NEW YORK (AdAge.com) -- In his recent Time cover story on saving newspapers, Aspen Institute President-CEO and former Time Editor Walter Isaacson pushed papers to start charging for online content, because online-ad revenue will never be enough.
He pleaded guilty during an interview with Ad Age, however, to helping create the predicament: He once ran the old Pathfinder network of Time Inc. sites, which never followed through on plans to charge for content. But simple subscription or micropayment models, Mr. Isaacson argued, could and should still be introduced today -- and not just for newspapers.
Wanted: Online Payment Plan for Print
As Everyone Weighs in on How to Save the Business, the Question Is Whether Consumers Will Cough up for Content They Can Get for Free
It's Not Newspapers in Peril; It's Their Owners
Dailies Still Make Good Money, but Debt-Laden Publishers Post Losses
Newsstand Suffers as Readers Skip the Store
Magazines' Single-Copy Sales Dropped 11.1% in Second Half of Last Year
Making the Case for Micropayments in News
Former Time Editor Talks About Fixing a Problem He Helped Create
Despite Recent Events, the American Magazine Is Not an Endangered SpeciesU.K. Magazine Circulation Up, While Papers Struggle
We've Seen Downturns Like This Before, and We Can Recover Yet Again
Mr. Isaacson: I don't know. I think we've seen a lot of people trying to find a new model. I was actually encouraged by the various ideas that came out, even though some people don't like micropayments. I was encouraged that it engendered so much discussion. The exact solutions I propose aren't the ones that will end up being the best possible solutions.
Ad Age: You talked about a traditional newspaper model supported by three revenue sources: newsstand sales, subscriptions and advertising. The web, you point out, has only advertising, which right now is a disaster. But subscription fees typically cover only the cost of paper and delivery. Ad revenue underwrites everything else necessary to produce the content. Is the web model really so different?
Mr. Isaacson: Different types of newspapers and magazines all have different balances of the revenue stream, but they tend to have three revenue streams. Clearly any one of those streams doesn't turn a profit, so you could say, "Well you'll never make a profit just on subscription revenue." Of course not. Still, it's nice to have three streams of revenue even if one of them is not going to cover everything.
Ad Age: The fundamental difficulty seems to be the loss of newspapers' old monopolies. How can newspapers charge for content when there are so many sources for the same or similar content, not always of lower quality?
Mr. Isaacson: A lot of people won't want to pay for a Washington Post story they feel they can eventually get from the Associated Press or a Reuters story that will say essentially the same thing. But we're not talking about a lot of money. I'd certainly pay a quarter or a dollar to read The Washington Post or to find out what Ethan Bronner of The New York Times is finding in Gaza. And, yeah, I could probably save myself a quarter or a dollar if I wait until someone rewrote the story. But eventually I suspect the AP, which is owned by the newspapers, maybe they'll start charging aggregator sites for the use of AP. There are various models that could work.
But you're right, there are a lot of people who won't pay a quarter for today's New York Times if they can download a wire-service report for free later. And there are some people who will.
The reason this comes to pass is if you look at the amount of revenue you're now going to get from web advertising this quarter, it's probably not enough to pay for even the costs of putting up a website. If advertising revenue were going to continue to shoot upward each year, we wouldn't have to have this discussion.
Look, I plead guilty. I helped start the Time Inc. sites 10 years ago, 15 years ago.
Ad Age: And Pathfinder was going to try to charge for content, but didn't, right?
Mr. Isaacson: Web advertising started growing exponentially. So it was like, hey, let's get as many eyeballs as possible, and we won't have to charge. And if that were going to continue to happen, that's a great model. I still think it's useful to have some reader revenue, but that's a more philosophical point.
By the way, this is not just to save old media; this is to incent new media. It's to incent new people who don't just want to do it for the ego kick, like having a blog or because they really love to contribute to their community, who feel the need to get paid for it. It's an incentive to anybody who creates any intellectual property, whether it's a game or a video, to have some system where people can pay for it. And maybe it's voluntary, maybe you don't have to pay for it, but people like me would pay for it.