Why Howard Stern, Ted Koppel and New York Times columnists are moving from free to fee media.
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.
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 TimesSelect by Dec. 6, according to a New York Times Co. spokeswoman. (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. (Click here for more about Stern's Sirius debut.)
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.
TimesSelect, 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.
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