Friday, September 25, 2009

Salt Lake Tribune Provides More Background On Dean Singleton's Decision To Start Charging For Online Content In 2010

On September 25th, 2009, the Salt Lake Tribune published more information regarding the decision by its publisher, Dean Singleton, to begin charging for at least some of its online content in 2010. Since Singleton is also the CEO of NewsMedia Group, which has 54 different outlets throughout the United States, he's also made the decision for these outlets as well, and announced it at the National Conference of Editorial Writers in Salt Lake City on Thursday September 24th, 2009. KSL Channel 5 aired a 16-minute interview with Singleton in which he outlined roughly how the Tribune might be affected by the decision.

But more information about Singleton's speech itself is filtering out. In a Tribune article entitled "Banks will be the new owners of U.S. newspapers", other points brought out by Singleton emerge:

(1). Banks: Banks are increasingly becoming inadvertent owners of news media outlets. Many in the news industry borrowed money to expand their companies, based upon balance sheets reflecting revenues and cash flows that existed at the time, and which assumed a modest level of growth going forward. There was none of the "irrational exuberance" which plagued the housing industry. But there was one variable understandably not factored in - recession.

(2). Recession: The news industry did not anticipate the nation plunging into the worst recession since the 1930s, triggering the collapse of revenues, particularly in advertising, which forced some newspapers out of business and others into bankruptcy court. Only a few newspapers appeared to be sufficiently capitalized to withstand this major "axle-breaking" economic sinkhole.

(3). Prognosis: A strong advertising rebound is unlikely as the recession ends and a modest recovery begins. To reduce debt, more newspapers are likely to seek bankruptcy court protection, while others try to convince banks to swap debt for ownership stakes in their companies. Whether by court supervision or by negotiation to convert some debt to equity, America's banks will find themselves owning a large stake in the news industry. Singleton expects lenders to seek to recoup their investments by pushing newspapers to consolidate. Through mergers, banks will eliminate expensive corporate overhead and allow papers to improve their financial performance without hurting readers or advertisers.

But it was left to the Tribune's Culture Vulture blogger to address the impact of the Internet upon the news industry. Sean P. Means takes issue with Singleton's statement, "When you begin charging for it, it has some value", wondering if that assessment of value — though valid for any tangible commodity, from widgets to watermelons — can fit when it comes to the Internet. This is a particularly perspicacious statement, considering the difficulty we've had in defining intellectual property using the parameters normally encompassing real or tangible property. It's been like trying to fit a square peg into a round hole, and the Recording Industry Association of America (RIAA), for one, has been witch-hunting Internet music consumers who have a more liberal perspective about the inviolability of intellectual property.

Means states that the "pay wall" business model works if you assume there are people who will pay for what we put behind it. But most Internet users have been trained, with the assistance and encouragement of the news industry, to find content without paying for it up front. Now, when an Internet user sees a pay wall, the user is more likely to go around it, dig under it or seek an outlet that will give him or her the same thing without the expense.

The writing in the Tribune has value to its readers, but only if they read it — which, if the content is behind a pay wall, they might not. The key is to figure out how to get the readers to return value for value in monetary form, whether it be advertising, a subscription model, an NPR-style donation system, or something new. And Sean P. Means tells us the banks are getting impatient.

Public comments to any local story about this issue indicate that the "pay wall" will go over like a lead balloon. Placing limited "specialized" content behind a pay wall may work - I've seen ESPN do it. The Ogden Standard-Examiner has been running a dual system for years. But in a two-newspaper town, using a pay wall works only if both newspapers use it. And the Deseret News has no need or incentive to use it - not when its owner is the cash-flush Church of Jesus Christ of Latter-day Saints.

The Tribune is caught between a rock and a hard place. While I don't share the negative attitude towards the Tribune held by many locals, the Tribune ought to take a hard look at its content. Is is offering a sufficient diversity of opinion on its pages? Should it consider adding some truly provocative columnists such as Dr. David Duke or Al Sharpton? How about a once-per-week section produced and published by local high school journalist students to show off the best of our youth? Has the Tribune become too antiseptic out of fear of breaching political correctness? Maybe it's time for the Tribune to take a few editorial risks to recapture its market share. It takes an attractive product to attract business and advertising in the first place.

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