“What we’re seeing is a tide sweeping through the industry of publishers lowering their meters and moving to prices that reflect the true value of their content,” Press+ cofounder Gordon Crovitz said in a statement.

Data from the company’s publishers shows that the average price of a monthly subscription was $9.26 in January 2013 — up five percent from July 2012 and 40 percent from July 2011:

In addition, Press+ says its clients are lowering their meters. On average, they offer 10 free articles per month, down from 11 last September and 13 at the beginning of 2012.

It’s worth noting that Press+ works with a lot of large newspaper companies. Pricing is likely to vary at smaller organizations and on blogs like Andrew Sullivan’s Dish (which runs its metered paywall through TinyPass), but it will be interesting to watch whether the trend of upward pricing and fewer free articles occurs across sites.

Photo courtesy of Shutterstock / Voronin76 

Tinypass, which signed up its first four publishers in December 2011 and says it now works with over 250 publishers (through a revenue share — see below), had tested the metering option with the news site Chicago Phoenix and is now making it available to everyone. The metering function is built into Tinypass’s WordPress and Drupal plugins and its APIs, and publishers can choose to meter by number of articles retrieved or by time frame (say, unlimited content for 24 hours).

Publishers who want to add a meter can choose from two options: client-side, which works by adding a cookie to a user’s browser, or server-side, which a user can’t circumvent by clearing cookies. Publishers can also choose whether they want to include links from social networks in a metered article limit, or whether they want those to be free views.

Tinypass makes money through a revenue share with publishers — taking a cut that ranges from 2 percent to 10 percent depending on volume. (The publisher’s share increases as volume increases.) That’s one way the company differentiates itself from Steve Brill and Gordon Crovitz’s Press+ (now owned by RR Donnelley), which charges publishers a setup fee. Also, Tinypass COO David Restrepo told me, Press+ is “very focused on newspapers and on bundling the physical paper with digital editions,” while Tinypass is “digital-native, digital-first and focused on media” like MP3s and PDFs, not just newspapers.

Tinypass was founded in January 2011 as part of Hudson Media Ventures and has raised $500,000 $1,000,000 in angel funding.

“There are a lot of existing siloed publications, like Aviation Weekly and cruise industry magazines,” Ali says. “There are frequent-flyer blogs and things like that. But there’s nothing in the travel industry that brings it all together in a cohesive, information-led effort. We are in a good position to build that.” His cofounder is Jason Clampet, formerly the senior online editor at Frommers.

Ali founded paidContent in 2002, sold the company to its pre-GigaOM owner, the Guardian Media Group, in 2008. He left paidContent in 2010.

Ali describes Skift as “a new breed of media company” that appeals both to industry professionals and consumers. ( The closest parallel, he says, is Politico, which targets Washington insiders as well as a large base of consumers interested in politics.

At launch, Skift is focused on news for the travel industry, with revenues coming from advertising. It contains four types of content: Software-aggregated, human-curated, licensed (from sources like the AP and Reuters) and original reporting. “That’s the fastest way to scale,” Ali says. The site includes categories like “Insights,” with news on mergers, acquisitions and travel startups, and “Rooms,” with info on hotels, rentals and shares.

As it expands, Skift will add news content for business travelers and will launch subscription-based data, services and other tools. “We feel the way to build a brand is through the media part, and the way to build a business is through the data,” Ali says. “We hope to scale on revenues with data, not with ads.” SkiftData, for example, will collect publicly available travel data like local tourism statistics and airport departures and arrivals. “All of that data is publicly available, sitting in government depositories and mostly in Excel or Word files,” Ali says. “We’ll be pulling all that data, normalizing, cleaning it and publishing it in a user-friendly fashion.”

Ali funded the site himself until its launch and has now raised a $500,000 angel round from investors like former MySpace president Jason Hirschhorn, former Thomson Reuters president of media Chris Ahearn, former Wall Street Journal publisher Gordon Crovitz and Associated Content founder Luke Beatty.

In the nearly seven months since Janet Robinson was forced out, the New York Times Co. has either had an interim CEO in Arthur Sulzberger Jr. or no CEO, depending on your point of view. In any case, Sulzberger was never meant to continue as chairman and CEO long term, and a search has been underway for some time — but how it will end is still unclear. The latest potential candidate is departing BBC Director-General Mark Thompson, reported by The Guardian to be “considering” the job along with other possibilities for his post-Beeb career.

Whether the New York Times Co. board is considering Thompson or actually has offered the job is a different question — one that got a “no comment” from NYTCo PR (it’s possible that the talks went public in part to push a decision from the Times). Although this is a standard response when such things come up, there could be some meat to this particular rumor: we are told it’s a job he would like, since his wife is from the U.S. and he has talked with friends about moving here for his next gig. And he could be a “get” for the NYT board, with his biggest draw being the BBC’s track record of digital innovation during his tenure.

Meanwhile, sources have brushed off speculation about most of the other candidates who have been touted in the press at various times, including Gordon Crovitz — the former Wall Street Journal publisher and co-founder/co-CEO of paywall operator Press+ — who speaks fluent newspaper, digital and premium content.

Then again, newspaper fluency or even experience is not a prerequisite for this job. The company has experienced newspaper execs in place — one of them, Scott Heekin-Canedy, president and GM of the NYT, is considered to be the leading candidate if the job goes to an internal candidate. (Others have reported that NYTCo Vice-Chairman Michael Golden, Sulzberger’s cousin, has expressed interest in the job. But while the family has the voting power to push it through, we’re told Golden has been explicit about not wanting it.)

What does matter is digital fluency and a record of pushing innovation across platforms. Where does Thompson fit on that? A former BBC colleague with direct experience on that front tells paidContent:

He is formidably clever — probably the cleverest guy I have ever worked with; very strong on strategy, gets digital totally – but from 30,000 feet. [He] hasnt ever really had a hands-on digital role but I think he could work as CEO.

Along those lines. Thompson hasn’t been close to online products; that was left to those who run or ran the future media and technology groups. iPlayer, the on-demand digital video product, pre-dated him. Innovation at the BBC comes from through the organization, usually not the top, but Thompson gets credit for getting a lot of ideas through. His tenure has been marked by downsizing in order to avoid a license-fee cut, and then again when the cut was delivered anyway. “Delivering Quality First” included a 25 percent-budget cut to online activities with an eye toward focusing on “what the BBC does best”, not all of which actually occurred.

And what about being the CEO of a public company in the U.S. versus the publicly funded BBC? That former colleague says, “He would like to have another substantial role and would like to find something that would surprise people. His wife is American — and the news and media challenges would really appeal to him.” But Thompson’s entire career has been in public service broadcasting at the BBC and as head of Channel 4 (a commercial channel but still public service in UK terms): “He ran Channel 4 here — a small commercial company — and has grown the BBC’s commercial revenues in his 8 years. But fundamentally he is a public service broadcast guy.”

Even so, Thompson has pushed to expand the BBC’s commercial activities in TV, online and mobile — and particularly in the U.S. by growing BBC America, BBC World News, the U.S.-facing news show on that channel, syndication of BBC shows through online platforms and more. Much of this comes through BBC Worldwide, a commercial division of the BBC.

He also knows what it is like to lead an iconic brand, and in an often-glaring spotlight. In the U.S., he would have to face investors but he wouldn’t have the same kind of political scrutiny as a manager or the pressure that comes from being funded publicly. That funding can be a boon but it also has kept the BBC out of certain areas or forced shut downs to avoid competing with for-profit media companies. That wouldn’t be an issue at the New York Times Co., which needs all the commercial opportunity — and delivery — it can get.

As for timing, while Robinson’s surprise departure took place last December, the board only started the search process formally in March by hiring Spencer Stuart. We can’t report an announcement is imminent but glimmers of daylight are showing in the tunnel. Thompson’s BBC term is over at the end of this year; if he turns out to be the answer, that interim title for Sulzberger could stick a lot longer than expected.

New board members

The board did have one announcement after its regularly scheduled meeting Thursday. The new CEO, whoever it may be, will have some high-profile digital advisors as Joi Ito and Brian McAndrews join the board.

Ito, an Internet pioneer, entrpreneur and early investor in Twitter and Kickstarter, among others, has been director of the MIT Media Lab since last September. McAndrews is a partner at Madrona Venture Group; he joined Microsoft as SVP, advertiser and publisher solutions after it acquired aQuantive, Inc., where he was CEO.

Here’s why the deal makes a lot more sense than it appears:

A “three corner pool shot”

This week’s deal makes Buffett’s company, Berkshire Hathaway, the proud owner of the Richmond Times-Dispatch and 62 other daily and weekly papers in Virginia and the South. Most of the titles, like The Goochland Gazette and The Bland County Messenger, have small circulations in the range of 5,000 – 25,000.

The Oracle himself explained the deal this way:

“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper. The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”

Buffett can wax sentimental all he wants but he is still the same hard-nosed businessman who was tough enough to stick it to Goldman Sachs. Like any of his deals, this is all about money.

“This deal is like a three corner pool shot that accomplishes several things at once,” says Ken Doctor, a media analyst.

Doctor notes that the deal includes an enormous loan and credit line to the newspapers’ former owner, Media General, in which Berkshire Hathaway will earn 10.5 percent. Buffett’s company also obtained stock warrants that will likely pay out handsomely as Media General works on becoming a full-time broadcasting company.

But what of the newspapers themselves? Doctor says that Buffett got them for a steal, noting that they sold on average for about $2 million a pop — or the price of an expensive home in each of the towns where they’re printed.

Small town papers make money

The story of the catastrophic decline in newspapers has been driven by metropolitan papers like the Washington Post  (on whose board Buffett sat for years) where ad rates plummeted while readers embraced digital alternatives.

The experience of small towns and counties has been different. In these places, a lack of print and online competition has allowed newspapers to hold onto some of their traditional monopoly power.

“In these communities, the local paper is the sole source of everyday news — from high school sports, local events or obituaries,” says Gordon Crovitz, former publisher of the Wall Street Journal and founder of digital subscription service, Press+.

This lack of competition has not only meant a slower decline in their print operations, but also a longer time period to make the transition to digital. While some metropolitan papers have rushed in a panic from one ill-advised paywall strategy to another in an effort to stay alive, smaller papers have had the luxury of a wait-and-see approach. In the meantime, digital subscription strategies have become more refined.

Crovitz claims that 70 publications have recently jettisoned the “free online” offer for print subscribers in favor of charging 25 percent and then letting readers opt-out of the digital part of the package.  He says that 90 percent of the customers elected to keep paying more.

What all this means for Buffett is that he can treat his newspaper fleet as a longer term investment that will pay off in three to five years. Most of the papers will likely deliver a modest profit from print while Berkshire Hathaway coaxes them into a digital strategy in which a growing share of revenue comes from subscription rather than ads (Doctor predicts subscription-based revenue will soon rise from 30 to 50 percent). The company can then cut away many of the printing, distribution and other legacy costs associated with newspapers.

Buffett being Buffett

Going into the newspaper business is a strange proposition for most investors but not for Buffett. This week’s purchase is consistent with a number of his investment mantras, including sticking to what he knows.

Buffett knows this business well from owning the Buffalo News and sitting on the board of the Washington Post, but also has more personal experience in the industry such as using $5000 from his savings as a paper-boy to launch Berkshire Hathaway. He also claims to read five newspapers a day.

Buffett also has a history of squeezing value out of traditional or troubled industries that scare off many investors. In recent years, for instance, he has bet big on airlines, autos and railroads.

There is also the question of scaling. According to Doctor, Berkshire Hathaway has long excelled at finding large scale efficiencies and the company now has enough newspapers (it also has six Nebraska papers in addition to the Omaha World-Herald) to make that happen.

Finally — and this is only speculation — some might wonder if Buffett, who has been close to the Obama Administration, might enjoy owning dozens of media outlets in swing states Virginia and North Carolina in an election year.

Join us for paidContent 2012: At The Crossroads on May 23 in NYC to discuss these issues and lots more.

– All 285 of Press+’s active affiliates have opted for meters over full paywalls. “We now have the data to show that meters are better than old-fashioned paywalls, so it’s become easy to steer publishers to the meter,” Crovitz tells paidContent.The pitch for meter over wall? “With meters, publishers keep all their online ad revenue and readership whereas of course with paywalls there’s a big decline in both.”

– The average Press+ affiliate meter runs 14 page views a month, with the average dropping as publishers stabilize the impact on advertising and traffic. The higher meter limits tend to affect less than 10 percent of users. The lower the meter, the faster subscription revenue grows, according to Crovitz. So far, the highest conversion rates come when a user is offered the reminder to subscribe just before the free access ends.

– New York Times print subs get full access to digital as a value-add but 90 percent of Press+ affiliates are charging print subscribers extra, on average about $2 a month compared to an average of $6.50 a month for digital-only access. So far, according to Press+, print subs aren’t very price sensitive, leading publishers to experiment with higher prices. Some affiliates are trying what Press+ calls an opt-out bundle, combining print and digital in a higher-priced bundle that ups the subscription price — then letting print subs opt out of digital. Press+ claims papers where digital is included for a 10 percent price increase over print, publishers are seeing 90 percent adoption of digital.

Who are these publishers? About 50 companies are represented, including MediaNews, Lee Enterprises (NYSE: LEE), McClatchy (NYSE: MNI), Tribune, GateHouse, and MediaGeneral, along with indies like the Chicago Sun-Times and Omaha World-Herald. The other 30 affiliates include The Onion, non-U.S. papers, magazines, online only.

Of the 285 who have launched so far, 255 are U.S. based. Crovitz says another 185 U.S. papers are set to launch in coming months. They don’t track circulation but Brill estimates about 40 percent of their current affiliates are smaller papers with 25,000 or less print circ.

Does this fill the gap left by the Pew Research Center’s PEJ study? Not really — Press+ is a business offering selective data, not an independent research unit, and it leave individual results and identifiable data to the publishers. But it’s a business with the ability to aggregate increasingly meaningful results from a substantial number of publishers, which in turn can help its own clients and those who choose to go a different way make informed decisions.

I’d like to see more details, like how the income that is being generated fits in with the digital advertising and other non-traditional efforts PEJ addressed in what it says is the first of an ongoing series that will explore digital content revenue eventually. Are the papers that have added meters not only increasing digital revenue but stemming the effective loss PEJ found of $7 print dollars for every digital buck they bring in? How many subscribers are there, how many re-up and how does their engagement with the site change once they’re paying for access? How many publishers will look at the overall results and decide it isn’t worth continuing or will double down? (If you’re a publisher with a meter ticking or another model in play, let’s talk. I’m staci AT paidcontent.org.)

Steve Brill was the first person I heard from Monday after I wrote of my dismay at the lack of paid content data from PEJ. A year ago, when it sold to RR Donnelley (NSDQ: RRD) for what we now know was $19.6 million in cash, Press+ had about 20 affiliate launches. It now has 285 with more coming, likely one reason co-CEOs Brill and Crovitz received $15.3 million from RR Donnelley in their first-year earnout.

“That projection keeps getting higher because there is now an avalanche,” Brill wrote me. “A year ago that number was about 20. Inertia has flipped and become a herd.”

The deal structure revealed in this week’s 10-K filing shows a payment of $19.6 million (plus $400,000 in cash that came with the company) and a contingent payout — what we call an earnout — of $15.3 million “based on achieving certain volume milestones for Journalism Online’s business following its acquisition by the Company.” The language describes the “prior owners” but only co-presidents Brill and Crovitz went to Donnelley and would be eligible for the additional pay.

That puts the total deal value at $35 million — for now. It might stay capped but my understanding is the deal was structured in a way that would allow for additional pay under certain circumstances that have not been spelled out publicly and could reach the higher end of the originally reported range. While Brill and Crovitz were out publicly selling the concept of Journalism Online and e-commerce product Press+ as possible salvation for newspapers and online news outlets, Chicago-based Donnelley is very quiet about goals and process.

Journalism Online, founded in April 2009, went from startup to exit in just under two years. This past year it went from 20 affiliate launches with various business models ranging from metered pay to donation to more than 200; Crovitz told The Globe and Mail 300 launches already are planned for this year. Customers include McClatchey, Torstar, Postmedia, Media News and Lee.

(Hat tip to Theo Francis for tweeting about the filing and to a reader for bringing it to our attention.)

The round was led by new investor, Institutional Venture Partners, along with continued support from existing backers RRE Ventures, Allen & Co., Marc Andreessen, Gordon Crovitz, Ken Lerer, among others.

The new capital comes a little more than a year after the site raised a $3 million fourth round. The year before that, the site raised $2.7 million, though at the time it was estimated to be in the $5 million range.

Blodget did not offer any hints as to what sorts of things would be coming, though it currently has 60 staffers — pretty large by the standards of online news publishing — and it’s likely that it may add to the roughly 15 channels currently organized under the Business Insider banner.

In March, the company said it had reached profitability — $2,127 at the end of 2010, to be exact. So far, the company hasn’t released any other details about its balance sheet, aside from the one accompanying today’s funding, when Blodget noted that Business Insider does have money in the bank.

So how’s it faring this year? Like most media entities in this up-and-down economy, Business Insider’s the bottom line probably varies month-to-month and quarter-to-quarter. For example, the company’s Ignition conference at the end of November will probably make that month and December a profitable month (ticket prices start at $1695 for the two-day event). Given the economic times, Business Insider can still expect to break even this year, but the need to drive more growth over the long term will require continued investment in the business.

All in all, while there’s no denying the site’s popularity with tech, media and financial professionals, there are many in its audience that loves to hate it and — and some who just plain hate it.

One detractor is Marco Arment, who is recognized as one of the primary developers of the Tumblr’s platform and the creator of Instapaper. In a post on his personal blog, Arment charges that Business Insider has “they’ve linked to nearly every significant article I’ve written” and in many cases, “rewritten my titles to be more inflammatory and attract more clicks, which irritates me more than how much their cluttered, ad-overloaded site “design” buries the link to my article.”

He adds that Business Insider eventually asked him if he would formally allow Business Insider to publish his posts, offering him the chance of greater promotion for his work, but no direct financial compensation. Needless to say, he declined the offer, saying that the traffic referrals were negligible.

In any case, it’s that kind of intensely visceral reaction that keeps readers interested in whatever it is Business Insider is doing.

In an interview late Thursday afternoon, co-presidents Brill and Crovitz confirmed that they were staying with the company they co-founded with Leo Hindery Jr. in April 2009 and that their team will move intact. They declined to say how many employees that included or how long the two of them would stay. “We’re here. We’re not going anywhere,” said Brill.

All Crovitz would say about the value of the deal: “We’re very happy with this transaction.” As a sign of the shift from startup to part of a public company, the pair, used to managing their own interviews, were joined on the call by RR Donnelley’s communications head Doug Fitzgerald.

As paidContent reported earlier today, Journalism Online was only on the block briefly before the RR Donnelley deal was brokered by the Jordan, Edmiston Group. The decision to look for a buyer came as the company was looking at further investment. None of the three would talk about the process or the sale specifics. Crovitz said the Chicago-based company’s publisher-centric approach made it the perfect fit. “Without getting into names of others, that’s not true of people selling tablets or selling search advertising or other services.”

FItzgerald said Press+, the name of JO’s paid content e-commerce system, will be the first offering of its kind for the Chicago-based company but “expands an area already working with publishing clients on.” Donnelly’s global footprint and existing relationships should help Press+ expand while the payment platform gives the larger company another offering for its clients and the potential to expand its own base. “It’s an opportunity to have our organization provide solutions that really span the breadth of the supply chain.”

Crovitz, the former publisher of the Wall Street Journal, said the sale also comes as the paid content question shifts from whether or not consumers will pay. No details (yes, that was a recurring theme of this session) but he said there are enough sites now running Press+ to see significant data patterns. “The religious debate is over,” he said. Some percentage of people will pay for content and with the right balance, sites can maintain traffic and retain readers.

The escalating data stream as they roll out to more sites should allow for more granularity. Brill said the question now turns to pricing and how results may vary from brand to brand.

When the New York Times Co. (NYSE: NYT) came up, they mentioned another pattern they’re starting to see. Unlike the Journal, the Times is not charging print subscribers extra for online access. That may be a mistake. Brill said their research shows people are just as like to add the online option when it’s heavily discounted as they are when it’s free. And, said Crovitz, when it’s free to print subscribers, fewer people seem to sign up for the online-only subscriptions.

From a business standpoint, it’s safe to call this a rational exit. It makes sense for Journalism Online to be part of a company like RR Donnelley and for Donnelley to be able to offer a flexible payment system for publishers. JO gets additional investment; RR Donnelley gets to skip the initial R&D phase of building one that works. Jon Housman, president of digital journalism initiatives for News Corp., wouldn’t disclose details but told paidContent the company’s investment “appreciated considerably.”

It’s not quite the result the co-founders had in mind in April 2009 when they announced Journalism Online, LLC, which launched with an undisclosed amount of funding from Hindery’s InterMedia Advisors, LLP and the trademark bravura that accompanies a Steve Brill endeavor. The launch followed Brill’s splashy memo on how to save journalism and the New York Times.

The startup was only on the block briefly and very quietly. Journalism Online was weighing additional funding earlier this year and decided to explore a possible sale. The Jordan, Edmiston Group, Inc. brokered the deal with Donnelley. Crovitz and Brill agreed to stay with the company to manage it.

The timing of their sale with the start of the New York Times Co. (NYSE: NYT) ambitious freemium scheme is striking: while Journalism Online had NDAs and affiliates with a large number of publishers and started small trials with some of them, it couldn’t gain a foothold with the NYT and never broke through with a high-profile announcement that matched expectations or hype. The News Corp. investment showed interest from a major publisher and proponent of pay systems but Press+ has yet to show up on the company’s sites. (My understanding is some News Corp. properties are exploring use of Press+ and could start to use it this year.)

But Journalism Online was able to stick fairly much to plan, methodically building a complex system capable of scaling and flexible enough to be used in a variety of circumstances for a wide range of sites. News Corp.’s Housman describes the system as “nimble.” I’ve seen one headline this morning calling JO a “paywall operator” but that’s too limiting a description. Press+ can be used for donations, as is the case with ProPublica and for memberships, in addition to various metered approaches.

More to come.

—————————————————————

Release:

R. R. Donnelley & Sons Company (Nasdaq:RRD) announced today that it has acquired Journalism Online, LLC and its Press+ offering which enables publishers to seamlessly integrate an innovative paid content engine with their websites. Journalism Online’s Press+ system supports publishers as they offer audiences a mix of free and subscription-based premium content. Journalism Online is managed by two of the company’s co-founders, veteran digital-media leaders Steven Brill, founder of The American Lawyer magazine and Court TV, and L. Gordon Crovitz, a former Wall Street Journal publisher.

“Our publishing customers continue to develop multi-channel advertising and editorial strategies and Press+ provides a valuable tool for monetizing content,” said Thomas J. Quinlan III, RR Donnelley’s President and Chief Executive Officer. “We provide solutions across the entire breadth of the publishing supply chain, from content creation and digital asset management through subscription solicitations, processing and renewals. Press+ enhances our offering and opens new avenues for publishers to generate incremental subscription and advertising revenue.”

Steven Brill said, “We are delighted to bring Press+’s innovative capabilities to RR Donnelley and look forward to engaging with the broad array of consumer and b-to-b publishers with whom RR Donnelley has relationships. For nearly 150 years, RR Donnelley has been enabling publishers to reach their customers with a viable, cost effective business model. We are excited to be working with them as they continue that tradition and that mission in the digital age.”

The Press+ offering enables publishers to offer readers a mix of options for subscribing to premium content, including metered and mobile/tablet access, enhanced site functionality, out-of-market access and more. The system also provides publishers a variety of ways to engage readers with paid content, such as day or week passes, print/online bundles, monthly or annual subscriptions, and others that even allow readers to receive credit for previous day passes as they select a longer-term subscription.

L. Gordon Crovitz stated, “The scalable Press+ model enables publishers to quickly test and implement a variety of content distribution strategies. Our experience demonstrates that publishers using Press+ for metered access to web sites and other digital products retain their online ad revenue and readership while adding a valuable revenue stream from online subscriptions.”

“We continue to engage our customers with integrated communications solutions that address both cost compression and revenue enhancement,” added Quinlan.

More information about Journalism Online and Press+ is available at http://www.mypressplus.com.