Archive for January, 2012

Pick up the pitchforks:
David Pogue underestimates Hollywood

January 20, 2012

Writing in his blog on the New York Times yesterday, David Pogue, one of the Times’ tech columnists, advises toning down the alarmist rhetoric over SOPA, suggesting that opponents of the bill (and its Senate cousin PIPA) should Put Down the Pitchforks. He takes particular issue with people who have criticized SOPA without actually understanding the text of the bill. Then, after this preamble, Pogue proceeds to offer an explanation of SOPA that makes it clear that he does not understand the text of the bill.

Here’s his description of what’s at stake:

If the entertainment industry’s legal arm gets out of control, [opponents] say, they could deem almost anything to be a piracy site. YouTube could be one, because lots of videos include bits of TV shows and copyrighted music. Facebook could be one, because people often link to copyrighted videos and songs. Google and Bing would be responsible for removing every link to a questionable Web site. Just a gigantic headache.

That’s Pogue’s perspective: Letting Hollywood decide whether any given site with user contributions facilitates piracy would amount to nothing more than “a gigantic headache.” (Me, I’d have gone with “a violation of the First Amendment.”) To come to a conclusion like this, you’d have to believe that traditional media companies are committed to balancing their desire for control with a respect for citizen rights, and indeed, Pogue does seem to believe this (hence the observation that bad things would happen only if the entertainment industry’s legal arm gets out of control.)

If their legal arm gets out of control? This is an industry that demands payment from summer camps if the kids sing Happy Birthday or God Bless America, an industry that issues takedown notices for a 29-second home movie of a toddler dancing to Prince. Traditional American media firms are implacably opposed to any increase in citizens’ ability to create, copy, save, alter, or share media on our own. They fought against cassette audio tapes, and photocopiers. They swore the VCR would destroy Hollywood. They tried to kill Tivo. They tried to kill MiniDisc. They tried to kill player pianos. They do this whenever a technology increases user freedom over media. Every time. Every single time.

And they don’t just want control — they want it at low cost, and high speed. Pogue talks about the bills’ allowing the Government to sue. What he doesn’t mention is that the bills were also written to allow “market based” system allowing media firms to get injunctions against sites they don’t like, or that they were written so that firms who host user conversations would have incentives to censor their own users in advance, rather than waiting for notification from a copyright holder, as happens now.

I know David Pogue, and he’s a smart guy. I don’t think he’s intentionally trying to obscure the way the bill imagines letting media firms escape due process and impose “market-based” censorship. I think he simply cannot imagine that the bills are as bad as they actually are.

This is a general problem — there is a reasonable conversation to be had about sites set up for large, commercial operations that are designed to violate copyright. And because there’s a reasonable conversation to be had, Pogue (and many others) simply imagine that the core of SOPA must therefore be reasonable. Surely Hollywood wouldn’t try to suspend due process, would they? Or create a parallel enforcement system? Or take away citizen recourse if they were unfairly silenced? They wouldn’t imagine the possibility of a longer jail term for streaming a Michael Jackson video than Jackson’s own doctor got for killing actual Michael Jackson? Would they?

Hollywood wants to take the law into their own hands — they had our representatives add a vigilante clause, for God’s sake, to protect overzealous censors from legal challenge by users — and like a Scooby Doo™ episode, they would have gotten away with it too, if it hadn’t been for us meddlesome kids.

Chris Dodd, lobbyist-in-chief for the MPAA, who is watching the thick end of a hundred million bucks of paid-for legislation swirl around the drain, has been reduced to bizarrely indirect defensiveness, touting the First Amendment credentials of the bill’s co-sponsors, as if that meant these bills must therefore be clean as well. Yet the very first substantive section of SOPA, Section 2.a.1., gives the game away, by being a little too touchy about its constitutional implications: “Nothing in this Act shall be construed to impose a prior restraint on free speech.” Got that? This bill is not about prior restraint. Totally not! What would make you even think such a thing!?

And arguments like Pogue’s are dangerous not because they are pro-SOPA — Pogue himself is glad it is in trouble — but because they obscure the core historical fact: The American media industry tries to stifle user freedom. Every time. Every single time.

We should delight in the stand we’ve taken in favor of things like, say, notifications, and trials, and proof before censoring someone, but we should get ready to do it again next year, and the year after that. The risk now is not that SOPA will pass. The risk is that we’ll think we’ve won. We haven’t; they’ll be back. Get ready to have this fight again.

Newspapers, Paywalls, and Core Users

January 4, 2012

This may be the year where newspapers finally drop the idea of treating all news as a product, and all readers as customers.

One early sign of this shift was the 2010 launch of paywalls for the London Times and Sunday Times. These involved no new strategy; however, the newspaper world was finally willing to regard them as real test of whether general-interest papers could induce a critical mass of readers to pay. (Nope.) Then, in March, the New York Times introduced a charge for readers who crossed a certain threshold of article views (a pattern copied from the financial press, and especially the Financial Times) which is generating substantial revenue. Finally, and most recently, were a pair of announcements last month: The Chicago Sun-Times was adopting a new threshold charge, and the Minneapolis Star-Tribune said that their existing one was also working well. Taken together, these events are a blow to the idea that online news can be treated as a simple product for sale, as the physical newspaper was.

For some time now, newspaper people have been insisting, sometimes angrily, that we readers will soon have to pay for content (an assertion that had already appeared, in just that form, by 1996.) During that same period, freely available content grew ten-thousand-fold, while buyers didn’t. In fact, as Paul Graham has pointed out, “Consumers never really were paying for content, and publishers weren’t really selling it either…Almost every form of publishing has been organized as if the medium was what they were selling, and the content was irrelevant.”

Commercial radio is ad-supported because no one could figure out a way to restrict access to radio waves; cable TV collects revenues because someone figured out a way to restrict access to co-axial cables. The logic of the internet is that everyone pays for the infrastructure, then everyone gets to use it. This is obviously incompatible with print economics, but oddly, the industry’s faith in ‘every reader a customer’ has been largely unshaken by newspapers’ own lived experience of the move to the web.

A printed paper was a bundle. A reader who wanted only sports and stock tables bought the same paper as a reader who wanted local and national politics, or recipes and horoscopes. Online, though, that bundle is torn apart, every day, by users who forward each other individual URLs, without regard to front pages or named sections or intended navigation. This unbundling leads to the odd math of web readership — if you rank readers by pages viewed in a month, the largest group by far, between a third and half of them, will visit only a single page. A smaller group will read two pages in a month, a still smaller group will read three, and so on, up to the most active reader, in a group by herself, who will read dozens of pages a day, hundreds in a month.

Against this hugely variable audience behavior, a paywall was all-or-nothing: “If you won’t give us any money, we won’t show you any ads!” Offered this all-or-nothing choice, most readers opted for ‘nothing’; the day they launched their paywall, the Times of London shrank its digital audience from a large multiple of its print circulation to a small fraction of it. This isn’t a problem with general-interest paywalls — it is the problem, widely understood before the turn of the century, and one to which there has never been a convincing answer. The easy part of treating digital news as a product is getting money from 2% of your audience. The hard part is losing 98% of your advertising base.

* * *

To understand newspapers’ 15-year attachment to paywalls, you have to understand “Everyone must pay!” not just as an economic assertion, but as a cultural one. Though the journalists all knew readership would plummet if their paper dropped imported content like Dear Abby or the funny pages, they never really had to know just how few people were reading about the City Council or the water main break. Part of the appeal of paywalls, even in the face of their economic ineffectiveness, was preserving this sense that a coupon-clipper and a news junkie were both just customers, people whose motivations the paper could serve in general, without having to understand in particular.

The article threshold has often been discussed as if it was simply a new method of getting readers to pay, to which the reply has to be “Yes, except for most of them.” Calling article thresholds a “leaky” or “porous” paywall understates the enormity of the change; the metaphor of a leak suggests a mostly intact container that lets out a minority of its contents, but a paper that shares even two pages a month frees a majority of users from any fee at all. By the time the threshold is at 20 pages (a number fast becoming customary) a paper has given up on even trying to charge between 85% and 95% of its readers, and it will only convince a minority of that minority to pay.

Newspapers have two principal sources of revenue, readers and advertisers, and they can operate at mass or niche scale for each of those groups. A metro-area daily paper is a mass product for customers (many readers buy the paper) and for advertisers (many readers see their ads.) Newsletters and small-circulation magazines, by contrast, serve niche readers, and therefore niche advertisers — Fire Chief, Mother Earth News. (Some newsletters get by with no advertising at all, as with Cooks’ Illustrated, where part of what the user pays for is freedom from ads, or rather freedom from a publisher beholden to advertisers.)

Paywalls were an attempt to preserve the old mass+mass model after a transition to digital distribution. With so few readers willing to pay, and therefore so few readers to advertise to, paywalls instead turned newspapers into a niche+niche business. What the article threshold creates is an odd hybrid — a mass market for advertising, but a niche market for users. As David Cohn has pointed out, this is the commercial equivalent of the National Public Radio model, where sponsors reach all listeners, but direct suport only comes from donors. (Lest NPR seem like small ball, it’s worth noting that the Times ‘ has convinced something like one out of every hundred of its online readers to pay, while NPR affiliates’ success rate is something like one in twelve. Newspapers with thresholds now aspire to NPR’s persuasiveness.) Paywalls encourage a paper to focus on the value of their content. Thresholds encourage them to focus on the value of their users.

* * *

Threshold charges subject the logic of the print bundle — a bit of everything for everybody, slathered with ads — to two new questions: What do our most committed users want? And what will turn our most frequent readers into committed users? Here are some things that won’t: More ads. More gossip. More syndicated copy. This is new territory for mainstream papers, who have always had head count rather than engagement as their principal business metric.

Celebrities behaving badly always drive page-views through the roof, but those readers will be anything but committed. Meanwhile, the people who hit the threshold and then hand over money are, almost by definition, people who regard the paper not just as an occasional source of interesting articles, but as an essential institution, one whose continued existence is vital no matter what today’s offerings are.

In discussing why the most loyal subset of readers would pay for access to the Times, Felix Salmon described some of the motivations reported by users: “I like the product, understand the incentives involved, and want its production to continue” and “I feel that maintaining a quality NYT is immensely important to the country as a whole.” Now, and presumably from now on, the readers that matter most are disproportionately likely to score high on the God Forbid index (as in “God forbid the Sun-Times not be around to keep an eye on the politicians!”)

The people who feel this way have always been a minority of the readership, a fact obscured by print bundles, but made painfully visible by paywalls. When a paper abandons the standard paywall strategy, it gives up on selling news as a simple transaction. Instead, it must also appeal to its readers’ non-financial and non-transactional motivations: loyalty, gratitude, dedication to the mission, a sense of identification with the paper, an urge to preserve it as an institution rather than a business.

* * *

Thresholds are now mostly being tried at big-city papers — New York, Chicago, Minneapolis. Most papers, however, are not the Minneapolis Star-Tribune. Most papers are the Springfield Reporter, papers with a circulation 20,000 or less, and mostly made up of content bought from the Associated Press and United Media. These papers may not do well on the God Forbid index, because they produce so little original content, and they may not find thresholds financially viable, because the most engaged hundredth of their audience will number in the dozens, not the thousands.

On the other hand, local reporting is almost the only form of content for which the local paper is the sole source, so it’s also possible to imagine a virtuous circle for at least some small papers, where a civically-minded core of citizens step in to fund the paper in return for an increase in local coverage, both of politics and community matters. (It’s hard to overstate how vital community coverage is for small-town papers, which have typically been as much village well as town crier.)

It’s too early to know what behaviors the newly core users will reward or demand from their papers. They may start asking to see fewer or less intrusive ads than non-paying readers do. They may reward papers that make their comments section more conversational (as the Times has just done.) The most dramatic change, though, is that the paying users are almost certain to be more political engaged than the median reader.

There has never been a mass market for good journalism in this country. What there used to be was a mass market for print ads, coupled with a mass market for a physical bundle of entertainment, opinion, and information; these were tied to an institutional agreement to subsidize a modicum of real journalism. In that mass market, the opinions of the politically engaged readers didn’t matter much, outnumbered as they were by people checking their horoscopes. This suited advertisers fine; they have always preferred a centrist and distanced political outlook, the better not to alienate potential customers. When the politically engaged readers are also the only paying readers, however, their opinion will come to matter more, and in ways that will sometimes contradict the advertisers’ desires for anodyne coverage.

It will take time for the economic weight of those users to affect the organizational form of the paper, but slowly slowly, form follows funding. For the moment at least, the most promising experiment in user support means forgoing mass in favor of passion; this may be the year where we see how papers figure out how to reward the people most committed to their long-term survival.