Answer of Bill Densmore to question about payment technologies to finance journalism
Bill Densmore, founder of Clickshare Service Corp., providing the following answer to a question posed by Peter Krasilovsky of Krasilovksy Consulting and following comments by Stacy Kramer of PaidContent.ORG. Densmore spoke at "Democracy & Independence: Sharing News & Politics in a Connected World," a summit conference June 29, 2006 at the University of Massachusetts at Amherst during a panel, "Can Free Media Sustain Democracy?."
QUESTIONER: What new technologies are out there that might provide an alternative?
STACY KRAMER (PaidContent.org): the one I mentioned before where the reader doesn't pay for it, but the advertiser pays for you to look at it before you see all the content that's behind a wall, is one model that is gaining some steam and more places are trying it because even though it irritates the heck out of a lot of people it enables them to actually function economically and viably. And that's what they're trying to model between the two. It doesn't work for everybody, it can't work for everybody. But it's an interesting option.
PETER KRASILOVSKY (Krasilovsky Consulting): "Bill, why don't you address that question, because you probably have more insight than anyone else."
DENSMORE: "Well, that's a puffball question. What you're referring to is I helped start a company a number of years ago called Clickshare Service Corp., which provides a system which some have called micropayments, that makes it easy to have an account at one website and buy from other websites. But what we've found is the advertising model has been so durable and has grown so quickly on the net that there really is not a lot of interest, frankly, in adopting even a partially paid wall.
I think -- I was talking to somebody last night who was describing the growth in their online revenue vs. the decline in their print revenue. And they're very excited about the growth in their online revenue. But the fact of the matter is that their print revenue is shrinking must faster in real dollars than their online revenue is increasing. And so as somebody else in this organization said to me a couple of months ago -- and you can tell by the size of this number what order of magnitude the organization is -- they see something like a $400 million gap between the kind of size of business they are now and the kind of size of business they will be in 10 or 15 years if they are just an online business.
And so the interesting question to me is: "Will advertising come along well enough to sustain the amount and quality of watchdog journalism that we having going on now? I don't really have any more insight than anybody else at this point. I think it's an open question. I think the trends are worrisome to me and to others. And so the question to me is at what point do folks say, "OK, I've grown my market enough with free, and I can see that even as much as I grow my market with free I'm never going to end up with enough revenue to do the kind of business I'm doing now."
Publishers are going to be faced with a decision, and the decision is going to be, "Do I abandon journalism, as I've known it, or do I become a much smaller business and a much smaller audience in order to support journalism?" Or, the other thing that has to happen is there has to be a change in the perception of the audience, or the former audience out there -- the participants -- that they are going to ante up and be willing to pay, as many have with some of the most successful public radio stations around the country."
BARRY PARR (publisher, Coastsider): Can I just respond to that quickly. I think it was Vin Crosbie who often repeats the statement that it would take 20 to 40 online subscribers to pay for a single print-subscriber revenue stream. The problem is those two things are not substitutable. You cannot assume that you can hang on to the print suscriber. And in fact the business models are changing so quickly that it is just simply not possible. And what you see here is really a very early portion of a wave of innovation that we are going to see over the next five years. This is really just the beginning. And you can see that money is becomming available and energy is going into these kinds of projects. And people are still thinking about the business models. But ultimately I think it does boil down to advertising. And there has never been a lot of money for investigative journalism. I think that is another thing we've got to acknowledge -- what a small amount of money that really is compared to, features, for example. And I think we want to be careful in remembering that."