By Eleanor K. Sommer

Joel Stein is right to be miffed that his Time magazine columns will languish for weeks before getting onto the Internet. Even if the Internet were not around, Mr. Stein’s column would be “free” content once the magazine rolled off the press. Pass-along readership begins within moments of dissemination. Someone will make a photo copy to share at the office. Another person will give the magazine to a friend. There will be copies in waiting rooms, left on commuter trains, and copied, uploaded and sent to friends. The two-week rule is nonsense. A typical survey question on most media demographic studies is “How many people besides yourself read this magazine?” Passed on copies are gold, and media are allowed to–and do–count pass-along readership in their circulation numbers. So how is the Internet different? Could it be that pass along readership exponentially explodes? Is that bad?

Internet readers represent increased readership. Media companies need only to capture demographics and propose the audience to advertisers—an improvement, in some ways, over the older (and more expensive) methods for gathering demographics. Unless a demographer looks over my shoulder on a Sunday morning while I read the print version of, say, The New York Times, there is no way to garner such audience details. Rather than some nameless, faceless pass-along reader, the Internet has the potential to put a demographic to a set of eyes.

Heedless to this treasure trove of new opportunities, traditional bastions of the pre-digital publishing media are scrambling to erect paywalls to get out of the online free-circulation pit. Watching these august companies writhe and gasp is painful and perplexing. They have the tools to be innovative but appear to be resisting logical and egalitarian options of a literally “free” press. Paywalls will not mitigate the challenges, and they may actually speed the doom of this ailing industry. What is the logic of approaching new technology with old tools? It’s like trying to repair a fuel injector with parts for a carburetor.

Historically, publishing has been about freedom but it rapidly morphed into a tool for persuasion and ultimately into big business. And then the Internet happened and freed content in a way more dramatic than Gutenberg’s first edition of the Bible. The print is off the page, and paywalls and stalled content are not the answer. Organizations and content will emerge to replace those that go behind paywalls. The Internet is difficult to tame so spending energy and capital to stifle the flow of information seems counterproductive and possibly damaging to a company’s image.

Where’s the Money?

Everyone recognizes that creating quality and meaningful content is costly, and those who foot the bill require compensation. However, news print companies such as Time magazine and The New York Times (as well as countless others) want the future to accommodate outdated modes of doing businesses. The old media are like the dinosaurs of the Cretaceous era doomed to crash while the survivors are like the nimble mice that ate less and had the flexibility to make it through the cataclysm. Sadly traditional media are stuck trying to make money the old-fashioned way. And while they are whining and trying to erect paywalls, the sleek, digital-only information outlets have honed the process into remarkably mean and efficient systems that often provide the information faster and better than the lumbering dinosaurs of the 20th century. Hyperlocal Web sites, enterprising niche publishers, and even general interest national sites are managing to make money, pay contributors (admittedly not enough), and garner huge audiences.

As for shared content, why haven’t news outlets taken a cue from the music model (flawed in many ways, but still managing to function)? It’s not much different from syndication. Content disseminators could join ASCAP-like organizations with fees paid to the providers. And tracking Web content is easier than traipsing around to bars and birthday parties to see who’s playing your client list.

Magazines, newspapers, and the broadcasting media survive on advertising revenue, which is garnered by “proving” suitable and sizable audience demographics. Calculating audience has never been an exact science. Rating services, audited circulation numbers, and other means are used to convince advertisers that dollars are purchasing appropriate audience. Circulation and audience share are key to broadcasting and publishing and are the reason Super Bowl advertisers pay millions of dollars for seconds of air time.

Circulation is not about revenue

Circulation, though, in terms of the Internet has a new meaning. Where subscriptions and rating sweeps are traditional proof of audience share, the Internet tallies audience in clicks and time spent on a Web page. Such information is an advertiser’s dream—and possibly a content provider’s nightmare if the numbers don’t meet advertiser’s expectations.

Journalism 101: Circulation has never been directly about income for periodicals, except for those that shun advertising, such as professional journals and magazines of not-for-profit organizations. For the rest of the print media, circulation revenues typically pay for, well, circulation—and often not even that. Printing content and promoting circulation is costly. Adding content to the Web still costs money: administrative, personnel, and pre-press, and maintenance. But after that? Circulation is nearly free. Only the “paperboy” loses.

The Internet represents vast advertising opportunities and, most importantly, extremely targeted ones. So the angst coming from the print media is not warranted. Offering free access to most print media is a smart move on the part of periodicals, and results in readership being multiplied astronomically. Capture the readership and discern the quality and quantity of those readers and advertisers will agree to pay handsomely for such access.

The New York Times has managed to incorporate substantial advertising into its Web pages without interrupting readers’ access to content in any significant way. Access for the user means putting up with advertising, just like it did when we received the paper on our front lawns. The difference now is that content can be delivered for fractions of a penny rather than tens of dollars. And advertisers have the opportunity to target their messages to specific audiences.

Unequal access

Erecting paywalls also has social justice issues. There is a huge potential to perpetuate class distinction—something proponents of a neutral Internet continually seek to eliminate. Class distinction already exists in the world of professional journals. Unequal access has already begun to sift people into two separate classes. Blocking information creates a class of people who are ill-formed and will likely make poor choices.

For instance, searching for health information on Google already points a user to lots of journal articles that must be purchased in order to be viewed. So for people without the economic means such content is off limits from the privacy of their homes. They may be able to, in some cases, research their medical conditions from libraries or hospitals (if those services are available).

Instead of blocking such content, periodicals need to look at the Web as one huge, international library that people can access from their home computers. Libraries provide free content of various sorts depending upon the size of the city they are serving. University libraries offer free access for students and faculty to medical journals both online and traditionally on the shelves. Search engines, when not set up to censor content make finding content more efficient. More people can have more information and can make more informed choices, which hopefully creates a better society.

Issues of access have resulted from the decision by broadcasters and the U.S. government to curtail analog television signals. This new technology denies some citizens the ability to receive free content over the airwaves. Those without the means to pay for cable or satellite service or those in rural areas where cable service is not available are effectively cut off from news and television. (In some geographic regions, the “box” is a joke and if it pulls in signals at all, they are weak and pixilated.) But on the positive side, this may result in a healthier group of the otherwise disenfranchised people because they may find more time for exercising, reading, and socializing. The point, however, is that paywalls, levels of access, and unaffordable technology create another divide between rich and poor.

The emergence of new free content

If periodicals and broadcast companies erect paywalls that are too expensive or too difficult to access, they may find their readership dwindling. People will have to make choices. They will have to prioritize between need and desire and as a result quality free content will emerge elsewhere on the Internet.

While many might argue that long-established, professional broadcast networks, newspapers, and prestigious magazines produce information with more accuracy and ethics—and put more money into doing so—than the burst of “news” Web sites, the playing field is evolving. Digital news organizations with well-educated, professional journalists are producing sophisticated content. And even less skilled sites are being appreciated for grassroots, eyewitness accounts of events that provide alternative perspectives to the “official” accounts delivered via organized media conglomerates.

For every content producer that hides behind a paywall, another will emerge with better news and more innovative ways to capture audience and create revenues. The Internet is treasure of endless information (both fact and fiction) much of it available for free or by “selling” your demographic. Profits can be made on the Internet via news and information—just not in the quaint old-fashioned ways of the past. The sheer size and variety of free content has made the Internet fertile ground: the media just needs to learn how to plant and harvest from it without stifling its diversity with closed access for those without limited funds. The Internet has made us hungry for content, that is, demand is high, so prices should be low.

More free content will surface if too many periodicals move toward online subscriptions, and it is likely to be well written, accurate, and innovative. Full literacy has been a focus of many nations for a long time, and much has been achieved in this arena. The result? We are becoming a world of readers and writers. Authorship is no longer an exclusive club. Anyone with a computer and a grammar school education can post to a blog. This is terrific and scary and funny and clever and awful all at once. But it is free. Once the paywalls go up, there will be a lot more rather than a lot less free content.

The future

Newspapers and magazines need to become clever and innovative. They should be concentrating on added value–enhanced Internet content for which they could charge–and reasonably priced Internet subscriptions. Because the online numbers are so huge, the cost of content can be spread around. Farmville, according to some estimates, expects a penny a person per day in revenue, that’s $3.65 a year. With 31 million players, that’s a potential $113 million. Granted, they don’t have to produce new content every day, but nevertheless, media needs to develop ingenious ways of gaining revenue in lieu of the old print model’s subscription. Television has managed all these years, and may indeed morph into Internet content sometime in the not-too-distant future. And print best be prepared with novelty, efficiency, and affordability.

If you really stop to think about it, advertising on the Internet is no different than advertising in a magazine or a newspaper. There is little real proof that an ad works unless a special of some kind or a discount or coupon is offered. All other types of ads are important “image” builders that promote and enhance a brand’s visibility and market share.

Clicks, however, are countable. Is that the problem? The ability to prove the effectiveness of advertising has always been controversial, although elaborate studies and sample surveys purported to do so. Now it’s a matter of clicks. That’s the downside. The upside is that The New York Times has the ability to tell advertisers exactly what kind of reader I am, and the advertiser can put a micro-targeted ad in front of my face every time I access content. And the even better news? That content is not going to end up wrapping a fish or being peed on by my puppy. The ad is still working when I access the article again—or send it my friends. If media outlets are smart, they can attach ads to the copy I print or download, and that ad will continue working way past the “sell by” date.

The Internet is the most powerful communication tool so far in the history of the world. It will thrive and morph and grow and probably surprise us all, especially if it is nurtured, shared, and used at its full potential—which is FREELY. Erecting toll roads will only cause users to look for alternate routes.

Update March 17, 2011: Steve Outing offers some great advice to the august Times company, and with a clever business model, which includes much more reasonable price points designed to attract lots of users–which should be the goal of Web enterprises. “I’m disappointed,” Outing posted today. “This is really a bad move that shows how Times management thinking remains stuck in the past.” I couldn’t agree more. “In my view,” he concludes,  “this over-priced metered-paywall mistaken strategy puts the “Gray Lady” a step closer to the grave rather than getting a chance at a new life.”