Interview, Steve Brill, Part 2: Lessons Learned From Contentville

This story was written by Staci D. Kramer.

Media Central survived the bubble burst (not much longer but that's another story); Brill's media and online ideas did not. He shut Brill's Content, Contentville and the editorial operations of Inside.com after 9/11 (Inside.com became a short-llived portal for Media Central content), then withdrew from publishing to write After, a hefty book on the catastrophic events. He gained an interest in airport security from his research and followed the book by founding Verified Identity Pass,Inc. to create a secure but easy way for frequent travelers to get through airport security. Brill is now vice chairman of the company. Recently, though, his passion for fixing journalism re-emerged and yesterday, Brill, Gordon Crovitz and Leo Hindery, Jr., went public with Journalism Online, LLC. We spoke Tuesday about the new venture, covered in Part 1, the New York Times Company (NYSE: NYT), lessons learned from the past and more. Here is the second part of edited excerpts from our conversation:

Staci D Kramer: To take the Wayback Machine, you were very ahead of this idea back in 2000 and 2001. I remember what it felt like when our stories went behind the wall and how much buzz died. A lot of that has to do with the fact that it was available to so many people to begin with, that it wasn't really on a trade model. What did you learn from that experience that you take in to this?

Steve Brill: I certainly learned that even then, as a tech matter you could do it. Now you can do it much better, much easier, much more seamlessand I've learned there we didn't have an advertising piece of it, an advertising model attached to it. ... In retrospect, the way to make it work much better is what the (Wall Street) Journal does. They have a ton of advertising revenue because a ton of stuff is available for free in different ways but a certain significant percentage, bought by a certain percentage of their hardcore readers, produces significant circulation revenue. What it comes down to is the same old equation that print publishers always had to deal with, which was how do you balance advertising revenue with circulation revenue? If you just worried about selling advertising, the more eyeballs the better but if you're worried about cheapening your brand and therefore your circulation revenue, you have to balance it.

Cable programmers are trying to figure out how to bring their content online in the most valuable way without damaging their licensing fees. Maybe you only make it available to people who already pay for it. .

I think Jeff (Bewke) has a pretty good idea there.

The difference is cable [so far] isn't talking about taking things that are already available away.

But there's not that much in that world that's already available.

In this world, there is though, and how do you do that?

With difficulty. But I think if you gradually turn off the spigot, you do a lot of sampling, you put some stuff behind the wall after a while, then you put some more stuff .... Here's the challengeit's a very explicit, simple challenge. I have a 24-year-old daughter who is a first-year law student and [last weekend] when I came down to the kitchen, she's sitting at the counter, she has her laptop open and she's reading the New York Times. I pick up the real New York Times and I hand it to her and say, 'Sophie, here, you can read the paper.' She says, 'No, I'd rather read it this way.'

Arthur Sulzberger is giving her the product she prefers; the only difference is he's giving it to her for free. The one she doesn't prefer is $200-$300 a year. How do you train her to begin to pay for that? Everyone always thought that was impossible but then Steve Jobs figured out a way. My kids don't steal music anymore because he did two things: he made it relatively inexpensive, but most important, he made it easy.

That same little tableaux in my kitchen is her grandmother, who lives in Cherry Hill, NJ, and gets the New York Times delivered, says, 'I'll take it.' She's 81 years old, she's paying $200-$300 to get it delivered. That is not a very good demographic deal for the New York Times if my mother, who's 81, is consuming their product and Sophie's not.

Have you talked to Arthur at all?

I just took a vow not to talk about whether and to whom I've talked to at the Times. I've had discussions with people at the Times.

The other half of this ... in the company that I currently have been running I buy a lot of advertising. The first thing about online advertising is it's so accountable. It's accountable there's a lot of information in a world in which there's no information. If I put a 30-second spot on primetime NBC I have no idea whether that sold my product or not. If I put an ad online, especially for a product like Clear, where you go online and sign up for it literally, you have a cost per acquisition for everything online. What I found was general interest newspapers are markedly ineffcient compared to websites I'd never heard of. We were advertising in the Denver Post and the (now-shuttered) Rocky Mountain News until our ad agency said what about Kayak or WeatherBug? In WeatherBug you can put ads on for anytime someone in Denver looks up the weather in Atlanta, you can serve your ad. ... Better yet, Expedia can sell us ads for anyone who makes a plane reservation out of any of our airports. Then there's search. You just can't match that kind of targeting.

What you can see is the yield from advertising online, the prices are just going down and down at more general-interest websites, even if they're more targeted. The travel page of the Denver Post is just not going to be as good as an ad on Expedia for people sitting in Denver making plane reservations. It'll bring you advertising but that's not the silver bullet. ... Imagine if you started a fashion magazine and you were selling pages in your magazine, then imagine every day a new fashion magazine started, so inventory just grew exponentially. That's what's happening online. The supply is just growing so fast that the value of the inventory is going down.

Can you bring enough income to more than make up for it online and make up for print?

If, hypothetically, you could get the 7 percent or 10 percent of your hardest core visitors to your newspaper website, if you got just those people to pay and the others cotinue to get it for freeyou can figure out how to get that doneyou would probably lose 2-3 percent of your ad revenue and create very significant circulation revenue. That's what the Journal's done. That's what FT has done. I know those are financial publications but that's even what the Arkansas Democrat Gazette has done.

By Staci D. Kramer