain amount of follow up from primary sources before printing unconfirmed rumors. Are we to assume you have turned over a new leaf and this new level of reporting will be adhered to on all topics and with all people?

just wondering...

8:04 PM  
Anonymous Anonymous said...

Dystopia, not disutopia.

6:07 AM  
Blogger Bee Balm Gal said...

I used to enjoy Natalie Walsh's gardening columns in the Gazette and had included a link to them on my blog. I just flushed that link because even her old stuff, published in the "free" days, is no longer accessible.
But trust me, there are a whole lot of excellent gardening bloggers out there for free. Many of them are unemployed former columnists who once wrote for The New York Times (Leslie Land http://leslieland.com/blog/) or Martha Stewart (see Margaret Roach at http://awaytogarden.com/)
Good luck with this plan, Daily Gazette!)

8:38 AM  
Anonymous Anonymous said...

HO
Speaking of newspapers, I see our local Saratogian has taken a stance against HoChiKim and his stance regarding SEMS.

If you really want to see your taxes go up, then have firemen answer all emergency calls.

It amazes me that we still tolerate rolling out the big machines with the hooks and ladders, and big aerial trucks, because some fireman needs more eggs for the souffle that he is cooking at the firehouse for dinner. Why can't they brown bag it like the rest of the folks do?

When did this practice of using our emergency vehicles as a taxi cab start? There has to be a better, simpler way to get chow for the chow hounds.

9:11 AM  
Anonymous Richard Kline said...

The Online Business Model
If you look at online news through the current business model of selling subscriptions to help pay for the process of development, and promote ad sales, you will soon conclude that you must do the same to your online service and charge them. The problem is, you are thinking as if you are still printing and delivering a newspaper. In the online edition of the news viewers will easily find other news source for free, thus creating an instantaneous loss of readership for your news organization. This would lead to an inevitable loss of advertising due to lack of readership. The one thing print and online news have in common is that advertising rates are based on the number of people who read them. So it would be logical to to drive the readership numbers, your fanbase, as high as you can.

From the advertiser perspective, why pay to compete against their own corporate website? Why spend advertising dollars to support a newspaper when they now have their own website and online marketing campaigns that can generate focused traffic from a Google search? The only reason to consider advertising is online traffic, and a lot of it.

Keeping an Eye On the Music Industry
The next five years will be the most interesting change in business since the inception of the mail order catalog. For the first time in over one hundred years, there will be a completely new business model emerging for a totally new venue.

Apple may be a complete success story, but they are just a fraction of the music that is downloaded for free. They didn’t solve the issue, they just found a sucker audience of forty somethings and beyond who don’t know any better.

I would venture to guess that we will all be getting our music for free soon. It will become clear that if you are a talented performer, you will make your money by performing live, licensing music as a sound track, and selling STUFF like t-shirts and fanny packs. The music will just be used to create a fanbase.

If the Gazette Were Bold
If generating a fanbase is so important to ad sales, why would you do anything to limit viewers of your news information. The decision made by the Gazette is obviously done out of desperation, and lack of knowledge of how the internet works. I can’t blame them, but they obviously haven’t done their homework.

Some printed news venues will survive, but it is an obsolete system, and online news will not support that model. Get rid of the print shop with all its excessive fixed costs, the print designers, and the distribution costs. If the Gazette wanted to do something bold, they would eliminate the printed version of the paper move into an office one fourth its current size and create an incredible online experience that leapfrogs the other lame online news offerings. It can be done quite affordably compared trying to publish a traditional printed daily publication.

7:05 PM  
Anonymous 1 + 1 = 2 said...

From Angry Bear...
(via JWT) Judy Wallman, a professional genealogy researcher in southern California, was doing some personal work on her own family tree. She discovered that Harry (senator (D) from Nevada ) Reid's great-great uncle, Remus Reid, was hanged for horse stealing and train robbery in Montana in 1889. Both Judy and Harry Reid share this common ancestor.

The only known photograph of Remus shows him standing on the gallows in Montana territory.
On the back of the picture Judy obtained during her research is this inscription:
Remus Reid, horse thief, sent to Montana Territorial Prison 1885, escaped 1887, robbed the Montana Flyer six times. Caught by Pinkerton detectives, convicted and hanged in 1889.

So Judy recently e-mailed Senator Harry Reid for information about their mutual great-great uncle.

Believe it or not, Harry Reid's staff sent back the following biographical sketch for her genealogy research:

"Remus Reid was a famous cowboy in the Montana Territory. His business empire grew to include acquisition of valuable equestrian assets and intimate dealings with the Montana railroad. Beginning in 1883, he devoted several years of his life to government service, finally taking leave to resume his dealings with the railroad. In 1887, he was a key player in a vital investigation run by the renowned Pinkerton Detective Agency. In 1889, Remus passed away during an important civic function held in his honor when the platform upon which he was standing collapsed."

2:11 PM  
Anonymous Anonymous said...

I've gone back and forth on the pay model, but now the Ruppert Murdoch has announced his pay-per-view plans by mid-2010, the entire industry will be quick to follow.

If people are willing to pay .99 for a song, why not a few bucks to read the news on-line versus killing few trees for the same pleasure.

Locally, for the ho-hum 'togian, with no web revenue (if you discount the track's annoying ad or SPAC) they aren't upsetting any advertisers and with print subscribers less than 8k per day, what do they have to lose?

Now that JRC is out of bankruptcy, time to back up the money truck and haul in those pennies per view to keep the new USS JRC alive for a few more years...

5:36 PM  
Anonymous Anonymous said...

HO. Im really disappointed in your writing , I have looked up to you since May 19th so many years ago. I thought you were smarter than that ! The Gazette was one of the first in the area to have their full staff of photographers to go digital , to concentrate on a Saratoga office, one of the first to launch a website, and the first to make layoffs.... They are trendsetters in the local community and i bet you a bottle of scotch that every local paper will soon start charging for the web product. They have all put all their eggs in the internet basket now they are realizing that it might not be the way of the future for them. HO , the internet isn't making any money for the local newspapers. The print product isn't either. Its just another desperate attempt to drive revenue with more quantity driven , narrow-minded, publishers, AKA (glorified Ad reps) looking for a profit margin so they can keep their 100k jobs. Unfortunately, if these publishers would just understand that its not quantity, its quality that the public really wants. Look at the St. Petersburg Times. Loaded with quality writing and photography. Real journalism!!!! Its a non-profit. Everyone that works there is paid handsomely, they never leave, they have great resources, up to date equipment, and above all, they have consistency, Oh yeah.... did i already tell you that they are certainly not hurting for advertising. Its about content, quality and consistency!!! Heck, Barbara Lombardo herself is probably teaching this to her students at U Albany. I hope this sparks your thoughts and Please make this anonymous.

5:46 PM  
Anonymous Anonymous said...

HO: You've spent years faithfully repeating the Republican party line, but now you've outlived your usefulness, just like Traitor Ben and his Disutopia blog. He had the sense to stop repeating the same tired old drivel. Time for you to do the same. Fold up your tent and steal off into the night. i saratoga is over.

4:44 PM  
Blogger Horatio Alger said...

4:44,

You've spent years faithfully bashing this blog as Republican (I'm still trying to figure that out),but now you've outlived your usefulness, just like your fellow Keehniacs and their diaper-wearing ilk. They lack the sense to stop repeating the same tired old drivel, and so do you. Time for you to fold up your tent and steal off into the night. I'll be here long after your faction of fascists is pushing up daisies.

Cheers!

5:46,

Sorry to disappoint, but the pay model as the Gazette has laid out is simply not going to cut it. They failed with their first pay-only model, and will likely do the same with this one. The only way they succeed is if the Times Union pulls out of Schenectady, which is where most of their readers are located. Now they're competing against a superior Web product that is free and getting freer by the minute. If the TU really wanted to stake a claim in the Capital Region, all they would need to do at this point is bolster their presence in all the Gazette markets, and keep the pressure on for six months. Frankly, I doubt they have the financial resources to do so, but that would be my first move if I were Old Man Hearst; go for the jugular.

Now with all this said, the Gazette has very many marketable attributes that it tends to shun in order to be the TU light. What they need to do before it's too late is develop a model that works. There is a pay model out there, but it's not subscription-based. Subscriptions are something that is going the way of the dodo, as information becomes easier to proliferate.

Like I said, the Napster/iTunes model would probably work like a charm, but it would take an multilateral agreement among print publications. In other words, you'd have to secure agreements with all the regional publications, no matter how diminutive they are.

The other option is to find new sources of revenue where the onus isn't placed on the reader. Back in the so-called heyday of journalism, the subscribers/readers were never asked to foot the entire bill like they are today, now that businesses don't give a rat's ass about advertisements. There are ideas out there. Some require agreements. Others might require legislation, or a wholesale departure from the for-profit model. Regardless, the Gazette's footsteps, bold as they may be, are not a departure from anything. It's the same tired bullshit that has driven the industry to the brink of extinction.


8:04,

It's called professional courtesy. I've offered 'Ben' this as a fellow blogger. And after I unwittingly participated in a witch hunt here that silenced the voice of a reasonable and reliable poster, I'm in no mood to do it again.

10:14 PM  
Blogger Horatio Alger said...

Andrew,

We're on the same page. The thing I can't see happening, however, is closing Pandora's Box. Once it's open, there's really no going back. To over-dramatize a bit, if you give someone a taste of freedom after they've spent their whole life in a cage, you'll be hard pressed to get that person back in the cage.

The music industry is a prime example. During the 1980s, they vociferously fought the CD burning technology, and rattled the cage with all kinds of meaningless threats about reproducing music on tape cassettes. As a result, they made a few extra dollars. But when CD burners suddenly started appearing in PCs, the only thing they could do is try to drive the cost through the roof. They wasted countless sums of cash trying to figure out copy-protect devices, just like the software companies attempted to do(unsuccessfully might I add). And then when they thought they had a handle on things, MP3s hit the scene. Then they spent almost a decade trying to regulate, obfuscate, and intimidate people away from the medium. All this instead of embracing it and trying to find a way to profit from it. Now, they're realizing there is no way they'll ever get the public to pay for all of its music. It's too easy to steal it now, and, like Richard Kline said in his comment, the process of DL'ing iTunes is relegated to a small percentage of honest Abes and folks who simply don't know the finer points of piracy.

What's the answer? Well, first of all, there needs to be an economic correction in the industry. Second of all, there needs to be a complete rethinking of the profit model. This is fucking economics 101; the shit they teach in goddamn high school. But all the people in the decision making positions don't understand they need to go back to the drawing table and come up with something new. Completely new. And until that happens, the news industry, like the music, movie and software industry, will continue to ebb.

10:15 PM  
Anonymous Anonymous said...

funny, professional courtesy smells an awful lot like the "good ole boys club"...just saying.

And, i certainly hope you do stop with unconfirmed rumor mongering. it is horrible to be the victim of a character assassination, especially when the one doing the assassinating is anonymous: it becomes very scary.

good luck - I mean that. There is a real need for professional, ethical and smart blogging out there.

6:53 AM  
Anonymous Anonymous said...

HO, could you discuss the right-wing yahoos that are now picketing in front of the P.O. against health care reform?

10:30 AM  
Anonymous Anonymous said...

So, Horatio, I take it you won't be going to Riggi's open house dog party, or will you?

2:53 PM  
Anonymous Anonymous said...

The Riggis will be putting on the dog for all those people who are just dying to see the inside of their castle.

I hope they aren't disappointed, I can't make it. Should I rsvp?

6:33 AM  

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