Friday, 7 August 2009

20th Century Media. The encore

(photo credit)
So Rupert Murdoch has finally made the announcement that the rest of the newspaper industry has been waiting for: online news content will be hidden behind a big paywall from sometime in 2010. This was always going to be a game of who blinked first; who would take the plunge. Realistically I don't think that it could ever have been trialled, tested or rolled out, as success or failure rests on giving the rest of the industry plenty of notice and hoping that they will all jump on board. What will be fun to watch is who doesn't join in. Murdoch's comments today about

"the sale of digital delivery of newspaper content"

suggest that he doesn't get what digital distribution is. His UK competitors at The Guardian and The Telegraph seem to have a much better grip on the realities of news distribution in the 21st century. What they clearly don't have at the moment is any more idea about how to make money from reporting it. The 'if you report it {and make it freely distributable through APIs and full text RSS} then they will come' may still bear fruit in the long run, but can they afford to wait? The dual squeeze of paper cost inflation and massive ad revenue contraction means that they have to look to the short term in order to survive.

So it's safe to say that any business that has been based on charging for news in the past is going to be examining the ways in which it can do so in future in the next few weeks. I've been trying to get my head around any way in which this can possibly work, and so here's a few attempts:

1. In the UK at least there is a robust model for paid content. 9m households subscribe to Mr Murdoch's own Sky TV/Broadband. As is clear from the post below, I am a massive fan of not just the technology, but everything about the Sky brand. If News International can leverage this paid network, and potentially include Sun or Sunday Times online content as a Sky Broadband subscription package (for instance instead of one of the free TV packages) then this would demonstrably monetize online news content with minimal impact on TV revenues. It may not provide any major cash injection, but let's face it, Rupert's pockets are deeper than his rivals, and anyway the whole paid news content is in desperate need of credibility; Sky could overcome the initial hurdles for News Int in a way that no other news publisher could compete with.

2. eReaders. Have been referenced by the upper echelons of News Int as the future recently. (apologies for linking to my own posts, but I've love writing about this stuff, and then I know where to find it!). News Int are apparently negotiating with Sony over a new reader, but personally I can't work out the point. Ever decreasing size and increasing power of digital devices means that we really only ever need to carry one. If I have the internet, email, Twitter, an mp3 player, camera, video recorder, feed reader and phone in one device in my pocket, there is no way I'm carrying another one with a news subscription on it. So, applications. Interestingly the pin-up kid of paid news, the Wall St Journal, offers free access via iPhone app. Ignoring that, most of the difficult bits of viewing news on a small screen are about navigation and search, so justifying payment on personalised content may work - the value for the viewer is not having to hunt for stuff that's interesting because the app learns what is and seeks it out.

3. And the alternative to applications, and where I think Rupert may already be casting his eye, is the mobile market itself. So absolutely commoditised that a bespoke content owner should be able to make major inroads quickly (only problem would be a tech partner - Apple hide behind an even bigger wall than newspapers, while I can't see this crusade sitting comfortably on open source Android)

But there's also a few tricky obstacles to overcome in this last hurrah. The first is that in the UK we have a pretty healthy paid content operation, the BBC. We pay around £11.50 per household per month for all the news, comment and analysis we can eat. And all it takes is one source of quality content to remain free and all the rest will just lose traffic. Expect the Murdoch press to become even more vehemently anti-BBC over the coming months.

I think there is an important distinction though between the BBC and News Int, which is that News Int's business has been newspapers. There's no new costs involved to publish text and pictures online once they are sent to the printers. People don't view websites in place of newspapers, and their enjoyment of them is rarely enhanced by engaging with them across two media. It's just the same content in a different place.

Secondly, there are lots of people who are quite happy with newspaper content because they trust it and it has always been there. It just happens that they are spending more time online than they are reading newsprint these days. If for some reason it wasn't there, they might well find out that most of the best stuff online isn't written by newspaper journalists. It doesn't matter whether you are after cricket analysis or celebrity scoops, it is a really straightforward lesson to learn, and one that newspaper marketing departments should be terrifed about. News spreads fast in the21st century, and they really are in danger of getting left behind.

And the most important question is how people will find these sites to go and pay them. Google can't look behind walls. The whole basis for paying for news is that you will be receiving the most authoritative set of opinions (ok, or The Sun. Or Fox News. So you might just be getting the set of opinions that you want...). Anyway, 10 years from now there will be no reputation left worth mentioning. As Jeff Jarvis points out in The Guardian, this move cuts access to the link economy. And whatever might have brought success last century, that is where long term revenues will be found this time around.


neilperkin said...

Great post and some excellent points Graeme. Sure enough, it's going to be fascinating to see how this one plays out

Graeme Wood said...

Thanks Neil - my guess is that it will all be a bit more prosaic and FT-like (a few pages per month free, a few more in return for data, some sort of micro-payment or subscription after that) than the more ambitious options above! Will be fun to watch though

neilperkin said...

Hi Graeme. Just wanted to let you know in case you hadn't caught it that this is in the running for Post Of The Month over on Dead Fish...
Hope all's good with you. N :-)

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