After months of operating in stealth, social news site Ongo, which received $12 million in funding from the NYTCo (NYSE: NYT), Gannett (NYSE: GCI) and The Washington Post Company (NYSE: WPO) last fall, makes its debut today with content from all three, as well as a half dozen other news outlets, including the Associated Press, The Financial Times and The Guardian. Yes, news aggregators have come in many forms for years, but Ongo, which was founded by former eBay (NSDQ: EBAY) and PayPal exec Alex Kazim, has a much different premise than most: in order to access its collected news, users will have to pay $6.99 a month.
The move comes as the speculation has been intensifying about the metered paywall plans for the NYTimes.com. The NYTimes.com’s announcement, which is expected any day — actually Feb. 3rd, when its Q4 earnings are released, is probably the time — has fueled the debate over paywalls for the past year. The big question is whether people will pay for general news site content — as opposed to news with business-related angle like WSJ.com and FT.com. San Francisco-based Ongo is coming along at just the time when the model will have its most prominent test.
Aggregation evolution: Paywalls aside, news aggregation is also undergoing a significant metamorphosis. Direct RSS feeds are losing ground to microblogs like Twitter or iPad-based social magazine Flipboard and the RSS-based news reader Pulse.
In an interview with Kazim, who in between this and eBay ran the now-defunct blog aggregator Tokoni, and Ongo Chief Revenue Officer Tom Adams, both acknowledged the various formats of reading news already out there. And rather than say it’s a winner-take-all-game, they believe that there’s plenty of room for their product. “People are getting their news online in lots of different ways,” Kazim said. “This is another option. We believe it recognizes the way people read on the web. They don’t just read one outlet. We’re giving them easy access across all their devices from all the day’s news, including breaking news, and in some cases, their local news.”
Not for diehards: For example, with the NYTimes.com, the publisher is aiming for the 15 percent diehard readers who turn to its content at least several times a week. With Ongo, the company is aiming for readers who have a more casual relationship with their news sources and just want everything in one neat package delivered up to the minute. In other words, while the NYTimes.com bets “heavy users” will fork over $20 per month (many already have been for the Amazon (NSDQ: AMZN) Kindle — until it lowered its price last fall — and B&N Nook readers are still charged $19.99 a month for daily digital delivery), Ongo bets that a large enough portion of news readers will pay $6.99 for website and app access.
The look: Ongo’s layout is pretty striking. Although Kazim says it was conceived about two years ago, well in advance of last April’s launch of Apple’s iPad, it certainly looks tailor made for app reading, as it resembles both the NYTimes and Gannett’s USA Today iPad apps except for the easier-on-the-eyes sepia colored background. Article pages easily slide left and right, up and down and users can select which papers and news sections they want with a few touches of the screen (or cursor, if its their PC). A mobile phone app is still in the works, and is expected to be released by the time the free monthly pass Ongo is offering with today’s launch.
Among the basic features that are immediately present today:
— Ongo Home – A single “front page” for the most important daily news, along with stories of interest picked by Ongo’s editors. (The company recently hired the former chief content officer of the San Francisco Chronicle’s SF Gate)
— Titles – Quick access to news by a subscriber’s publications.
— My Topics – Users can create a customized news “playlist” arranged by title, section or keyword.
— Clippings – Create your own archive.
— Ongo Search – Fine-tuned news search by category, title, date or writer with readily accessible tools for quick filtering of results. Search results cover all titles within Ongo, not just those in a subscriber’s package.
— Sharing – Invitation-only “Clubs,” which are discussion groups among Ongo subscribers. In keeping with the “social news” aspect of Ongo, even non-subscribers can participate in Clubs, receiving emailed and posted articles from Ongo subscribers, extending the value of Ongo membership. (Kazim told me he’s not too worried about users “stealing content” via social media or trying some other way to get into the backdoor without paying. If they want to clear their cookies and do all sorts of other work arounds to get a news story, you might as well let them, since most people can’t be bothered. “Besides, we’re charging for a service, for an experience, not just for a one-time story they can get elsewhere for free, in most cases.”)
Paying for experience, not content: “We realized that users won’t pay for content — however, they will pay for a better user experience and that’s what we’re really offering,” Kazim said. “Starbucks (NSDQ: SBUX) can charge more for a cup of coffee than the deli down the street not because it’s better coffee necessarily, but because they’ve created an environment where people want to go. Publishers, traditionally, haven’t focused much on the user experience. They primarily optimize for advertisers, not users. And now, with these huge display takeovers, they’re making it worse. We see our job as giving people such a great experience, that they almost forget the same news is free somewhere else.”
No disruption: Gannett’s USAT, which had been planning on switching to a paid format to its popular iPad app, but decided last summer to table that decision because advertising demand was so surprisingly high.
In an e-mail interview, Jack Williams, president, Gannett digital ventures, expressed a great deal enthusiasm for what Ongo’s doing and that it was additive, not disruptive to its own thoughts of eventually charging for more of its online content.
“We believe strongly in the value of the content we create, particularly the unique local content we provide in the Gannett local newspaper and broadcast markets,” Williams said. “We also feel that in the future, part of the digital revenue models will be paid content, maybe just for premium or special offerings, or maybe for most of our content. That is still open.”
Gannett’s test: Williams added, “We saw Ongo as a good opportunity to test some additional concepts such as the ability to add value when you offer multiple high quality brands packaged together. We think The New York Times and The Washington Post are great partners to work with. In addition, Ongo helps readers – many who may be overwhelmed with the time and complexity of finding and consuming the content they want online — by offering the convenience of a single place to go for high quality news brands; the special features our colleagues at Ongo have developed, including the ability for readers to personalize the content from their specific publications; the ability to search multiple publications they trust; and a common navigation.”
Publishers’ prerogative: One of the other things Kazim promised publishers is that they would get the user data for the subscribers they bring to the site (for example, if a USAToday.com reader signs up for Ongo, Gannett will get to know who paid; users can also opt-in for marketing information from that publisher; that information will not be shared among the other Ongo publishers). There is a slight connection to Kazim’s previous life at eBay, Ongo’s payment system will use PayPal, where Kazim did two-year stint as VP of marketing and products.
“In addition to making it easy on the user, we’re making it easy on the publisher,” said Ongo’s Adams. “We’re not asking publishers to set up a special paywall around their content or do anything different.”
Today newspapers, tomorrow magazines: While its all about newspapers — and with the AP, news services — Ongo will be looking to expand to other newspaper paper publishers and shortly after that, magazines, where it may find itself competing, at least indirectly, with Next Issue Media, the big publishing joint venture which is setting up a “digital storefront” starting on Google’s Android system.
Kazim and Adams would reveal what sort of subscriber numbers they’re expecting in the first year. But they did try to suggest that the numbers don’t have to be all that high for the business to profitable. “If you look at it, subscription businesses are not typically large,” Kazim said. “If you look at Netflix (NSDQ: NFLX), they’ve been at this for 15 years and they have about 20 million subscribers. The good news you don’t need a large base to be viable. If our ARPU is $100 and we had a million subscribers, that’s $100 million of revenue. We’d be very happy with that.”
Disclosure: Our publisher ContentNext is a wholly owned subsidiary of Guardian News & Media.