On one extreme are the newspaper-phobes who hate virtually everything our industry does, believes we are going to die, and therefore advocate that all of our worthless content be free and open to consumers.
On the other extreme are the newspaper-philes who are in love with themselves, believe we are misunderstood and under-valued, and therefore advocate that all of our valuable content should have a price tag for consumers.
Bet on the guy in the middle – if and when a middle emerges. Trust me on this one.
One of the news industry challenges is that we remain governed by people who see audiences and institutions as one-size-fits-all. That goes for the people in the boardrooms and the people in Twitterdom.
In fact, we have to segment several items to get a better picture about perceived value of content to consumers:
- The content that we produce is of variable quality.
- The audiences we serve are of variable quality.
You have to see the total spectrum of commentary on the paid content subject to see that there are some smart people beginning to embrace the variable qualities of content and audiences.
Content that appears to have commercial value online includes:
- Finance: Content that helps the consumer make or save money has monetary potential. Financial newspapers are kings at this.
- Health: Health news has value, and there’s some evidence that the news doesn’t have to be unique to the news brand. The Toronto Star, for example, is able to charge at least three times CPM for banner advertising on its health micro-site versus its main web site.
- Technology: There is some suggestion that technology news has value, though I need to hear from more newspapers about this.
- Stocks, Scores, National News: Content with little to no value because of commoditisation includes stock quotes, national news, and sports scores.
- Opinion: Editorials, opinions, and columnists have little to no value due to the over-supply from the blogosphere. In fact, The New York Times acknowledged two years ago that opinion columns likely would not generate advertising revenue, but are traffic drivers to other more lucrative parts of its web site.
- Archives: Archives and transcripts have rapidly declining value. National Public Radio (NPR) in the United States last week announced that it was discontinuing the US$3.95 charge for transcripts. Said Kinsey Wilson, senior vice president of NPR’s digital media department: “As web content becomes easier to share and distribute, and search and social media have become important drivers of audience engagement, archival content – whether in the form of stories or transcripts – has an entirely different value than it did in the past.”
- Entertainment: Arts and entertainment news has little value generally, even if it’s unique to the newspaper’s geography. For example, the Los Angeles Times tried to charge for access to its arts section in 2005, yet dropped the wall after web traffic plummeted.
In terms of customer segmentation, I was struck by a presentation last week by futurist Gerd Leonhard at InsightExchange in Sydney, Australia, when he emphasised that “we are only beginning to understand the huge shift from disconnected to connect consumers.” His point was that connected people act, consumer, behave, and communicate very differently from those who are not as connected.
This will, no doubt, drive the emerging online business models for news organisations.
Steven Brill of Journalism Online predicts only 10% of web site visitors will pay for access to interactive news. By comparison, about 12%-15% of Minnesota public radio listeners make financial contributions. My guess is these are the “connected&dquo; people to whom Gerd Leonhard referred.
Knowing more about what content segments have value and what customer segments are more likely to be engaged enough to pay takes the “paid content” discussion out of the hands of the extremists in our industry.
Yet I also have further segmentation questions.
In my reading, I ran across a September 2007 New York Times article announcing the discontinuation of its TimesSelect programme. As a reminder, this programme charged nearly US$50 per year for online access to its columnists and newspaper archives – eventually drawing 227,000 paying subscribers and US$10 million in revenue. The New York Times pulled the plug on the programme seeing more upside in online advertising than a paid subscriber base.
Yet in the article announcing the change, a newspaper spokesperson said it was the unexpectedly high traffic from non-Times sources such as Google and Yahoo that forced the discontinuation of the TimesSelect programme. The article said that “what changed ... was that many more readers started coming to the site from search engines and links on other sites instead of coming directly to NYTimes.com. These indirect readers, unable to get access to articles behind the pay wall and less likely to pay subscription fees than the more loyal direct users, were seen as opportunities for more page views and increased advertising revenue.”
Two years later, has this changed?
The New York Times is considering either a pay wall or a membership club model to derive more revenue from its readers. We know that only certain content is chargeable, and only certain readers will pay. Presumably, the lessons from TimesSelect are being used in this determination and the logic from two years ago still applies today.
Another prestigious news brand has already killed from consideration one of the two pay models: The Guardian in the United Kingdom clearly prefers the membership model. Guardian Media Digital Director Emily Bell was adamant that a pay wall is a “stupid idea in that they restrict audiences for largely replicable content.” Instead, the Guardian strategy is “entirely” about “reach and audience engagement,” which would be “irreparably damaged by pay walls.”
Of course, the “free and open” advocates still have a strong long-term case. In short, they say, higher costs per thousands (CPMs) can be driven by tagging postal code data to a customer. Next-generation data-tagging would be demographics, preferences, desires, and behaviours.
What do I take away from this “light” airplane reading? Five points:
- Our content universe has widely different perceived values that we need to explore more deeply.
- Our audiences are either connected or disconnected. This should probably be an organising principle.
- There appears to be some kind of segmentation of our connected audience that we have to better understand.
- The paid consumer business model that gets adopted – the most prominent being a pay wall or a membership model – will be tied to a judgment call about monetising reach.
- There are smart versions of “free and open” that are about to break into the public domain, yet I suspect publishers won’t have the patience to wait for them. They believe they need to derive more from consumers now.