Newsday and SF Chronicles' Desperate Moves

At second glance, Newsday and San Francisco Chronicle's bold move to charge online news content seems to be pulled out of desperation rather than strategic planning.

Despite of my strong belief that readers should pay for online news, reality is it is too late for any individual publications to reverse the free trend. When it only takes one more click to take a reader to free alternatives, what will be the incentive to pay? Very little. We need sea change to reverse sea change.

This requires an aggregator with a scale as big as Google to serve as the content provider and the gatekeeper that prevents paid content to be circulated elsewhere online for free.

Newsday and San Francisco Chronicles’ attempt of fee-based model is likely to hasten the failure of these two renowned US newspapers. Both their announcements were made at a timing that led to suspicion that they were made in panic.

Cablevision, owner of Newsday who bought the paper last May with $650 million, has recently written down its value by $402 million, nearly 70 percent less.

While in the statement this Tuesday, management of San Francisco Chronicle, Hearst Corporation, announced that

“San Francisco Chronicle newspaper is undertaking critical cost-saving measures including a significant reduction in the number of its unionized and nonunion employees. If these savings cannot be accomplished within weeks, Hearst said, the Company would be forced to sell or close the newspaper.”

According to the website, the Chronicle has had significant losses since 2001 after Hearst bought it. The losses in 2008 exceeded $50 million and it expects to get worse in 2009. Two days later, the paper's management team held an emergency meeting bringing about the creation of "pay-per-view sections on the Web site."

Lessons should be learned after the New York Times lifted its pay wall. Although the FT and the Wall Street Journal are successful examples for charging online content, it has applies only to the financial news sector so far. Unless Newsday and SF Chronicle come up with some brilliant ideas, otherwise, it is questionable to pick up what has been proved wrong. Didn't people say: “fool me once, shame on you; fool me twice, shame on me"?

If it doesn't work, at least, Newsday and SF Chronicle would get the last bit of money (if anyone signs up) before their demise. And the rest of us could say: See what I've told you? It’s not working, again! But I am still wondering: why hasn't Google jumped on the idea, yet.

Letter To The Editor: Something's Gotta Give

Reader Daniel Hernandez, reporter of the Chunichi Shimbun newspaper in New York commented on the previous post: RE: Shall Readers Pay For Online News? Hernandez also keeps a blog on the Huffington Post.

"I agree. They've created a monster. But I still think they can turn it in their favor and turn a profit. They got us addicted -- that's usually the hard part -- now they need to cut us off.

I think an e-commerce company like PayPal has to handle micro-payments. We won't have patience to sign up for every newspaper. It's gotta be a one account for all sites kinda thing. And if any of 'em want it to work, they all need to do it. If you got 'em all in a room -- and there really aren't that many newspaper companies -- they'd all agree they need a new way to make money.

But how do blogs fit in? They point out articles no one would ever catch, but paraphrase the content. That could be a real problem if a blog's free and a paper ain't. But is it legal to quote paid content? I don't think so. Either way, something's gotta give there on both ends. This model wont work for much longer."

American Social Networks Trudging Into China With Difficulty

Facebook's effort to expand into the largest Internet market might be thwarted facing strict Chinese online police and local competitors.

Murdoch's MySpace, launched in China early 2007, has so far proven to be barely a success, with less than 10 million users at the last count, comparing with the Chinese rivals at 100 million users.

Xiaonei.com (On Campus), a Chinese social networking website, has in last year raised $430 million, which surpassed the capital that Facebook has. David Chao, a venture capitalist who was on the board two years ago when they were looking to fund Xiaonei, said he didn't think western sites are able to compete any time soon. He told Matt Marshal that: "history tells us there’s not going to be too much to worry about an outside, non-Chinese born company taking a big chunk of the Chinese market."

Despite the adroitness western social networks might have in screening porn and violence, the China challenge surfaced when it comes to figure out how to deal with the politically sensitive content. Without a good understanding of Chinese culture, western owners, despite the attractive applications and features, lost the edge to their Chinese counterparts.

Chinese websites, on the other hand, have grown to adapt to the gate-keeping role and have developed the world's most sophisticated Internet censoring system. Growing number of private websites not only filter thousands of "forbidden phrases" every second, but the database has been ever expanding. Some sites hire hundreds of employees to manually go through pages and press the "delete" button. Conventionally, extra attention ought to be given before and during NPC/CPPCC (National People's Congress/The Chinese People Political Consultative Conference) each March when most protests and petitions take place.

As Rebecca MacKinnon, former CNN China correspondent, media expert and analyst of China online censorship, wrote in the Wall Street Journal blog recently that China's new subtle approach towards Internet censorship is not good news for western social networking sites as well.

"The strategy seems clear: Give China’s professional journalists a longer leash to cover breaking news even if it’s not positive — since the news will come out anyway and unlike bloggers, the journalists are still on a leash. At the same time, clamp down on blogs, chat rooms and video-sharing sites that might allow too much unfettered discussion of the news."

Although China's tempting number of Internet users, 298 million at the end of 2008, keep luring western big names like Facebooks and MySpace, this cake is not ready to be shared yet.

Time To Consider Paying For Your "Lunch", Again

Eric Schmidt, CEO of Google, said to Fortune magazine recently during an interview about the survival of newspaper: "the culture of the Internet is that information wants to be free." For Google whose business goes way beyond providing information, it is a fair statement. But for news publications, such statement can be dangerously misleading.

Most content providers use free information as a tool to market themselves in order to, eventually, get noticed, get a deal for other apps, and get paid! Michael Noer, executive editor for Forbes.com, one of the very few profitable websites, said: "If I didn't want to make money, I'd go home and write a journal."

Publications that failed to do so are creating plenty problems in their tradition part of the business. Walter Isaacson, former managing editor of Time magazine, admitted in The Daily Show that "we made a mistake" to have made online news free which he thought might have pushed the print to the edge of obliteration.

However, I believe plenty of bloggers and website founders did not start disseminating free online information just to make money. Many began with a passion of the free exchange of ideas and a handful is running successfully on voluntary writers/editors and charity. But even they are worried about where to get the funding for next year. Any business needs to be able to, at least, self sustained. Worry about passion after we know where the next meal is.

The abundance of free online information is likely to, eventually, wipe out the print business. It might not be a bad thing. When that day arrives, the dynamics of news business would switch and the news websites might be able to start charging again. Call it assumption, but the Internet doesn't want to kill the print before killing itself, does it? Internet needs to charge, but in a whole new way. For example, micro-charge: an idea brought up in Isaacson's cover story: How to save your newspaper or there will be thousands of mini Googles that offer applications and services alongside content.

Crowdfunding: Hire Your Reporters and Decide Your Stories

Spot.us is testing a new idea of journalism. It is inviting readers to hire your own reporters and decide what stories you want to hear. They are calling it: crowdfunding. Cool idea! And it fits right into the micro-fee model we discussed in the previous blog.

So far, Spot.us has funded 13 stories since its launch last autumn from a radio show on San Francisco’s new car and tent cities in the economic crisis (listen to the audio) to a news story on the safety of Bay beaches and water after Cosco Busan oil spill a year ago. The stories raised $550 and $560 each.

David Cohn, the 26-year-old founder of Spot.us, is very pleased with what he has achieved: 13 stories have received full funding, and three more are halfway to success. He is ready to bring the half-year-old newborn to the next level Spot.us 2.0.

The idea I like the most is to have a blog with every story pitched and make the reporting process public, which Cohn calls "beat blogging". It'll make reporting more like a video game where game players walk through every scene with the hero.

But the website, as exciting and promising as it seems, faces plenty of challenges. Cohn illustrated some in his post “Spot.us deals with the good and bad of the limitations.” One of its most crucial challenges, I believe, is how to control the quality of the products. The questions that I would like to have Cohn address are:

How much time does the reporters have before a story is published? What does the website do to make sure a story is thoroughly investigated and well written? Is there a screening process for any reporter who pitches a story? How does it work? What if the donors are not happy with the quality and seeking for a refund?

However, it doesn't hurt to try. As professor Jay Rosen told New York Times that: “My own feeling is that we need to try lots of things. Most of them won’t work. You’ll have a lot of failure. But we need to launch a lot of boats.”

In the end, the stimulus bill is a crowdfunding project, isn’t it? We don’t know whether either Spot.us or the stimulus plan is going to work eventually, but “god, we keep trying!” And I hope both "boats" would sail.

Shall Readers Pay For Online News?

To a large extent, many major publications dug their own tombs and jumped in, hoping there is a heaven, until they are more than half way to the hell. Now they admitted that they screwed up.

“We made a mistake!” Walter Isaacson, the president of Aspen Institute, a DC-based educational and policy studies organization and former managing editor of Time Magazine said to Jon Stewart in The Daily Show recently. The mistake that Mr. Isaacson was referring to was when the print moved online, the news should never have been free.

He is right. The mistake was they started a price war with online news aggregators and bloggers and sold themselves short.

What Mr. Isaacson and other decision makers back then hoped for was the free news would have driven up traffic which was thought to be the key to attract ads. But the plan didn't quite pan out.

If the idea was to copy what the telecom companies are doing: give away the cell phones and charge for the services, it won’t work because telecom companies like AT&T owns both the services and the phones while Time doesn’t own advertising companies.

So now what? If we cannot make magazines "narcotically addictive" as Stewart suggested in the show, what can we do to make readers pay?

Mr. Isaacson’s idea was to charge micro-fees and I couldn’t agree more.

In fact, I agree to such an extreme that I think we should charge per article instead of per magazine edition. Therefore, readers can choose the topics they want to read instead of being given the bunch of articles. Besides, charging by articles will ultimately bring down the fee from dollars to dimes or cents. Price for each article should also go up as more readers buy it. This encourages readers to buy as early as possible.

Yup, I strongly support that quality writing should be paid. By the way, did I really hear Isaacson say: “We gotta have some system where some journalists are getting paid…!” Really?

Will Kindle Save Journalism

Amazon launched kindle 2.0 this Monday, the latest electronic display gadget. What they failed to mention was the new product might soon have a negative impact on industries from paper mills, furniture manufacturers, shipping companies, to people like librarians. But it might save journalism.

As Jeff Bezos, founder and CEO of Amazon.com, said his vision is to have "every book ever published in any languages available in 60 seconds." As of today, there is a selection of over 200,000 books ready to be downloaded into Kindle.

Using Amazon's current database, the largest of its kind in the world, it is easy to find out what people want to read and that's where Kindle is starting with --- the bestsellers. "But eventually we want to move to the long tail," Bezos said.

Compared to Kindle 1.0, launched 14 months ago, the newer version has a 16 shades of gray versus 4, pages turn 20% faster, battery life is 25% longer, process is stronger and it reads to you.

If Kindle 2 reaches the mass audience, it will overhaul industries that heavily rely on the print. If there is less printing, a lot less paper will be needed; there won't be need for bookshelves; newspaper/magazine delivery services will be out of business; in a long run, we won't need a library and librarians might need to find new jobs.

But on the other hand, publishers of New York Times and the New Yorker could cut down printing cost substantially and still be able to charge the same amount of money for their Kindle versions. As a matter of fact, print publishers are so excited that a whole list of newspapers and magazines have already released their Kindle editions from Time ($1.49 per week) to the Wall Street Journal ($9.99 per month). NYT's Kindle edition costs $13.99 per month, the most expensive news publication on Kindle.

Kindle, a new platform where there is no need to print but readers still pay, might save a dying industry.

The newspaper still stirs

Newspaper is not dead, yet. Although, it will, and soon.

This may not sound nostalgic to some people. Many that are older than me are still holding dear to the idea of the printed paper, magazines and books. "No, they cannot die!" And some might even believe that it is about the confidence: If every one of us holds up the belief that print media will survive and keeps buying, it will survive. It works like the stock market. Or, is it?

The last time the newspaper business was in trouble was back in 1765 when the British Parliament decided to levy a new tax, requiring government-issued stamps on each printed-paper. Beginning November that year, printers pay halfpenny for every half sheet and two shilling for every advertisement.

Jill Lepore's recent story Back Issue in New Yorker magazine recalled: "On October 31, the New-Hampshire Gazette appeared with black mourning borders and, in a column on page 1, lamented its own demise: 'I must Die!” The Connecticut Courant quoted the book of Samuel: “Tell it not in Gath! publish it not in Askalon!” The newspaper is dead!"

But newspaper was not dead. After the Parliament repealed the Stamp Act in 1766 in the midst of opposition. Newspaper stirred and came back to life. But this time, it is not the government. It is the technology that has invaded. This time, newspaper will die.

At the center of the issue is the question of the fundamental function of the newspaper --- to disseminate information as fast as possible. What if there is a way to disseminate more information much faster, and for free? The technology has made it a reality. In a matter of a few years, digital newspapers and online news have dramatically changed our way of obtaining news, no matter whether we like it or not.

But I think it is time to celebrate. Newspaper is going to die, but news will go on. Newspaper is taking a whole new shape and become omnipotent. It is not the time to be nostalgic although you are feeling the pain.