Interview with Steven Brill

Columnist and media mogul Steven Brill, who founded American Lawyer magazine and Court TV, made a splash this week when a memo he authored detailing a new business model for the New York Times appeared on Jim Romenesko's blog. In an exclusive interview, Steven Brill talks to The Daily Beast about the Times' "last man standing" strategy and why not charging readers for content is a road to bankruptcy.

They will never be able to replace circulation revenue and classified revenue, which they've lost forever online, with advertising revenue online. It will just never happen.

Q: You've been very critical of the New York Times policy of giving away its content online for free. Why do you think this is unsustainable?

It's unsustainable because it's never worked ever in history. No one has ever made a viable independent business out of providing quality content for free. It's just never happened. It certainly can't happen on the Internet where you're competing with a million other outlets for advertising. What you have now is the specter of places like The Huffington Post that are just parasites off the people doing the actual reporting. They're smaller, less expensive operations that might be able to make it on advertising, but the ones paying the reporters to do the work are going to go out of business.

Q: The New York Times' ran a self-reported piece the other day talking up a business strategy of being the "last man standing," where they'll soak up readers and advertisers from other papers who are going under. Could this be a viable plan?

That’s precisely why charging for their content will work, but what they don't seem to understand as well as people like me, who actually buy advertising and know what the market is like, is that they will never be able to replace circulation revenue and classified revenue, which they've lost forever online, with advertising revenue online. It will just never happen. The economics of that advertising market don't work.

Q: So what’s the best pricing model instead? In your memo, you suggested a combination of micropayments and monthly charges...

Ultimately, what you're going for is to get people to take annual subscriptions. The best way to do that is to have people able to buy bite sized portions until they decide they want to save money by getting the whole thing for a year. I suggested some examples of how much you pay for a day, how much you pay for a year, but ultimately if the Times could get $55 a year, 15 cents a day, they would have a very good business. The alternative—no one has presented the business model for the alternative, the model by which if you charge nothing you'll have so much advertising revenue online that you'll have a viable business. It's never happened. The closest thing there ever was when you had the big three broadcast networks in the 1950s through 1970s who shared 90 plus percent of all people watching television. Even then their news divisions didn't make money, but the networks made money. Now the networks don't make money because they're competing with a hundred different cable channels and online and everything else. There's never, repeat, never been an example of large scale quality journalism making it just on online advertising revenue. People can say, well, the Internet deserves to be free. Well, reporters deserve to be able to feed their children and they can’t do that if you give the stuff away.

Q: One criticism of your memo on the topic has been that readership would drop significantly if The Times became part of a payment system.

Oh, it will definitely drop off, for sure, and it will take time to get back. It's the laws of supply and demand, you'll never have as many people who will use something that costs money versus something that's free, that’s kind of obvious. So yeah, they'll be a drop-off, but the prices for their advertising per thousand eyeballs are plummeting because there's so much competition and they can check and see where they get the best response and search advertising and highly targeted advertising gets the best response. It just doesn't work. But that's also where the "last man standing" argument works, you're not just going to flip some switch on some magic day and expect everything to be wonderful. There will definitely be a dip in revenue while you make the transition, but when you come out the other end you will have what great newspaper franchises have always had—a lot of paying customers driving the enterprise to make its reporting as good as possible and advertisers who want to reach those people because they are committed to spending time with and reading the publication.

Let me give you an example. I really like Joe Klein, who's a columnist for Time Magazine. But just to make sure I'm not tempted while I walk past a newsstand to buy Time Magazine, what do they do? They email me his column because I signed up for it. It's like saying "don't give me your money." It's insane. They even email it to me sooner than I can get it at a newsstand! What's the purpose of that other than to commit suicide?

Q: But isn't there an issue with a unilateral switch to a pay system—It seems that other papers and wire services can step in and fill the void with their own free content to steal customers from the Times.

The question is how many people will say "I really want the New York Times and I'll pay 15 cents a day for it." Will it be the same amount who take it for free? No, but i think because the competition is falling back and deteriorating rapidly, many will. That's part of the risk here and it's part of the transition period, but think about the opposite. The opposite is saying that our report on what happened yesterday in Albany or the Gaza Strip is the same as anyone else's, so if we ditch ours people will read it somewhere else. I hope the people who occupy the New York Times building don't think that's true, that they don't think it's fungible, that they don't think it's like everyone else's. If it isn't they should just buy a bunch of wire service and not pay $200 million a year for staff.

Q: So the key would be keeping the quality a cut above the competition then.

Just think of how much fun it would be to be a journalist working there—all the promotion and advertising is geared towards saying "We have really good stuff, our stuff is better." Then the whole impetus in the newsroom is to say "We have to make it better, if we don't it will become fungible." Suddenly, the editorial plan becomes the business plan. Today if you give it away for free everything you spend on journalism becomes a cost on the way to getting advertising, just something to run so you can get ads up. But if you're paid for journalism, there's more incentive to have the reporter stay an extra a few days or travel more to get the story so readers will say "That's worth more than the others, I'll pay more to read it." It changes the culture back to what it was and what always should be, which is that we make our way in the world by the fact we do really good journalism.

Benjamin Sarlin is a reporter for The Daily Beast. He previously covered New York City politics for The New York Sun and has worked for talkingpointsmemo.com.