Wednesday, 18 November 2009

Charging for news

So we are starting to find out a bit more about News International's plans for charging for news online. Rupert Murdoch's interview with Sky News earlier in the week suggested that he hasn't recently looked at the figures for how much traffic his sites receive from Google. As Google frequently point out when the print media criticise them, it only takes a robot.txt command to exclude content: Murdoch apparently intends to finally take them up on this opportunity to opt out.

On a less confrontational note, Times editor James Harding explained a little bit more to the Society of Editors about how this is going to work for his bit of the Murdoch empire. It seems that the plan goes something like this:

Micropayments are too difficult, and let's face it, too different
to newspaper publishing. Newspapers' business model was based on the scarcity of news. So let's try and recreate it by charging for access to everything published in the previous 24 hours.

My words not his, but that is the general gist of it. However, this is apparently going to "rewrite the economics of newspapers" (Personally I think they were rewritten some time ago....)

A lot of the discussions of Murdoch's print business model though forget that behind all the hype there is a solid basis for increasing revenue. For all the talk about rewriting business models, I don't think anyone at the top end of News Int thinks that they are going to increase print sales over the next ten years. They seem to be doing a better job on online ad revenue: the chart below shows that despite all the pressures on ad budgets over 2009, the Times has maintained its revenue online (figures from Nielsen Media Research, so the increase may be partly due to the improvements in online tracking that Nielsen have made this year).

They have also been increasing UK traffic figures according to the latest comScore stats. To the extent that according to the combined Nielsen/comScore figures, to REPLACE their UK ad revenue would require some £0.17 per UK unique user. Obviously every unique user is not going to pay them: a Forrester report published earlier this week had a figure of 20% (of US internet users) who would be interested in paying for newspaper content. So based on an example of 15% of Times users being signing up to this project (still an extremely ambitious target), News Int would only need £1.14 a month to REPLACE ad revenue. Bear in mind that they aren't going to be stopping running banner ads any time soon, and will certainly be charging media buyers a premium to target subscribers based on user data. And that there will also be a substantial chunk of Times inventory that is outside of the paywall, also running ads to a wider audience. But £1.14 doesn't sound that much if you like reading the Times online: most people spend more than that per day on coffee.

This doesn't mean that this is a good idea, or that it will secure the future of News Int's media properties. I've written lots of random stuff about what I think might be, but then of course I'm a random blogger and Rupert Murdoch is a media mogul with a track record of leading the market. I think the point I'm trying to make is that this isn't a great crusade to save paid content, it is more a pretty plausible attempt to create a new revenue stream to cover for the lack of ad advertising 2010-2011. Whatever is going to "save news publishing" is something different (probably something that doesn't start off by treating news as a 'once every 24 hours' concept). It might be, as Conde Nast are eagerly anticipating, something that happens on a new size of Apple branded screen. It will certainly demand the sort of radical innovation that established market leaders often find difficult to embrace. But if it is found, News International need to ensure that they are still a leading publisher of news when it happens.


curiouslypersistent said...

James Harding from the Times gave a pretty compelling case on why newspapers need to charge. But, to my mind, there is no clear revenue model that can work. As long as one publisher (whether WSJ, Vanity Fair, Economist, Atlantic) puts in-depth investigative journalism/criticism online for free, it is very difficult for others to charge. Given your subsequent post, perhaps Google can move from aggregating to funding the news??

Graeme Wood said...

Agree about the revenue model: I can't see on that will work, and I don't expect that radical innovation will come from the established players. Murdoch is leading a decline management movement, but the speed it is being talked up by everyone other than the Guardian suggests that no-one is willing or able to lead. Which is why looking to Apple and Google seems obvious.

I think Google do monetize news pretty well at the moment through Adsense. It just isn't at the scale that would replace the scarcity-based business models of big publishers. Politically this seems a bit worrying, as even in cases like Trafigura the groundswell movement was focused on allowing a newspaper to publish the facts.

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