[BC] The Free to Fee question

[Reader]

Shifting Stars
Why Howard Stern, Ted Koppel and New York Times columnists are moving 
from free to fee media.
By 
<http://money.cnn.com/2006/01/11/news/companies/pluggedin_fortune/index.htm>Marc 
Gunther
FORTUNE senior writer

NEW YORK (FORTUNE) - Howard Stern, Ted Koppel and Maureen Dowd have 
very little in common, but there is this -- whereas once they were 
available for free, people now will have to pay to hear what they have to say.

Shock jock Stern, whose radio program had been syndicated on 
over-the-air stations since 1986, has just taken his act to Sirius 
Satellite Radio.

Koppel, who spent 42 years at ABC News, will move to cable's 
Discovery Channel, along with his longtime executive producer at 
"Nightline" and a staff of eight.

Dowd and her fellow New York Times columnists, meanwhile, could be 
read over the Internet until last fall. Since then, the newspaper's 
pundits have been available only to those who buy the paper or 
subscribe to an online product called TimesSelect.

Take a closer look at these moves from free media to fee media and 
you'll see that, while circumstances differ, they reflect some of 
upheaval roiling the media industry.

Start with this: Radio, broadcast television and newspapers, all of 
them declining businesses, are squeezing costs. So it's no wonder 
that some stars are going elsewhere -- or that, in the case of the 
Times, the newspaper is attempting to use its star writers to bring 
in new revenues.

The Times' online initiative is off to a promising start. About 
330,000 people had signed up for Times. (No more recent figures are 
available.) Almost half do not subscribe to the print edition, which 
means they pay either $49.95 per year or $7.95 a month to read Dowd, 
Tom Friedman, Frank Rich, Nicholas Kristof and other opinion-makers.

That is welcome news for The New York Times Co., which, when faced 
with declining profits, announced two rounds of staff reductions, 
amounting to about 700 people, last year. Online revenues, from paid 
subscriptions and advertising, need to grow to help finance the 
Times' unmatched news operation.

Here's a second thing these shifts have in common -- they offer media 
stars more creative freedom or more money or both.

Stern is doubly a winner here. The 52-year-old morning man used to 
keep a bevy of FCC lawyers busy at Viacom, his former employer. On 
Sirius, he can (and does) say whatever he wants.

What's more, he's getting fabulously rich. Sirius just announced that 
Stern and his agent, Don Buchwald, will collect about $220 million in 
stock this year because the company hit subscriber targets set when 
he signed up in 2004. Sirius says it had 3.3 million subscribers at 
the end of 2005, bringing it closer to the industry leader, XM 
Satellite Radio, which had about 5.9 million. In the last quarter of 
the year, Sirius signed up 1.1 million new subs, more than XM's 903,000.

In Koppel's case, freedom, and not money, was the motivator. It's a 
safe bet that he took a pay cut when he left ABC, which is owned by 
The Walt Disney Co., for Discovery, a unit of Discovery 
Communications. (Discovery did not comment on his contract.) But the 
65-year-old Koppel has already made a fortune.

Discovery, a network devoted entirely to non-fiction programming, 
albeit much of it fluff, gives him what ABC could not -- prime time 
exposure for serious journalism. He'll make six to 10 programs a 
year, including documentaries, town meetings and specials tied to 
breaking news.

"The fact of the matter is that that kind of programming simply 
doesn't fit any more" at the networks, Koppel said, in explaining his 
move. This also explains when he did not even talk to cable news 
networks, which, in his words, tend to engage in "a desperate race to 
be first with the obvious" and only occasionally invest in serious 
documentaries.

Times, meanwhile, gives the paper's columnist the chance to 
supplement their 700-word columns with more commentary, audio, video 
and photographs. Check out (if you are a subscriber) the work of the 
globe-trotting Nicholas Kristof, who maintains a lively blog, posts 
video and audio reports and tells his fans what books he's read lately.

Finally, though, each of these moves has a significant cost: Stern, 
Koppel and the Times opinion-makers will reach smaller audiences than 
they once did.

Stern spoke to as many as 9 million people when he worked for Viacom; 
never will that many tune in to Sirius. "Nightline" was a more 
important program than anything Discovery has ever done, or will do, 
even with Koppel aboard. And while the Times will increase its 
profits by asking its readers to pay for Dowd, Friedman and Kristof, 
it will diminish their influence.

Ironic, isn't it? Only big stars have the clout to persuade people to 
pay to hear what they have to say. But by doing so, those stars get a 
little smaller.