April 03, 2005

Reading about reading: All the news that's fit to code

There was an interesting article in the New York Times a couple of weeks ago about the dilemma faced by newspapers in deciding whether to charge for news content online:

I won't repeat all the for-and-against arguments referenced in the article, but I've been thinking about this topic recently because of the Globe and Mail's relatively recent foray into content-pricing. I don't think they're doing a good job with it. I've heard a lot of people say that the cost of the "Insider Edition" is way too high at $14.95 a month, and I have to agree -- the staggering insight of Margaret Wente's delightful prose notwithstanding (ahem). The packaging is cumbersome -- in part, I think they went too far in automatically including Wall Street Journal content which I can only imagine constitutes a sizeable chunk of the $14.95 (interestingly, the WSJ apparently charges an affordable $79/year for online access).

Now, I don't expect free news. But I do wish the Globe and Mail and others would be more creative, harnessing the power of this crazy Internet thing to do micro-charging, customizable bundling, etc. The Ottawa Citizen charges $1 for an old issue (scanned in print version, but with text-accessibility) and lets you buy packages (min. $5) so that you can purchase one-offs without the Citizen (and therefore you) paying repeated credit card fees. The Globe and Mail, meanwhile, charges $4.95 for a single article (only $4 per article if you buy 10 -- oh boy!). By setting up Citizen-style internalized declining-balance accounts, newspapers can do "micro-charging" without incurring huge transaction costs. Ideally once this catches on and the market for it has matured, the "micro" should be a lot more micro, too.

There are also some very specific features I would love to see in exchange for paid content. A while ago the Globe and Mail stopped offering full-text/plain-text e-mailing of its articles, leaving behind only a few other newspapers still doing it (the Washington Post, the Christian Science Monitor, the New York Times, etc.). The NYT actually just stopped the practice a few weeks ago as well. I would happily pay some reasonable premium to be able to do that again, because I like to be able to "clip and save" articles, as I would with a hardcopy, and -- and this is critical -- I like to be able to do it conveniently. I can still save the content of Globe articles in several ways. It's just more annoying. Possibly this was the intent -- there's no customer like an annoyed customer! -- but maybe it's that I'm not really thought of as a "customer"? Unlikely given the role of advertising online, I imagine. In any case, I e-mailed the Globe back when they cut the plain-text/full-text e-mail option, leaving only an HTML/full-text e-mail feature. I sung the praises of the full-text feature (and of the Globe and Mail more generally, of course) and was surprised to receive this e-mail back:

Anatole,

Sorry for the delay, and many thanks for the lengthy email on how we can improve (I guess, by taking one step back).

I'll make a note of this for the next set of enhancements to the site, so thank you for that. I guess that all I can recommend in the interim is that you copy and past the text of the article and paste it in your email, and send the text to friends/co-workers that way.

[name removed]
Globeandmail.com

Subsequent "enhancements" have not (yet) returned the old functionality. Perhaps it's time for another letter.

While I'm griping about the Globe, I have one more thorn in my side (aside -- no pun intended -- why is it always in the side?). Along with the Globe's Insider Edition paid content has come registration for accessing the rest of the site. I have no problem with this, and it follows the pattern of the vast majority of online newspapers over the past few years. What is astonishing is that this registration seems to have stripped academic/research databases like Lexis Nexis of Globe and Mail full-text content. This is unheard of, in that every other newspaper of any repute offers its full-text content to these databases. Are they insane?

Moving on -- this past Friday, said Globe and Mail carried a story on the inroads made by free dailies like Metro in Canada's major cities. Apparently the newspaper business overall is holding strong, with a stable 12 million weekly readers over the past five years. Both the Globe and the National Post had declining readership, although the Post seems to (continue to) be having a worse time of it, now at under 65% of the Globe's national readership and falling faster -- and taking hits in cities where the Globe's readership actually increased (e.g. Toronto).

Finally, a Saturday article in the Globe (thanks for the tip, Rob!) looks at book purchasing and other "cultural spending" (the connection is that it includes spending on newspapers!). Here's a summary of the data, supplemented by numbers from the source document, a report by Hill Strategies based on a Statistics Canada survey.

2001 data % of households spending Rank Total spending across Canada Rank
Newspapers 63% 1$1.22 billion1
Movies 61% 2$1.18 billion2
Magazines and periodicals 54% 3$683 million6
Books 48% 4$1.13 billion3
Live performing-arts 36% 5$824 million5
Museum admissions 32%6$375 million8
Art, antiques, decorative wear 29%7$1.12 billion 4
Live sporting events 19%8$451 million7

Posted by anatole at April 3, 2005 07:38 PM
Comments

Hey Anatole. If iTunes can bill my VISA $0.99 for a single song, I'm sure the newspapers can handle it too. In my relatively limited understanding, VISA takes a percentage (typically 2-4%) of the sale from the business. I have never heard of them charging their business or end-users a fee per transaction. An automated system that involves no paper or humans per transaction should not incur higher costs for more transactions.

Posted by: Amos at April 4, 2005 02:36 PM

Oh... BTW. The figures for periodicals and sporting events look a little low. I mean... unless the NHL lockout had a bigger effect (and hockey magazines were more popular) than I would have ever thought. ;)

Posted by: Amos at April 4, 2005 02:45 PM

Let's see ... on a per capita basis, Canadians spend about 0.002 cents annually on periodicals. Right.

Duly updated, Amos! Thanks ... a million(s).

Posted by: Anatole at April 4, 2005 03:24 PM

And now a response to the substance of your comments. That's a great point. I hadn't thought about iTunes and such. I had heard that financial transaction costs were a hurdle to micro-charging, but maybe that's not the case.

I've searched (very!) briefly on Google and found links like the following that describe the fees associated with processing credit card transactions. You're right that what's called the "merchant discount fee/rate" is in the order of a few percentage points, but it looks like there are other fees you incur on a per-transaction basis (these are negotiable, however; I wonder what kind of a deal Apple managed to swing):

http://www.keybank.com/html/I-6.8.9a.html

In any case, for micro-charging where the charges are truly "micro" (i.e. in cents not $1+), the non-percentage fees outlined in this keybank.com article could quickly become prohibitive.

Posted by: Anatole at April 4, 2005 10:57 PM

I manage an ecommerce site, so as far as the transaction fees goes, it all depends on what sort of plan you sign up for, and also, it's based on the volume of business and "sticker price" of your average purchase.

I don't pay any "per transaction" fees other than the standard 3%-4% per plus my monthly service fee, and the products that we sell through this particular site have a MUCH larger sticker price than say, iTunes at their $.99 per song.

So, I'd say it's feasible for mainstream media to adopt this sort of model. It would also be really cool from both a consumer and a business-marketing perspective.

Posted by: robyn at April 12, 2005 02:22 PM