Will newspaper companies finally smarten up?

Take a look at this bankruptcy scorecard for newspaper companies and you’ll get a snapshot of some of the disastrous business decisions made in the publishing and newspaper businesses. Too much debt and a complete misunderstanding of the new media landscape led to doom for many lenders in this space.

The good news is that many of these companies have dramatically reduced their debt, so perhaps now they can make rational, long-term business decisions. Hopefully they won’t be stupid enough to erect pay walls on their content, and focus instead on finding new sources of revenue from things like the iPad and other tablets where they can charge for the convenience of delivery, rather than charging for online access to their content.

More disaster stories for pay sites

Here’s another story of a newspaper making the grave mistake for charging for news content online. We’ve addressed this issue time and again on this blog – most people will not pay for news online when there are thousands of resources giving away content for free!

Of course, some won’t listen and instead follow Rupert Murdoch’s silly advice, but with more horror stories like this most will finally get the message. If one wants to sell a traditional newspaper subscription, of course you make that a viable business. Just cut some of the ridiculous costs you’ve built up over the years. You might even be able to entice them with special features or services available online only to subscribers. But, don’t be foolish and expect to turn your entire news operation into an online subscription model. Free content is here to stay.

Magazines and the iPad

Commentators have been debating whether online news and opinion articles should be put behind pay walls to help the struggling publishing industry, but developments like the introduction of the iPad by Apple will make many of these discussions moot.

With the iPad and other tablets, publishers now have a new option with loads of potential, with the ability to send out electronic versions of their print magazines with colorful ads. Then, by adding interactivity and video, the ads can become more engaging and much more effective. This story from the WSJ offers a glimpse of what’s to come.

Time magazine has signed up Unilever, Toyota Motor, Fidelity Investments and at least three others for marketing agreements priced at about $200,000 apiece for a single ad spot in each of the first eight issues of the magazine’s iPad edition, according to people familiar with the matter.

At Condé Nast Publications, Wired magazine is offering different levels of ad functionality depending on how many pages of ads a marketer buys, according to a person familiar with the matter. Advertisers that agree to buy eight pages of ads in a single issue of Wired magazine will be able to lace video and other extra features through the iPad version, say people familiar with the matter.

Magazines largely are planning downloadable iPad applications that are near-replicas of the stories in the print versions, but they are demonstrating the new-media bells and whistles for advertisers: add-ons like videos, social-networking tools and navigation that take advantage of the large screen, touch technology and Internet connections of the tablet computer.

Time Inc.’s Sport Illustrated has been showing advertisers three video-heavy ad prototypes, including one for a Ford Mustang that includes an arcade-style driving game using the tilt-and-turn capability of the iPad. With a few touches to the screen, readers can pick paint colors and wheel styles for cars they might want to buy.

“Some of the things you can do are just mind blowing,” says Steve Pacheco, FedEx’s director of advertising. “You are taking something that used to be flat on a page and making it interactive and have it jump off the page.”

Magazine publishers see the device as crucial to their future as they scour for new ways to make money, with print advertising still under threat. Digital advertising has been a disappointment for many publishers, but with the iPad they feel they have a technology that best marries the splashy look and size of a full-page print ad with the cool interactive features of a digital ad—and the ability to count how many people saw it.

As I’ve argued before, a pay for delivery model makes much more sense for advertisers when compared to a pay wall. Pay walls can severely hurt a publication’s popularity, as many users will not be interested in paying for content and most bloggers won’t link to a story behind a pay wall. But, I suspect many users will pay for the convenience of being able to download a beautifully laid out magazine on a device like the iPad. They’ll even pay for a black and white version on their Kindle. Imagine having all your favorite magazines loaded up on your device when you board your flight, along with the books you’ve been waiting to read.

These changes are inevitable, and I expect most publishers and large brand advertisers to jump on this trend.

Aaron Baar of Marketing Daily agrees that the iPad will be transformational for the publishing business.

Q: Is the iPad the savior of the publishing industry?

A: We do believe it will be transformational for newspaper and magazine publishers. Whether it will save the business or not is a different story, but we definitely think it will put a new face to the way consumers can actually interact with print content as well as advertising within print content. It kind of gives the industry a breath of fresh air.

The iPad “provokes” customer responses. Naturally, part of that is because the format os relatively new. But the interactive qualities will mean this effect will have considerable staying power.

Steve Brill’s dumb idea

The pay wall argument heated up again at The Paley Center for Media.

The big debate over pay walls is getting down to the fine points; as opposed to grand theological, existential questions, it’s really more of a sharper dispute over the method of getting users to pay. Do you dangle carrots and hope the support follows? Or brandish a stick—perhaps a variety of sticks of different lengths? The debate played along those lines at the Paley Center on Tuesday, with the make ‘em pay side represented by Steve Brill, co-founder of startup Journalism Online, which promises to help news outlets charge for their content, and Vivian Schiller, president and CEO of non-profit NPR, arguing for making pay optional.

The most vocal panelists—the group included Buzzmachine’s Jeff Jarvis and media consultant Shelly Palmer—backed up Schiller’s contention that having a formal pay wall will only drive consumers away. In defense of the pay model, Brill contended that businesses need to run on direct money, and advertising and promotions won’t keep the lights on. Plus, he and others dismissed softer measures of coaxing money through online tip jars as being hard to count on.

Developing the pay habit: People have been exchanging cash for newspapers and magazines for decades, they just need to get back into the habit of doing so online, Brill said. In a conversation after the panel, Brill told me that the pay wall isn’t the only way to achieve that: “We believe in giving publishers a variety of options, including donations and bundling online and print. But some have this religious idea that people will be offended if you try to get them to pay for the news product. I’m just asking, ‘Who really knows?’”

“Who really knows?” Is that the best he can do? He’s trying to turn upside down a revolution in news, information and communication and he’s saying that? The debate at this point is beyond stupid.

Users are used to getting things free, but that’s only part of the reason why this will never work. Bloggers and other journalists are now used to DELIVERING the content for free. Look at a small outfit like Talking Points Memo. The quality of the content is better than that of most newspapers, and they’re growing, even in this crappy environment, and the news is free.

You can’t hide news behind a pay wall because there will also be thousands of free sources. Newspapers could charge in the past because they were the only game in town. Those days are over!

Regarding opinion pieces, your opinion no longer matters if nobody hears it or reads it. Paul Krugman has become exponentially more influential after the Times got rid of the ridiculous pay wall. The instant Krugman writes something now about health care or the economy, bloggers and news sites all over the world are linking to it. Aspiring writers and bloggers are doing everything possible to get noticed and to get LINKED. That’s how the world works now.

Newspapers have so many problems that have nothing to do with the pay model. Their costs structures are completely whacked, and yet you had supposedly smart people dumping piles of money for these dinosaurs just a couple of years ago.

If newspapers and magazines want to charge for something, they need to charge for services and delivery. Let the whole world log on to the web and see your content. Encourage everyone to link it and make it popular as hell. But, if I want the paper version, or if I want a subscription that is sent to my Kindle or any other device in a way that lets me easily read the content whether I’m online or not, then you can charge me. And guess what – I, along with most people who value news and opinion and other good content, will gladly pay for the convenience. I’d be thrilled to have all my magazine subscriptions sent to me electronically so that I don’t have to collect all my magazines before I go on to a plane. Just like books, magazines can be a hassle. Make it easy for me to consume your product, and I’ll pay for that luxury. Imagine the cool ads and sponsorship messages that can be embedded in a magazine designed for an e-book or similar devices.

The e-book boom is coming!

paidContent.org has this very interesting story.

Need more proof that we’re witnessing the beginning of the e-book boom? It appears that the Kindle version of The Lost Symbol, the latest thriller from The Da Vinci Code author Dan Brown, is out-selling the hardcover version on Amazon (NSDQ: AMZN). Kindle Nation Daily first noticed first noticed the trend by analyzing the category sales rankings on Amazon; the $9.99 Kindle version of the book is currently more popular than the hardcover version, which is retailing for $16.17.

Everything is changing VERY quickly. As more and more people get comfortable getting all their news and reading material on devices instead of paper, we’ll see an acceleration of the trend.

Publishers of magazines and newspapers need to pay attention here. Instead of wasting time wondering how to charge for online content, start thinking about ways to offer PREMIUM DELIVERY options that one can charge for.

I love to read the New York Times online or on my Blackberry, and that should be free. It’s news, and the Times wants to be a leader there, and you can’t maintain leadership if you hide behind a pay wall. On the other hand, I’d pay a small subscription fee to have the Times or may favorite magazines sent to my Kindle in an organized, readable format. This way I can read it at my leisure, regardless of whether I have an Internet connection.

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