Google CEO Eric Schmidt told the Newspaper Association of America that all was not lost for its industry. Newspapers have a chance to create a new form of revenue, if only they will take it.
At the heart of Schmidt's proposal was using the TV business as a model. A large amount of television content is free and supported by advertising. Other content is part of basic cable, and there is some income in being part of that distribution channel. Finally, pay TV creates a wall that the consumer cannot get over unless he is willing to shell out for premium content like movies. (See pictures of Google Earth.)
To get newspaper readers to pay for a portion of online content, Schmidt suggests that a micropayment system be created so subscribers can "pay as they go."
Schmidt's ideas are deeply flawed. Moreover, they come too late in the cycle of destruction that has marked the end of newspapers' financial viability. (Read a TIME cover story on how to save newspapers.)
The first hurdle to a paid online subscriber system is creating and testing one. Deciding what technology to use to group subscribers based on what they will and will not pay for and then billing them accordingly is a complex process. Determining what content is valuable enough to charge for is also time-consuming.
Perhaps the biggest hurdle in getting subscribers to pay for content online is the fact that most content will be available for free somewhere else. The New York Times (NYT) has good international news — but a great deal of similar content is available at CNN.com and MSNBC.com. Those sites also have real-time video of breaking-news events. The sports section of the Times may be good at covering local teams, but most national sports news is available at sites like CBS SportsLine and Yahoo! (YHOO) Sports. (See pictures of baseball's top 10 worst first pitches.)
Technology news is probably more complete at sites like CNET than at NYTimes.com. CNNMoney covers most business news well, as do Reuters and Bloomberg.
That leaves the New York Times with its columnists. NYTimes.com used to charge subscribers for most of the paper's opinion pieces. That did not work well enough to be sustained, and the content was later made free along with the rest of the paper.
The New York Times will almost certainly lose money this year. It can experiment with paid online subscriptions, but it does not have much to offer that smart consumers cannot find, in one form or another, elsewhere on the Internet. Americans are used to free news now. Reversing that will be nearly impossible.
— Douglas A. McIntyre
Read a TIME cover story on how to save newspapers.
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