Margaret Simons has an interesting piece up at Crikey talking about some research on whether people will pay for online content, and the likely move of The Oz to a paywall system.
It’s an interesting piece but she falls, like most others who’ve been talking about the issue, into the trap of assuming the default target for subscriptions will be individuals and the general public.
I doubt very much that it will be. There will be very few people at News Ltd that will be under the misapprehension that consumers will pay for content – the studies are pretty clear, and their analysts are in the business of making money off clear plans, not blind hope.
Unless you keep the subscription rates very low (less than $30 a year, say), there would be little prospect of getting individual subscriptions for basic news content – and that money would probably be more of a hassle to collect than the revenue is worth.
But there’s an alternate model. My guess is that the primary target for subscriptions will be businesses, and other larger organisations – particularly targeted and packaged subscriptions, as discussed in the Mark Day piece Simons linked to.
I wouldn’t pay $100 a year to access the Oz online, but I reckon there’s a chance my employer would drop several times that get access for our entire office – particularly if they could sell us a package that was relevant to our business.
In a previous life I worked as a flack in local government, and I would have almost certainly found the room in our budget for subs to the Oz, the West, and maybe a couple of others.
It would have been irritating, and there would have been some resistance at first, but I know eventually we would have dropped a few hundred dollars on subscriptions for the major papers if we needed to do so to ensure online access for our staff. And if News Ltd was able to limit access to targeted sections (and, say, thereby prevent people from spending time reading the sport and entertainment sections on work time), so much the better. Our CEO would have called it a productivity bonus and named it cheap at the price.
It’s a model that has had some success, particularly in specialised sectors: Pharma in Focus and MiningNews.net are two good local examples, and there’s a raft of other small publishers around the world that have had significant success in producing good journalism for a targeted audience, particularly when it’s business paying for the subscription.
If News charges a sliding scale (based on numbers of people accessing the site through a corporate subscription) to corporations, governments and NGOs for targeted content then there’s plenty of money to be made. Major players like BHP wouldn’t think twice about dropping $10,000 on a company wide subscription, and other organisations would probably feel the same way.
It will almost certainly come at the cost of their subscription to the paper copies of the papers – but News and the rest know they’re dying anyway, so what do they care?
“But there’s an alternate model.”
Alternative.
Institutional buyers/subscribers are probably factored in as no doubt are the small number of individual subscribers who will pay a smallish fee (I’m guessing). But given the struggles that subscriber models have in making a serious amount of money the most likely scenario imo is still a much leaner Oz online with much more syndicated content. Advertising is still going to be a significant contributor but regardless of the revenue model the bottom line is that the internet with its plurality of sources and instant access, not to mention the sharing and viral nature of social networks has pretty much annihilated the old media monopoly on news and opinion. Without the monopoly any business model looks more like guesswork than anything else.
just my 2c (which is more than I think anything Rupert produces is worth paying for).
I think you’re right, Nick. There’s also money in reporting on employment law changes, workplace stuff, etc. But I’m not sure:
(a) News Limited has the actual expertise to produce niche content of high enough quality (that’s not to diss their journos, just to point out that to do this sort of gig well, you have to be highly specialised);
(b) The killer for News Ltd will always be that their cost structure will always be much higher than small outfits (particularly online only). You might have to adopt a loss leader strategy to really succeed in this market, and I wonder how long they’d be prepared to back a business in development while their revenues generally suffer.
Interesting post!
Thankyou neighbourhood pedant: I salute you! The distinction between alternate and alternative was something I felt like raising at the earlier “Everybody needs to know thread” once it was derailed from the “what people should know from my area of expertise” to a general what civilised persons should know.
Dr Cat, this is actually your area of expertise, so your comment on the earlier thread (re spelling etc) was one of the few legitimate ones. Your thoughts on “alternate” vs “alternative”?
But having complained of derailed threads I fear I’ve (potentially) just done the same
Lots of people read their ‘work newspaper’ over breaks and look at sports and entertainment sections, not to help them with work. Plus the sudoku.And circulating articles with odd headlines.
A downside of this for Australian newspapers is that employer buyers would quickly have a metric showing that very few of their employees use the newspapers. I find that they rarely have the detail I need to increase my knowledge – but maybe if their online articles actually named the reports they were discussing and provide a link that would be a slight improvment on their current approach.
I think you’re bang-on, Nick; in every org I’ve worked for – from a huge multinational now, to NGOs with seven staff, there have been “industry” publications everybody pretty much has to read – it’s the only place to get the news you need – and crucially – the only place to advertise to your (specialised) audience and peers. I’ve worked for a few of these puppies, too, so I’m not just talking out my arse.
This is the thing I suspect you’re forgetting Mark: as ever, the money ain’t in subscriptions, it’s in advertising – and that’s how these trade mags make a living (and, to a far more generalised degree, the Fin online, I’d bet). Rates can also be surprisingly high in these kind of publications, not because of circulation numbers, but circulation depth – people who are actually interested and actually buying read these ads.
This all said, costs are lower – way lower. The Oz may find its budget for stupid editorial bullshit will be dramatically reduced when no one’s interested in reading (again, compare and contrast the editorials in the Fin and Oz). Advertorial (not called as such) is also far more common – buy a page, get a feature.
In some ways it’s a far grubbier, commercial enterprise – if such a thing is possible. 3/4 of your content is based on advertising. On the other hand, people are probably more interested in reading an interview with the CEO of your company – or better yet a technical expert from your company or host/ed academic – than a lot of other bollocks. Fields are so specialised news can be more difficult to come by. In some ways, it’s a much more communal, personal way of doing business, and if you work for a smaller company a very equal footing with the publisher.
Interestingly, working the PR side of the fence now, The Fin really is an outlier with regards to editorial independence and perks. They won’t take junkets (press conference with lunch, maybe, but that’s it, no paid flights, hosted trips, etc etc), and they set their editorials in advance then call for submissions on topic. The Oz (in my current field – IT) is a bit more lackadaisical with regard to editorial, and they _will_ take hospitality.
@Patrick, take your point about advertising, but it seems as if it’s impossible to make as much money from online ads as from print, no matter what the product. And, again, I suspect that it would be difficult for News Limited to cover the field, as it were, with all the various different industry publications being well established. The other thing to consider, here, is how existing players could fight back, and I suspect that they could do so very effectively.
As someone who was deeply involved with the afr’s many aborted attempts at monetising their content online, I have heard all these arguments before.
“Let’s sell corporate online subscriptions at $10K annually.” The Macquarie Groups of the world will leap at the opportunity to swap cumbersome newsprint for clean and customisable digital content.
It sounds great. The truth is for every online subscription you sell, you lose 5 higher margin hard copy ones. You can’t replace your dead tree readership so quickly or so easily.
Eighty percent of your revenues in metro newspapers come from advertising. Problem is they’ve migrated online. And they don’t need journalism as wallpaper for their ads anymore.
Eric Beecher knows this and wrote about it in Crikey this week. Corporate online subscriptions won’t come close to replacing hard copy ones. Worse, as your print subs fall, so do your advertising yields. A display ad online fetches nowhere near what a page 3 one gets in the newsprint version.
And if you lock the web version down you give up the page impressions that drive online ad revenue.
In any case, corporate information aggregators like Factiva and Lexis Nexis have this market sewn up. You can get News Corp content, Fairfax, Finacial Times, NY Times, Reuters, Dow Jones etc etc etc in virtual real time with great functionality and at a fraction of the price.
Believe me. The Oz’s strategy will almost certainly fail.Been there, done that.
I don’t think any of us know whether online ads will make good money, but I agree with patrickg that one very successful method is in getting specific eyeballs, not just linkbait and any old person clicking. This is where the subscription model helps with that, since advertisers can be confident that the people willing to pay for a subscription are more committed to the niche they’re targeting.
It’s also why I don’t think it will be a successful method for general news, since the reasons to pay to subscribe are fewer (availability of free sources, desire for a wide range of news sources rather than just one publisher etc), and there isn’t a lot that readers will have in common with each other, apart from wanting to know what’s going on. For more general information (news, gossip etc) I think that’s where becoming part of the public debate, being a go-to voice of authority, and being easy to access and share is more important. They just need to figure out how to best use that kind of audience to be desirable for advertisers.
I think it’s also going to be about advertisers learning and understanding more about the internet and how it works. I think as generational change happens there, that will also have an effect on how media and advertising works together in the future.
Mr Denmore you’re right about Lexis Nexus and Factiva and their penetration, but my employer subscribes to Factiva, and I tell you; it’s god-fucking awful to use. Horrific navigation, slow, content displayed awkwardly. Yuck.
As a consequence, despite our subscription we have print subscriptions to everything, our interns transcribe articles mentioning us into daily press report emailed to execs and other stakeholders.
We looked at online subby to the Fin – they screwed it up like three times, and then when we looked at getting an organisational one, the price was astonishingly high.
But my point to both Mark and you is – despite my respect for it – I’m not talking about the Fin. I’m talking about Waste Management Monthly, or The Land, or Computer Resellers Network, to name a few. Their website ads are currrently affiliated, and thus would be relatively cheap to purchase, however the differential between print and online is smaller than “mass-market” publications, and I suspect that in the complete absence of print, if they managed their own ads, they would creep up. There’s simply nowhere else to read this news.
The negative side of the coin – a current side even with print – is that the good small mags like this rely on contacts, knowledgeable journos to analyse the industry, and lots of catching up. The bad ones, broke ones, and cheap ones rely on wire services and press releases. They manage to make money by having a staff of literally two or three.
I view this period as a transitional one; neither the apocalypse so painted, nor some rosy digital future.
Ha ha ha, Anna we crossed over as I was typing that. We’re both on the same digital page re: advertising.
You might well be right about that, patrickg, but there’s a cost involved in managing your own ads too. The current practice, as well, is for the commission to be much higher than for print. Whether or not that’s justified, I have no idea, but at the moment the story is it’s harder to find and sell advertisers.
I think we’re furiously agreeing that News Ltd would not be able to (or probably want to) reproduce what people get from Waste Management Monthly and the like!
That’s for sure, Mark!
Regarding the difficulty of finding advertisers, that’s one thing these ‘trade mags’ truly don’t have to worry about. These guys are talking to their advertisers for all the advertorial (and, to be fair, real news too) every month, if not week. They would actually be in a far better position to negotiate advertising than the current affiliates. Of course, that works business-to-relatively-small-business; for a company the size of my employer’s, they prefer the affiliates because they’re guaranteed to to be cheaper, they can negotiate global rates if not content, and use it across huge stables of publications. My employers would resist a change to local, but at the end of the day they won’t have a choice.
Broad-based news is going to change, but I suspect that local, customised stuff is poised to break out, if they can figure a way to get all the money.
It’s not just locality, patrickg, but targeting particular demographics, I think is the key. If, for the sake of argument, you had a lively arts/music publication in Brisbane, you could very easily find local advertisers who’d want to market stuff to a youthful, educated demographic with a habit of spending lots of $ on clothes, going out, bars, etc.
It’s much harder to work out how you’d do it with broad news. The local paper model doesn’t work so well, at least in big metro areas, and I would imagine the stuff that fills full pages in the Courier-Mail (rarer and rarer these days) – you know, the David Jones sale or something, really will have had its day soon, particularly as big businesses get savvier about micro-targeting customers.
There’s another conundrum there, though, and it goes back to advertorial. Street press is basically that. You’d need really quality writing to make the sort of thing I’m thinking of succeed, not either journo hackery or the model of getting students to write stuff for free tix. In other words, you need, as with the trade publications, people who really know what they’re talking about. I don’t think big bureaucratic media (and that’s what all large newscorps are, News Ltd, Fairfax, the ABC, whoever) are best placed to serve niche markets.
Amen to that. That’s why most of them ceded it to niche pubs in the first place. I suspect this demographic ‘fracturing’ and a resultant failure to understand or exploit it meaningfully is behind much of big media’s problems.
Mark @3 and @15
I don’t necessarily agree about the difficulty in specialising.
I work a a journo for a specialist publication and I came in cold, from completely outside the industry. It took maybe 6 months to get up to speed on the sector, and maybe 12 to be pretty well across it. Good journalists – particularly with a masthead behind them – can get across pretty much anything quickly, it’s their primary skill.
And mastheads have a significant advantage over trade press. While the general assumption is that specialist journos know their patch much better than their colleagues at the big papers, that’s only true to a certain extent, because with a masthead comes a certain standing. While I would argue I know my patch better than journos at the big papers, that’s only because I follow the intimate details of the area much more closely – I don’t necessarily get the breaking stories because if someone’s going to leak something juicy they’re much likely to go to the Oz than to me. I might be able to put together the same story from half a dozen small tidbits, but I have to work much harder to get there.
Mr Denmore @8.
You’re right – you lose the hard copy and they’re much more lucrative.
But I’d argue that the major reason for the failure of the AFR experiment was that you weren’t getting much more than what’s in the hard copy for what you paid for.
That wouldn’t be the case if News Ltd played it smarter.
The primary limitation on reporting in the major papers is space – the New York Times historical slogan was “All the news that’s fit to print”. That’s bollocks. The real rule in a hard copy is “All the news that fits”. Papers and magazines work on an advertising/editorial space ratio – 50/50, 60/40, 40/60, depending on the publication and the section.
For every story you see there will be at least another couple filed – and editors will make a decision on their broader readership, rather than what might be of significant interest to a smaller group.
You don’t have those space limitations online – all of that copy can go up, filtered out to the subscribers with a specific interest. That’s where the value will be in the major news room operations under the model I think will be applied.
Fascinating discussion on ‘freeconomics’ – the economics of giving things away for free – that the internet has brought us: http://fora.tv/2009/09/23/Free-Conomics_with_Chris_Anderson
Worth a look if you have the time. From what I’ve seen, a model for the news industry has not yet arrived.
CrankyNick, I suspect you will see that leaking preference change as the profile of niche media changes.
Where I work, only execs who don’t know any better and only care about egos (and anyone concerned with branding) care about big paper coverage (except the Fin), because they know buyers aren’t reading it – and if they are, not with buying in mind. I mean they like it, but it’s not seen as a sales tool. More a branding/business position tool. Advertising, basically.
From past experience working with much smaller companies, they never cared about big media, cause there was literally no value in it, and the papers wouldn’t have covered the topics – or not in the right way – anyway.
Furthermore, working from the PR side of the fence as I do now, let me assure you; it never pays to underestimate personal relationships for leaking. Leaking is pretty unusual these days (bad news even more so), but a – ahem – friend of a friend has leaked in the past based on a desire to solidify relationships with a particular journalist/publication and/or a general liking for a particular journalist, in both cases these were not big media or illustrious publications.
I have also seen (and been) trade journo’s at conferences. Everybody knows them, everybody respects their knowledge of the field, and when everyone gets pissed in the afternoon, they do not self-censor. But it’s not a matter of “breaking” stories in trade mags, in my experience. They don’t exist to do investigative journalism in the classical sense, they just report on industry – which seems to be what people want, anyway; they get the gossip from each other already, they just want to read about who’s getting money (where and how), and any policy changes/advocacy that could affect their business.
Again, for large multi-nationals with complex operations and products, value here is limited. But if you’re selling mining and waste equipment like Steinhert for example, you couldn’t give a shit about getting in the SMH, etc. Steinhert is a big company, but they are too specialised to care about that jazz.
@patrickg
I guess I’m mostly talking about online news services, which is what I run, being in competition with the daily’s for breaking news. I agree it’s not so much the case for magazines, which have a different set of priorities.
And the kind of leaks I’m talking about are the internal brawl things – shareholder activists agitating against management and boards, that sort of juicy little story. I really doubt that will change – when those groups think media, and have a barrow to push, they’re going to go to the mass media, not the industry publications.
The other difference, I think, is in the decisions you make about what you will and won’t report. I’ve been at plently of those conferences, and heard more than a few of those semi-pissed revelations.
My experience is that journos in my position tend to self censor a little more than the masthead journos – the consequences for giving your sector the shits are a greater for smaller publications than they are for the big papers. That can be a real problem, but is probably unavoidable.
But yes, I think the advertising pitch can also be more compelling for trade press than for mastheads. Being able to say “our readership is small, but everyone that sees the ad is someone who is in the market for your products” can be a much more compelling case than straight volume traffic.
Heaven knows what newspapers can do. Environmentally it’s absurd to print up that much paper, move it all about, just for people to glance at and throw it out.
The only electronic news thing I subscribe to is Counterpunch and my gmail account is full of unopened emails of Counterpunch. There’s just so much else to read.
Institutions also may not be easy to sell to as once they were. We expected, and wanted, to subscribe to an online AFR, and they tried to force people to by taking their content out of the aggregators like Factiva, but the product was so rotten we decided to keep the paper copies instead.
Something similar happened with CCH – we had subscriptions for their online products for years, but their pricing was crazy (as pointed out earlier you know exactly what the use of your online subscriptions is) and in the end we just cancelled all the subs and spent a bit of time searching out the (mostly government) websites that had similar info. We haven’t regreted the move.
As long as you can find some high quality blogs in your areas of interest that have expert commenters using the BBC, ABC news stories as the basis for good posts, you won’t have time for the generally awful stuff from the mainstream press.
Often we forget the little guy, the SMB, in our discussions of the comings and goings of the Internet marketing industry. Sure there are times like this when a report surfaces talking about their issues and concerns but, for the most part, we like to talk about big brands and how they do the Internet marketing thing well or not so well.