Negotiating a new deal for newspapers
byJun 25th 2009 8:30AM
Watch your back, Amazon (AMZN). If Steve Brill and his partners get their way, you won't be able to strong-arm newspapers into accepting stingy revenue splits any longer.
Brill, the founder of Court TV and American Lawyer, is the prime mover behind Journalism Online, a start-up formed earlier this year to help publishers increase their online revenues by charging readers for digital content. (Former Wall Street Journal publisher Gordon Crovitz and ex-AT&T exec Leo Hindery are the co-founders.)
The company has kept its plans largely under wraps, but offered some hints about the evolution of its thinking at a briefing with reporters yesterday. Slide no. 10 of the presentation was titled "Restoring a Balance of Power":
We will negotiate wholesale licensing and royalty fees with intermediaries, such as electronic readers, search engines and other websites that base much of their business models on the original content of newspaper, magazine, and online news websites. (Emphasis mine.)
The bit about electronic readers was absent from the presentation Brill gave at a hush-hush gathering of newspaper executives in Chicago last month. It's presumably a reference to the reported 70 percent of revenues that Amazon gets from subscriptions to newspapers on the Kindle, its e-reader.
Yesterday's briefing also broke down the projected benefits that a New York Times-sized newspaper and an Economist-sized weekly magazine would derive from using Journalism Online to monetize their content. The newspaper would see bottom-line improvement of $29.8 million in the first year and $82.2 million in the second year; the magazine would earn an extra $6.6 million in year one and $23.2 million in year two. According to the presentation, publishers employing a hybrid paid/free (ie. "freemium") model for their websites would maintain 88 percent of their current page views and 91 percent of their ad revenue; they'd also be able to charge premium rates for advertising directed at those readers who pay to subscribe.