Funding the future

Questions I’ve been asked my thoughts on recently:

1. Should papers charge for some content online?
2. Could more money be made from paid content than advertising?
3. What about premium models?
4. How will new technologies affect charging?
5. Is it better to be an early adopter or a follower?
6. What about competitors? How do we respond to what they do?

Tricky eh? And my lack of answers led me to spend an afternoon rifling Google Scholar, blogs and articles to try and see if I could at least understand the issues better. I’ve linked to those I found useful, and I have some ideas now – but I still don’t have answers…

Should papers charge for all/some content? Rupert Murdoch thinks so. Consumers, obviously, disagree: Only 16 per cent of consumers said they would rather pay for content (and avoid online ads) one survey found. Leaving the nationals aside, on the subject of charging for content, specialist or otherwise, Mark Potts, says “any given local media ecosystem also comprises community papers, alternative papers, business papers, ethnic papers, TV stations, radio stations, blogs, community newsgroups and listservs, Web players (Yelp, Citysearch, craigslist, etc.) and many others….the marketplace is going to shrug and turn elsewhere to find out what’s going on around town, for free”.
I’m interested to see where Journalism Online takes things but, right here and now I don’t think regional newspapers are in a position to start charging for content, specialist or otherwise.

Could more money be made from paid content than advertising? I’d guess not with most newspapers’ existing websites, editorial production models and commercial and editorial set-ups (and mindsets.
I’m intrigued by the Newport Daily News deciding to make its online readers pay a lot more to access content than it charges for its printed editions and maybe strong regional brands might see an opportunity with this idea (Sheila L. Mullowney, the newspaper’s executive editor, describes as “a print-newspaper-first strategy*”) but investing in commercial technologies and training, recruiting and retaining the right commercial teams, caring about the products on offer, creating relevant, user-friendly advertising platforms and being able to provide paying clients and consumers with real excellence is perhaps a more realistic goal.
*Caveat: The News is a family-owned business, and has “no debt” or shareholders expecting high profits either. It is not, I think, a yardstick for much of the industry.

The WSJ is, I guess, the most successful example of using a paywall. Alan Murray, executive editor, says Google News readers are now allowed behind the paywall because they have no relationship with the paper and arrive via a search. He also says you shouldn’t put your most popular content behind a paywall because you restrict your reach, and believes content behind a pay wall should appeal to (sometimes very small) niches.
Quite a few industry brains think Alan Murray is wrong; I think the WSJ model is imperfect but there are lessons to learn from its operation.

The WSJ’s paid content relies on brand strength, very high quality journalism, and niche targeting. To provide high quality journalism, you have to ensure all your journalists aren’t all grinding out copy in a never-ending battle to fill overnight pages. In short, you have to ask which is more important: print or online?
And since I’m on thin ice, I’m going to edge out further and say that while premiership football might seem like an obvious niche, it’s not.

Football clubs, like newspapers, are in the main now run as plcs not family businesses or hobbies (generally anyway – and for every Chelsea there’s a Newcastle Utd), and break their own exclusives, make tv shows, interview players and managers, and generally aim to spin and influence reporters to their advantage. Maybe, though, there is a real opportunity to apply quality sports journalism to grassroots sports – football, rugby, gymnastics, whatever. A searchable online archive of all your newspapers going back to the Year Dot could be considered niche, as could photo archives, and personalisation.

At the very least, premium models have a better chance of success than a broad paywall approach. But newspapers that attempt premium models will need to offer good user experience, excellent interface, mobile integration and keep investing, improving and innovating, because the ground will keep shifting.

Technology (and cultural shifts) will inevitably affect charging; mobile remains an emerging area and Nokia to Apple proved scope exists to charge for packaged content easily browsed on-the-go although USA Today learned a hard lesson with its free iPhone app.
Geotargeting mobile customers is a proven, effective way of extending commercial reach, rss can easily carry advertising, podcasts and video should be topped and tailed with commercial opportunities, with the option of an ad break for longer shows.

Newspaper companies also eying e-readers as a potential way of introducing commercial models to users (younger, more affluent, probably familiar with buying content online – whether Amazon or their iPod) – after all, the Kindle 2 is used by the New York Times, WSJ, FT and USA Today.
I think the mobile web could be far more commercially viable but it’s not the whole answer.
I pay for some apps on my iPod but I don’t pay for news on that or on my pc – I go elsewhere. Hidden it behind a paywall? No matter, I or someone in my network will source the same article elsewhere on the web within minutes.
So, drawing on my own experience, I’d say e-readers should be a part of a business model – but not a big part. I was interested in Steven R. Swartz, president of Hearst Newspapers, saying: “We believe we must begin to provide greater differentiation between the content of our free Web sites and the content of our paid product, be that paid product read in print, on a digital device like Amazon’s Kindle, or online,” but I note his all-staff email opens with the need to cut costs.

Early adopter or follower? without being glib, I’d go for early follower. Early adopters might go into something with a bigger budget but it doesn’t mean the outcome will be more successful for being first.
Plus, if a business strategy is robust, flexible and truly forward-looking then the actions of a rival can help inform decisions but I doubt someone is going to come up with a gasoline pill. Whatever one company does, a rival will copy and do differently, while claiming their model is better, more innovative, cheaper or successful.
It’s just the way of the world.
* Update: I forgot to link to this post by Kevin Matthews too.

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