Steve Brill is sick of the airport security business, and he’s going back to journalism. Specifically, he’s saving it, with a new company called Journalism Online, which is co-founded by two other media luminaries: Gordon Crovitz and Leo Hindery. (Full disclosure: Gordon’s an investor in this publication).
Full description of the company in the press release below. In a nutshell, JOI plans to 1) build a distributable commerce system that will make it easy for newspapers to charge online subscription fees and 2) create a portal that can sell “one-pass” subscriptions to all participating newspapers.
We’ve heard several versions of this idea over the past few months–akin to a paid Hulu-for-newspapers–and we have a lot of respect for the founders (Gordon was the brains behind the Wall Street Journal‘s online business). We’re also all for any idea that might offer newspaper publishers an alternative end-game to the one they’re currently heading for. But, for several reasons, we’re sceptical this will work:
- A universal commerce system makes sense, but the company would only likely be able to charge a few percentage points of the subscription fee as a processing fee. It would therefore have to have massive scale to make a profit itself.
- The “one-pass” portal would have to sell a staggering number of subscriptions in order to send meaningful revenue back to the participating newspapers. For example, if the “one-pass” cost $100 a year and the company got 10 million subs, it would make $1 billion in gross revenue. If it had to share that revenue with 100 participating papers, however, that would only be $10 million of revenue apiece. That’s just not a lot of money compared with the size of most newspapers’ current subscription revenues.
- The company has yet work out revenue splits and other details. These will obviously be critical in getting newspapers to participate–and they won’t be easy to work out. Big, brand-name newspapers will demand a much bigger share of the revenue than smaller papers, and the company will need a critical mass of them to succeed.
NEW YORK, April xx, 2009 – Citing “the urgent need” for a comprehensive, immediate plan to address the downward spiral in the business of publishing original, quality journalism, experienced journalism and media industry executives Steven Brill, Gordon Crovitz, and Leo Hindery today announced the formation of Journalism Online, Inc. (JOI), a company that will quickly facilitate the ability of newspaper, magazine and online publishers to realise revenue from the digital distribution of the original journalism they produce.
“We have formed Journalism Online, Inc. because we think this is a special moment in time when there is an urgent need for a business model that allows quality journalism to be the beneficiary of the Internet’s efficient delivery mechanism rather than its victim,” said co-founder Steven Brill. “We believe we have developed a strategy and a set of services that will establish that model by restoring a stream of circulation revenue to supplement advertising revenue, while taking advantage of the savings to be gained from producing and delivering content electronically.”
The company will offer four key services to publishers.
First, Journalism Online, Inc. will develop a password-protected website with one easy-to-use account through which consumers will be able to purchase annual or monthly subscriptions, day passes, and single articles from multiple publishers. The password-enabled payment system will be integrated into all of the member-publishers’ websites, and the publishers will have sole discretion over which content to charge for, how much to charge, and the manner of charge.
“The website will provide a way for publishers of quality journalism to charge whatever they believe is a reasonable amount for their content in ways that are seamlessly convenient for readers,” explained co-founder Leo Hindery. “The only condition of participation is that the publishers have to charge for some portion of their content,” he explained. “They can do this while also offering the first portion of all articles for free, or by making a certain number of articles free each month for potential customers to sample, or by employing any other strategy they choose to balance the prospect of online circulation revenue with the need to maintain traffic and advertising revenue.”
Second, Journalism Online, Inc. will aggressively market all-inclusive annual or monthly subscriptions for those consumers who want to pay one fee to access all of the JOI-member publishers’ content. Revenues will be shared among publishers.
“This will allow readers the option of one simple subscription to a full range of quality content, while offering publishers a new revenue stream to support journalism, supplementing online advertising revenues,” said co-founder Gordon Crovitz. “This way, when a story from a publisher that is not one that a consumer usually reads ‘pops’ in popularity and becomes prominent, that publisher will benefit from all of the interest in it in a way that would not happen if the reader had to have a separate subscription to that paper.”
“We will market this feature aggressively, and proudly, because we believe that quality journalism is something that people understand must be supported,” Brill added. “We’ve all heard some people say that Internet journalism needs to be free because other less-valuable content is free,” Brill continued. “But we believe Americans know that advertising alone can’t support quality journalism – and the truth is that it never has.” The irony is that by using the Internet publishers of newspapers and magazines have dramatically improved the quality and breadth of their journalism with online updates, video reports, blogs, data analyses, and specialised beat coverage. The problem is that, with rare exceptions, they are getting paid nothing for it.”
Third, a key initiative of Journalism Online, Inc. will be to negotiate wholesale licensing and royalty fees with intermediaries such as search engines and other websites that currently base much of their business models on referrals of readers to the original content on newspaper, magazine and online news websites.
“We intend to help establish a more stable relationship between referral intermediaries and those who produce, at great cost, the content that is so important in ensuring that the Internet remains a powerful way for people to access the most important news and information,” explained Crovitz. “Whether it’s traditional news people or online-only journalists and bloggers doing the work, there are real costs associated with the quality journalism that helps create enormous value to search engines and other online services that don’t incur these expenses. Journalism Online, Inc. will enable news publishers to negotiate from a position of strength. Consumers will benefit because they will have greater choice, and search engines and other intermediaries will benefit because they will have access to more journalism.”
Fourth, Journalism Online, Inc. will provide reports to member publishers on which strategies and tactics are achieving the best results in building circulation revenue while maintaining the traffic necessary to support advertising revenue. “Our members will be engaged in a bold new effort to recreate the journalism business model,” Hindery said. “We’ll be sharing reports and metrics from the front lines of that battle and, if asked, even consult with members on how to maximise the value for the journalism they invest in.”
“We’re convinced that publishers are ready to take this step and that the journalists who work with them are anxious for them to do so,” Hindery added. “Both groups now believe that they can and must receive fair value for their online work. Whether it’s the smaller newspapers or online news sites with their unique local content, larger-city publications with their strong regional content, or national publications, all of them will be able finally to realise the value of the unique, original stories their journalists work so hard to produce.”
“We’re also convinced,” Brill added, “that readers, who have been paying billions of dollars a year for print journalism, will continue to support journalists by paying a modest, fair price for original, independent, professional work distributed online. They realise—as we do—that quality journalism is a vital component of a functioning democracy and free market.”
“My experience with The Wall Street Journal taught me that people will pay a reasonable price to access exclusive and essential journalism, whether delivered in print or online,” Crovitz explained. “News publishers, including digital-only operations, need to find ways to attract revenues from readers as well as from advertisers. Viable journalism enterprises need both, and we believe the solution must include state-of-the-art technology, smart pricing options and creative, aggressive marketing based on best practices for monetizing online content and services.”
“We have had initial talks, and in many cases longer follow-up discussions, with most of the major newspaper and magazine publishers, as well as many online journalism enterprises,” Brill said. “They have all been extremely encouraging and expressed strong interest. It’s clear that this is exactly the right time for us to proceed as quickly as possible. It’s equally clear,” he concluded, “that our multi-faceted approach is what publishers are looking for, and that the combination of services we are offering—one password account and payment processing system for multiple publishers, an equally-simple subscription alternative for all content from all members, engagement from a position of strength with intermediary users of original content, and a clearinghouse for information on best practices—presents the best way for consumers and publishers alike to preserve quality journalism.”
Brill, the founder of Court TV, The American Lawyer, and Brill’s Content, most recently founded and was CEO of Clear, the airport biometric fast-pass security card. He also founded the Yale Journalism Initiative.
As publisher of The Wall Street Journal, Crovitz grew WSJ.com to become the largest paid news site on the Web, with more than one million paying subscribers. Crovitz, who founded the news-database Factiva and is a member of the board of directors of ProQuest and an advisor to several early-stage technology and online media companies, has long experience in using digital technologies to help news publishers generate significant and highly profitable revenues from readers and users.
Hindery, a longtime media executive whose positions have included being CEO of cable giants TCI and AT&T Broadband, is managing partner of InterMedia Partners, a media industry private equity firm. He currently sits on the board of advisors of the Columbia University Graduate School of Journalism.
Full bios of the founders are attached.
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Steven Brill, a graduate of Yale College (’72) and Yale Law School (’75), was the CEO of Verified Identity Pass, an airport security fast pass provider, until he stepped away from an active role in the company to lay the groundwork for Journalism Online, Inc. The new company will offer an innovative system for newspaper, magazine and other online publishers to realise revenue from the digital distribution of the original journalism they produce.
For the last eight years, Brill has also taught a seminar for aspiring journalists at Yale College. In 2006, Brill and his wife Cynthia (also Yale College ’72) expanded that seminar by endowing the Yale Journalism Initiative – an array of non-fiction writing activities, career counseling services and supported internships aimed at channeling Yale students into the profession. In 2007, Yale Law School announced that Brill was providing significant support to a grant from the Knight Foundation aimed at establishing a similar journalism program at the Law School, and in 2009 Brill began teaching (with First Amendment attorney Floyd Abrams and New York Times reporter Adam Liptak) a seminar at Yale Law School covering modern media law issues, including how the Internet has affected journalism and the media industry.
Brill worked his way through Yale Law School by writing for New York and Harper’s magazines. When he graduated, he became a legal columnist for Esquire and wrote a best-selling book about the Teamsters Union. In 1978, he founded The American Lawyer magazine, which soon expanded into a national chain of daily and weekly legal newspapers. In 1991, he launched Court TV. He sold the legal publications and Court TV in 1997 and returned to journalism full time, with the founding of Brill’s Content, a magazine about the media which ceased publication in 2001. Brill then researched and wrote “AFTER,” a book focusing on the aftermath of the September 11th attacks, which was published in 2003, while also serving as a Newsweek columnist and a consultant to NBC on the same subject.
Gordon Crovitz is a media executive and advisor to media and technology companies. He is a former publisher of The Wall Street Journal and former executive vice-president of Dow Jones, where he launched the company’s Consumer Media Group. Under his decade-long leadership, the Wall Street Journal Online became the largest paid subscription news site on the web, with more than one million paying subscribers. He founded the online news service Factiva and is a member of the board of directors of the news and information provider ProQuest, both of which provide highly profitable revenues to news publishers.
He is an advisor to several technology-based media companies in California and New York and was named to the “Silicon Alley 100” for 2008. He writes the weekly “Information Age” column in The Wall Street Journal.
While at Dow Jones, he turned around the financial performance of The Wall Street Journal to become strongly profitable after earlier losing money, including strong growth in circulation revenue in print and on the web. He led the acquisition of publicly traded MarketWatch as well as specialist services Private Equity Analyst, VentureOne and VentureWire, London-based news franchise eFinancial News and Frankfurt-based newswire VWD. Earlier in his career at Dow Jones, he served as the corporate vice president for planning and strategy. He was editor and publisher of the Far Eastern Economic Review in Hong Kong and founding editorial page editor of the Wall Street Journal Europe in Brussels.
He is a graduate of the University of Chicago and has law degrees from Oxford University, where he was a Rhodes scholar, and Yale Law School. He and his wife, Minky Worden, live in New York with their two sons.
LEO HINDERY, JR.
Leo Hindery, Jr. is Managing Partner of InterMedia Partners, LP, a New York-based media industry private equity fund manager which he first founded in 1988.
Until October 2004, Mr. Hindery was Chairman (and until May 2004 Chief Executive Officer) of The YES Network, the nation’s largest regional sports network which he founded in the summer of 2001 as the television home of the New York Yankees. From December 1999 until January 2001, Mr. Hindery was Chairman and Chief Executive Officer of GlobalCenter Inc., a major Internet services company, which was then merged into Exodus Communications, Inc. Until November 1999, Mr. Hindery was President and Chief Executive Officer of AT&T Broadband, which was formed out of the $48 billion March 1999 merger of Tele-Communications, Inc. (TCI) into AT&T. Mr. Hindery was elected President of TCI and all of its affiliated companies, then the world’s largest cable television system operator and programming entity, in February 1997, when he was Managing Partner of the original InterMedia Partners.
Mr. Hindery is Chairman of the Smart Globalization Initiative at the New America Foundation and a Member of the Council on Foreign Relations. He is a Trustee of New School University; a Director of the Minority Media & Telecommunications Council, the Paley centre for Media, and Teach for America; and a member of the Board of Visitors of the Columbia School of Journalism.
Mr. Hindery has in the past been recognised as International Cable Executive of the Year, Cable Television Operator of the Year, one of Business Week’s “Top 25 Executives of the Year,” and one of the cable industry’s “25 Most Influential Executives Over the Past 25 Years.” He is the author of “It Takes a CEO: It’s Time to Lead With Integrity” (Free Press, 2005) and “The Biggest Game of All” (Free Press, 2003).