It's payback time for consumers of free online newspaper content as the paywalls come down.
LexisNexis - once thought to be the one stop shop for news aggregation and search - has begun sending out letters warning of the withdrawal of some of its titles. Guess which ones?
The Times newspapers announced that the paywalls would come down in June. The long march away from free content starts now. Mr Murdoch's appearance at the National Press Club (in the USA) saw him argue that people would pay when there was nowhere else left to go. No, he's not going mad. But it does underline my earlier thesis that he views the BBC (and Google) as competition. Why?
The answer is this. If you are building a system of paywalls you will obviously lose ad revenue. The BBC can't benefit from ad revenue as it cannot carry advertisements but it may well benefit from an audience uplift to it's network of (very good) websites. So, what can Mr Murdoch do?
Ranting aside, Murdoch can recast his newspaper empire as an adjunct to his broadcast/film interests. In this way he can create a synergetic cross-media whole from what currently seems a disparate grouping of media entities. Then, fasten the bonds with a 'club' of some sort (Times+) where you get free tickets or reduced subscriptions to other Murdoch owned or sponsored initiatives . . . .
What you now have is a self-sustaining model predicated less on expensive consumer acquisition and more on customer retention (cheaper and more profitable in the long run). It's the oldest and simplest rule of marketing. In this way Murdoch can manage the decline in ad revenues from the print editions, which the uplift in online ad revenues has in no way plugged I might add, and thus stem the flow of cusomers away from his products. Finally, he can upsell advertisements across platforms in a way that the BBC cannot commercially (though it does effectively with it's content). Oh - and of course his customes are paying customers so are also likely be seen as more attractive by advertisers.
One big problem. Few, if any, of Murdoch's competitors in the UK show any sign of going down either the paywall route or withdrawing their content from Google and other search engines. The BBC is also very much alive. There is little or no proof that audiences will pay for conent they think they can get free elsewhere.
The painful truth may well turn out to be as Thomas Jefferson put it:
"I read no newspaper now but Ritchie's, and in that chiefly the advertisements, for they contain the only truths to be relied on in a newspaper."
Thomas Jefferson, Letter to Nathaniel Macon, January 12, 1819
With the plethora of news and comment available to us, do we really need newspapers as we once did? Is a managed decline actually the only way forward? Has Mr Murdoch in fact hit on a way of managing that decline as profitably as he can within a short timeframe? I think he might have.
Showing posts with label BBC. Show all posts
Showing posts with label BBC. Show all posts
9 Apr 2010
18 Mar 2010
Growth in 2010?
UK Association of Online Publishers (AOP) recent released their census results. AOP members are drawn from digital publishing and include the likes of BBC, Channel 4, Sky, Reuters, Telegraph, Times, Guardian and Daily Mail as well as niche B2B publishers.
The AOP forecast that in 2010 the growth in digital revenues is expected to be 10 percent. Online publishers seem to be losing confidence as the ad downturn continues. The survey also concluded that:
- 75% of respondents plan greater digital investment
- 60% plan to do more technology-partnering
- 50% of respondents expect to increase staff this year
- Nearly 50% say ad sales is a top-three priority
- Almost 33% also put editorial skills in that bracket
- 25% say that database skills are a top three priority
So, it's a mixed picture. Most investment is taking place in the development of pay walls. However, the broadband boom of recent years presents publishers with a new growth opportunity - video advertising.
7 Mar 2010
Paid-for content: Why it may not work
A salutary lesson in what people really are prepared to pay for online has come my way from Nielsen.
In summary, consumers are most likely to fork out cash for online movies, music and games rather than socially created content or communities or existing free news content tha is repackaged. Seemingly, consumers are also more likely to pay for online theatrical releases, music and games - in short, things they already pay for. The Nielsen survey consulted 27,000 consumers across 52 countries.
The consumers surveyed remain ambivalent about whether the quality of online content would suffer if companies could not charge for it.
Forrester research seems to bear out the Nielsen findings too.
In summary, consumers are most likely to fork out cash for online movies, music and games rather than socially created content or communities or existing free news content tha is repackaged. Seemingly, consumers are also more likely to pay for online theatrical releases, music and games - in short, things they already pay for. The Nielsen survey consulted 27,000 consumers across 52 countries.
- 85% prefer that free content remain free
- 79% would stop using a web site that charges them, especially if they can find the same information at no cost
- 78% believe they should be able to use newspaper/magazine web site content free if they are offline subscribers
- 71% of global consumers say online content will have to offer considerably more value than that which is freely available before they will pay
- 64% of those surveyed believe that if they must pay for content online, there should be no ads
- 62% agree that once they purchase content, it should be theirs to copy or share as they choose
- 47% of respondents are willing to accept more advertising to subsidise free content
- 43% say an easy payment method would make them more likely to buy content online
The consumers surveyed remain ambivalent about whether the quality of online content would suffer if companies could not charge for it.
Forrester research seems to bear out the Nielsen findings too.
Forrester Research presentation at paidContent 2010
Here is some more food for thought from Nielsen research into paid-for-content.
16 Feb 2010
Music and Newspapers: Parallels in paid-for-content models
Last week Warner Music CEO Edgar Bronfman Jr questioned the sustainability of the emerging ad-funded music streaming models and called a halt to any further deals.
The deals with WE7, Spotify and MySpace Music will remain in place, for now.
Mr Bronfman said, “Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed . . . . “.
He went on to suggest that getting all the music you want free, with the option to pay for a few bells and whistles was doomed to fail. Now it seems that pretty much the entire digital industry is warning music companies not to pin their hopes on advertising revenues to plug the shortfall from declining physical sales. The parallel with newspapers and their paid-for-content models is stark.
A breakdown in negotiations between YouTube and music collection agency PRS seems to be behind these calls for a cessation of the ad-funded model. Google has also attracted the music industry's ire after demanding the option to build up advertising income to a sustainable level prior to paying the rights holders fees. Other content distributors echo Google and call for modest revenue deals in what they still see as an emerging market.
The furore is understandable. Radio 1 is known to pay up to £20 a minute for music. In accepting far less from digital content distributors, rights holders' acceptance is unlikely. The gap between falling physical sales and fixed or rising costs isn't being bridged by growth in digital downloads either.
Newspapers face an identical problem. Physical newspaper sales are falling. Yet the costs of news generation remain fixed, or are rising. Advertising revenues are on the decline too and though these may recover it is unlikely that we will see the heights we saw in the noughties. The damage is also exacerbated by the extensive free provision of news content, as much by newspaper websites as the BBC and Google.
News International (owners of The Sun, The Times, Sunday Times and News of the World) who also have interests in satellite broadcasting (BSkyB in the UK and Fox in the USA) seem poised to bundle their newspaper offering into a 'club' with associated 'member rewards' available to their TV customers. The costs of news generation will be reduced as the economies of scale come into play. Cross-selling to their very strong TV base means an instant uplift in subscription revenues, and is also great for retention. Advertising revenues can also be upsold and cross-marketed on the diverse platforms. So, Mr Murdoch's enterprises will start to rival publicly funded broadcasters like the BBC who, though free are prevented from such commercial activity (in the UK at least).
The Guardian and the Telegraph are likely to develop their existing community and 'club' initiatives whilst maintaining a limited free model. The likely focus for both will lie with developing new content and apps for every access model conceivable. This move has already been signalled by the focus on clubs, content, commerce and community that both publishers have outlined.
The paid-for-content model is, in its infancy and likely to face many more hurdles. News International and BSkyB have deep pockets, a history of undercutting competitors and promoting their offerings aggressively. As they will also be most likely to launch first, theirs might the model that sets the terms of the debate going forward. It won't be without challenges. What is certain is that if there is nothing in it for the consumer, publishers will lose out. In our democratising media age, the customer is the king maker.
UPDATE (28/02/2010)
So, the BBC has announced cuts in it's operations and budgets and the Times responds with a carping editorial . . . roll on the battle to be top dog - Both organisations ask you to pay, which offers the best deal?
The deals with WE7, Spotify and MySpace Music will remain in place, for now.
Mr Bronfman said, “Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed . . . . “.
He went on to suggest that getting all the music you want free, with the option to pay for a few bells and whistles was doomed to fail. Now it seems that pretty much the entire digital industry is warning music companies not to pin their hopes on advertising revenues to plug the shortfall from declining physical sales. The parallel with newspapers and their paid-for-content models is stark.
A breakdown in negotiations between YouTube and music collection agency PRS seems to be behind these calls for a cessation of the ad-funded model. Google has also attracted the music industry's ire after demanding the option to build up advertising income to a sustainable level prior to paying the rights holders fees. Other content distributors echo Google and call for modest revenue deals in what they still see as an emerging market.
The furore is understandable. Radio 1 is known to pay up to £20 a minute for music. In accepting far less from digital content distributors, rights holders' acceptance is unlikely. The gap between falling physical sales and fixed or rising costs isn't being bridged by growth in digital downloads either.
Newspapers face an identical problem. Physical newspaper sales are falling. Yet the costs of news generation remain fixed, or are rising. Advertising revenues are on the decline too and though these may recover it is unlikely that we will see the heights we saw in the noughties. The damage is also exacerbated by the extensive free provision of news content, as much by newspaper websites as the BBC and Google.
News International (owners of The Sun, The Times, Sunday Times and News of the World) who also have interests in satellite broadcasting (BSkyB in the UK and Fox in the USA) seem poised to bundle their newspaper offering into a 'club' with associated 'member rewards' available to their TV customers. The costs of news generation will be reduced as the economies of scale come into play. Cross-selling to their very strong TV base means an instant uplift in subscription revenues, and is also great for retention. Advertising revenues can also be upsold and cross-marketed on the diverse platforms. So, Mr Murdoch's enterprises will start to rival publicly funded broadcasters like the BBC who, though free are prevented from such commercial activity (in the UK at least).
The Guardian and the Telegraph are likely to develop their existing community and 'club' initiatives whilst maintaining a limited free model. The likely focus for both will lie with developing new content and apps for every access model conceivable. This move has already been signalled by the focus on clubs, content, commerce and community that both publishers have outlined.
The paid-for-content model is, in its infancy and likely to face many more hurdles. News International and BSkyB have deep pockets, a history of undercutting competitors and promoting their offerings aggressively. As they will also be most likely to launch first, theirs might the model that sets the terms of the debate going forward. It won't be without challenges. What is certain is that if there is nothing in it for the consumer, publishers will lose out. In our democratising media age, the customer is the king maker.
UPDATE (28/02/2010)
So, the BBC has announced cuts in it's operations and budgets and the Times responds with a carping editorial . . . roll on the battle to be top dog - Both organisations ask you to pay, which offers the best deal?
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