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The news is THE news these days if you live in, say, Denver, or Seattle, or San Francisco, or just about any big city. Some are shrinking to one-newspaper towns. Others, like Denver, will have no daily paper soon.
Bill Densmore has hatched a plan to save the news as we want it – solid reporting that is original, fact-checked and reliable. This involves some big changes for the news industry, and, perhaps, even more for readers.
Listen in as Densmore describes how we can save the news.
The following is an interview with Bill Densmore, a Fellow at the Reynolds Journalism Institute, on February 16, 2009. Densmore appeared on the McGraw Show, on St. Louis radio station KTRS. Densmore’s comments are in bold, after those of McGraw Milhaven, the show’s host. (This transcript was edited for clarity.)
Milhaven: Are you going to single-handedly save newspapers?
Densmore: I’m not going to do it single-handedly. As a Fellow at the Reynolds Journalism Institute, I’m working on creating a shared user network for the web. This network would be a non-profit venture with the goal of offering “pay-per-click” news. The non-profit would help the nation’s news and information services industries figure out new ways of benefiting from advertisements. Also, customers would pay for information that they think is worth paying for.
Milhaven: As I prepared for today’s show, I must have looked at 15 or 16 different daily newspapers, and it didn’t cost me a dime. Can that model continue?
Densmore: We don’t think so, because it costs money to do quality journalism. Here’s the problem. When the web first became popular, everybody assumed that ads sold online would be sufficient to support journalism. Newspaper companies expected to transition from print to digital while financially supporting their operations.
Now newspapers are seeing a decrease in online advertising revenue because there are so many other sites where you can place ads.
The business plan isn’t working.
Milhaven: Bill, I think it’s important to note that one of the biggest things - if not the biggest – about web advertising is classifieds ads moving online. The result is billions of dollars in losses for newspapers.
Densmore: That’s right. Craigslist has taken a lot of classified advertising from newspapers in major markets because in most places (except, I think, New York, San Francisco and a couple of other cities), it doesn’t charge anything to place a classified ad. That’s because the Internet is so efficient as a network.
Milhaven: And newspapers - like our hometown newspaper, the St. Louis Post-Dispatch - are dying on the vine because there are no more classified ads.
Densmore: That’s right. But we’re working on a solution where you, as a consumer, would create an “account” with your most trusted “information valet” - that’s a new term we’ve coined. That information valet could be your local newspaper. It could be your Internet service or cell phone provider. Or it could be your bank.
Here’s the idea. You would vest your information valet with demographic information about yourself, which you control and share, selectively, when you want to access information on the web.
When you share your information, you receive something of value. For example, your information valet could credit your account because you looked at an ad. Or you could agree to fill out a form and receive some sort of value, or compensation, for that. In turn, you could use the amount you’ve accrued to buy things. You might use it to download a song or video. Or you could use your account to buy a particularly good story, or package of stories, say, from the Post-Dispatch.
Densmore: I don’t think anybody in the information valet environment has talked about building a wall where you pay to access news sites. It’s a much more nuanced issue.
It’s a value exchange between the consumer and web sites.
Milhaven: Let’s back up a second. Not too long ago, each time you visited a newspaper on the web, they would ask you for your user name and password. That has largely disappeared. I think papers made it so hard to access their web sites that people stopped going.
Densmore: You’re absolutely right. I’ll use an analogy. When I was growing up, my mom kept a whole lot of charge cards in her wallet. She used each of these cards at the different local department stores in town. Eventually, those stores realized that they could do better business if they accepted Visa and MasterCard. Over time, what might have been a wallet full of charge cards for all those stores turned into just two or three credit cards.
We have to move away from an environment where you register for every site you visit – with a different thing to remember for each one.
We need universal registration completely in the consumer’s control.
That way, when you arrive at a web site, you can offer a little bit of information about yourself without dealing with remembering each and every registration.
Milhaven: In other words, I go to the St. Louis Post-Dispatch and log on. Then I want to visit The New York Times, and the Times already knows it’s me, already knows my bill is current, and then lets me through.
Densmore: Exactly, and the Times may know something about you - your personal interests, if you choose to provide that information. You don’t have to, but if you do provide it, you may get extra benefits.
Milhaven: Do you look at iTunes as an example of your model?
Densmore: I think iTunes has been a really interesting experiment telling us about the willingness of people to pay per click in a disaggregated way.
In modern day media, people buy bundles. When you get cable TV, you buy a bundle, not a single channel. In the early 90’s, people assumed that consumers didn’t want to pay per click. However, studies have shown that people pay more for things if they buy a bundle, because of the convenience. Steve Jobs and Apple have shown that people will buy music per song.
Milhaven: Because if you buy a whole album, it would cost you $20. Now you’re buying one song for 99 cents.
Densmore: But the problem is your iTunes account only works at Apple’s iTunes.
Milhaven: Back to newspapers. Say I want to read a Bernie Miklasz column in the St. Louis Post-Dispatch I go to the web site. I click on Bernie’s link, and I get to read that article. With your model, would that cost me a nickel? Would that cost me a dime? Or would that be free with, say, a $20 subscription?
Densmore: That would depend on the particular relationship that the Post-Dispatch wants to forge with you, as a user. For example, it may decide to offer you a bundle of information that includes access to everything on their web site, and maybe access to several other resources across the web for a flat monthly fee - just the way your cable company offers you all kinds of entertainment for a flat monthly fee.
Or the Post-Dispatch, or another information-valet service provider, could offer you an à la carte menu.
The information valet is merely a free-market platform for digital information. You decide: Today I want to pay à la carte to access this information. Tomorrow, I want it to be part of my subscription bundle based at the Post-Dispatch.
Or you might be an environmentalist. So you might decide to subscribe to a web site that’s all about environmental news. Then that’s the persona you choose in order to view news on the web at that time.
Milhaven: Would I have to pay $20, or some nominal fee, for every newspaper I wanted to check out every day?
Densmore: The logical approach would be creating a news network that allots value, just as department stores did many years ago. The news industry would place value on allowing an individual’s persona to work at multiple web sites.
Milhaven: So, it would be like a PPO in health care. Doctors are in a specific network, and I can go to any doctor in this network.
These newspapers are in a network. If I buy into a plan, I can get any newspaper in that network.
Densmore: You know, I hadn’t heard or thought of the PPO analogy - that’s a very good one.
What are newspapers saying? Do they like this idea? Do they think you’re crazy?
Densmore: The industry is now beginning to see that it needs to take some really bold steps to solve the riddle of how to sustain journalism. Lee Enterprises, the owner of Post-Dispatch, is working with us to informally prototype this. But that doesn’t mean that they’re going to implement it. They’re only working with us at a conceptual level.
Milhaven: When do you see this rolling out?
Densmore: We hope to demonstrate it in mid-April at a news conference in Washington, DC. And we expect to have a prototype before the end of the year. As far as when it will be available to consumers, I hesitate to predict that.
Milhaven: Are you creating a non-profit, or are you just giving this information to anyone who wants it?
Densmore: We’re discussing this now with the Missouri School of Journalism, the Donald W. Reynolds Journalism Institute and some non-profits in the journalism world. We’re thinking about what sort of non-profit could own and operate the system.
One example of a form of ownership is the Associated Press, which is a non-profit co-op chartered under a very particular part of New York State Law. The AP is owned by its member newspapers.
Milhaven: You could see a situation where this entity is owned by its member newspapers?
Densmore: I don’t think newspaper companies would be the sole owners of the information valet service. More and more, I think of newspaper companies as news companies. They’re beginning to realize that they’re in the service of providing the information you need to get through the day, rather than delivering a printed product.
Milhaven: When do newspapers, television news programs and radio news programs all meld into one?
Densmore: That’s happening now. They’re all pedaling as fast as they can to make the web - and mobile - the principal consumer platform. Soon, they’ll start to realize that they’re not in the broadcasting business. They’re not in the newspaper business. They’re in the information service business - delivering timely, actionable information to their consumers.
It’s really about changing their relationship with consumers. It’s about being the place where people go to access the information they need, rather than the particular product you’re buying or watching.
Milhaven: The Wall Street Journal is one of the few papers that still charges for their daily content. Is this successful?
Densmore: The Wall Street Journal has hundreds of thousands of subscribers paying to read the paper online. Here’s the conventional wisdom about why they’ve been successful. The Journal contains a lot of information that helps people make money.
If you’re trying to make money, and you can’t get certain information anywhere else, then the fact that you have to pay for it, and you can deduct it as a business expense, isn’t a big barrier.
But when you take that idea to a general circulation newspaper, you’re asking people to pay for something that isn’t about making money. It’s about being a better citizen, or knowing what’s going on at the school board or city council, or finding out what happened at the fire station last night.
The challenge is to create a value exchange.
We may not be willing to pay for news. But we can create a way to fund newsrooms through consumer interests, just as we do now.
When you pick up a newspaper, only a small fraction of the 50 cents or 75 cents that you plunk down to read it actually goes to the true cost of putting out the paper. Most of the paper is financed by advertisements.
Milhaven: When you open the newspaper, the ads are prominent. But when you go online, there are few ads. Why don’t newspapers make the online page look like the print version?
Densmore: Some newspapers offer an online page that replicates the print version. They either charge you to look at the page, or it’s part of your print subscription. The reality is that consumers prefer the current layout of web pages.
Milhaven: What happens to a web site like a Drudge Report that basically takes links from other stories and puts it on one page?
Densmore: With the information valet, the Drudge link to an article at, say, the Post-Dispatch, would trigger the system, which would determine whether or not the incoming user is a member of the information valet service. If it were a partner, then it would automatically log them in. The Drudge Report actually would create revenue for the Post-Dispatch, because the Post-Dispatch ads would relate to the consumer’s particular demographic.
In other words, you, McGraw, go to the Drudge Report. You click on a link referring to the Post-Dispatch. But the Drudge Report isn’t getting anything because you subscribe to the Post-Dispatch. If the Post-Dispatch is your news service provider, then the Post-Dispatch gains from you looking at those ads.
Milhaven: Is the technology there to make this happen?
Densmore: Yes. But the big challenge is convincing consumers that this is a valuable service. And it’s important for them to know who’s doing what with their demographic information.
It’s a solution to dealing with the breadcrumbs scattered all over the web showing who we are
- in places like Facebook, which logs information about what you’re doing all the time, and then tells you that you can’t know what they’ve logged.
We have to change that. We have to create an environment where your most trusted information valet works with you to share and manage your demographic information and tells you, “ Look, if you get tired of working with me, take your demographic info and go next door.” That’s part of the deal.
Milhaven: So, you envision a world where we sign up for one of these information valet systems and pay $20 or $30 a month.
Densmore: Or you may pay nothing if you’re willing to profile yourself significantly - tell the system all of your personal interests and agree to look at ads that relate to those interests. The system may produce so much revenue from highly targeted advertising that the information valet won’t need to charge you anything at all.
Milhaven: This is sort of like a super Google ad, if you will.
Densmore: Here’s other extreme. Maybe you want an information valet that resembles a Swiss Bank account. You don’t want anybody to know anything about who you are or where you’re going. If that’s what you want, there’s no other choice but the information valet service, which will require that you pay a small amount to maintain your privacy.
Milhaven: How long do newspapers have before they just stop printing the daily paper delivered to my front door?
Densmore: I think newspapers like the Post-Dispatch are going to keep printing for many years. But their print audiences will shrink. The business of providing news to metropolitan St. Louis can continue. The company that puts out the Post-Dispatch will continue to have a critical role in that service via print, online and mobile.
Milhaven: In your research, will people pay for news articles?
Densmore: I don’t think people will pay for undifferentiated news articles. A web site asking somebody to pay for the latest story about what President Obama is doing is out of luck, because there are so many other places where you can get that information. But if you’re providing information about what happened at your city council meeting last night, and there’s no other place to get it, that’s different.
Milhaven: Say Joe Strauss, who covers the St. Louis Cardinals, files his report from Jupiter. That might be of value because that’s the only place you can get the story.
Densmore: It’s unique because people know Joe Strauss’ personality through his writing. They know that he’s a very experienced observer of the Cardinals. Another good example of that is the Milwaukee Journal, which has offered a Packers Plus Premium web site for years, and it makes money.
Milhaven: Because that’s where you go to get your Packers news.
It also creates a more valuable reporter.
If a Bill McClellan, Deb Peterson or McGraw Milhaven is somebody you trust and like, then you might spend some money to find out what he or she is saying.
Bill, you sound excited. Time magazine did a story on February 9…
Densmore: Yes, Walter Isaacson, the CEO of the Aspen Institute, the nation’s premier think tank, and the former managing editor of Time, wrote a piece called “How to Save Your Newspaper.”
Milhaven: Is the newspaper industry excited about this?
Densmore: The newspaper industry is getting very excited. The rate for web advertising - for undifferentiated, mass-market advertising - is going down. The only web advertising on the rise these days is advertising targeted to customers you know something about. So the industry must agree on a system that allows users to share information voluntarily.
For more information, contact Bill Densmore.