Journalism Online Says Letters Of Intent Now Cover More 1,000 Media Outlets; Does it Matter?

Journalism Online Founders: Gordon Crovitz (l), Leo Hindery, Steve Brill (r)

Journalism Online says companies representing more than 1,000 newspapers, magazines and online media outlets have signed letters of intent to work with the startup on “freemium” models and that the collective number of monthly uniques for those sites passes 100 million. In the end, all that really matters is how many media outlets actually go to launch with Steve Brill. Gordon Crovitz and Leo Hindery, Jr.’s company — and whether it can deliver on the promises. So what do these numbers mean?

Let’s start with whether they’re actually affiliates, a term JO used in today’s release talking about the results of an API survey of publishers on paid content. It may sound like I’m getting stuck on semantics but it’s more than that: letters of intent to become affiliates don’t mean they’ve signed on to more than sharing information and discussion possibilities. The number of outlets shows the potential reach but the actual number participating in a beta launch likely will much smaller — a chain with 80 papers may start with one or two, for instance.

So far only the non-profit Institute for War and Peace Reporting has committed publicly to launch; we reported earlier that our parent Guardian News & Media has signed a letter of intent (the company declined comment), while the Milwaukee Journal-Sentinel has admitted to signing a letter and exploring its options.

The number of uniques that could be reached if everyone who signed a letter of intent moves on to the next round — big honking if — sounds very impressive but a rollout to anything approaching that number isn’t on the horizon. Still, the number does matter: JO’s proposals are based on getting a subset of engaged readers, roughly 10 percent depending on the publisher, to pay for some kind of content. A small percentage of the right size pool can make an impact.

Gordon Crovitz put it a different way when he talked to paidContent today: “This shows real interest by publishers in a paid model.” The letters of intent mean “we’re working with all of them on developing models based on the usage of their sites and theior brands, what their approach might be. This is not about the pay wall, it’s about making the most of the freemium strategy. By far, the majority would continue accessing sites without paying but percentage of the most engaged would be converted.”

One other number has received a fair amount of attention for JO since the release of an NAA platforms report that included the startup’s rev share; 20 percent, lest credit card fees. That would be a percentage of incremental new revenue created by JO’s programs and covers all of the costs. Crovitz says, “I think the 20 percent is very reasonable compared to the royalty rates publishers get from other services… We feel we’ve kept the percentage modest based on the tech expense and benefit.” By comparison, Dallas Morning News Publisher and CEO James Morone railed to the U.S. Senate earlier this year that Amazon (NSDQ: AMZN) wanted 70 percent and, that “on top of that they have said we get the right to republish your intellectual property to any portable device.” The split works the other way for Apple (NSDQ: AAPL) — 70-30 in favor of the content provider.

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