News, a business model problem

I've previously mentioned that "We may eventually find that the profitable running of a newspaper was a failed experiment!". The thought being that we may one day look back at the big print media barons and see that, just because they were at the time operating in an imperfect economy (where information was not globally and freely available), that they never had a long term commercially viable product.


Or as Google CEO Eric Schmidt said in a keynote speech to open the annual conference of the American Society of News Editors back in April:

"We have a business model problem; we don't have a news problem" http://news.cnet.com/8301-1023_3-20002227-93.html

However only yesterday, research released from online measurement company Hitwise gave a good indication that the paywall finally put up around the Times newspaper website is having a negative affect on its readership (its currently only requiring people to register to see content, charging is expected to happen towards the end of July).

This is hardly a surprise.... if you insist on registering users, you will affected visitor traffic. The question is whether loyal Times readers will pay for the opportunity from next month. Or vote with their virtual feed and migrate to other popular newspaper sites.

Schmidt may have claimed in his speech that newspapers were "fundamental" to democracy, but he also predicted that they would need to come up with new business models based on advertising and subscriptions.

I wonder which business model historians of the future will say was the correct one?

The Times Online annouces its paywall

News International, owner of the The Times and Sunday Times newspapers has announced that its paywall in June, only a few months away.

Following a relaunch of both online properties in May and a period of free usage to registered customers (presumably to build up the potential user base) users will then pay £1 for a single day and £2 for weekly site access . However no further details of other site subscriptions have been main available as-yet (e.g. Quarterly or Yearly).

Further questions are obviously going to be answered as this date draws nearer, such as will the sites continue to support advertising alongside articles or do so in such an overt manner?

The fact remains that there are a number of other alternatives all watching to see: if Mr Murdoch's plan will work, if the same monetisation scheme is applied to other NewsCorp properties and if their own site traffic rises as a consequence.

Here's a link to the article on The Times Online, although please note that from June it will cost you a £1/$2/€1.5 to read it!
http://business.timesonline.co.uk/tol/business/industry_sectors/media/article7076987.ece

Don't call it a pay wall

Its funny how cyclical things are in the Internet industry, as old ideas come back into fashion and what's new becomes old very quickly. To some, this typifies the ever-changing way that ideas evolve now that 1.7 billion people all have access to the same information online. To others, this is just an example of how some people never learn by their own mistakes, let alone by those made by other people.

The topic of paying for digital news content is one such subject that has come full circle. As the mainstream media either tries to embrace the digital switch, change its business models or just try to ignorantly and arrogantly force the Internet to bow to its ways (mentioning no names), its is economically squeezed on all sides as the world recovers from the financial binge of the last decade or so, hungover from what some are now calling "The Great Recession".

So last week the great and good of the "Paid Content Industry" all got together in New York to discuss this. What's quite surprising is that it seems that this wasn't the usual Google-bashing conference that mainstream media middle management still seem to still engage in, but was apparently a quite sensible discussions on the future business models for digital news.

Obviously the topic of paywalls was high on the agenda (funny that) and the announcement by the New York Times that it would be creating a 'metered pay system' sometime in the as-yet-to-be-determined future (possibly by the end of this year) was apparently a hot topic.

Its therefore worth asking the question of whether the NYT will be able to afford to send any management to next year's conference, as a consequence of losing money on this proposed venture. Or if, by then, they will all be blaming the lack of advertising spend for not putting more free content online, as the cycle repeats itself in an ever-decreasing timeframe.

More info from Meghan Keane at eConsultancy is available here.

New York Times and its paywall

OK, I've not blogged in a few days, mainly because we've been busy here at Ideal Interface Towers on a bunch of new business. But I couldn't let one piece of news go past without commenting on it...that the New York Times is more than just ready to stick up its paywall its going to 'meter' users for reading its content:

Starting in January 2011, a visitor to NYTimes.com will be allowed to view a certain number of articles free each month; to read more, the reader must pay a flat fee for unlimited access.

Now I could be wrong here, but haven't they tried this before in 2005?

BTW: yes they did and then they shot it down in 2007:
http://www.reuters.com/article/idUSWEN101120070918

Google changes First Click Free rules

Readers of paid content on websites have known for ages that they can get around the paywall security of newspapers by visiting these sites via Google News.
The 'First Click Free' functionality in Google allowed visitors access to view the first page of premium content on such sites, but subsequent pages were blocked. This blockage could be overcome by constantly going back into Google News and clicking on the next premium story, meaning that all premium content could be read for free. But this has now been changed.

Now Google has announced that it is allowing publisher to change this rule, meaning that after viewing 5 pages of a paid content site per day, Google will stop its First Click Free rule being used. This means that visitors on the 6th click will be faced with the newspapers site's registration/payment screen.
More information from Josh Cohen at Google is available here.

So... is this a knee jerk to the recently-announced News Corp / Microsoft discussions? Is it a way to placate Rupert Murdoch following his relentless insulting of Google?

Errr... no! Apparently Google has been planning this change for some time, although it has also been more-than aware of the battle that's been coming for some time as well!

Is delisting from Google a financial model?

I've recently mentioned the Forrester report that states that 80% of Internet users would not bother to pay for newspaper content online. Yet the belief at News Corp is that there is still a model to be had from sticking up a pay wall and hiding your content from Google (and charging Microsoft for the privilege of displaying your content).

Perhaps this is the "rewriting the economics of newspaper" that James Harding, Editor of The Times talked about last week? Here he talked about charging a fee for a 24 hour view of the newspaper online (figures of around £1 have been mentioned, but obviously an annual subscription would be less than this).

But is there a possible financial model to had from de-listing from Google? Well... Bill Tancer at Hitwise has done this work, albeit taking just one News Corp newspaper as an example... The Wall Street Journal.

His findings are that although WSJ.com gets over 15% of its traffic from normal search (which quite possibly isn't that valuable to Mr Murdoch, as this is predominately brand searches, not searches for content), it gets 11% of its traffic from Google News. Now that must surely contribute to 11% of all landing page advertising inventory and any successive page that the visitor then moves onto?

So.... unless Bing can provide this sort of replacement revenue to News Corp.... how are they hoping to make more money (not less) from de-listing from Google and going to a Bing-only search engine model?

Obviously the answer is they are hoping to make further money from their paywall subscriptions. Although the WSJ may need to seriously consider whether its readers will be happy about paying for their paper and well as having to deal with intrusive/distracting in-page advertising.

And now proof of the UK paywall model for local content is about to be put to the test. Today, news has surfaced that local newspaper publisher Johnston Press will start an experiment to charge for access to its weekly websites from next week, although they have yet to announce they are de-listing their content from Google.

Newspapers and their pay walls

Is news really worth paying for?

Well, unsuprisingly one newspaper bosses think it is, but unfortunately readers and other journalists think otherwise.

Now, as many people know, hiding news content to readers (unless they are charged for it), is known as using a paywall and Mr Rupert Murdoch (who is some chap who owns a company called NewCorp - a company that took a $3.4 billion net loss in 2008, down from net income of $5.4 billion in 2007) thinks that this will make him some money. Well... he's correct.

So... how will they actually charge for this service? Well one way would be to have a subscription service such as the economist website and the other one is to use Micro-payments (e.g via a service such as http://bitcents.com/)

Putting up a pay wall for the New York Times or The (London) Times WILL make some money. But will it kill off his online readership (and therefore his small but constant advertising revenue) in the process? Quite possibly!

There are a lot of industry observers such as myself who think this will fail, most notable including Steve Outing, who shows statistical evidence from the USA that newspaper execs "remain delusional about how charging for online content"

But its not just observers who think this is a bad idea [bad joke: its also Observers]

Emily Bell from the Guardian, back in August said

No – we are not contemplating a pay wall, nor as far as I’m concerned would we ever….they are a stupid idea in that they restrict audiences for largely replicable content. Murdoch no doubt will find this out – even rudimentary maths suggests he will struggle with a completely free model to meet advertising revenue levels across the NI offerings.

And even Google CEO Eric Schmidt says that is is unlikely that a paywall model will work because news content is now so ubiquitous across the web.

Time will tell.....