The partnership, which comes a year after a similar deal between Flipboard and the New York Times, will grant full access to FT subscribers while casual visitors will be able to read a smattering of FT blog posts and cultural stories.

Rob Grimshaw, managing director of the FT.com, said by phone that the deal will involve the FT and Flipboard sharing advertising revenue, but would not disclose what the exact revenue split is. In the past, the ad splits have been a source of contention for some publishers, including Condé Nast, which pulled back its advertisements from titles like New Yorker and Wired. (A Flipboard spokesperson said the company has an “excellent relationship” with Conde and is partnering on ads for six other titles).

Grimshaw also said that the FT is exploring selling subscriptions through Flipboard, and would be willing to share some of the proceeds with the platform. This is significant because the FT made waves by leaving iTunes in part due to the 30 percent commission (or “vig,” as the Brits call it) that Apple takes from every publisher.

So why is the FT willing to partner up with Flipboard so soon after leaving Apple? Grimshaw says the difference lies in how the two platforms treat customer relationships.

“The issue is not so much a percentage, it’s the relationship between publisher and audience. Paying a 30 percent finder’s fee is okay. Paying 30 percent in perpetuity and not knowing who the customer is not okay.”

The Flipboard partnership also reflects the fact that the FT and other publishers are keen to get their stories in as many places as possible at a time when readers are consuming more and more content on mobile. As for the future role of Flipboard, which some describe as a “giant iceberg” in the way of publishers, Grimshaw had this to say:

“I think the really interesting aspect to the platform is the way they’re giving readers the ability to create a bespoke user experience. I personally think this is going to be a strong strand in publishing and consumption of news in the digital space.”

Correction: This article was updated at 2:40pm to state that Conde Nast titles had pulled ads from certain titles; Conde did not, as previously stated, break off the relationship.

On Wednesday, the FT rolled out a new version of its iPad offering that lets readers toggle between a live version of the website and a static view that resembles the morning newspaper. The new “app” also allows readers to clip articles to read later and features a personalized reading history and financial portfolio.

“It’s a much superior second-generation web app based on the latest HMTL5 implementation out there,” said FT.com’s Managing Director, Rob Grimshaw, in a phone interview. He added that it’s only on the iPad for now, but will soon be available on other devices like the iPhone, the Chromebook and Android devices.

While the new version of the web app is nice enough aesthetically (you can see screenshots at right), its real significance remains on a symbolic level. In deciding to bolt Apple altogether last year, the FT took up a vanguard position in the web vs. app debate – standing for the position that improvements in HTML5 means native apps have become unnecessary. Other premium publishers, such as the New York Times and the Wall Street Journal, have so far resisted the FT’s “all-in on web” approach and continue to design apps specifically for Apple and Android devices, and sell them through app stores. (We’ll be digging into the web vs. app debate with three influential publishers at paidContent Live later this month.)

The FT’s decision to quit the app stores meant it would no longer have to fork out a 30% commission to the likes of Apple, but also raised a risk that readers would fail to find the publisher on smartphones and tablets. Grimshaw says this”discoverability” concern is not an issue for major brands, and that the FT’s tablet traffic has actually risen 70% since leaving iTunes.

“If you are a big brand, why not use that? We don’t need Apple or anyone else to say what the FT is,” said Grimshaw.

He did acknowledge that collecting payments from mobile devices are still a challenge for publishers; unlike iTunes, which already has a user’s credit card on file, the web doesn’t offer a quick and easy way for people to pay. Grimshaw added, though, that a solution is coming soon.

“Players like Amazon are opening their payment plan more,” he said. “There’s Amazon, PayPal and one or two others. It’s problem that’s about to get solved.”

For now, Grimshaw says that 15-20 percent of new digital subscriptions are coming via a mobile device and that he expects that number to rise. Like its sister publication, The Economist, the FT has unbundled digital access from its print subscriptions and is offering a variety of price points: a premium online subscription is $8.49 a week while a standard one is $6.25 (Grimshaw says a third of subscribers buy premium); a print and digital subscription is $11.49 while print-only is $7.25.

The FT has become something of a poster child for the idea that news that a bright future in the digital era. It recently announced that it had “crossed over” with its audience, amassing more digital subscribers than print ones. But, as we’ve noted before, the Financial Times‘ distinct audience and product make it more of an outlier than a model that lots of other news publications can replicate.

The piece in question is by media analyst Ken Doctor who notes the FT is the first newspaper to have “crossed over” by amassing more digital subscribers than print ones. As of February, the respective numbers were  316,000 to 286,000; the feat fulfills the FT’s prediction at paidContent 2012 that the cross-over would occur in 2013. (You’ll be able to hear more digital-media industry predictions at paidContent Live on April 17).

As Doctor explains, the accomplishment results from shrewd business decisions such as persuading companies to buy individual subscriptions for their employees: “Rather than leaving B2B customer sales relationships to aggregators like Lexis Nexis and News Corp.’s Factiva, the FT began converting corporate FT buyers to direct relationships.”

Doctor acknowledges that daily newspapers don’t have the same corporate opportunities, but says that they can follow the FT and Politico in creating a valuable niche: “If dailies’ news and information are as critical locally as the FT’s is to a global business clientele, why not test a new model? .. [Politico] Pro works several niches. Mr. and Ms. Publishers, what’s your niche?”

If a publisher can come to occupy such a niche, they may enjoy the same virtuous cycle as the FT where margins rise with digital revenue while distribution costs stay nearly fixed.

But it’s hard to see how the FT case study can apply to anyone other than the FT. Recall that even the New York Times is struggling to “cross over;” its digital revenues are rising but, overall, the paper’s overall operations are shrinking. The Wall Street Journal, with a similar global business niche, may be the only other publisher with a hope of crossing over this year.

Doctor also cites the FT’s 30-person data and analytics team as integral to the company’s digital transition. He points out that such teams can supply critical intelligence about customer targeting and revenue optimization. But do other publications, which can no longer afford copy editors, have the means to hire dozens of data scientists? Probably not.

How many other newspaper and magazine brands can you name that even stand a chance of making this crossover?

As Arment explains in his blog post about the change, the need to open up his magazine’s content more for sharing was brought home by the response to a recent piece he published by Jamelle Bouie on the topic of race and technology writing. As with most of the essays in The Magazine, the writer was free to publish on his own blog as well, which he did — and while The Magazine’s version got plenty of readers, the response to Bouie’s piece after it appeared on his own site was substantially larger:

“We allow authors to republish their articles on their own sites (or anywhere else) just 30 days after we publish them. Bouie did exactly that, as many of our authors have. Only then did his article explode into the huge discussion I suspected may result from it — and The Magazine wasn’t a part of it.”

The magazine was cut off from the social web

The Magazine wasn’t part of this broader web and social-media discussion because Arment initially showed only a short excerpt at the website — as well as a download link for the iOS app — when readers shared a story. As the publisher points out, since his magazine doesn’t rely on advertising at all but gets its revenue entirely from subscriptions, a web presence with full content seemed like a fairly low priority, if not an outright negative. Arment calls this “the biggest mistake I’ve made with The Magazine to date.”

“You’d share a link, and everyone would just see the truncated teaser. Some of them would subscribe and see the rest, but most would get turned off by the truncation and just abandon the effort, as we web readers tend to do. Most people with big followings would quickly realize this and, understandably, avoid linking to our articles.”

This is similar to the problem (one of many) that News Corp.’s iPad-only magazine The Daily ran into when it launched: it didn’t even have a website, per se, so initially users who followed a shared link from a subscriber would get a static page. In the early days of the app, in fact, readers were actually sent to an image of the page from the app — something that was impossible to click on or otherwise interact with. The sharing experience was so broken that many likely never bothered.

Where should the freemium line be drawn?

Arment’s problem is a microcosm of the tension that publishers everywhere are experiencing, from the New York Times to the smallest local paper. While some media companies — including News Corp. with some its British papers — have chosen to go with what are called “hard” paywalls, where virtually no content is provided to readers for free, almost everyone else is trying to find a happy medium between that and no subscription barrier or paywall at all.

The NYT started by providing 20 free articles, and giving anyone who came in via a link on social media a free view, a so-called “porous” paywall approach many other newspapers have adopted. But the paper recently cut the number of free articles in half. Andrew Sullivan, meanwhile — who recently launched a standalone blog funded solely by subscriptions — has made virtually of his content free via RSS, but imposed a click-through wall for readers on the site.

The issue for everyone from Sullivan (who will be appearing at our paidContent Live conference in New York in April) and Arment to the New York Times is how much they need to be part of the social web vs. how much they plan to rely on reader subscriptions. A hard paywall essentially means a publication will be supported solely by existing readers, plus a few new sign-ups here and there — but newer or smaller publishers need the word-of-mouth that sharing brings in order to build awareness (and older brands might as well).

As traditional advertising continues to decline in value — something that has taken both the New York Times and the Financial Times to the point where subscription revenue now exceeds advertising revenue for the first time — more and more publishers are going to have to confront this tension between paying and sharing. And in all likelihood, there is no single right answer.

Post and thumbnail images courtesy of Flickr user Giuseppe Bognanni and Shutterstock / Daniilantiq

• As previously reported, Financial Times digital subscriptions overtook print subscriptions for the first time in 2012. The FT now has “almost 316,000″ digital subscribers, compared to about 286,000 print subs, and “mobile devices now account for 30% of FT.com traffic and 15% of new subscriptions.” The company said it expects advertising to remain weak, “with profits reflecting further actions to accelerate the shift from print to digital.” Pearson CEO John Fallon denied rumors that the company is selling off the FT.
• The Economist isn’t nearly as far along in the digital transition: Total print and digital circulation was 1.67 million, “of which 150,000 customers bought digital-only copies.”
• At Penguin, ebooks accounted for 17 percent of global book revenues, up from 12 percent in 2011, and “almost 30 percent” in the U.S., compared to 20 percent in 2011. Penguin’s total revenues worldwide were £1.053 billion (USD $1.59 billion), up 1 percent over the previous year. Global app sales were up by 200 percent, but the company didn’t break out app revenues.

As news guru Ken Doctor notes in a Nieman blog post, the LA Times and Chicago Tribune are set to come on the block in 2013. Meanwhile, there are reliable rumors that the venerable Financial Times and part of The Economist will be shopped early next year too.

While news of the sales have been around for a while, they are made more interesting by Doctor’s prediction that regulators could relax cross-ownership rules that limit how many TV and newspaper properties a media titan can own in the same market. Here’s the key upshot from Doctor:

Today, though, most of the reporting power, much of the brand power, and the political power still resides in big companies and their leadership. We may well get our strongest display of that early in 2013: In Washington, the FCC cross-ownership debate may move to center stage in January.

It’s a pretty safe bet that the coming newspaper sales are beyond the reach of people not named Buffett, Bloomberg or Murdoch. More interesting will be five years from now — to see if the titles are still around and if, by then, companies like Twitter, Google or Facebook have media mogul aspirations of their own.

(Image by Everett Collection via Shutterstock)

In a well-sourced story on Sunday, the New York Times reported that the venerable U.K. publication will be on the block in 2013 and that Bloomberg is already kicking the tires. According to the report, the mayor is passionate about the FT’s crisp editorial style and carries the orange-tinted paper around with him all day (a habit shared by tycoon Warren Buffett, who has also picked up a passion for newspapers). The report says Bloomberg has become well-versed in the FT’s business operations.

Bloomberg owns 88 percent of financial services giant Bloomberg LP, and there’s no question he could afford to buy the FT. The harder question is whether he should.

On the surface, the deal is attractive. The FT is a prestigious operation with a healthy digital presence that also has a half-stake in The Economist. This top shelf editorial content, along with the FT’s 600,000 subscribers (half of them digital), would be an attractive complement to Bloomberg LP’s existing reporting.

But there is a snag. While Bloomberg LP has news operations, it is at heart a data company that sells $20,000 subscriptions to bankers and traders. The company is also famous for an insular corporate culture and for sticking to its knitting. Taking on a free-wheeling global news brand, even one as prestigious as the FT, could prove to be a dangerous distraction.

For proof, look at Thomson Reuters, another large data company (and a potential suitor for the FT). As the Wall Street Journal reported this month, the Thomson family’s decision to acquire Reuters in 2008 has produced ongoing cultural clashes that have been hard to overcome. Meanwhile, the merger has coincided with a depressed share price and a loss of market share for Thomson’s valuable data businesses.

That doesn’t mean that Bloomberg shouldn’t buy the FT. But it’s worth noting that being a press baron isn’t always what it’s cracked up to be.

As Adrienne LaFrance describes it in a post at the Nieman Journalism Lab, and as Marshall has described it in a series of posts on the site, the new membership program that is launching later this month is called TPM Prime — a nod to Amazon’s Prime, which gives members free shipping and other benefits — and will cost readers $50 per year, or a monthly charge that the site has not yet specified (there is also an innovative option that allows readers to sponsor memberships for others).

Members pay for a deeper relationship, not content

And what do members get for signing up? There are content-related benefits, such as preferential access to a line of TPM Singles — mini e-books that the site plans to publish on a variety of topics — and the signup page mentions future possibilities including discounts on other publications that Talking Points Memo might cut a deal with. But the main benefit of membership is the opportunity to get more involved with the site in other ways, including member-only discussion forums, as well as exclusive live chats and interviews with newsmakers and political influencers.

What’s interesting is how Marshall describes the rationale behind the membership layer, and the reasons why he chose to go that route instead of just putting up a paywall — including the fact that he was uncomfortable with how much the site relied on advertising, instead of using a model that was based on creating a relationship with its readers. As he put it to LaFrance:

“What I noticed is that we didn’t have really strong internal financial incentives focused on our core readers… I didn’t like that we were growing in a way where we didn’t have really clear parts of the bottom line that were tied to servicing that community.”

On the surface at least, this rationale seems like it could be used to defend a paywall just as easily as a membership layer. After all, a paywall or strict subscription approach like that taken by the Financial Times or the NYT also relies on readers for support — to the point where both newspapers have crossed (or are close to crossing) the line where they get more revenue from subscriptions than they do from advertising. Doesn’t that mean paywalled newspapers or media outlets are also tied to servicing their reader community, just like Talking Points Memo?

Membership is special in a way that paywalls are not

In a sense, that’s true. But I would argue there is a crucial difference: a membership layer treats readers as though they are special and gives them added benefits in addition to the regular free news content, while a paywall or traditional subscription simply charges everyone the same amount for the same content. One feels like a duty or an annoyance, and the other feels more like something unique that only those who are really committed to a topic or a site have access to — like a velvet rope instead of a wall. As I’ve written before, I think the idea of offering membership with special benefits, or access to additional content and experiences (such as live events, which The Atlantic and others have built into their model) is a much more appealing — and in many cases, potentially more lucrative — approach than a wall or pay-fence.

Former Washington Post managing editor Raju Narisetti, now at the Wall Street Journal, has talked about what he and author Jeff Jarvis refer to as a “reverse paywall,” where readers get preferential access to content and related offerings. And these kinds of efforts can do more than just generate revenue: by allowing a site like Talking Points Memo to deepen its relationship with readers, it allows Marshall to get to know those readers better, and that knowledge can become a powerful tool in its own right when it comes to advertising and other more traditional revenue-generation methods.

The approach that Marshall is taking is very similar to one that Techdirt, the technology-analysis site run by Mike Masnick, recently expanded — giving readers who join the club access to a host of special benefits including a reader-only discussion forum. And the Talking Points Memo founder said the early response has been encouraging: more than 1,000 people signed up in just the first 10 hours. That may be a drop in the bucket financially-speaking, but it is an impressive sign of reader engagement for a web-only political blog, and it will be interesting to see how TPM builds on that early support.

Post and thumbnail images courtesy of Flickr users Christian Scholz and Giuseppe Bognanni

As my paidContent colleague Robert Andrews reported recently, the Financial Times has seen digital subscriptions soar in the past several years — the number of paying subscribers has tripled since 2009, and recently crossed the 300,000 mark after growing by 31 percent last year. That means the number of digital subscribers is greater than the number who subscribe to the print product (a shift FT managing director Rob Grimshaw forecast at paidContent 2012 in May). And while parent Pearson PLC doesn’t break out ad revenue numbers, Grimshaw has said subscription revenue will surpass ad revenue sometime this year.

The New York Times Co. crossed that point in its most recent financial quarter: subscription revenue for the NYT and the other newspapers owned by the company — the Boston Globe and the International Herald-Tribune — totaled $233 million, compared with advertising revenue of $220 million. The metered paywall plan that the New York Times introduced last year likely provided the bulk of that growth, since it now has over 500,000 registered subscribers, although the NYT has also seen a boost in print subscriptions because digital plans are bundled with print, and it has increased the pricing of its print product as well.

Subscribers dominate because advertisers are fleeing

Crossing that threshold is a triumph of sorts, since it means that getting subscribers to pay — something that was fairly controversial when the New York Times started doing it — can actually pay off to a certain extent. The question of whether paywalls would work and/or were a smart decision for newspapers to make has probably been one of the most contentious debates in the industry over the past couple of years, and something I have written about more than a few times, both from a professional and a personal point of view. The NYT’s success has also (rightly or wrongly) triggered a wave of copycat paywalls at dozens of newspapers throughout the U.S.

But as online-journalism veteran Steve Yelvington pointed out on Twitter recently, there are two ways of getting to the kind of crossover point that the New York Times and the Financial Times have reached: one is to increase your subscription revenue, and the other is to decrease your advertising revenue, and both newspapers have certainly done their share of the latter as well as the former. In the NYT’s case in particular, print advertising revenue has been dropping significantly in every quarter — and not only has digital advertising revenue not made up the shortfall, but it has actually been falling as well.

When trumpeting a 50-50 reader/ad revenue balance, remember there are 2 ways to achieve it, and they're not equally desirable.

—
Steve Yelvington (@yelvington) August 02, 2012

So what happens when your subscribers or readers are funding more of your business than advertisers are? Some argue that this shift is a virtuous one — in the sense that it forces newspapers or publishers to think more about what their actual audience wants, rather than what will please their advertisers. According to this argument, the Faustian bargain that the newspaper industry formed with the ad industry has done at least as much harm as it has good, since it has funded important elements such as investigative journalism, but also driven newspapers to produce all kinds of content designed primarily to get ads or clicks.

Dalton Caldwell, the entrepreneur who is trying to build a subscriber-funded alternative to Twitter, described the effect that catering to advertisers has had on social networks like Twitter and Facebook in a recent post about his project, but he might as well have been talking about the news business:

“All of these services are essentially in the same business: vying for the opportunity to sell you/your clickstream to advertisers. Why isn’t there an opportunity to pay money to get an ad-free feed from a company where the product is something you pay for, not, well, you.”

Being reader-funded could mean being a lot smaller

Caldwell’s concerns about the impact of advertising on such services highlight the fact that networks like Twitter and Facebook are gobbling up more of the digital advertising market (which brings its own potential for conflict, as Twitter has found out with the Olympics) and the result is that newspapers and other traditional publishers are left with less. And while prominent brands like the New York Times or those with targeted markets like the FT might be able to make the shift to subscriptions, many smaller newspapers simply won’t be able to make that transition, because they won’t have enough subscribers. So what happens to them?

As Clay Shirky pointed out in an essay about the Times of London paywall, catering more to readers rather than advertisers also carries its own risks. For one thing, there is a very real risk — not just for the NYT or Financial Times, but even more so for smaller newspapers — that relying on subscription revenue will result in a much smaller number of readers and also a much smaller business overall. What will that mean for the journalism that such newspapers produce? What happens to the public impact and social benefits that newspapers have always argued they bring to the table? Do newspapers just become a new variation on the controlled-circulation newsletter?

Outlets like the NYT and the Wall Street Journal will likely continue to offer a kind of “freemium” product for the foreseeable future, with free web content that is used as a loss leader to entice readers to subscribe. And no doubt they will always pull some important stories outside their paywall when they feel the societal value of those stories makes it worthwhile. But as more and more of their revenue comes from reader subscriptions, it seems obvious that more and more of their content will wind up being delivered only to those paying readers.

Is that a positive thing for journalism, or for society in general? I honestly don’t know, although I suspect it is not. But if print advertising continues its decline — and in its latest results, the Washington Post (which has said it will likely never have a paywall) said print revenue fell by more than 13 percent over the previous year — we are going to start seeing the effects of this transition ripple through the industry, and the impact on how mainstream news is produced and how it is consumed (and by whom) could potentially be far-reaching.

Post and thumbnail images courtesy of Flickr user Giuseppe Bognanni

NYT foreign editor Joseph Kahn tells Media Decoder that “about two-thirds of the content [will] be translated from Times articles and one-third [will] be written by Chinese editors and local freelance journalists.”

The site’s servers will operate outside China and Kahn says “we’re not tailoring it to the demands of the Chinese government, so we’re not operating like a Chinese media company.” The Wall Street Journal and Financial Times already operate Chinese-language sites, and at times the Chinese government has blocked them. The BBC’s Chinese-language site has been consistently blocked.

Tech In Asia was the first blog to discover the account that the NYT created on Chinese microblogging service Sina Weibo, in honor of cn.nytimes.com’s launch. The paper’s first message was “The New York Times Chinese Edition begins operation today, and tomorrow will begin releasing news. We welcome our new friends and followers and look forward to engaging with you.” It now has 10,740 followers.