Industry realizing valuable news merits a price tag

Jun. 14, 2014 @ 01:59 PM

A couple decades ago, I was in a crowded, stuffy hotel room at a group editors’ meeting, looking over the shoulder of an editor from the San Jose Mercury News. He was demonstrating the paper’s new on-line news operation.

I returned home to State College, Pennsylvania, signed up for America On-Line – the only way to access the new Merc Center – and wrote that I had seen the future of journalism.

That future has exploded in the 20 years since I watched and wrote.  It has taken twists and turns, and the newspaper industry has learned much, some of it very wrong, in that time. One thing is very clear – a growing number of news consumers, and a significant majority of younger consumers, are learning the news they want and need in some form other than what one commentator years snarkily calls smeared ink on dead trees.

They are viewing it on desktop computer screens, on tablets, smartphones and laptops.

In the heady early days when we realized that high-speed presses – a 19th century industrial age-innovation – were not going to be only way we delivered news, the business model seemed clear.

The Internet is free – that was the mantra of the day, and newspapers drank the Kool-Aid.  It costs a lot of to deliver, edit and disseminate news but we concluded it shouldn’t cost consumers.

After all, only 20 to 25 percent of our revenue came from the end consumer. Fully 75 cents of every dollar came from advertisers.  Radio and television derived close to 100 percent of their revenue from advertisers eager to reach viewers drawn to free news and entertainment programs.

It didn’t seem that big a leap for us to get that whole dollar from advertisers as readers flocked to our news and feature content on line.

Wrong.

The inventory of advertising space on-line is vast, so the cost any site can charge per set of eyeballs is staggeringly low. Advertisers seem to understand the vast nature of the web, as their digital spending is a relative trickle.

The news industry has been playing catchup to embrace the fact that we have a valuable product that if we are going to continue to produce it cannot rely solely on advertising.

The Wall Street Journal made that decision at the dawn of the online age, in 1996, and has prospered. Many years passed before others joined in significant numbers. Now, hundreds of newspaper sites ask users to pay, including The New York Times which now makes, according to Bloomberg BusinessWeek, more than half its revenue from readers and less than that from advertisers. Our nearby friends at the News and Observer in Raleigh joined the ranks last year.

This week, so will The Herald-Sun. Beginning Tuesday, we’ll charge for heraldsun.com.

If you’re reading this in the paper, chances are good you are a seven-day-a-week subscriber. For you, online access will continue to be free, an added value to your print subscription.

We’ll also offer a digital-only subscription for $10 a month. For a new or occasional reader who is interested in a story, we’ll offer a one-month trial for only one buck.

We are confident our unequalled breadth of news and sports coverage in Durham and Chapel Hill has value. And we think putting a price tag on that will ensure we can continue serving you with it for a long time to come.

Bob Ashley is editor of The Herald-Sun. You can reach him at 919-419-6678 or bashley@heraldsun.com.