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Lauren Rich Fine, former longtime newspaper analyst for Merrill Lynch, and now research director for ContentNext Media, parent of paidContent, tells me that some newspapers will be able to charge for selected, premium content, but not many can charge for full, recurring subscriptions.

Transcript

Lauren Rich Fine on Business Models for Online Newspapers Interviewer: Let me ask you first of about your study about social media and how that’s working out. What were some of the findings you have? Lauren Rich: Well, the biggest take away was the fact that Facebook is one of the biggest in the social media area is almost like a mall that forgot to charge rent. They’re creating enormous value for other people. A lot of the application providers people like Zynga which does Texas Hold ‘em. He’s creating a really good business off their back with their success at Facebook up to 300 million users, they’re suffering really escalating network cost, yet they really need to get a revenue model that’s more sustainable and can scale tasks. Interviewer: How could they? What are some of the promising opportunities for them in terms of revenue would you say? Lauren Rich: Well, they are doing more of advertising but I'm a believer that there’s so much inventory out there that the advertising will never really keep up with the user base but they could charge some of the application providers a very small amount using the molonalogy again. They’re being given an opportunity to be somewhere that’s heavily trafficked. It’s charging a very small amount for this application provider will scale big very quickly. Interviewer: Did it surprise you that the application providers are making more than Facebook itself? Lauren Rich: Not really. I think we’ve seen that happen on the internet many times that you can throw something up there quickly. You can track people. It’s in the game area largely that we’re seeing these successes and so that isn’t that surprising when you think about community. The opportunity to play games together is natural. Interviewer: Let me ask you about where a couple of blocks in New York Times here. What opportunities did they have for survival growth, new business? What are some of your thoughts? Lauren Rich: Well, the New York Times is a venerable brand and they’ve done a good job in the past of charging a premium for their content. I think the challenge for them is to act more like an integrated brand across all different distribution channels without being us concerned about whether it’s in print or otherwise. They recently tired to raise their prices and they’re hopefully successful in raising prices for their print model but at the same time, they haven’t really done a good job of integrating their electronic version, their Kindle version and pointing out the potential readers in broadening their audience so they got less expensive alternatives out there. They could create -- they already do create premium content that they could try more experiments at charging for it. They are probably going a little bit of stray by trying to charge to all the products they’re charging for, that they heavily promote in the paper. They’ve got a lot of wonderful columnists which are brands that they could charge for as well but ultimately, their news organizations they should stick to that. It’s just a question of threading out which user proves might pay for different pieces of it. Interviewer: In terms of online strategy, are they any newspaper change either in this country or abroad that you think is doing a good job effectively? Lauren Rich: Well, I was reminded yesterday. I'm reading an article actually in The New York Times of somebody that I interviewed a number of months ago, Christopher Ruddy at Newsmax. I think he’s done a really good job of creating an online site. Out of that, came a print magazine that is actually making money and out of that, he was able to launch a very successful newsletters on different topics that were relevant to his audience that was targeted and he’s a done a pretty good job with e-mail direct marketing as well. And so, he’s an example of someone who I think has been successful, has enjoyed good growth, has not tried to get people to pay for content online but using the knowledge of them has gotten into paper content elsewhere. Interviewer: And, finally, about Google, is it a giant parasitic tapeworm in the stomach of newspapers? Tell us about your perception of the relationship between Google and the newspaper industry. Lauren Rich: Well, I'm not sure I understand why the newspaper industry is so vexed about Google. I think Google has done a tremendous job of deriving traffic to sites that would never have gotten that recognition without Google. It would have been too costly for most of those sites to ever get the same level of promotion that they do get with Google today. And so, I'm not quite sure why it’s such an adversarial relationship. Interviewer: I see and just -- the question about paid contents, so to speak, or subscriptions for newspapers and we see a brilliant progress coming up with a new company and other discussions. Where do you think, either micropayment subscriptions, where will the pay model evolve in your opinion? Lauren Rich: I'm not sure that most newspapers will ever really get away with their recurring subscription model but if they can create premium content that’s valuable to a select community. I think we’ll have some success and so I think it’s going to either be more happenstance in knowing when they’ve got something they can package, if there are series of articles that when out together becomes something else, that they could then charge for. Some of that would be archived information or they can create things of value so if I'm a local newspaper, maybe I can't get you to pay for the content, but I could create a real estate service that says, “You're going to be one of 25 people who receives the first alert that a new home is available. And, so I think they’ve got to think a little bit more creatively about what people will pay for that they find the value of core news in it of itself still fells like they’re so much available that it’s going to be very hard to get people to pay, journals who ahs been successful because they’re selling to a community that will pass the money, can expense it and or can justify by saving a basis point on a tray. Interviewer: And, one last question. Looking into your crystal ball, where will the New York Times be one year from now? Lauren Rich: The New York Times will still be a very successful organization in print. A lot of people will still look to them for very important investigative journalism, watchdog journalism. They’ll be struggling probably still financially and hopefully, they’ll be trying a lot more experiments of getting people to pay for some of the valuable content they create online.