Cheap, Free and Otherwise

Economics Publishing
Pricing models are in the air. A new book called Cheap by Ellen Ruppel Shell argues that modern American consumers have duped themselves into a bargain-hunting haze and lost touch with the true price and the true value of things. I was invited by Ed Champion to join a roundtable discussion of this book, and we wasted no time getting down and dirty in this discussion. I turn out to be one of the naysayers in the group, as you'll see if you check out this lively conversation. But I'm glad I was exposed to Ruppel Shell's book. Questions of price and value clearly touch on emotions that cut deeper than any blue light special at K-Mart.

As did my post yesterday about the possibility that the New York Times may begin charging for web access. I wrote that I would stop reading and writing about the New York Times if they began restricting their content to paying subscribers -- a perfectly reasonable stance, I think, since there is plenty of excellent content out there that is openly available to readers around the world which I can read and write about instead.

But I got a strong negative reaction to this statement (via comments, twitter and email), and am honestly surprised to discover that many of my own friends are excited that the New York Times might pioneer a new payment framework for web articles. One reason, of course, is that these people are not only readers but are writers or publishing professionals themselves, and therefore don't like the "free" model for online content any more than the New York Times does.

There's a lot to be said on this topic. Today, I'd just like to respond to a few things I've heard, and explain my side of this debate better. Here's what a few of you have said, and what I'd like to say back:

Why aren't you willing to pay for the New York Times?

I am very, very willing to pay for the New York Times. I already pay about $35 a month to get the print edition delivered to my doorstep every morning.

I never said I wasn't willing to pay for the New York Times, or even that I wouldn't be willing to pay more to help the New York Times survive. I'd happily pay $5 a month more if I felt it would help anything. But I don't.

I believe the decision to put NYTimes.com behind a payment wall would be a bad and short-sighted decision. The New York Times should consider itself to be in the global news business, but this move would marginalize it to the world outside of its own subscriber base. Becoming unavailable to the worldwide community of readers would irreparably harm the paper's position as the most widely referenced American newspaper. It would be the beginning of a slow and painful nose-dive into global irrelevance, because other newspapers would certainly move in to take the Times's place. This is why I'm against the proposed payment plan -- it has nothing to do with my own willingness to pay $5 a month.

Advertising alone cannot support an expensive operation like the New York Times.

Nonsense. Nonsense, nonsense, nonsense. If this were true, the New York Times would have folded in 1895, because the Times has always made more money on advertising than on newsstand sales and subscriptions. So do almost all newspapers and magazines.

I may have mentioned it elsewhere that from 1995 to 1998 I was manager of advertising technology at Time Inc. New Media, which ran websites for Time, People, Sports Illustrated, Life and Fortune. I worked closely with the advertising department and learned a lot, including the fact that every Time Inc. magazine makes more money on advertising than on sales. So do most other magazines, and so does the New York Times and pretty much every newspaper.

You can't support excellent content solely through advertising? Somebody better warn the television industry, and the radio industry too. They've somehow managed to thrive all these decades.

It's a simple fact: advertising is big money. The reason the New York Times is suffering now is that they haven't yet figured out how to sell ads online (where they regularly get their ass kicked by Google, which has figured out how). Another reason is that there's a big recession going on, and ad sales is down. That's why a decision to put NYTimes.com behind a payment wall is short-sighted: as soon as the economy picks up again, the Times is going to want those pageviews back. I guarantee it.

(And, again, I been around this online ad sales industry a while. They will want those pageviews back -- I guarantee it).

Instead of convincing newspaper readers to pay to access the website (a hard sell, except apparently to my friends and a few other eager New Yorkers), the Times should be bringing their advertising strategy into the 21st Century (hint: figure out which publishers are selling ads online, and learn from them). They should also be convincing their investors and potential investors of the long-term revenue potential for the most trusted journalistic source in America. The long-term potential is enormous, and that's why a retreat behind a payment wall would be such a shame.

The problem with private/dedicated payment plans is mechanical. We need a payment system that works.

This I agree with. Putting the Times behind a payment wall is clearly a desperation move, and a diversionary tactic. The numbers just don't add up -- this idea will not bring in enough revenue to equal a healthy online sales operation.

However, here's the kind of idea that might work: figure out a way people can pay $10 a month or $20 a month and get privileged levels of online access for every major newspaper in the world. Some consortium or third party provider should then need to figure out how to chop that money up and dole it out correctly to the individual publishers. This is a formula -- the cable TV model -- that could actually work. I'd pay up, why not? Make it easy for us, and we'll be in.

But even if this does happen, guess what? The $10/$20 splits won't support the New York Times and the Los Angeles Times and the Washington Post. They'll still need advertising revenue to survive, just like they always did.

Advertising has supported some of the most innovative entertainment and publishing of the last 100 years. That's the funny truth about all this faddish talk about "free" as an innovative new content model: free has been around all our lives. It was "free" that made Lucille Ball and Elvis Presley and Walter Cronkite and the Beatles and Bill Cosby and Michael Jackson and Jerry Seinfeld. As far as content/publishing goes, there's nothing new about "free". It's what always made the world go around.

7 Responses to "Cheap, Free and Otherwise"

Levi, we're all conditioned to believe that advertising is big money because it has been for so long, and I realize that you saw it first-hand as manager of advertising technology at Time Inc. New Media, but that was ten years ago.

You say that television and radio have "managed to thrive all these decades" by advertising, but is it possible that a saturation point has been reached? When I hear about Budweiser spending more money every year for Superbowl ads, it reminds me of the housing market, how year after year people made more money buying and selling houses, until the bubble burst. Aren't there a lot of TV and radio formats moving to a fee-based subscription model, because more & more people skip past the commercials?

Also, to hear you and Ed Champion review the NYT book review, 75% of it sucks anyway, so why are we reading it?

by Levi Asher on

Hey Bill -- well, nobody can predict the future but I definitely do not believe that advertising is in any kind of permanent decline. Advertising is very useful, and I see no reason to think it is becoming less useful. There's simply a recession going on. Less spending, less advertising. It will cycle back.

Also, I think I praise about 50% of the reviews I read in the NYTBR. I think the Book Review has a lot of room for improvement, but I still enjoy reading it. It's my weekend morning comfort food.

by Duncan Brown on

Advertising is not just 'revenue' there is a creative subtext.
Some of the best writers and artists on the planet
have worked in advertising, and when it comes to television, some ads are more watchable than a whole host programmes.
Advertising is as much an art as any other creative discipline. I cant quite understand why advertising is disparaged so much by some people.
Recently I have seen or heard Picasso, Bob Dylan,Janis Joplin, Johnnie Rotten and a host of other contemporary icons 'do'ads.
Is there something wrong with that?

Levi, perhaps my comment on you and Ed sounded a bit snide. You obviously care a lot about the Times or you wouldn't bother.

Duncan, I agree. I read somewhere that some of the most talented directors do 30 second TV commercials, because you have to get an entire story arc into the allotted time frame. I think especially of the Saturday morning TV cereal commercials I used to watch, involving the Honeycomb Hideout or the Trix Rabbit, and now we have the Esurence spy girl (who is really hot) and the Ecredit music videos, which are actually pretty good.

Art, literature, and music has always needed sponsors. Michelangelo, DaVinci, Haydn, and many others received patronage from Church and State as well as various aristocrats.

by mike on

How's about have it(the lastest issue) behind the pay wall for a day ? Then cut it loose for the googlers.

Yes, the whole "NYTBR bashing" did emerge out of a concern for how poorly the ostensible leading book review section has fared in the past few years. And one can make a similar case for how bland and gutless the Los Angeles Times's books section -- nearly a facsimile of Tanenhaus's deficiencies -- has been ever since its editor began firing people and became more interested in his own job security. But, hey, since neither editor is listening and is unlikely to make changes, what's the point in ranting about it? Let these aging horses die, and let the craven opportunists riding on these rotten racetracks learn precisely how far they've fallen when the pistols fire into these useless equine heads.

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