The paywall — which, as my colleague Jeff John Roberts previously noted, is pretty leaky. It’s initially set at 20 free articles, after which those select readers will have to pay up. Pricing: “$9.99 per month for access to the desktop and mobile web and $14.99 for the Digital Premium package, which also includes access to all of The Post’s custom apps.” Home delivery subscribers get free access.

“Over the coming months, we will learn more about how everything is working, listen to reader feedback and modify our model accordingly,” publishers Katharine Weymouth said in a statement. “There is going to be a great deal of experimentation ahead to strike the right balance between ensuring access to critical news and information and building a sustainable business.”

“[T]he launch of the pay model is the most important and most successful business decision made by The New York Times in many years. We have around 700,000 paid digital subscribers across the company’s products so far and a new nine-figure revenue stream that is still growing.”

Thompson added that media pundits predicted that the Times’ subscription model, which is based on a so-called “metered paywall,” would be a disaster when it launched in 2011. Since then, he noted, it’s become a standard for the rest of the newspaper industry. ”In modern media, you could make the case that the best way forward is to listen carefully to what the industry has to say and then do the exact opposite.”

Thompson also equated disruptions in the news business to what’s happening in other industries, like high tech and car rental, and said that risk-taking is the secret of America’s culture of innovation and entrepreneurship.

Commencement speeches are, by nature, restricted to this sort of soaring stuff. A skeptic, however, might note that the New York Times‘ digital subscription model has already begun to plateau and that the company is still shedding ad dollars and assets. Likewise, Thompson, who arrived from the BBC only months ago, still has to prove he can run an institution that isn’t supported by mandatory contributions from the public.

But the tone of Thompson’s speech is the right one, and it’s welcome to see the New York Times waving its banner not just in the safe halls of Columbia’s journalism school but among the MBA crowd as well. If you want to read more of what he said, here’s a longer excerpt:

The American news business is living through revolutionary times. For The New York Times, which I joined six months ago, it means catapulting the Grey Lady into a world very different from the one in which she spent her first century and a half: multimedia, multi-platform, multi pretty much  everything.

There are some things we’re not going to take risks with. The quality, authority and accuracy of our journalism. Our values, including the time-honoured but still vital tradition of keeping our journalism independent from the commercial interests of the company. In the age of so-called ‘native’ advertising in which the boundary between editorial and commercial content is more and more frequently blurred, that tradition of maintaining a clear line between the journalism and the business of The New York Times is more important than ever.

But we will not secure the future of The Times without the kind of bold innovation – in products and services, in
business-model – which is intrinsically and necessarily risky. Two years ago The Times launched a new digital pay model, essentially asking users of The Times on digital to do what more than a million print users of the newspaper were already doing, which is to pay a regular subscription in return for extensive access to our journalism.

The consensus among the experts was that it wouldn’t work, was foolhardy in fact and not needed. People just weren’t prepared to pay for high quality content on the internet and, besides, wasn’t digital advertising enough – wouldn’t it grow until, just as with print advertising in the golden age of physical newspapers, it alone was enough to support America’s newsrooms?

In fact the launch of the pay model is the most important and most successful business decision made by The New York Times in many years. We have around 700,000 paid digital subscribers across the company’s products so far and a new nine-figure revenue-stream which is still growing. Much of the rest of the US newspaper industry is now following suit. And developing this pay model, launching a suite of new subscription products to attract additional new subscribers, is central to our plans for the future.

What’s interesting, though, was that initial widespread skepticism. It won’t work. It’s mad. They’re barking up the
wrong tree.

In many ways, the thing that gets disrupted in a disruptive age is the conventional wisdom. Wherever you end up, in this country or abroad, starting your own business or joining an established company large or small, you’ll bump into conventional wisdom and all the apparently excellent advice that flows from it. But the definition of a disruptive age is one in which the discontinuities outnumber and overwhelm the continuities and in which predictions based on the past or the smooth projection of current trends into the future frequently prove unsound. Conventional wisdom tries valiantly to keep up, to recalibrate in the light of recent developments, but because it cannot foresee transformational breakthroughs or the kind of behavioral and business-model pivots which digital technology makes possible, it never can.

Take my industry. The movies are finished. TV advertising is dead. Exactly what happened to music will happen to TV. Nobody wants news anymore. No one will ever pay for anything on the internet. Not just said, but said widely and widely believed. And – for the most part and within the time horizon which the prophets themselves were suggesting – just plain wrong.

All of the strategically successful things I’ve been involved in – whether a set of new TV channels or developing the BBC’s digital on-demand service, the i-Player – have had this thing in common: that, at the point of launch, pretty much everyone not involved in the project has agreed that it was going to be a total disaster. In modern media, you could make the case that the best way forward is to listen carefully to what the industry has to say and then do the exact opposite.

Friedman is no stranger to the vicissitudes of modern media — she was laid off as the editor of GOOD magazine last year, after the publication decided to pivot and become a kind of social network for user-generated content. But in her CJR piece, she describes how on a recent speaking tour she grew frustrated with the numbers of people complaining about a lack of jobs, a lack of money and the rise of short-attention-span media like Twitter:

“Again and again, I found myself playing the role of cheerleader, trying to convince tired and broke journalists to get excited about the future of media.”

There is far more good than bad

As the CJR columnist acknowledges, it can be hard to motivate journalists — or anyone in the field of media — when reports from research outfits like the Pew Center lay out in bald detail how the business model for much of what we think of as the mainstream media is rapidly disintegrating, with nothing obvious to take its place, and when the number of journalists employed in newsrooms is lower than it has been at any time since the 1950s.

But Friedman argues — I think fairly persuasively — that there are far more benefits available to journalists now than there have ever been, if they choose to see and make use of them. Among other things, she lists:

Reporters have more access to sources: Thanks to the web, social media and other tools, “it’s never been easier to find and reach out to anyone.” This is unequivocally true, especially with the number of potential sources who have their own blogs, Facebook pages, Twitter accounts, etc.

Consumers have access to more media: Your job may have been more secure in the past, Friedman says, but now if you have something to say you have the ability to reach a much larger group of readers, and they have much more choice (this is also one argument against paywalls, she says).

Journalists get more engagement: Reporters used to work for years with little or no response from or engagement with readers (which some no doubt preferred), but now you get more feedback than you could ever want. Says Friedman: “I know a lot of journalists hate this, but it’s a good thing.”

Chaos promotes creativity: When traditional paths to professional success are closed, Friedman argues, “those of us who love journalism so much we’d never give up are forced to redefine success – and our methods of seeking it.” And there are more routes to success than ever before.

Disruption also produces opportunity

To some, this may all have a certain Pollyanna-ish feel to it, but I think Friedman is right — and in many ways she is saying something similar to what Matt Yglesias at Slate argued recently, when he responded to the Pew Center report and said that in his view news consumers were better off than they had ever been (although many disagreed). Jay Rosen made a similar case for why the internet is good for journalism in a debate hosted by the Economist in 2011.

Yes, much of the traditional media business is in turmoil, and the road to profitability — or even survival, for some — is far from clear. And it’s easy to look at the chaos of social media and “citizen journalism” during something like the Boston bombings or Hurricane Sandy and assume that we are much worse off, both as journalists and as news consumers (an argument I have tried to counter). And there is no question that many bad things come with the good.

But as Friedman argues, that same chaotic environment is what produces new things, many of which may grow to become powerful and positive tools for journalism — in some cases better than the ones we have. It’s easy to succumb to the gloom, but the reality is that while disruption of the kind the media world is experiencing creates great upheaval, it also creates great opportunity.

Post and thumbnail photos courtesy of Flickr user George Kelly and Shutterstock / Feng Yu

In a memo to staff that was also posted on Politico’s website, the site’s editors explain, “We chose smaller states, spread across the country, so our experiment captures any regional trends and also limits any potential loss of traffic to the site. This will last at least six months, so we have a large enough sample to appraise the results.” They’ll experiment with different price points and with the number of stories that a reader can access for free before the meter kicks in. (I’ve asked Politico about the range of prices and will update the post when I hear back.)

The memo also explains why Washington, D.C. is exempt from a paywall:

“Unlike other media companies, we often sell out our ad inventory in the Washington, D.C., market because demand for our ad space is so high. This means it’s highly unlikely we would ever institute a metered system in the D.C. area. The economics wouldn’t work because every company that has put a subscription system in place has seen some decrease in traffic, as you might expect. We want and need that traffic in D.C. because the desire of advertisers to reach our elite audience here is exceptionally strong. For you non-business folks, that is a very good problem to face.”

The editors acknowledge that it’s unclear whether “the metered system, while dominant today, is the best model for subscriptions in the long run.” But they say it’s “increasingly clear that readers are more willing than we once thought to pay for content they value and enjoy.”

In addition to advertising revenue and the paywall, Politico has a revenue stream coming from its professional product, Politico Pro. Over 1,000 organizations are now subscribing to Pro, the company announced in March, with a yearly subscription starting in the thousands of dollars.

“We’re still chugging along steadily in revenue, and we are brainstorming about new sources of income (stay tuned),” Sullivan wrote. The site had raised $680,000 as of Tuesday, up from $653,000 as of March 25.

“The most passionate readers have already joined. It gets harder after that,” Sullivan wrote. As he noted at the paidContent Live conference in New York last month (see video below), he is not taking a salary for the first year.

The Dish has already tweaked its payment model a few times. Initially, the site charged a minimum of $19.99 per year for unlimited access to premium content; in March, it lowered the meter and added a monthly payment option.

But Greg Golebiewski, the founder and CEO of a micropayment provider, thinks this conventional wisdom is wrong, and that media companies are missing a lucrative opportunity.

Golebiewski’s company is called Znak It, and he says he has spent the past five years or so trying to convince publishers and media companies of all kinds that they should at least experiment with micropayments — and that they could actually make more from such a model than they do from a paywall, while also attracting new readers who might never get beyond the subscription barrier. But with only a handful of clients using his system, most of them located in eastern Europe, the Znak It founder is still very much a lonely voice crying in the media wilderness.

“I’ve been trying to sell this idea for the past five years — it’s extremely difficult to break that notion, the theory that micropayments don’t sell. [Critics] don’t have any data, it’s just conventional wisdom or common knowledge, but it’s very difficult to go to them and say we have a flexible system for payments and then when they figure out it’s micropayments, they stop listening.”

Micropayments equal being “nickel and dimed”

The idea that micropayments are unworkable for content stems in part from a piece by media theorist Clay Shirky in 2009, in which he said that users “don’t like being nickel and dimed.” The psychological friction created by this perception, he said, meant that very few people would go through with a micropayment for content. Suggestions that Bitcoins (as described recently by Jeremy Liew of Lightspeed Venture Partners) or some other system could make the idea more feasible are routinely dismissed by media-industry insiders.

Golebiewski, however, says that his research shows that when given a choice between a paywall or micropayments, readers are overwhelmingly in favor of paying for specific pieces of content rather than signing up for a monthly or annual subscription plan — and that this is particularly true for younger users, who are often thought to be opposed to paying for content online.

Znak It published a white paper last year (PDF link) based on the results of five pilot projects involving a variety of different kinds of media such as videos, music and text content. Out of a total of 43,000 unique users there were 1,281 buyers and the largest single group was 18-24 years of age, although that number could be skewed because music was part of the trial. In that age category, as many as 5 percent of the unique users wound up becoming buyers (paywalls usually get about one percent conversion).

Part of the problem for Golebiewski and Znak It is the chicken-and-egg factor: there are so few companies using micropayments that it’s difficult to come up with any comprehensive research to prove that they work. Znak It’s white paper is based on such a small sample size that it’s hard to use it as an argument for why the New York Times or another newspaper should go with the micropayment model. But the Znak It founder is adamant that publishers need to try it, if only to increase their reach.

This is a challenge that I discussed in a recent post — the idea that paywalls are good for monetizing your existing readers, but not particularly good for encouraging new readers (apart from the occasional dropping of the wall for breaking-news purposes). Part of Golebiewski’s point is that allowing readers to pay for a single article encourages browsing, which makes it more likely someone will convert into a regular paying customer.

Micropayments aren’t a quick fix

The Znak It founder admits that he has so far only had success with a few eastern European media companies — including a national weekly publication in Poland (where Golebiewski is from) and some small newspapers in other countries — and blames this on the deep-seated dislike of micropayments in North America.

“We started in some of the countries in eastern Europe and elsewhere that were a bit more responsive to our ideas — a bit more desperate if you will. It was easier to go to those smaller countries and start there, they’re a little more open to experiment — they don’t have the big brands and massive traffic, so they are a little bit more receptive.”

The company’s system has two different models: in one, users create accounts with Znak-It and can then use its payment process with any site that supports it, while the second is an “earn free access” option in which advertisers subsidize access for readers who provide some kind of information or engage in some kind of task — such as reading through an ad or filling out a survey. Part of the challenge for Znak It as a small provider is signing up enough clients to make it worthwhile to have an account there (Google has also experimented with micropayments via Google Wallet, and has a “survey wall” service as well).

Despite his lack of substantial progress, however, Golebiewski says he remains convinced that some form of micropayments has to be part of the future of media and content online, since subscription models are only going to appeal to small sub-segment of the total population:

“Many publishers are looking for a quick fix, and I don’t think this logic we are trying to sell is attractive enough — but it will be. It’s inevitable. Maybe if we don’t call it micropayments, maybe we should call it flexible payments. But study after study shows that flexible payments are more popular with users… it has to be the future of the internet as a marketplace.”

Post and thumbnail photos courtesy of Shutterstock / Maryna Pleshkun and Shutterstock / Patryk Kosmider

While most of the losses arose as a result of pension and restructuring expenses, the company’s core business remains distressed. Print advertising revenues fell 8 percent, and while circulation declined by seven percent. A small bright spot comes in the form of a 16 percent increase in online display advertising at a time when such revenue is flat or falling at other newspapers.

While the Washington Post’s earnings reflect a familiar story of the declining newspaper business, they are particularly discouraging because the paper does not appear to have a turnaround plan on the horizon. While the New York Times has been experimenting with its digital paywall for over a year, and now has plans to create different pricing tiers, the Post’s plan to raise online digital subscription revenue remains amorphous. The company plans to launch a paywall this summer, but the model appears so leaky that it is unlikely to bring in significant money any time soon.

At the same time, while the New York Times has cut away all its non-core assets to focus on the flagship brand, the Washington Post Company is also figuring out how to turn around Kaplan, its troubled education segment.

Correction: The first paragraph of this post was updated to correct descriptions of profit and loss.

There was much talk about both aspects of this ongoing evolution at the conference, from people like star blogger Andrew Sullivan and Tumblr founder David Karp to investor Ken Lerer and Guardian editor-in-chief Alan Rusbridger. What follows are just some of the key lessons or moments that struck me as significant during the show (you can also read our live coverage of each session and watch livestreams of each panel as well).

Paywalls vs. open journalism:

During my interview with him, one of the key points that Guardian editor Alan Rusbridger made was that there is a very clear tension between the efforts by an increasing number of newspapers to erect paywalls — in order to bolster their revenue — and the philosophical approach to journalism that sees openness and interactivity with readers as a cornerstone of what journalism has become. As Rusbridger put it:

“It is journalism that wants a response. It is journalism that is itself responsive. It is journalism that doesn’t just sit on the web as though it has no connection with the web, that acknowledges that the web is the most extraordinary revolution in publishing where lots of people will be publishing extremely worthwhile and informative information. And so you can produce better things by not ignoring it or building a barrier between yourself and that but incorporating it and linking to it.”

The many different flavors of paywall:

Much of the discussion that took place on the monetization panel — which featured Dick Tofel of ProPublica, Justin Smith of Atlantic Media, Raju Narisetti of News Corp. and Bob Bowman of Major League Baseball — was about the myriad ways in which media companies can charge for their content. Bowman argued that every media company should be charging its users, even if it is through some kind of “pro” version, and Smith announced that The Atlantic will soon be launching a content offering related to the magazine that will be subscription only, although he didn’t say what kind of content it would be.

Narisetti also talked a bit about his vision of a “reverse paywall,” which focuses more on membership benefits that readers could accumulate based on their engagement with a site — although Bowman said he thought this would just encourage readers to click on ads or perform other tasks in order to get something for free, and that advertisers would quickly see through this gaming and not be interested in advertising around it. Smith also pointed out that The Atlantic‘s event business produces a lot of revenue for the company, and therefore decreases the need for a strict paywall.

No one can agree on sponsored content:

On the panel that focused on the increasingly blurry line between editorial content and advertising, Felix Salmon of Reuters challenged Jon Steinberg of BuzzFeed, Kyle Monson of Knock Twice and Forbes chief operating officer Lewis D’Vorkin to define their terms — but the panelists spent most of their time debating whether “native advertising” of all kinds is inherently unethical or duplicitous in some way (the view held by Andrew Sullivan, who has railed against the phenomenon).

Steinberg maintained that the conventional wisdom that says average readers are confused — and in some sense misled — by sponsored content is hogwash, and that this is essentially a lie perpetrated by traditional media entities who continue to rely on banner advertising for their revenue. According to the BuzzFeed president, banner ads are a dying medium, and some form of sponsored content is the only real alternative. Monson, however, argued that if native advertising becomes too ubiquitous, readers will begin to ignore it the same way they currently ignore every other form of advertising.

Independence is a doubled-edged sword:

(L to R:) Andrew Sullivan, Editor, The Dish; Andrew Ross Sorkin, Columnist, NYT; Maria Popova, Writer, Brain Pickings; Tim Ferriss, Author, The 4-Hour Workweek paidContent Live 2013 Albert Chau / itsmebert.com

One of the highlights of the conference for many (including me) was a panel composed of superstar bloggers and authors Andrew Sullivan, Maria Popova, Andrew Ross Sorkin and Tim Ferris. Sullivan has famously bet his livelihood on going direct to his readers for financial support — although he maintained that he is not anti-advertising, as some have assumed. He said he is dedicated to that approach even to the point of not taking a salary until he can prove that the model works, and that he values his independence and his direct relationship with readers over the comfort of working for a large media entity.

Andrew Ross Sorkin, by contrast, has been able to build a fairly large team and business model for himself inside the New York Times — even though he could probably (or theoretically) have created something similar, and more independent, on his own. Sorkin said that his interest in remaining inside a large media entity stems in part from the resources it puts at his disposal, and partly from his commitment to the brand itself, since the paper took a large bet on him years ago when he created DealBook.

There was a lot more to the conference that I haven’t even touched on here — including a startup showcase featuring new platforms like Circa and Branch, a panel on the use of algorith-driven personalization with Mark Johnson of Zite and Aria Haghighi of Prismatic, a great look at the future of books with Dominique Raccah of Sourcebooks and Evan Ratliffe of Atavist, a discussion between Om and John Borthwick of Betaworks, and an interview with the architect of Aereo’s ongoing disruption of cable.

Thanks to all those who attended and to all of our speakers as well.

Post and thumbnail images courtesy of Albert Chau

Smith didn’t go into many details about the nature of the offering, but he made it clear that the company had no choice but to try every kind of monetization. “To say the ad model is gonna win over the pay model is foolish,” Smith said. The key would be to unlock multiple revenue streams, not to just put all your eggs in one basket.

Smith got some support for that notion from fellow panelist Raju Narisetti, senior vice president and deputy head of strategy at News Corp. Narisetti’s company may be seen as one of the driving forces behind paywalls, but he stressed Wednesday that News Corp. actually has been experimenting with lots of different options, ranging from tight paywalls for the Times all the way to free sites like All Things Digital. But he also defended paywalls against criticism, saying that newspapers were “courageous” for taking the step to charge for their content. “We have a lot of faith in our journalism,” he argued, including in the notion that people would pay for this kind of content.

Bob Bowman, President and CEO, MLB Advanced Media, strongly voiced support for this perspective. “Any publication out there should have a paid content product,” he said, arguing that all publications have avid fans that are willing to pay for content He asked, “Who are you to say: ‘we don’t want your money?’”

Of course, asking for money doesn’t always need to involve paywalls. That was a point driven home by ProPublica President, Richard Tofel, who revealed Wednesday that his nonprofit organization has received donations from 2,300 supporters last year, with 100 of the contributing on “quite significant levels.”

His prediction for monetizing and sustaining journalism? “Every major city in this country has a symphony,” Tofel said. Eventually, cultural institutions like symphony orchestras, libraries and museums would be complemented by nonprofit press institutions. Having nonprofit press is essential for many areas that can’t be covered by traditional media organizations anymore, he argued, whether those have a paywall or not.

Check out the rest of our paidContent Live 2013 coverage here, and a video embed of the session follows below:

A transcription of the video follows on the next page

Go to page 2 (of 2) on paidContent .

That’s one of the ideas contained in a new book from Nicco Mele, a lecturer at the Harvard Kennedy School who acted as operations director for Howard Dean during his 2004 presidential race. In the book, entitled “The End of Big: How the Internet Makes David the New Goliath,” the author looks at how the social web and digital technology in general have altered the balance of power between the individual and the organization. And in a recent piece at the Nieman Journalism Lab, Mele argues the same thing is happening to the media:

“Some news personalities now play a strong role on Twitter and Facebook, but they often get little institutional support for this, and such participation and engagement remain merely part of a narrow web traffic strategy. But what if news outlets decided to flip their model, so that the editorial staff was not subservient to the brand, but the ‘brand’ became a platform for talent?”

Embrace the trend or be disrupted by it

Although Mele doesn’t explicitly say so in his Nieman piece, the flipping of this model is already occurring, whether media outlets want it to or not — as I tried to point out in a recent post about the shifting balance of power. Where platforms like the New York Times and Newsweek used to hold all the cards, and individual writers were forced to cut deals in order to find an audience, bloggers like Andrew Sullivan and Josh Marshall of Talking Points Memo have shown there is an alternate route (one we’ll be discussing with Sullivan and others at the paidContent Live conference on April 17).

While Sullivan’s experiment as a standalone media entity is far from complete, he has raised over $600,000 to fund his team, which means he is well on his way to being self-sustaining, instead of just being a part of the content at The Daily Beast and subject to their broad paywall. And a big part of what Sullivan (and pioneers in other fields, such as musician Amanda Palmer) see as the benefit of this approach isn’t just the money, but the personal connection with an audience.

As Mele suggests in his piece at the Nieman Lab, many traditional media organizations not only don’t help their journalists make use of social tools to connect with their readers, they actively discourage it with restrictive social-media policies. But what if they tried to enhance that connection and build on it — and perhaps even tried to share in the monetization of it? They could even experiment with allowing readers to subscribe to individual writers. Says Mele:

“On Election Day 2012, more than 20 percent of NYTimes.com traffic visited Nate Silver’s blog. At the same time, his book had just been released. The Times had little role in Silver’s book. But imagine it had a big one; imagine the way it would open revenue possibilities, taking advantage of the giant platform the Times provided Silver. Publishing books, hosting events, and public speaking are just the beginning.”

Why not a personal paywall for writers?

This is the essence of the “personal paywall” that I tried to describe in a recent post: the idea that individual writers are what increasing numbers of readers are connecting with and seeking out — not impersonal media brands or institutions. Why not provide Nate Silver or Nick Kristof with as many tools and resources as possible to make that easier? The New York Times is clearly thinking along those lines, according to new executive editor Jill Abramson, but it would be nice to see that idea expand and accelerate beyond just a chosen few at one newspaper.

Instead of thinking of the newspaper as the pre-eminent brand, why not think of it more like a talent agency or a record label: an entity that gets its value from helping to develop and promote a variety of voices — in whatever way it can, across whatever platforms. Newspapers have always promoted their star writers, but any value captured has gone solely to the larger brand, the assumption being that those journalists should consider themselves lucky to have been chosen. But as Mele notes:

“Talented people — their voices, personalities, tastes and ultimately news skills and judgement — are the filters that digital era consumers want, not archaic, anonymous news brand names. With the decline of trust and loyalty in large institutions, it is increasingly hard to imagine people in the coming decades subscribing because of loyalty to an institutional Big Media entity. Yet it’s easy to imagine them wanting to fund several people whom they trust to bring them information they care about.”

Post and thumbnail photos courtesy of Flickr user Christian Scholz, as well as Shutterstock / olyy and Shutterstock / Daniilantiq