Revamping revenue bases

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With the online advertising model increasingly vulnerable due to the commoditization of news and information wrought by the Web, a growing number of business publishers have stopped debating paid-versus-free and are now scrambling to shift their brands to a subscription model.

Through various pay mechanisms, several media companies are starting to charge for their online content:

  • recently added new editorial features designed to encourage readers to sign up for a paid subscription—$186 for a standard subscription, $299 for a premium subscription (packaged with the print edition). The new features, targeting premium subscribers, include a monthly "Editor's Newsletter" and an electronic edition of
  • Reed Business Information's Variety in early December started charging $248 annually for access to all its content, including daily and weekly print offerings, and an iPhone application. The publication, whose print version has a paid circulation of 30,000, had offered its online content for free since October 2006.
  • The Economist is reportedly considering putting some of its online content behind a fire wall, and The New York Times recently announced that starting in early 2011, visitors to will get a certain number of articles free every month before being asked to pay a flat fee for unlimited access.

"With CPMs falling apart, [online advertising] is not a sustainable model and [publishers] are going to have to go in the other direction," said Scott Peters, co-president of media investment bank Jordan Edmiston Group. Shifting to a subscription model online is the "ultimate test for business publishers to see whether their content is "mission critical' and helps people to do their jobs better," he added. "If so, people will be willing to pay a fair price."

Since it reintroduced a pay wall on Dec. 8, has garnered 250 paid subscribers, predominantly b-to-b buyers, said Neil Stiles, president of the Variety Group.

After clicking on three pages on, one in 10 randomly selected visitors is prompted to register for further access. Nonsubscribers may access only five pages of content a month. Content unaffected by the pay wall includes the home page, headlines, brief article summaries and search results.

Stiles admitted that the move to a paid model will result in loss of traffic for, which has about 2 million unique monthly visitors. However, he said that the publication's core readers, such as studio executives, talent agencies and high-wealth people in the industry, will be "more than sufficient to deliver on our core advertisers' needs."

(Stiles declined to comment on a recent report that Variety is up for sale. Parent company Reed Elsevier unsuccessfully tried to sell its RBI unit last year and has since started to sell off the portfolio in pieces, such as Broadcasting & Cable, Multichannel News and Twice in December to NewBay Media.), which has more than 1.8 million registered users, continues to aggressively pursue a paid strategy. Since 2001, the Web site has had a relatively simple subscription model in which content was either paid or free.

However, in 2007, switched to a tiered model that allows users a level of access depending on the frequency of use. Readers are allowed to read one article a month before they're asked to register and 10 articles before they'll need to subscribe.

The tiered approach is working. Paid subscriptions at grew 22% in 2009, to 121,200, compared with 2008, said Managing Director Rob Grimshaw. Revenue from digital subscribers rose 30% in 2009 compared with the year earlier.

Overall, digital revenue grew to represent 21% of FT's business, up from 14% in 2007. Indeed, this year FT's online and print content revenues combined will overtake print advertising revenue for the first time, Grimshaw said.

"We produce a great quality product that costs a lot of money to produce and collect, and we think it's worth something," he added. "A lot of publishers are suffering a lack of belief in their own product and that's something you don't see in any other industry.

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