Martin Belam neatly illustrates the scarceness of scarcity when it comes to news online.
If in the charging for online news debate an ‘iTunes for news’ model is introduced, what are the factors that will push up the price and make people pay, he asks.
Quick link post rounding up some of this weekend’s chatter following Rupert Murdoch’s latest decision that News Corp properties will start charging for access to online news by 2010.
Kevin Anderson on Guardian.co.uk asks what news organisations can learn from the music, video and games industries when it comes to charging for online – especially relevant given the Financial Time’s announcement that it is considering introducing a ‘pay-per-article’ system.
On econsultancy Malcolm Coles address the frequently voiced arguments against Murdoch’s plans (e.g. it won’t work unless all sites start charging) in a mythbusting post.
(Backing up Coles points that people, outside of WSJ and FT readers will pay for content, is Press Gazette’s report that Which? increased online subscriptions by 11 per cent in the year to the end of June.)
More from Lionel Barber on the future as paid-for, following his speech at an industry event last month in which the FT editor predicted almost all news organisations would charge for online content in the next 12 months.
In an interview with Channel 4 News’ Benjamin Cohen, Barber explains how the FT’s part-free/part-subscription model could be replicated by other news organsiations; and gives his views on the BBC’s recent video plans.
“I think there is an inexorable momentum behind charging for content (…) What I would say to the competition and to the rest of the world is that it’s getting late. If we move now we can assure ourselves of a prosperous future.”
Interesting poll currently running (well, at 2:54pm on July 24 at least) on Times Online asking if and how much listeners would be willing to pay to listen to its podcast The Bugle.
Of course this means nothing more than the podcast’s producer’s curiosity over whether its audience would be willing to pay. So far, 41 per cent of respondents have suggested they would pay something; though 59 per cent say they wouldn’t cough up at all.
It’s also quite refreshing to see a newspaper site ask its users outright – whether this means there are any plans to charge or not.
According to a Bloomberg report today, Jonathan Miller, chief digital officer with News Corp, whose News International arm owns the Times, has suggested the group could start charging for news and entertainment online.
Back in June, MediaGuardian reports suggested the Times’ sister title, the Sunday Times, was considering setting up a paid-for standalone webiste.
MinOnline looks beyond the obvious and selects five online paid model case studies from news media and non-news media, including the American Patchwork and Quilting Inner Circle Club’s bonus initiative and BHG: Decorating Inspiration’s ‘event’ packages.
In what may feel like a twist of logic too far, there are a growing number of non-media companies who are adopting the Fourth Estate’s digital business model.
That’s the ad-funded, free-to-the-consumer model.
You know the one.
It’s at the root of the crisis afflicting the newspaper industry around the world, an industry which is trying desperately to make money online. Or at least not haemorrhage it.
To believe the unholy trinity that is News International, Daily Mail and General Trust, and the Guardian Media Group, the media model is unworkable, unsustainable and it’s got to go.
The three are not sure if it should be replaced by paywalls, micropayments, subscriptions or something else entirely.
But what they are agreed on is that it cannot be business as usual. Because that business is going under.
So why do we find the likes of Facebook, Digg and the mighty Google – and perhaps soon Amazon– adopting the ad-funded model to support services and software.
Take Gmail. It’s not a media entity, it’s email, but it is ad-supported.
One answer is that that advertising is the last, desperate (and largely) failing attempt to generate some money, given nobody wants to pay for their products. In short: free reigns.
On that latter point, Wired’s editor-in-chief Chris Anderson is likely to agree.
His new book ‘Free: The Future of a Radical Price’ – appropriately available to read and listen to online without charge – celebrates ‘freeconomics’, but has a much more positive take on its effect on the business world.
The reason, he says, people are convinced that ad-funded won’t work is because they are applying the conventional rules.
Offline – in newspapers, magazines, billboards, TV and radio – advertising is predicated on scarcity not abundance. Ad sales people trade on ‘space’ and the less there is the higher the yield.
So when there is infinite space online, their greatest selling tool disappears.
Right? Wrong.
Anderson argues that there is another kind of advertising which is epitomised by Google’s text ads:
“Google doesn’t sell space. It sells users’ intentions – what they’ve declared to be interested in, in the form of a search query.
“And that’s a scarce resource. The number of people typing in ‘Berkeley dry cleaner’ on any given day is finite.”
Google’s CEO Eric Schmidt – admittedly a man with a vested interest – estimates that the potential market for online advertising is $800bn.
“That’s twice the total advertising market, online and off, today,” notes Anderson.
So why is his tone at such odds with that of the media he is writing about?
Perhaps it has something to do with the production-cycle of book publishing. This book was in train before he had even finished writing the much-admired The Long Tail.
Clearly much of his thinking predates the collapse of Lehman Brothers which sealed our current economic fate.
His penultimate chapter, presumably added very late in the day and titled ‘Coda: Free in a Time of Economic Crisis’, is an acknowlegement of that, although not a denunciation of his core argument.
Just maybe, it’s the down-in-the-mouth media owners who are out of time, not Anderson.
Maybe this rush to find other ways to monetise will be a passing phase and when the economy picks up so too will online advertising revenues.
After all, what’s the alternative?
Pay walls may work for niche information but not for mainstream news and exclusives. That’s something that even the Wall Street Journal, poster child of the paid model, accepts.
Interviewed earlier this year its executive editor Alan Murray said:
“Look, if it’s a big news story, if we report a takeover and – we could hold that behind the pay wall. But if we do, BusinessWeek or someone else will simply write a story saying ‘The Wall Street Journal is reporting x’ and they’ll get all the traffic. Why would we do that?
“So if it’s that kind of a big, broad-interest news story, we’ll put it outside the pay wall and go ahead and take the traffic ourselves, thank you very much.”
Jon Bernstein is former multimedia editor of Channel 4 News. This is part of a series of regular columns for Journalism.co.uk. You can read his personal blog at this link.
Journalism Online, the recently launched project aimed at creating online pay walls/subscription packages for newspaper and magazine publishers, says it expects 10 per cent of internet news readers will pay for content.
The organisation has set an average of $25 a month, or $300 annually, as the figure it believes consumers are willing to pay for ‘professionally produced stories on the web’, based on research.
If it reaches this target the new venture would generate significant income for newspaper and magazine partners, the AP reports.
“Journalism Online thinks it can help by serving up a smorgasbord of online newspaper and magazine content that enables readers to pay a single vendor for coverage pulled from multiple Web sites. The subscription packages, for instance, might cater to Web surfers willing to pay for the best stories about entertainment, business or even something even more specialized like California politics,” the AP states.
The long-running debate around pay walls for online news sites seems to be moving into reality.
Following recent announcements by the Sunday Times and News International, Nieman Journalism Lab has this report on Rhode Island’s Newport Daily News.
The 12,000-circulation paper has introduced a three-tier pricing structure for print/online subscriptions (see the video below).
Meanwhile, paidContent.org reports that ESPN The Magazine is introduced paid-for online content.
On the subject, Salon co-founder Scott Rosenberg’s post is well worth a read (via Mark Potts). Rosenberg has experience in the field – “[A]t Salon we tried every online revenue strategy you can imagine,” he writes.
“Yes, 2009 is different from 2000-2002. But the fundamental lesson remains: you can get some revenue from readers, and there’s nothing wrong with trying; but if in doing so you cut yourself off from the rest of the web in any way, you are dooming yourself to irrelevance and financial decline.”
“Unless you’re selling porn – especially weird porn – I would not go the subscription route,” Ariana Huffington, founder of the Huffington Post, told the All Things D conference last week.
In the video below with the Washington Post’s Katharine Weymouth, Huffington also talks about the development of HuffPo: half of the site’s traffic now comes from non-political stories; the last round of funding is going into the investigative journalism fund, local verticals and expansion; the site is breaking even.
Robert Andrews gives a rundown of the problems newspaper companies face when trying to ‘get the genie back in the bottle’ – charging for online content that has been free for 15 years. Also be aware of gorillas and white elephants, he says.