Monetising online content

The future of online journalism, part 2

Change happens fast

• Nick Blunden of the Economist earlier this year commented wryly that it took the magazine 160 years to go from 0 to 1 million sales, and just 9 years to go from 1 million to 1.6 million combined paper and online sales.

• New York times now as more than 700,000 paid-for digital subscribers to its app

• These stats show the incredible rate at which online is challenging print – but also, if publications get it right, the incredible opportunities for online expansion.

• This is about YOUR future

This year as well…• The Telegraph announced the loss of 80 old print jobs to meet the challenge of

a digital future, but at the same time, announced the creation of 50 new online jobs:

• “We are also going to have to restructure our editorial operation to produce a root and branch change in the way we function. To this end, it will be merged into one unified operation, serving digital and print products on a 24/7 basis. This operation will require the very best digital talent available. We will therefore be creating around 50 new digitally focused jobs over the next six months – a strong and positive sign of our faith in the future. Any such change of course also requires difficult choices, and regrettably we expect to lose around 80, mostly print-based, editorial positions. Other areas of the business will also be reviewed in due course.”

• New York Times this year as well revealed its new website, designed much more with online in mind. www.nytimes.com. Have a look at it, isn’t it beautiful?

Media Analysts Oliver and Ohlbaum’s latest research

• Identifies a range, from completely free, to behind a paywall, in media content:

• Ad-funded only• Consumer tracking• Multi-platform access with free browser, pay for app• Metered access• Free ad-included versions, paid for ad-free versions• Premium content paid for, other content free• Hard Pay Wall

Example of free/premium hybrid model

• Many Scandinavian papers do this such as the Swedish Aftonbladet. Access to the browser is free, but you have to log in to see premium content in Aftonbladetplus:

• http://www.aftonbladet.se/

Piano Media• Piano Media is a new and growing European media company,

which helps newspapers monetise online content. At the moment it works with papers in Poland, Czechoslovakia and Slovenia.

• Under the Piano Media system, groups of three or more newspapers are managed together and one log in will bring online access to premium content of ALL papers in the country that are managed through Piano.

• In Czechoslovakia, where Piano started, 70 different media companies are involved. Typical payment for users is 5 euros per month.

• Subscriptions money is distributed to participants based on traffic; Piano takes a cut.

Piano contd• The advantage of this nationwide system is that it reduces the risks

of one news outlet going behind a paywall, while others stay outside.• A minimum of three media companies can group together in this

way• Confirms the principle of paying for content• Allows for ‘locked’ and ‘unlocked’ content such as daily news

(unlocked) and archive (locked)• In Poland, people are also charged to comment on articles – people

can comment free, but free comments appear truncated and below paid for comments - but what are the implications for this?

• This year, other countries including France, Italy, Ireland, Finland, Belgium and Portugal are all joining.

Piano Media Tomas Bella:

• “You can get high levels of sophistication with this system. Premium articles are ‘unlocked’ for, say 12 – 24 hours only, similarly the archive is available at certain times only.

• “Some content is locked behind the paywall, other is free• “The system includes a lot of analysis of how people use

the website, down to how many clicks an individual journalist gets. If for example, the City editor gets 10,000 clicks on his blog just before the stock exchange opens, it will be worth the paper’s while making his blog part of the premium service while other journalists, whose articles are clicked on regularly throughout the day, can remain free.”

FT’s strategy• The FT’s strategy behind its successful metered paywall system is to drive all readers,

eventually to digital readership only, except for the Weekend FT.• The FT has 600,000 combined print and digital subscribers. In 2012, the number of digital

subscribers rose by 18 per cent and surpassed the number of print subscribers: 316,000 digital, 284,000 print. By July 2013, this went up to 343,000 digital subscribers. For every print purchaser that switches to digital the paper makes an extra 75 per cent on the sale

• Nearly half (45 per cent) of FT’s revenue is from sales of digital and print, 55 per cent is from ads.

• MB Christie, F T’s Director of Online Product Management: ‘The newspaper has had to completely turn around its selling psychology, from remotely distributing the newspaper to news agents, to developing a much more personal relationship selling each app directly to the customer.”

• The FT has controversially removed its app, launched in April 2010, out of the apple app store – didn’t like Apple taking 30 per cent of its sales income.

• Christie attributes the rapid digital growth to the re-designed app launch in June 2011, which was beautifully designed and easy to use. “The key to successful digital sales is good design.”

Guardian’s strategy

• Guardian’s strategy is very different from the FT or Economist, concentrating on being free and open and converting its 80 million worldwide browsers into lucrative advertising deals.

• Last year its digital ad revenues were £45.7 million.

• This compares with the New York Times’s digital app revenues last year of US$63 million

Will the Guardian retain its strategy?

• Interesting article about paywalls in the US this year suggests that the future of online is now mapped out:

• Ken Doctor of the Nieman Lab said: “The money now flowing into newspaper companies due to paywalls is getting to be seriously countable.”

Ken Doctor• “For Gannett, which installed its metered systems throughout the year,

overall circulation revenue was up almost $40 million in the fourth quarter. That should lead to more than $100 million in added revenue in 2013. Add in the multiple millions pulled in by paywall leaders like the Star Tribune, the Columbus Dispatch and the Charleston Post and Courier, and you’ve got serious money. Figure that U.S. paywall programs will generate more than $300 million this year. When the 2012 final numbers come in, the industry’s circulation revenue should punch back through the $10 billion level — on their way to beating the $11.2 billion zenith, set in 2003, by 2016. It’s money that’s stabilizing the business, really for the first time since 2006. Newspaper revenue trends among those top performers are getting back to that under-appreciated “zero” number making up for continuing losses in ad revenue. It also means we’ll see more top-line growth this year — and that’s milestone territory. That’s the reason why the U.S. system of metered paywalls is now being applied around the world”.

Ken Doctor contd• “Might such paywalls have prevented the massive loss of reporting that local papers — and

local readers — have suffered? Would they have saved a good number of the more than 15,000 newsroom jobs (a 28 per cent decline since 2001) that have evaporated? Might the global bureaus of the big metros been spared? Would regional business news coverage be as robust as it was in the 1990s? Would investigative units be off the endangered species list?

• Why, oh, why, after the newsroom carnage of the last decade, are we only now seeing paywalls being erected and reader revenues being harvested? We can sum it up in two words: thinking and technology. It’s the intertwining of the two, in a hard-to-distinguish chicken-and-egg digital dance that appears to have led us to today.

• Ask veterans of the trade, and they’ll remember the history this way: Reuters, in an earlier foray to establish a greatest U.S. presence, began licensing its national and global coverage to the portals — Yahoo, AOL, Excite, MSN, Lycos — of the day. The Associated Press followed suit. National and global coverage — a key ingredient of the daily newspaper mix — had gone free overnight. Digital evangelists seemed born anew on every street corner of the web; “free” became the new article of faith. The “death of distance” realization confirmed that local news consumers could no longer be held “captive.” There were paid forays by individual companies, and the outline of a bigger “national press pass” idea considered by then-industry chieftains through the New Century Network

N Y Times won’t abandon print

• The New York Times, however, for the moment, is not abandoning its print edition. It favours ‘bundling’ – a way people can, through a digital subscription, also get a print version. In the highly concentrated metropolitan area of NYC, it also does not cost too much to distribute paper copies. People still like to have papers on the metro.

Andrew Miller, Chief Executive Officer, GMG

• Auto-trader (‘wonga.com for the car world’) went online and profits went from £ 80 million to £140 million in one year.

• Auto-trader’s whole reason for living is to subsidise Guardian and Observer journalism.

• Guardian is now the third most read newspaper in the world, with 80 million browsers. Each month brings a new record.

• It now beats the BBC website for US readers• Also last month, for the first time readers on mobile devices

surpassed browser readers.• However, it loses £44 million a year• It has fewer than 20,000 paid subsciptions for its app

Guardian’s ‘Open’ policy

• Guardian’s model is very different from NY Times or FT. It ‘harnesses the creativity of the people who read it’ – for example its travel pages contain 4,500 tips from readers about where to stay.

• Its philosophy is embodied in its Three Little Pigs ad, which has won multiple awards:

• http://www.guardian.co.uk/media/video/2012/feb/29/open-journalism-three-little-pigs-advert

Collaborative advertising

• Guardian’s strategy is to ‘tailor-make’ advertising, collaborating with companies, for the paper’s ‘progressive’ audience, such as the co-branded Blackberry Festivals app in 2012.

• The Guardian sells its ‘brand’ and readers as being:• Interested in other cultures• Well-informed• Agreeing that is good to strive for equality for all• Interested in international events and travel

Advantages of digital readership

• Can much more tailor advertising packages:• ‘We know that our peak ipad readership is

between 5 – 7 am, our peak browser readership is lunchtime and peak social media interaction is in the late afternoon. That means we can tailor ipad advertising/browser advertising.’

• What are the potential problems of a strategy of advertiser-only revenue?

But this is what Rob Grimshaw of FT.com says:

• ‘I think the key factor is a growing realisation that online ads are not going to pay the bills. Online ad revenue growth at most publishers has slowed to a trickle. What many interpreted as a blip is now an established pattern over several years. As a result, many publishers are revisiting strategic plans and concluding that they have no hope of building exclusively ad-funded online businesses. Paywalls and content revenues are the obvious alternative.

• The fact that major general news players like NYT have jumped into the water also encourages others to take the plunge. The industry could have got to this place a lot earlier because the warning signs around online ads have been evident for a while to anyone that was looking. Unfortunately publishers were watching each other when they should have been paying attention to developments with ad networks, search and social media.

• The talk is about turning paper dollars into digital dimes. It doesn’t work.’

Economist• Nick Blunden Global Digital Publisher, the Economist: ‘More people are

paying for the Economist’s content than ever before. We have 650,000 registered app users

• ‘British media has an enormous advantage over European, Asian, South American media in that more people will pay for English content than in any other language

• ‘I firmly believe that online media is leading to mass intelligence. We’re smartening up, not dumbing down

• ‘The rise of the internet has made intelligent analysis such as the Economist provides more, not less valuable, despite all that free content out there

• ‘It is not true that people won’t pay for content in a digital world• ‘Print is also still very important. Of our subscribers, 75 per cent go for

print and digital packages combined. They want both

Task

• Spend Ten minutes composing a 300 – 500 word answer to this question:

• ‘Outline some of the most recent models and thinking in online revenue for newspapers and other media organisations. Compare the FT/NYT and Guardian strategies. Outline the advantages and disadvantages to both and suggest whether a free/paid for dichotomy will last or not.’

Further Reading

• http://www.niemanlab.org/2013/03/the-newsonomics-of-why-paywalls-now/