Going for the gold without garroting the goose: The Jerusalem Post looks for a middle road
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In his 1966 classic “The Moon is a Harsh Mistress,” science fiction author Robert Heinlein created the acronym, TANSTAAFL, which stands for “There Ain’t No Such Thing As A Free Lunch.” While Heinlein was not referring to the Internet, the phrase has stuck with me for a long time, and now I understand it well. In the book, Heinlein says how the “free” lunch buffet offered at the pub is certainly factored into the price of the beer. Well, it’s as good an operating phrase as any for the modern Internet. Someone has to pay for the “free” information on the Web, and for newspapers, at least as far as I can see, it is the readers who will have to pay. We’ll get back to that point a little later. First, a little history of the Jerusalem Post, because it is a unique publication, with a unique history, and it will help you understand how we came to be where we are today. The paper was founded as the Palestine Post in 1932, nearly 16 years before the establishment of the state of Israel. It was intended to be a medium to explain Zionist ideas and the problems of the small Jewish community in pre-state Palestine. The audience was primarily the large contingent of British officials, who then, of course, were managing the affairs of Mandate Palestine under the auspices of the League of Nations. The Post quickly grew in size and influence, and it was the country’s largest circulation daily newspaper at the founding of the state of Israel in 1948. The Post was never officially an organ of any political party, as the other papers in Israel were at the time, but it hewed to a Zionist ideology. The Palestine Post was not founded as a business in the conventional sense. It was not, in fact, designed to make money. Palestine Post founder Gershon Agron, who was born and raised in the USA, wanted the paper to cover its costs, certainly, and he had a paternal hand toward employees, but he wanted to push his agenda more than he wanted to pump up his bottom line. By the way, Agron became a towering figure in the early days of the country, and was Mayor of Jerusalem and then a government minister. Perhaps the Palestine Post’s most momentous headline came in May 1948, when it reported on the creation of the State of Israel. It’s a study of the difference in the times.
The paper’s first understanding of the changes in the domestic marketplace came shortly afterward. The disappearance of the British as a major force in the country meant a shrinkage in the English-language audience for the Palestine Post. As early as 1959, in one of his last acts as the paper’s editor, Agron started an overseas weekly edition, because he saw that the opportunity for the paper’s growth was not in Israel. That’s not how this product appeared when it first was published in 1959, of course, but this is its current incarnation. As Israel’s English-language audience shrunk as a percentage of the population, the paper saw a consequent decline in advertising and political clout. It was a prescient bit of business sense that was reflected in the creation of the JPost.com Web site in late 1995. Thirty years later, the change became complete when Hollinger Inc. acquired the Jerusalem Post. Today, nearly 14 years later, after numerous internal changes we don’t need to get into today, the Jerusalem Post has developed a business model designed to address its need to compete in the global news marketplace against media large and small in its reporting and analysis of, and commentary on, news from Israel. One of the most conspicuous steps along that way was the creation of JPost.com
in late 1995. By 1996 it was already rated as one of the top 10 news sites on
the Web. JPost.com met those first- and second-generation Internet demands – franchise protection and audience expansion. Today, a new era is upon us. The Internet news industry is changing. The “information must be free” era is ending. Hundreds, if not thousands, of Web site ventures worldwide have collapsed because they lacked solid business models. Many new brands failed to turn profits or even produce significant revenues, despite large marketing efforts. This pattern has certainly been repeated in Israel, where there is quite a dustbin of failed Internet ventures. I should know, I worked for several of them. So three years ago, the company made a strategic decision that it would go to a pay site eventually. Corporate officials saw such a step as the biggest opportunity for growth. The growth of the newspaper – perhaps even its very survival – depended on bringing in more money from our overseas readers – more than 90% of whom don’t subscribe to any of our print products. We may very soon become the tail that wagged the dog. If we’re not there, yet, we’re at least turning the dog around. Later, I will describe some of the newsroom changes we’re seeking to make to address those needs, as well. But let me say the decision was a typically audacious Israeli move – in fact, three years ago we were so far ahead of the curve there was no one else who could even be seen in this field, with the exception of the Wall Street Journal. Since I took over the Web site in 2002, we have been preparing for the day we go to a pay site. We have: But even more key to this is our definition of who we are, and our focus on
that. We focus on the stories of interest to our readers, and the stories we
do well. Remember, our site is not an all-encompassing news site, but a deeply
focused “niche” site, albeit a fairly wide niche. However, now is the time to contract those boundaries back again to our main focuses: Israel, Jews, the “matzav,” (the Hebrew term for the continuing security situation), the economic crisis in Israel, anti-Semitism, US-Israel relations, US-Middle East relations, and the like. Remember, where we add value is in our original content, unique perspective and added context and depth about these subjects. No one else can cover Israel the way we do; many people can cover China and Singapore better than we can. Who are our major competitors? Chief among our direct competitors – at least on the Web – is Haaretz.com, the English-language Web site of Israel’s prestige newspaper, Ha’aretz. The Hebrew-language Haaretz print edition is significantly larger than the Post, and its Web site has far more resources on which to call. We compete against smaller pure Web plays as well. But we also feel global media players such as CNN, FoxNews, BBC and others are our competitors, as they all maintain operations in Israel, and report on it daily.
Despite all of that competition, our site has grown steadily through the years, until it reached its current size of 20 million monthly pageviews. Since we began registering users last December, we have signed up 300,000 members around the world. Even in this competitive environment, JPost.com has prospered. We are a profitable Web site. Even though I cannot give you full disclosure on our revenues, I can say without equivocation that our site is currently profitable from advertising. Advertising and sales of our SMS Alert service in Israel, our e-mail edition of selected articles, our archives and other products put us in the black the last two years. Advertising held its own in 2002, and new procedures we put in actually allowed us to collect virtually all of the advertising revenues we recorded on the books. In fact, we were able to raise ad rates (well, perhaps they were too low to begin with), an average of 25% this year with little resistance. Given this situation, we have thought long and hard about whether to and how to start charging for content on our site. In the end, we did make the decision to charge for our content. Why? The simple reason is the one I gave above: TAANSTAFL! It really does cost us money to put the Web site together. There’s more to the decision than that, of course. Here are a few other reasons: 1. Like our friends at Ireland.com, much of our audience is far away from our
home territory and doesn’t see or pay for the printed product. Fully 90%
of our audience is outside Israel, with 75 percent of the total in the US and
Canada. The UK and Europe account for another 10 percent, with the rest of the
world at about 5 percent total. Of that audience, less than 10 percent see any
print products of the Jerusalem Post – that includes the International,
the French Edition, a weekend edition available on same day of printing in New
York, and the Jerusalem Report, a specialty magazine. That audience is, we feel,
getting something of significant value for nothing. If we sell them content,
we have little risk of cannibalizing existing subscription sales. Certainly, virtually all of the content on JPost.com is “unique” in that it is written exclusively for the Jerusalem Post. We use a modest amount of wire copy from the Associated Press in our breaking news category (about 25% of our breaking news items contain some AP copy, especially those stories of Israeli or Jewish interest that originate in other world capitals). The breaking news category also uses material reported on Israeli radio and television stations. However, several points must be made about this “generic” copy: Nonetheless, it could be said that much of the major news from Israel is available on hundreds of other Web sites and media sources. There is significant representation in Israel from the world’s major media. Certainly, when a terror attack hits a major Israeli community, some version of that story will appear on BBC, CNN, the New York Times, and hundreds of other online, broadcast and print news media outlets. However, all of the material on JPost.com is presented with the JPost perspective. For our readers, this is a unique and value-added proposition. We receive e-mails almost daily from readers thanking us for presenting the “same” stories they saw elsewhere with our approach, background, fairness, and understanding. This audience loyalty gives us hope that we will retain many of them in a paid-for version. There is an intense connection with our readers. When we have a typo onsite we hear about it in minutes from some sharp-eyed reader. In general, then, we believe the competition is manageable. As noted before,
both JPost.com and the print edition break their own share of scoops. A number
of competitors have come and gone. The Jerusalem Post is a powerful worldwide
brand, and there is no source of news, Israel-based or foreign, that carries
a similar association with Israel. “The Internet as a business? Dead. Completely dead. I don’t expect that a way will be invented to make money from the Internet. Tons of users will never pay for access to sites. What was once given free will remain free. The customers have already gotten used to that. So from where will the money come? Some tell me, from advertising? But advertising via the Internet doesn’t work. It gets people mad, its repellent, scares people away....” Furthermore, for all of our research into who’s doing what out there, existing subscription services on the Internet provide only a limited guide for us. There are few Internet-subscription success stories; each of the major media organizations that have gone to subscription services has done so differently. In essence, there is no single proven recipe cookbook or time-tested formula we can follow. A 2002 survey of newspapers’ online operations came up with these inconclusive findings: special content (most frequently archives searches). The survey respondents said they were having difficulty in coming to grips with the economics of the Web. One said: “We have a lack of perspective and a great uncertainty, both short- and long-term.” Another said: “It is way too early to start charging for content. We haven’t even got the advertising figured out.” As has been said similarly by some at the JP, one executive surveyed wrote: “If we start to charge, we’ll put the readership of our digital edition at high risk.” Several consumer surveys support this view. Researchers have found a strong resistance to paying for what was once free. However, that conclusion is not supported by the experience of the relatively small number of sites – 22 percent in North America – that charge visitors. Asked how many site visits are lost when charges are imposed, 80 percent of the survey’s respondents reported no loss. With all of that in the mix, it remains that any direction we take will require educated guesses and estimates that just cannot be proven beforehand. Our venture into a subscription operation is something of a leap of faith based on our instincts, our connection to our audience and our continuing ability to provide users with unique content. With all that as background, it’s not surprising that there is a still ongoing debate within the building about the wisdom of the strategic decision to go to a pay site. First, the editorial side is dead set against it. The editors and writers for the paper don’t want to see their audience shrink. In fact, our editorial side is enhanced by the many “brand-name” contributors we have, who continue to write for the Post for rather pitiful amounts of money, for the worldwide exposure their material gets on JPost.com. Our advertising department is also squishy on the idea. They don’t want to risk the golden goose of advertising referenced in this essay’s title. If we close off the majority of the site to free use, we may lose a significant percentage of our overall traffic. Even if we can sell our advertisers on the idea of an improved audience from the standpoint of our knowledge of them and the audience’s demographics, it seems likely we will lose a percentage of our advertising revenue. Many of our smaller advertisers won’t be able to pay higher tariffs, and we won’t have the audience to attract larger advertisers. So that means the pay version of the site would first have to first dig out of a hole before actually making us more money. On the other hand, the ongoing recession in the US, Israel, and elsewhere has harmed media advertising in the last 18 months. Long-term advertising growth prospects on the Internet, while improving, do not seem poised to make dramatic leaps upward in the near future. The JPost is bucking industry trends, in that its advertising revenue has been stable, while the industry overall is in decline. Like our look or not, we have more than 60 advertisers on our homepage! However, even though new forms of advertising – and new locations for ads – are being developed on the JPost Web site, long-term upside potential for significant additional advertising revenue is questionable. In recognition of that fact, the Internet Department has worked to develop numerous new revenue-producing products. These are some of the pay products already existing and planned at JPost.com: Planned pay products include: What we learn from these lists is that JPost.com is already in the forefront of newspaper Web sites when it comes to charging for products. We charge for a large number of products. We hope this has – to some degree – softened customer resistance to a subscription-based site. We increased revenues from these existing and new syndication services by 20 percent in 2002. In addition, we increased royalty rates from our main archives provider by 50% and have raised prices for archive searches. Opportunities also exist in syndication services. Our Syndication Director has been successful in reaching out to numerous Jewish and Christian media outlets in the U.S. and elsewhere for our Foreign Service. The recent closure of a major deal indicates there is upside potential from this division. Many other syndication-type ventures in the works, including transformation of JPostRadio into a subscription-only service, creation of SMS services for Israel and Europe, sales through PressPoint newspaper vending machines, and onsite sales of an “electronic newspaper” through PDF files, also show promise. But none of these ventures seems to hold out the opportunity for major revenue success as great as subscriptions to the online Jerusalem Post. So what steps have we taken so far to get us there? Registration is being done all over the Web by major media company Web sites. There has been limited customer resistance, primarily to systems perceived as overly technologically demanding or too intrusive. The New York Times is the acknowledged industry leader, with more than 10 million registered users. Registration for JPost.com was set as the first, interim step toward a subscription site. The reasons for that included: In its first round of registration, JPost.com logged in more than 41,000 users in less than one week. From the moment registration was turned on, users signed up at a rate of several hundred an hour. This held steady despite technical problems that cropped up from demand. We paused for a few months to reinforce our technology, and then turned registration back on in mid-December. Since then, we have registered nearly 300,000 names total, nearly three times my original estimate. The Post received some consumer complaints regarding registration. Most stemmed from difficulties in registering. Key complaint areas, all of which have been or are being addressed, included: But the volume of complaints – considering the number who registered – was modest, and has slowed to a trickle as we have continued to refine our system. Our new e-mail lists – comprised of our registered members, have become a valuable resource. I expect e-mail advertising revenues for 2003 to be many times what they were in 2002. So, where are we?
Here, too, survey research provides useful for background, but does not offer a clear roadmap. The 2002 global newspaper survey mentioned above offered these findings on what newspapers are charging for: The key question for us is what types of content should be closed off to paying subscribers. JPost.com content breaks down into five main areas: Furthermore, we must take into account the volume of readers for each of these areas.
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This front page, arguably the most important in the paper’s history –
and it has had a lot of them, from World War II, to the Six Day War, the Yom
Kippur War, the peace deals of the mid-1990s and Terror War of the last few
years – came out on Sunday, two days after the event announced on the
top of the front page. Can you imagine what we would do today with a story like
that – particularly on the Web site?
