TimeOut, Moses and ITV
Jim Marshall, chief client officer at Aegis, on the world of previously paid for media moving successfully into the free media sector and questioning what is happening the other way around?
Since August TimeOut has been distributed free in London. It seems to be working, for me at least because having been a lapsed user for over a couple of decades I’m now an avid reader again.
In fact, I’m a big fan of the burgeoning ‘free publication’ sector: Metro, Evening Standard, Shortlist and Sport are now all regular reads for me and I’ve even cast my eyes over Stylist.
They are all ideally designed to alleviate the daily drudge of commuting and all have a decent editorial standard. I’m particularly impressed by Shortlist.
In fairness, free has always been an effective way of marketing and distributing your product and it’s hardly a new approach. For example, the story goes that when Moses met with God on Mount Sinai the conversation went something like:
God: “Hello Moses, I’ve got some commandments for you.”
Moses: “That sounds interesting, how much are they?”’
God: “They’re free.”
Moses: “They’re free! Then I’ll take 10.”
Arguably, if Moses hadn’t been quite so quick to take 10 it might have done the Israelites and subsequently the Christian world a bit of a favour. Obviously you shouldn’t go around murdering, stealing, lying, committing adultery or bowing down to false prophets but the one about not coveting your neighbour’s wife, maidservant, ox and ass really does remove any latitude for creativity. But then that’s the power of direct marketing, combined with a free product give away.
Anyway, the world of previously paid for media is moving successfully into the free media sector but what about the other way around?
The biggest challenge is the internet and specifically the online content of publications. In my view, it may be possible to charge for specialist content (which is always going to be somewhat niche and relatively low volume) but online providers offering general news, information and entertainment are going to struggle, just as they are now beginning to offline.
However, and what is arguably more interesting is the challenge for the free-to-air TV companies. BSkyB has proved that a subscription/pay-per-view approach not only will work but it is also potentially a far more powerful commercial proposition than the ad funded model. Should the BBC, ITV, Channel 4 and Five be worried? Not today, and probably never for the BBC and Channel 4, while they continue to be publicly ‘underwritten’.
The case for ITV is a bit different. It is difficult to criticise the management of ITV given its recent performance in terms of its programming, share price and ever improving status within the media sector, but here goes…
For me, what is missing from the ITV management armoury is a strategy for developing a pay-per-view strand for its business. Admittedly it doesn’t need one now or even probably for the next couple of years. Nevertheless, pay TV and BSkyB specifically with its subscription TV model, may turn into the ogre that could eventually ‘eat’ ITV – it wouldn’t be allowed to do that to the BBC or Channel 4 and Five probably represents too small a meal (and Five is also small and commercially agile enough to adapt its sales model).
The problem is that while ITV has viewers in terms of numbers and wonderful content, it can mainly only leverage this commercially through advertising sales. Admittedly TV advertising is highly fashionable again and ITV is the clear market leader.
But the ad market is becoming ever more competitive, both within media sectors and increasingly across the various platforms and media channels. And ad revenue overall is unlikely to grow significantly (if at all) in the foreseeable future.
Consequently ITV is going to be competing in a contracting market, irrespective of the quality of its own product. In these circumstances it will become just a matter of time before ITV will start to feel the pressure in terms of its ability to invest and acquire programming – anywhere between two and 10 years.
I’d say it is unlikely to be as soon as two years but just as unlikely that it will take as long as 10 years.
So, as the media world continues along the path of convergence, where all the media have to develop a range of funding models, ITV really does need to get motoring on a pay-per-view/subscription proposition. And particularly now, at a time when its business looks in very good shape.
Also I think ITV will find that it doesn’t say anywhere that you can’t covet your neighbour’s pay-per-view channels…