Will the pay model really work for newspapers online…?
Comment and analysis from MediaTel Group’s ‘Future of National Newspapers’ seminar re-enforces the scale of the task ahead for the newspaper business model, says our weekly columnist Raymond Snoddy…
Careless users of PowerPoint presentations are far more effective in curing insomnia than endless numbers of sheep. But just occasionally a well targeted chart or table can cut through acres of verbiage and get to the heart of the matter. Such a chart, from Enders Analysis, which appeared in the introduction to last week’s lively MediaTel debate on the Future of National Newspapers.
The chart was rather prosaically called ‘Value of Readers and Users’ (National News Brands) but the information it contained was potentially explosive. Enders estimates that last year a UK national newspaper reader was worth a total of £155, £65 of which was generated from advertising with the rest coming from £90 worth of newspaper purchases. At the same time, revenue per online unique visitor totalled just £5 – all of it from advertising. It sounds like a worrying amount but apparently that is more than double the amount per user that Facebook is drawing in. Is Facebook even a business when it makes just $2 per user per year, another panellist asked.
The numbers are only averages and are probably already a bit out of date as the recession continues to bite and copy sales, in the main, continue their remorseless decline. But it is still an eloquent exposition of the central dilemma now facing the industry. It must go online to protect the future but at the same time it risks cannibalising paper sales and adding to costs for so very little extra return.
The simple numbers provide the answer, at least for now, to those who would advocate national newspapers going over to the free model. And those who argue that the answer to The Independent‘s deep-seated problems lie in moving entirely online clearly do not have the paper’s best interests at heart.
Some more numbers delivered in person by Claire Enders at last Thursday’s seminar make the contrast between print and online, and the chances of ever bridging the gap between the two, even more stark. Purchasers of paper copies of national newspapers spend 12 hours a month reading them. The equivalent online time is just 10 minutes, according to ComScore’s official readership survey. Does that disparity in time have any implication for publishers’ chances of pushing up that pitiful £5 a year online revenue figure. Indeed it does. Publishers wring their hands and moan about how little advertising revenue they make from all those millions of well-heeled American online readers out there. It just needs a special push, the right advertising sales deal or even a new breed of specialist sales house for them to get their just rewards.
Claire Enders has firm, if unconventional thoughts on that too. Given the headline hopping behaviour of readers online, the papers, she believes, are already getting their just deserts. In fact, more than their just deserts if the time spent with the online product is fully taken into account. If Enders is right then you should not downgrade the paper product anytime soon, or indulge in too many fantasies about increasing online revenue to 50 per cent of the whole – unless you have disgracefully low expectations about the future of the medium.
So where does that leave individual newspapers? The Guardian‘s position is completely clear and unambiguous. It will continue to place great emphasis on online but it has no plans for a general charge on online. Specialist products such as MediaGuardian might one day be another matter.
News International’s position is equally clear. It plans to explore charging a “fair” price for both print and online. It is so because the News Corporation chairman Rupert Murdoch has decreed that it will be so. Murdoch says he plans to charge users to read The Times and Sun online content. The News Corp executive said he would test the pay model on his stronger titles following the success of the Wall Street Journal‘s charges for online business news.
The small problem is that most observers believe it is relatively easy to charge for specialist business information of the sort provided by the Journal or the Financial Times but very difficult to make paying stick for general news stories, whatever the method chosen. Even Murdoch himself initially thought he would offer Wall Street Journal material for free when he first took over – before he had looked at the books. Changes to the online charging policy for titles such as The Times could come as early as the end of this year.
At the seminar Paul Hayes, commercial managing director of News International, naturally agreed with Mr Murdoch’s position. Hayes believes that newspapers can emulate the success of Sky – finding compelling content and then charging for it. It will be a first if he makes it work. There is no evidence that you can charge for general newspaper content in the way you can for live, exclusive, mainstream televised sport. There are too many alternative sources of information – not least BBC online, free to the user at point of access.
In the great charging battle between Rupert Murdoch and Claire Enders, it’s Enders who looks as if she is on the money.