Studies of Life

Learning by doing.

Online Journalism needs to adopt the Spotify Model

13 July 2014 by Jim


Representative Newspapers of the US

Over the last few years, many major high-quality online newspapers have chosen to setup a paywall after years of relying almost entirely on advertising revenue. They usually offer casual readers to read 8 or 10 articles per week or month for free, and then prompt you to subscribe for a usually low fee. Some of these newspapers, most of which I personally read, include the New York Times, the Economist, Financial Times and Le Monde (French).

The switch to digital subscriptions has become necessary because advertising revenues for these online newspapers are falling. Why? Because more and more page views on the Internet are accumulating in less intellectual corners of the Internet. This includes less traditional news websites like the Huffington Post, ‘content farms’ about subjects like technology, gossip (the Gawker network), humour websites like FunnyOrDie, video hosts like YouTube, and others. This post is however not the place to criticise this increasing shift of the masses to casual online entertainment rather than high-quality information.

But what can traditional, high-quality newspapers do about this? In Europe, traditional newspapers were always seen as protectors of political and ideological pluralism. There cannot just be one hugely popular ‘best newspaper’ that sucks up all the customers of the many newspapers of the past. There need to be many different newspapers because a healthy society needs different points of view. So the solution is not capitalistic monopoly of one newspaper that is supposedly better than the others (at least in terms of catching page views).

What else can be done? In France, Germany and Luxembourg, general newspapers are financed in part via taxes, because the governments of these countries think that ideological pluralism is necessary for their countries. I agree. But government intervention should be kept to a minimum. I would prefer to see newspapers find ways to fund themselves appropriately without begging the government for money. Especially since the government may change its stance on this kind of financial aids in tough times, or the European Commission may yet end up prohibiting some kinds of financial aid because they may be deemed unfair. (Questions like which newspapers or media websites deserve financial help and which do not are difficult to answer, and it seems impossible to finance all of them.)

So what can be done?

As a ‘digital native’ I grew up expecting everything to be free online. I am familiar with a digital culture that downloads their software, music and movies online via torrents or streams them online and uses ad-blocking extensions in their browsers to hide annoying ads. Proper journalism cannot finance itself if all customers expect everything to be free.

But guess what? Music and movies have not disappeared. They have found new financing models to get people to pay for them again. The most innovative of those, and in my opinion most future-proof, are the high-volume low-price strategy and the subscription all-you-can-eat buffet.

High-volume low-price

Apple’s App Store, the iTunes Store and digital music sales in general rely on this strategy to function. An app may cost tens of thousands of euros to develop, but the usual price range of most popular apps is 0.99 to 4.99 euros. That’s because developers have long found out that it’s better to have your app in the hands of millions of customers for a low fee rather than having a few sales at a steeper price. Additionally, this reinforces the entire app economy because it makes people spend money more easily. They don’t need to think for a week whether they can afford a 20 euro app. At 0.99 euros, the typical app is cheaper than a cup of coffee, and that makes it easy to spend money on apps without having to cut back on anything else.

Digital music sales are the same thing: why pay extra for a physical CD with a CD case and a lyrics booklet, if you can just download the entire thing for a third of that price? iTunes and Amazon offer many albums at 7.99 or 9.99, whereas physical CDs often cost around 50 or 100% more. Movies are offered at 3.99 for 24 hours of streaming, which is plenty for most people who do not want to watch a movie 10 times in their lives anyway, so why buy a DVD for three or four times that price? Make it cheap, and you’ll have many customers.

Subscription – an all-you-can-eat buffet

The subscription model is what Spotify and Netflix use, and the number of their customers is steadily increasing. It works well because it gives people the possibility to spend comparatively little for as much content as they like, and both services attempt to offer all the content there is – they are not limited to a single label or studio. About 98% of the music I want to listen to can be found on Spotify. I can’t speak for Netflix though, since in Luxembourg Netflix doesn’t yet offer their service (even though they seem to enjoy the low taxes and highly skilled and multilingual labour force here).

For newspapers, the subscription model seems a good choice, but the current digital subscriptions are nothing but a copy of the old paper subscription model, and that’s why it still needs to adapt to the digital world. Why?

People don’t just read one newspaper.

Online, all it takes is a Google search to get results from 10 different websites. Most people use Google a lot to read news online. With paper newspapers, you had to read the physical paper you had in your hands, but online, you can quickly jump from one to the next, and most people do this, so it makes no sense to offer subscriptions for one single newspaper. What is needed is a general digital journalism subscription at a low price (9.99 per month, like Spotify, for example) which then allows you to read all the online websites you want and tracks how many page views each newspaper got. At the end of the month, the cumulative income of this subscription would then be split proportionally among all participating newspapers. So if 13% of page views went to the Economist in a given month, the newspaper would get 13% of the revenue.

This system would ensure that all newspapers would be available to the subscriber, not just one, and that the revenue would be fairly split based on how engaging the articles are. You could even include metrics like reading duration to allocate more of the revenue to newspapers that produce articles that are actually read, as opposed to those who just produce headlines that get page views without proper content.

A project like this already exists and it’s called Flattr. But of course it hasn’t been adopted by any major newspaper, and it requires active clicking of a button to give revenue to a site, or in this case, content creator. A better choice would be a browser extension that automatically tracks which pages you read, or an account sign-in process via Facebook or some other mechanism that wouldn’t require you to log in on every newspaper’s website individually.

This idea based on a subscription reflects an earlier one where I talked about a national or possibly international solution to digital piracy.

Leave a comment | Categories: Thinking, Writing | Tags: , , , ,