James Murdoch, News Corp's CEO of Europe and Asia, got a chuckle at last week's Monaco Media Forum as he shared his thoughts on the paid content debate and wryly commented: "If you are going to monetize something, you probably should not give it away for free."
We know that this has become the party line at News Corp., which took the brave step of installing a paywall last July for its two flagship British newspaper websites -- The Times and The Sunday Times -- to put its conviction to the test, and hopefully spark some imitation, which would help the paid content cause.
While page views plummeted 87% -- cue victory cries from paywall opponents -- the papers' digital content online and on mobile devices has been paid for some 100,000 times, according to the company. It's not clear how many of those purchases represent one-month, £1 trials and how many are longer commitments, but they still show people paying for digital news.
|James Murdoch at the Monaco Media Forum|
The news giant also recently announced its plans to launch a paid tablet and mobile news product not associated with any existing news brand. Add this to their ownership of WSJ.com and its established online subscription and it looks like Murdoch's organization is actually making a broad strategy on this.
Why 90% down isn't as harmful as it seems
Although it's too early to tell, I'm beginning to think this makes good sense. The subscription price of $3.20 a week per subscriber isn't that far off a CPM -- or what a website these days earns for placing a banner ad in front of a thousand online readers. By my reckoning, one paid reader is easily worth more than 10 free ones, so 90% down doesn't look so bad. And it's not a stretch to assume that if a Times reader couldn't get its stories online for free, she'd be less inclined to stop buying the physical newspaper.
The iPad phenomenon has been a shot in the arm for media companies hoping to convince consumers to open their wallets for content. This new platform had every media player at Monaco buzzing. Mobile appears to offer a revenue model for everyone in the food chain: content creators, content distributers, device manufacturers, app developers and telco carriers. Not bad for a medium that didn't even exist seven months ago.
Is Steve Jobs a genius? Well, yes, he is, but that isn't why everyone is chasing mobile gold. It's because this platform was launched in the thick of the advertising recession. Publishers smarting from slashed advertising budgets simply weren't financially in a position to give their content away, no matter how good the press read.
If the iPad launched three years ago
In truth, the industry shot itself in the foot a decade ago when they succumbed to the hype of the internet and posted its content online for free. Industry powers felt that was necessary to build big audiences that they'd, theoretically, cash in on later through ad sales. In doing so, they disregarded all commercial instincts along the way.
I'm convinced that had Apple launched the iPad three years ago, when everyone was much happier with the advertising money flowing their way, this emerging paid model would have been compromised as every media company eagerly entered the tablet space race -- but with free offerings.
So back to the web. Can the online publisher revenue model be fixed? Eric Hippeau -- CEO of the Huffington Post, which spearheaded an ingenious low-cost online news model -- was adamant at Monaco that "that genie" can't be put back into the bottle. He claimed that there is no paying market for general news. Many agree. Why would anyone pay for something that is readily available for free?
I think there is a place for pay to view in today's publishing world, even when many others are willing to give it away. Quality editorial, well researched and specialized, skillfully curated and marketed, has value to customers.
Paid content persists
There are other models that defy Mr. Hippeau's logic that we can look to. Who would have thought 10 years ago that consumers, even young ones, would go back to buying music online. The music industry in 2003 treated Apple warily when it launched iTunes. Yet over 10 billion songs have been downloaded to date. ITunes itself is essentially a break-even proposition for Apple, but look at everything else it enables the company to do.
Despite a saturation of plenty of high-quality free broadcast and basic cable channel choices for viewers, HBO and Showtime appear to be thriving with a premium pay model by simply providing the same thing better. And NPR draws significant funding of its operating expenses through donations from a small number of its total listener base. Pandora is finding traction through payment from its heavy and passionate users.
Most media commentators seem to be highly cynical of the paywall, almost willing Murdoch to fail. Perhaps this is a camouflaged desire to see a competitor tumble. Or maybe correspondents feel there's some journalistic integrity in predicting the demise of their own industry. As a media buyer, I have no stake in the game other than wanting to see the media industry healthy and profitable.
Or maybe I just like it when one player attempts to prove the establishment wrong.
|ABOUT THE AUTHOR|
Antony Young is CEO of Optimedia US -- a Publicis Groupe-owned media planning and buying agency headquartered in New York. He will be publishing his second book in December, "Brand Media Strategy: Integrated Communication Planning in a Digital Era," from Palgrave-MacMillan and Advertising Age. Follow him on Twitter @antonyyoung.