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Posted by on Sep 23, 2009 in At TMV | 2 comments

Newspapers’ online salvation: subscribers and multipliers

I hope Nicholas Negroponte at MIT doesn’t get mad if I quote two full paragraphs from his 1995 book, “Being Digital.” I only do it because 1) I desperately want newspapers to survive their transition from newsprint to digital. Even Barack Obama was talking about that survival over the weekend. There must be a business model, he said. Well, here it is. Here are Negroponte’s words from 1995:

“It was through The New York Times that I came to know and enjoy the writing of the computer and communications business reporter, John Markoff. Without The New York Times, I would never have known of his work. However, now that I do, it would be far easier for me to have an automatic method to collect any new story Markoff writes and drop it into my personalized newspaper or suggested-reading list. I would probably be willing to pay Markoff the proverbial ‘two cents’ for each of his stories.

“If one two-hundreth of the 1995 Internet population were to subscribe to this idea and John were to write a hundred stories a year (he actually writes between one-hundred-twenty and one-hundred-forty), he would earn $1,000,000 per year, which I am prepared to guess is more than The New York Times pays him. If you think one two-hundredth is too big a proportion, then wait a short while. The numbers really do work.”

Now that it is 2009, Negropone’s figures will need updating. The target percentage of the 2009 Internet population, to make the system work, may by now be one two-thousandth. It would be easy enough to do the math. But the key words in the two paragraphs are “two cents” and “subscribe.”

In the old, traditional days of newspapering, subscribers didn’t make the publishers rich. Advertising did. But the Internet is truly revolutionary because 1) between the media and the public, the Internet turned the direction of information around 180 degrees, which 2) eliminates the old, traditional distribution costs, which was (still is) cruelly expensive. That’s why advertisers have fled traditional newspapers. The cost for companies to do their own online advertising, which is only files in a computer, is a tiny, tiny percentage of the traditional distribution arrangement.

A third revolutionary effect, which Negroponte realized 15 years ago, is the multiplier effect. Since the Internet is global, immediate, and available for pennies to the masses, Internet businesses can attract millions or billions of visitors, and make billions or trillions by charging each visitor two cents each per visit. I realized this myself, in the 1990s, when one day I was trying to tie my necktie. For decades, I wished I could tie a Windsor knot. By then, I was familiar enough with the Internet to understand its reach, and the ease of that reach. So I decided to search.

My search engine at the time was Alta Vista. I searched “Windsor knot” and was presented with 37 returns for sites about Windsor knots. At that instant, I knew that the Internet was something of great power. Just now, Googling “Windsor knot,” I am presented with 105,000 returns. This volume is possible because the information is only inexpensive files in a computer, waiting to be accessed by a global audience whose only expense is access to the Internet.

Why should Windsor knot merchants spend a penny on distributed advertising? So newspapers, and other traditional distributors of advertising, are left high and dry. If the advertising money tree has dried up, where can newspapers turn? Online subscribers. It is truly revolutionary. Reading his book, I believe Negroponte thought the online subscriber design would happen naturally. But it hasn’t. On the Internet, businesses give away information for free. This can’t go on. On the Internet, the only business that advertisers will support is themselves.

What should transpire? A subscriber system. Every time an Internet user clicks into a Website, that site should receive two cents from the visitor. Every Internet user will open a subscription account of $30 a month (1,500 site visits) through a central payment system. This account will be debited two cents for each site visited. If the site is The New York Times, the fee will be charged for each story visited. The Times and the reporter will negotiate an agreement in which the reporter gets a cut of the two cents – let’s say it is 50-50 – which means, in Negroponte’s aging Markoff example, both the reporter and the newspaper will earn $500,000 a year from the reporter’s stories. I am prepared to guess the arrangement would be acceptable to both parties.

Every content provider will receive two cents per visit. Popular blogs and content will receive considerable revenue, which is appropriate, and schlock blogs and content will wither, which seems equally appropriate. Internet surfers, when they are required to pay for it, will think twice about where they spend their two cents, always wanting their two cents’ worth. The result will be better Internet content quality. That will be a nice bonus. My only concern in writing this today, though, is the quality of the free, aggressive, well-staffed, well-edited press. Without that, this country is in danger of collapsing.

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