Journalism Online received some good news last month when News Corp. invested in the startup, which aims to help newspaper and other media companies generate additional revenue from paid content.
Financial terms of News Corp.'s investment were not disclosed.
Jon Miller, News Corp.'s chief digital officer, said in a statement that the move underscored the company's “ongoing commitment to create strong business models that support journalism at a time of great change in our industry.”
In the next several weeks Journalism Online media customers will begin using the company's Press+ e-commerce platform, enabling them to charge for content online. Newspapers will lead the way, but other media companies—including business media outlets—are planning to use Journalism Online's platform.
“It's been integrated into the websites of a number of publishers. They'll be launching in the coming weeks,” said Gordon Crovitz, one of Journalism Online's founders. “There is a lot of interest among b-to-b publishers, online-only publishers and bloggers. ... We have publishers in all of these different media working with us. This is about finding new revenue streams.”
The Press+ platform allows media companies to choose from multiple options for charging users for consuming content. One of the options is the “metered model,” pioneered by the Financial Times, which begins to charge readers after they have accessed a prespecified number of stories.
Crovitz said it has become widely accepted that newspapers and other print properties—including controlled-circulation magazines—will try to emulate U.S. television, which was once completely free but begin charging for some specialized content.
“I would say that by this spring the debate had shifted to not whether publishers should charge for content but how best to charge for content,” he said. “Our view is the remaining portion of 2010 is going to be a great experiment of different formats of charging for access.”
Journalism Online is not the only one experimenting. Google is reportedly developing Newspass, a platform that also would enable publishers to charge for content.
The question now is whether charging will represent a revenue stream significant enough to begin turning around the inexorable revenue declines at newspapers. “I think it's going to be a tough road,” said Emile Courtney, newspaper analyst at Standard & Poor's.
“It's not going to be a significant revenue stream or a huge factor one way or the other for at least several years,” said Rick Edmonds, media business analyst at the Poynter Institute.
Most newspaper industry observers believe the steady erosion of classified advertising revenue, which has been siphoned away by the likes of Monster.com and Craig's List, and the inability to replace the loss of print display advertising revenue with online banner ad revenue have posed bigger financial issues than any declines in subscription revenue. In most cases, subscription revenue was designed to defray paper, printing and distribution costs.
The model of the modern newspaper has been to aggregate an audience and turn a profit from advertising. Crovitz said that's been the model since World War II; prior to that, newspapers primarily made their money from circulation. “We may look back on this period [the post-World War II period] as an aberrational time,” he said.
Crovitz pointed to the Financial Times, which anticipates that content revenue will overtake print advertising revenue this year—and total advertising revenue by 2012.
Similarly, Randy Bennett, senior VP-business development for the Newspaper Association of America, said some newspapers are adjusting their revenue streams from 80% advertising and 20% circulation to a 60-40 model.
Crovitz added that developing a paid-content revenue stream online doesn't involve printing an extra newspaper for every new subscriber. “This is the one area where publishers have an opportunity to take analog dimes and turn them into digital quarters as opposed to on the advertising side, where they're taking analog dollars and turning them into digital dimes—or maybe two cents,” he said. M