Business models

This month’s Carnival of Journalism, hosted by Michael Rosenbaum, asks the provocative question: “Can a good journalist also be a good capitalist?”

I’ll probably open myself up to charges of being “ageist,” but here goes…

Working at a university journalism program (University of Colorado Boulder), I’ve come to the conclusion that the next generation of journalists will be better capitalists than older journalists. Because what I’m seeing on this campus, and I’m sure it’s similar at other university journalism programs, is a growing number of students who are interested in business-model innovation for news. No, certainly not a majority, but enough to feel some optimism.

More new journalism graduates will want to build new news businesses, because they’ve grown up to see lone bloggers starting on a shoestring build sizable media enterprises

That’s logical, since many journalism students (but not all, in my experience!) recognize that the old news institutions that try to cling to their old business models are crumbling, and they understand that to forge a career in journalism they will need to come up with new ways for news entities to be profitable, or at least sustainable — whether they go to work for an existing news organization or create a new digital news enterprise from scratch using today’s and tomorrow’s inexpensive or free digital publishing tools.

At the Digital News Test Kitchen, I’m working with two graduate students this semester who have business-model projects and research under way: one focusing on collegiate news media, the other on niche (music/entertainment) news media. One Journalism master’s student just asked me for a recommendation letter to support her application to CU’s MBA program, so she can work on dual master’s degrees while she’s here in Boulder. (That’s fantastic; I only wish that another 10 students would announce similar intentions.) A journalism student and Test Kitchen researcher who received his master’s degree in December now works for a national non-profit news service based in Boulder, serving as a digital-media and business-model strategist.

Looking elsewhere, we’ve seen a growing number of entrepreneurial journalism programs, like the Tow-Knight Center for Entrepreneurial Journalism, run by Jeff Jarvis at the CUNY Graduate School of Journalism; the Missouri School of Journalism’s interdisciplinary Entrepreneurial Journalism program; and at Arizona State, the Cronkite School’s Knight Center for Digital Media Entrepreneurship.

At many journalism schools and departments that lack that kind of commitment and devotion of resources, entrepreneurial journalism courses at least have been added. That’s the case at CU-Boulder, with a course called “Adventures in Entrepreneurial Journalism,” which has been co-taught by faculty from Journalism and the Business School’s Deming Center for Entrepreneurship.

I have to believe that today’s crop of journalism graduates will embark into the world of news (those that choose to work in journalism) devoid of the attitudes that were instilled in my generation of journalism graduates: that editorial and the business sides of news should be separated by a wall, lest the latter contaminate the ethics of the former. I think that more new graduates will want to build new journalism businesses, because they’ve grown up to see lone bloggers starting on a shoestring build sizable media enterprises (TalkingPointsMemo, PaidContent, the Drudge Report, etc.). And they’ve been exposed to the notions that entrepreneurship and journalism now do mix; you don’t have to start with a big pile of money to start a media enterprise; and it is ethically possible to seek both truth and cash.

Can older journalists who’ve crossed from print and broadcast into digital become successful capitalists? Of course there are the exceptions, but I’m less optimistic about my age peers than about the students I encounter daily. For every Nick Denton (a British former newspaper journalist who built the Gawker empire and is every bit the successful capitalist) there are probably a hundred former old-media journalists scraping by with their own news websites covering their communities and still doing the work they love, but not having much of a chance that their small media businesses will grow beyond small.

That’s not to denigrate smaller online news entities that have emerged and are filling the holes left by the many layoffs of journalists from old-media organizations. We might call those local news websites (the ones that are for-profit) capitalism with a small “c”; they can serve their communities well, create some but not large numbers of new jobs for journalists, and give their founders a non-extravagant earnings level.

But my suspicion and my prediction is that it will be the next generation that will include journalism entrepreneurs who, for the lucky ones, will create journalism-based enterprises that grow to be represent Capitalism, with a capital “C.”

Next month’s Carnival: Hosted by me, Digital News Test Kitchen

I’ve been wanting to host a Carnival of Journalism, and head organizer David Cohn has agreed to let me do it for February 2012. So watch for the announcement soon of next month’s question, hosted by the Digital News Test Kitchen at CU-Boulder and me.

I missed the last couple Carnivals of Journalism, but it’s time for me to get back into the groove. This month there is a question each for journalists and for technologists. My question is:

If you are a journalist, what would be the best present from programmers and developers that Santa Claus could leave under your Christmas tree?

I’ll overlook the pro-Christian slant (hey, what about under the FSM tree?!) and play the game.

What I’d like to receive is a written contract from some developers and technologist friends committing to spending a year of their time working on projects that are purely related to the betterment (or perhaps resurrection is a better word) of journalism and informing communities, utilizing the latest in technology developments and know-how.

Not to be too restrictive, they can work with me, my colleagues and students in the Journalism program at CU-Boulder, and/or journalists of all kinds in a variety of areas: New crowd-funding systems for news. … New forms of and platforms for crowd-sourcing. … New forms of storytelling that better engage news consumers, and that support making money from readers or users. … New algorithms to identify quality and credibility in news content, and filter out the best stuff (not just the most popular). … New systems to not only entice online and mobile users to pay for news and/or news-related services, but also make it easy and frictionless to make payments. (Could you build a Spotify for news, please?) … New algorithms to better mine the social-media stream (or more accurately, raging torrent of a river) for news which can be personalized to individual readers’ locations and/or interests. … Well, I could go on and on, but I’ll spare you.

The point is, developers, programmers, and technologists are in high demand. On my campus, our Computer Science Department is hammered with requests for partnerships and collaborations not just from Journalism, but from all manner of disciplines. If I could get a half dozen CS students to work with the Digital News Test Kitchen for a year, I’d be in heaven.

Out in the “real world,” technologists seem to have better things to do than concentrate on altruistic technology projects that serve to better inform communities or help clueless news executives adapt to the digital age. Where’s the potential big payout in that, after all? The promise of big money is everywhere except in the news industry, it would seem. Venture capitalists don’t want to invest in news ventures, for the most part, so why should individuals with in-high-demand technology skills work within a field where money is more likely to come from philanthropists and foundations than VCs?

Yet I know that there are some technologists who “get it” — who understand that journalism is in crisis; that the deterioration in quality journalism is immensely corrosive of our democracy; and that solutions for improving the sorry state of today’s journalism will require the expertise and effort of technologists working with journalists. I meet some such people at our local Hack/Hackers Colorado meetings. I read about them being part of the Knight Mozilla News Technology Partnership.

There just aren’t enough of them to go around. Certainly there aren’t enough technologists willing to pitch in their expertise to help journalists figure out how to get out of the mess we’re in.

So I’d like Santa, or the Flying Spaghetti Monster, or whoever puts stuff under my holiday tree to find a bunch of talented technologists looking for a challenge like leveraging emerging technology to reinvent a floundering industry which just happens to be vital to the future functioning of our democracy. Maybe they can consider it akin to serving in the Peace Corps for a year; they’ll do something important and good for society, before returning to the work where the money is.

I just renewed my subscription to Wired magazine. $12 for another year of the print edition, plus I get the tablet edition for free to read an enhanced edition on my iPad. What a deal!

Alas, I don’t want the print edition! I’d prefer to receive only the iPad edition and reduce my carbon footprint a bit by causing one less copy of the magazine to be printed, shipped around by trucks, and so on. Also, I prefer reading on my iPad over print magazines, the latter which tend to get lost in piles of paper and books around the house. But for the $12-a-year renewal offer, I have to get the print edition.

Sure, I could opt for paying for just the digital-tablet edition with no print delivery, but that would cost me $19.99 a year. (That also happens to be the price advertised for new subscribers on the Wired website for print edition and tablet subscription. The site doesn’t offer tablet-only for that price, as far as I can tell; you can pay $19.99 a year and avoid the print edition by purchasing a digital edition via the iPad app.)

If I was truly committed to avoiding the extra resources consumed and pollution created by taking the print edition, I could of course just pay the extra $8 a year. It’s not much, right? I considered that, but I’m on a meager university salary and my wife is a public-school teacher, and in this economy we’ve had to watch expenses and cut back on some things (bye-bye, exorbitant cable-TV bill!), so if I have a chance to save money, I do. (I’ll donate my printed Wired magazines to my wife’s school library.)

Besides, what logic is there to charge subscribers more for getting less (i.e., digital-only subscription), and charging more for subscribers who want to do the right thing environmentally? It’s stupid.

Well, it’s not stupid from the publisher’s standpoint, of course. Wired and its parent company want me and others to continue to take the print edition, whether we want it or not, because those colorful print ads that fill up the magazine bring in lots of money. It won’t do to encourage or support subscribers giving up print in favor of digital only, because the print ads would then bring in less money.

I get that. But it pisses me off that in this media transition that we find ourselves in, print publishers resort to discouraging the digital transition and encouraging subscribers to continue receiving a product that consumes physical resources (trees) and pollutes the environment (trucks and delivery).

It’s not just Wired. Making the cheapest option for newspaper and magazine subscriptions be print + digital is a current major trend in media business models.

In another few years, perhaps we’ll be past such stupidity (I mean in an environmental sense, not a business one). For now, all I or any magazine or newspaper subscriber who wants a publisher’s product and are caught in such a situation can do is gripe, or be altruistic and pay more.

I don’t want to break my record of contributing to all of the resurrected Carnivals of Journalism, but this month I’m just too darned busy. However, a few years ago, I did write up the lessons I learned from a start-up company where I was one of two co-founders: the Enthusiast Group. It was published as one of my then-regular columns for Editor & Publisher Online. (I’ve also spoken publicly about lessons for the news industry from our experience trying to make a business from niche grassroots journalism and online+physical social networking.)

Since my old columns (15 years worth!) are no longer available at EditorandPublisher.com (speaking of Fail!), I’ll link to a version of the column that I have on this, my personal website:

An Important Lesson About Grassroots Media

Harking back to a failure from 2007 does not imply that there aren’t other Fails I could write about and share lessons learned. But those will have to wait.

I’m looking forward to reading about others’ failures (but more importantly, what can be learned from them).

Fail forward!

Monday marks the rollout of NYTimes.com’s “metered paywall,” which I wrote about (and criticized) here last week (before going on vacation for a week). Here are a few quick developments and additional thoughts about what is an important milestone in the digital-news space:

What do you think of the NYT paywall? Tell Columbia researchers!

Columbia University researchers Shahzeem Attari and Jonathan Cook are conducting a survey on attitudes about and intentions of using (or not) the new New York Times metered paywall. Take the survey here and help them get a good number of responses so that the results are meaningful. (They’ll also appreciate it if you share the link further.)

Can NYT lower the price after starting so high?

I’m sticking to my criticisms as expressed in my last blog post about the NYT paywall. One thing that absolutely confuses me is why Times executives would choose to begin the program at such a high price for digital access ($15 per 4 weeks for web + iPhone/smartphone app; $20 per 4 weeks for web + iPad/tablet app; and $35 per 4 weeks for web + iPhone/smartphone app + iPad/tablet app). Starting high will make it awfully difficult to lower the prices to levels that will work for more than the few NYT supporters willing to help out the company.

Last week, NYT’s David Carr wrote a defense of the program and pricing, and reading through the user comments is telling. Lots of commenters said that they would be willing to pay $4.99 a month; that number appeared often. Indeed, many indicated they’d sign up in a heartbeat for a digital plan (no print edition) that allowed access to NYT content on any device (PC, laptop, smartphone, tablet) at that price. But the vast majority in that comment stream balked at the Times’ high asking price. They’ll go elsewhere for quality free news online, or work around the paywall limits, which is pretty easy to do.

Let’s imagine that this is an accurate reading of public reaction to the Times’ pricing, and that NYT executives wake up to realize that $4.99 is the monthly price that will bring in the greatest success all-around, in terms of dollars incoming and number of paying subscribers. The people already paying the exorbitant rate will all have to get refunds based on the new rate, I guess — or feel like dummies for paying so much in the first place.

Wouldn’t it make more sense to start with a (pretty standard-model) charter rate that was very low, then raise rates later? Odd.

‘We need this to survive!’ … zzzzz

Catching up on reading after my vacation, I spotted David Winer’s March 17 piece, “Comments on NYT paywall announcement,” and he makes a strong point that I’m 100% in agreement on: The Times’ pitch for people to begin paying for news online is that “We need this to survive.” … Fail!

So much better, Winer wrote (and again, 100% concurrence here), would be an offering of value to consumers. “Wouldn’t it have been wise to, at this juncture, offer something to sweeten the deal. Something truly exciting and new that you get when you pay the money. Something that makes your palms sweat and your heart beat faster?”

This supports my notion that premium memberships are a smarter idea for most news companies that want to bring in more revenue online. Currently, the Times is asking for people to pay for something that they’ve received free online for many years; that’s a difficult sale, when other quality news providers continue to be free. To compound it, the Times offers nothing new to “sweeten the deal.” … Fail.

False charge: I say news should be free

My last blog item got tweeted and shared quite a bit, and I spotted some pushback like this tweet: “NYTimes’ new pay model: They blew it!, or Why I want to bitch about paying for stuff on the internet (Via @steveouting)”

I need to push back on that one. In the case of NYT, I do think they can succeed by charging. As explained in my last post, I believe that a larger success will come from asking a much, much lower monthly fee; I suggested 99 cents for web-only full access to NYT content, and $1.99 for all-device access. As noted above, David Carr’s commenters indicate that $4.99 a month might be a price point that fills the NYT Co.’s bank account nicely.

No, I’m not bitching about paying for stuff on the Internet. I’m criticizing a pricing model that reflects an old-media view of doing business on the Internet and fails to address the realities of the Internet (one of them being that under-30ies are extremely unlikely to pay for NYT content online, so the debut price structure completely writes off younger readers; how smart is that?). If NYT execs followed my advice on the 99-cent/$1.99 pricing, they might still have a chance at the younger audience. Apparently they don’t care, which I find appalling. I guess the younger crowd can continue getting their news from Jon Stewart and Stephen Colbert. Oh, and Arianna Huffington.

Also, a high rate charged by ONE news provider damages the rest of the industry. If I as a typical consumer decide I love the Times so much that I’ll fork over $15, $20, or $35 every 4 weeks for access, I am extremely unlikely to add any other paid news sources that also demand payment, including my local newspaper website, should it charge. The more general-interest news sites that charge for access to non-premium content, the amount any one can attract will dwindle over time. There are too many quality news sources available online for site-specific charging to work over the long term among news websites.

Back to the premium-membership model: I think that for general-interest newspapers that are NOT the New York Times, free general-news content and a fee for premium “stuff” is the strongest option. What that stuff is I’ll address at a later date, after some research by a few of us at CU-Boulder is completed or at least further along.

Thanks, Lincoln, for the free NYT subscription

Finally, here’s another NYT-paywall development that has me scratching my head. Lincoln (the car brand) sent out e-mails to (I’m assuming) frequent-visiting NYTimes.com registered users, including me, offering a free NYT web + iPhone/smartphone account for the remainder of 2011. Yes, I accepted the offer; presumably I’ll be getting e-mails from Lincoln marketing a car I’ll never buy.

I don’t grok the logic of this, other than that Lincoln probably waved some nice cash in front of the Times. For those who pay $15/$20/$35 per 4 weeks, won’t they feel like chumps if they didn’t receive this offer and learn about it?

I don’t know NYT execs’ logic on this; perhaps they’ll let me know. Perhaps the e-mail went out to long-time registered NYTimes.com users. If that was the case, that would be a group of people long used to free access and difficult to transition into paying a high monthly fee. So this offer could be a way to ease them toward paying later on. … Perhaps the e-mail offers only went to older registered users — the target market for a brand like Lincoln. Though the problem with that is that older NYT readers are the most likely to pay a high monthly NYT subscription fee! … What’s your analysis of this move?

If any non-niche, general-interest news organization could successfully pull off a digital “metered paywall” model, I thought it would be the New York Times. Alas, today the Times announced its plans and pricing, beginning March 28 in the U.S. (and being tested first in Canada).

I’m disappointed. This is really a bad move that shows how Times management thinking remains stuck in the past. (Or perhaps it’s classic “decision by committee” dysfunction.)

First, the details:

• Home subscribers (to print edition) get full access to NYT digital content across all platforms, no limitations: website, tablet access, smartphone access. No extra charge.
• Non-print subscribers:
  • Using website: 20 free articles per month on NYTimes.com before hitting the paywall. Articles reached via an inbound link (blog, Twitter, Facebook, search, etc.) will not be counted against the 20.
  • Using NYT smartphone or tablet app: “Top News” sections free; accessing anything else will hit the paywall.
  • Digital subscription package #1: $15 every 4 weeks. Full access to website and smartphone app.
  • Digital subscription package #2: $20 every 4 weeks. Full access to website and tablet app.
  • Digital subscription package #3: $35 every 4 weeks. Full access to website, smartphone app, and tablet app.

Wow, there are so many flaws in that strategy. Let me count them:

1. 20 articles a month free, or 1 article every weekday for the 4-week subscription period. This means that nearly everyone who visits NYTimes.com regularly and directly will hit the paywall — and the majority will turn away. What this will do is ensure that an increasing amount of NYTimes.com traffic will come via social-media links and search. The NYT homepage will become much less of a draw to many people. …
   I would have set this much higher if the monthly fee had to be as high as it is. Many casual users who will not pay will hit the paywall with the announced plan; it would have been better to limit paywall exposure to only NYT’s most-frequent web users; i.e., those most likely to pay.
    

2. Pricing is absurdly high. Yes, the New York Times is a great news organization producing the best journalism in the world. But faced with those fees when there are so many other quality news websites a click away, a small percentage of NYTimes.com visitors will pay. …
   My suggestion for smarter pricing: 99 cents every 4 weeks using the 20-free-articles-per-month model. $1.99 per 4 weeks for full website access plus smartphone AND tablet app full access. Here’s why: NYT has not learned from the Apple experience. Apparently, NYT executives would rather have a small number of elite digital readers pay a high monthly fee than millions of people paying iTunes- or App Store-like fees. What the high price point will do — because of the low limit on monthly free articles — is dramatically diminish the Times’ importance as a global news organization, ceding its longtime lead to other credible news organizations that choose not to charge online. A 99-cent price point would be a “no-brainer” for many people who like the NYT brand, just as paying 99 cents for a song on iTunes or an iPhone/iPad app is an easy impulse buy: “Why the hell not?! It’s only 99 cents!”
    

3. Separate fees for smartphone and tablet app access goes against the trends in media. Increasingly, as consumers add more gadgets capable of consuming news, more people will be switching between viewing news on a laptop or PC, smartphone, and tablet. For that privilege, the Times wants $35 per 4 weeks. To separate pricing for smartphone and tablet apps flies in the face of where media consumption is heading. And that price will attract only a small, affluent customer base. $35 per 4 weeks for ONE NEWS SOURCE online? That is completely off the charts for non-niche news. …
   My solution is simple: one price across all platforms, to make it most convenient for today’s early adopters and tomorrow’s mainstream news audience. See my $1.99 suggestion above.
    

4. The high digital price point is obviously designed to retain high-paying print subscribers and extend the life of the print newspaper. After all, if the Times followed my low-pricing recommendation for digital, many print subscribers would be inclined to dump their expensive print home-delivery subscriptions. Fine, I understand that, but it’s a backward-looking strategy that hobbles the potential success of the digital side. I contend that no news organization — even the New York Times — can succeed long term when it makes decisions based on looking over its shoulder at the dying legacy product.
    

5. Finally, the Times overlooked offering, ALSO, a higher-priced “Times Premium” membership. Charging 99 cents or $1.99 per 4 weeks is probably the most they can get the majority of people to pay for their news alone. But NYT could also offer a higher-priced premium membership that included not only full access on web, tablets, and smartphones, but also other valuable benefits that make it worth paying more. (I won’t get into that now. It’s another blog post, and I’m running a research project at the University of Colorado Boulder looking at effective models for news premium memberships — so more on that another time.)

I hope someone from NY Times management will respond to my criticisms. If they do, I expect that the justification for this announced pricing model will be that they can’t do harm to the newspaper product. I guess that’s the way it is. But in my view, 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.

Once again, the high grades go to the “new” digital media players. I’ll give the Times a “D.” (That at least gives me a tiny fudge factor in case the Times proves me wrong. But I really doubt it.)

2010 was such an interesting, eventful year in the media business. But I expect that 2011 is going to bring even more change. Indeed, I hope for more change. Here are some of my wishes for the news and media worlds for the year ahead:

I wish… for Murdoch to fail, quickly

I wish… for NYTimes.com’s “metered” paywall to flounder

I wish… news publishers will wake up to the membership model, and learn to SELL

I wish… that Wikileaks and mainstream news providers learn to get along

I wish… that many newspaper executives will retire

I wish… that the cost of developing mobile apps will fall greatly

I wish… that non-profit investigative news organizations have a GREAT year

 
What are your media wishes for 2011?

In American Journalism Review, long-time newspaper analyst John Morton yet again has trotted out the tired argument that the newspaper industry made a colossal mistake years ago by giving its news away free on the web.

“So what should the nation’s dailies have done to combat the Internet onslaught? Erecting paywalls to protect their most valuable resource – the information they gather – is obvious.”

(There’s more nuance in Morton’s argument, but read it yourself; I won’t waste your time repeating his other points.)

This has become a political argument within the media world . It reminds me of the politics of climate change:

• Climate-change debate:
  • Vast majority of scientists believe humankind is adversely affecting climate and that we are headed toward catastrophe, and must act quickly to implement solutions.
  • Vocal minority of entrenched interests (nearly all non-scientists) makes so much noise arguing that climate change is a myth that our political system is paralyzed and little progress is made toward changing public policy to support finding solutions.
  • We well may end up discovering that climate change is “real” when its effects are so detrimental that the deniers finally have to shut up.
• Newspapers’ mistake was free content on the web debate:
  • Most experts in digital media recognize that the web is different than “old media” (especially newspapers) and charging for commodity news content is fool-hardy when the environmental factors include a massive number of competitors and potential competitors, enabled by a very low barrier to entry. In other words, putting up newspaper-website paywalls early would have enabled a wave of online-only news entities that probably would have killed many more metro newspapers by now than has been the case.
  • Powerful and vocal old-media players like Rupert Murdoch have amped up the volume on a disproved notion (“newspapers should have charged all along for news on the web”), and a modest but growing number of old-media publishers now are trying paywalls online. This is happening despite numerous failures by metro newspapers trying web paywalls in the past, from the web’s earliest days to recent years (remember “TimesSelect”?).
  • My expectation is that we’ll find out soon enough that paywalls on general news by newspaper websites truly don’t work (except perhaps in some non-competitive small markets), but the result of some following Murdoch’s lead will be the death of more metro dailies.

Don’t mistake this for a “news wants to be free” screed. The right business model for news online very well may include as a component people paying for some content or services, and there are many possibilities other than Murdoch’s “hard paywall” as demonstrated by The Times/Sunday Times.

But resurrecting the “Original Sin” argument tends to get news people thinking in black-and-white, which won’t solve the problem.

I’m sticking to my predictions. Climate change will prove out. Newspaper website paywalls will not be the solution that saves old-media news organizations.

As I noted yesterday, web donation network Kachingle has launched a good-natured guerrilla marketing campaign to allow Kachingle users to financially support any of NYTimes.com’s 50-plus bloggers. The theme is “Stop the Paywall!” (as in, NYTimes.com’s upcoming “metered paywall,” set to debut in early 2011) … “Keep the NYT Blogs you love in the open web.”

And as I predicted yesterday, Times executives have decided to put their lawyers on the case and send a cease and desist order to Kachingle founder Cynthia Typaldos and CEO Fred Dewey. So, rather than let an innovative marketing campaign by a tiny company run its course, Times executives are doing Kachingle a potentially big favor by flexing their legal muscles.

If this gets much press/Twitter/blogosphere attention, then Kachingle will benefit from a big boost in visibility. (Perhaps NYTimes.com could run a news story about the dispute!)

Typaldos today blogged about her encounter yesterday with Times executives: “But we love you The New York Times. My conversation with Mr. Digital and Mr. Legal and Mr. Paywall.” In her blog item, she recounted the discussion and reported that she would be receiving a letter soon:

“They said they were going to send us a legal document via FedEx called a ‘cease and desist’ order. I have never received one of these before so it’s going to be quite exciting. As soon as it arrives I will scan it and post.”

It doesn’t sound like Typaldos intends to back down:

“I told the three NYTimes executives that we have the same goal — saving the NYTimes Blogs from obscurity. Finding a new business model for news. At Kachingle we passionately believe that paywalls are truly bad … they cut off information from the open web, they dampen social discourse, they exclude people all over the world who cannot afford to be nickel-and-dimed-and-quartered-and-dollared for quality content. We believe paywalls are the enemy of democracy. We believe in our mission, and we will not back down.

While I can’t imagine it’s fun to be threatened by a huge media company’s lawyers (and there are financial risks in fighting back, of course), there’s clearly potential for an upside. I’m reminded of a former business partner (our company died in a bit less than two years from launch) who, when traffic to our websites failed to grow sufficiently fast enough, bemoaned that we needed something that would make a bigger splash. Getting sued by a big media or other company and the accompanying publicity and controversy would certainly do the trick, he said. I don’t believe he was joking. (He was a veteran of several previous Internet start-ups, and now is a partner at one that’s doing very well.)

I’ll keep watch on what happens next and report any interesting developments.

(Disclaimer: I have written about Kachingle in the past as a former columnist, and in this blog; I’ve also done a small amount of consulting for the company.)

This is an interesting case of what I guess would be termed “guerrilla marketing.” Kachingle, an online user-donation network that aims to financially support many websites and blogs, has begun a campaign to “STOP THE PAYWALL” at NYTimes.com.

First, some quick background:

• NYTimes.com has announced that it will put up a “metered paywall” on the site in early 2011. That means that site visitors after viewing an as yet unspecified number of stories in a month will be asked to pay to subscribe to the site or otherwise pay to access more Times content. It is likely that web users referred via links on Google, Facebook, Twitter, blogs, etc. will not be counted against the monthly free allotment. (In other words, it’s a porous paywall, unlike the “hard” paywall that’s on Rupert Murdoch The Times (UK) website; that paywall allows no free content, and only paying customers can see beyond the headlines.)

Kachingle’s founders don’t believe in paywalls for general news websites, and they think that they have a better idea: Get readers of news across many sites and blogs to band together, pay $5 a month to Kachingle, then have Kachingle distribute that money based on individual users’ tracked visits to sites and blogs that they like (and that display Kachingle “medallions”).

The Kachingle guerrilla marketing campaign has specifically targeted the 50-plus blogs published on NYTimes.com, by allowing Kachingle’s paying member (I’m one) to “Kachingle” or support any of those blogs — without NYTimes.com’s cooperation. (I regularly read some of the NYT blogs and have Kachingled the ones I like. So, when I visit those blogs from now on, some of my $5 a month will start going to NYTimes.com bloggers — that is, if they choose to sign up to collect it.)

Since the Times doesn’t appear to want to do business with Kachingle or support its donation scheme, Kachingle founder Cynthia Typaldos and CEO Fred Dewey had their staff create browser plug-ins for Firefox and Chrome that allow a Kachingle member to support the NYTimes.com blogs. With the plug-in installed, when you visit one of the blogs, a thin Kachingle medallion banner appears above the page, pushing down the rest of the NYTimes.com page. That’s how you can “Kachingle” a specific NYTimes.com blogger. … NYTimes.com visitors who do not install the Kachingle browser plug-in will not see the medallions.

There’s also an automatically updating “Leader Board” that shows which NYT blogs are getting the most Kachinglers (i.e., financial supporters). As I write this, Paul Krugman’s blog is leading the Bits Blog and David Pogue’s Posts blog. The numbers aren’t much, but the campaign was launched only last night, and paying Kachingle members and some journalists and bloggers were notified today.

We’ll have to wait and see what the reaction is from NYTimes.com executives. As I see it, they can ignore this innovative but perhaps annoying (to NYT) ploy by a small Internet donation start-up, and it will either catch on with web users who think it’s a good idea, or die quickly. Or the Times execs can make a stink and try to force Kachingle to halt the campaign.

My experience with big media companies is that they often can’t help themselves from the latter approach: Call in the lawyers and send out the cease-and-desist orders! That would not be wise, since it will turn Kachingle’s guerrilla marketing ploy into a David-vs.-Goliath saga that could get lots of attention in the blogosphere and on Twitter.

Hey, what better way for a small business struggling to catch on with the public than to get a boost by being threatened or sued by New York Times lawyers! And it will raise more questions about the NYTimes.com paywall strategy.

I should learn more later, so we’ll see where this goes. In any event, it looks like fun.

(Disclaimer: I have written about Kachingle in the past as a former columnist, and in this blog; I’ve also done a small amount of consulting for the company.)