Newspapers ponder new web revenue streams
How can Irish newspapers make their online operations pay? 2010 will bring some answers to this troubling question as publishers experiment in earnest with different kinds of paid-for content.
Newspapers across the world have been grappling throughout 2009 with the question of how to generate revenue from online content.
Rupert Murdoch lit a fire under the industry when he announced plans to erect a pay wall for the Sun and the Times newspapers, probably as soon as next year.
Matthias Džpfner, the top executive at Axel Springer Verlag and publisher of more than 150 papers and magazines in Europe, last week launched paid-for iPhone applications for Bild, its flagship tabloid, and its broadsheet newspaper, DieWelt.
Murdoch has further taken his mission to make money from online news to Google, whose practice of aggregating news is now under heavy fire.
Johnston Press, the second biggest local newspaper publisher in Britain announced earlier this month that it is to conduct pay wall trials on several of its regional papers for the next three months.
The company owns a number of local newspapers in Ireland, The National Newspapers of Ireland group, which represents most national and local titles, is in the process of setting up a committee to examine the pay wall issue in 2010. For papers involved in producing national news here, there is an obvious difficulty in competing with free websites, such as RTE, which provides breaking news all day.
At this point, individual publishers appear to be focusing on developing pay walls in particular niche sectors, rather than considering a blanket charge for all readers.
The Irish Examiner has dipped a toe into paid-for waters by charging users for accessing ‘family notices’ (mostly death notices) online. The charges, which initially generated some controversy, are €5 for 30 days or €35 for a year.
‘‘We’re delighted we did it,” said Anthony Dinan, chief executive of Thomas Crosbie Holdings. He acknowledged there had been some complaints initially about the move, but said that was natural, since people were used to getting the information free.
Dinan said he hoped to introduce more paid-for content across the entire TCH portfolio of papers within the next year.
‘‘It’s about time that newspapers started charging for specific content,” he said. ‘‘I think, for local papers in particular, there are opportunities. Papers can be the voices of their communities.
We need to keep communicating with those communities. If we can do this online, then that’s a great thing.”
The Irish Independent, which recently appointed Axel Springer AG’s chief financial officer, Lothar Lanz, to its board as a non-executive director, has launched a pay iPhone application and said it planned more apps in 2010.
The Irish Times has started operating a crossword club for online users, charging €35 a year. Its membership runs into ‘‘several thousand’’, according to Paul Farrell, commercial director at the Irish Times.
Farrell said the paper had spent the past year investigating ways to make its online content pay. It now had a firm strategy for 2010 which would see it introduce several additional paid-for elements to its website.
He said he expected to launch these services in the second or third quarter of 2010.
He said he did not believe that Murdoch’s idea of a pay wall would be effective for a paper like the Irish Times, but that there were other ways of making additional revenue from the paper’s now two millionstrong online audience.
He said he had identified several groups of users who might be willing to pay for content, and tailor-made products or services could be devised for them.
‘‘I think if we had, say five groups of 10,000 people each who were paying for content, that would be a good source of revenue for us,” he said.
‘‘We need to move from a position where we’re distributing information – because that’s what anyone can do – to a position where we’re distributing intelligence,” he said.
‘‘This is certainly a challenge for this industry.”
Generally speaking, the Irish newspaper market has had bad experiences with charging for online content, and no paper knows this better than the Irish Times.
In 2002,the paper, which has since invested tens of millions in its online presence, started subscription charges for news content, to help finance its online offering.
Six years later, with a loss making website on its hands, the paper abandoned this model and launched a new site offering readers access to the latest edition of the paper and those from the past 12 months, free of charge. Charges are imposed only for the full archive.
(The Irish Independent also charges for access to its full archive.) Subscribers to what used to be called ireland.com (now irishtimes.ie) numbered fewer than 10,000 individuals. Each was paying some €79,and there were more subscribers paying for e-mail.
Sunday Business Post chief executive Fiachra O’Riordan said he and all other Irish publishers were keeping a close watch on Rupert Murdoch’s activities in the digital space.
‘‘If the largest publishers of this world are pursuing a strategy here where they going to start charging for content, it makes it easier for the industry as a whole to follow that model,” he said. ‘‘The price point is the question. The price point for different sorts of customers is probably very different. But content is just too expensive for us to continue distributing it for free on the web.”
Dinan said that, for national newspapers, the obvious areas of added value lay in columnists and opinion pieces. Mobile phone content is another potential revenue stream.
The Irish Independent was the first national Irish newspaper to launch an application for the iPhone. It enjoyed a few weeks at the top of the ‘app charts’. Users have to pay €2.39 to download the app, which provides a daily teaser of the main stories in the newspaper.
This group is also actively researching further ways to monetise its online operations, which include 14 local websites, Independent.ie and other sites such as Loadzajobs.ie. Ian Byrne, managing director of Independent Digital, told IMJ magazine recently that the group was researching market trends and options for a range of possible paid-for products.
‘‘The potential impact of new pricing models must be examined against other existing or potential revenue streams. Publishers must be conscious of the need to strike a balance between the expectations of readers and advertisers.”
Until 2009, the impetus for papers to charge for online media was less acute, as papers were making plenty of money from their printed operations and didn’t need to justify investing in digital media. Now, print media is struggling.
Advertising revenue is down around 20 per cent this year, and banner advertising is not bringing in huge amounts of money.
The case for publishing houses to develop new digital revenue models is stronger than it has been in many years.
One key question is how the market will react to being asked to pay for what it has been conditioned to expect free. Research in this area has been contradictory.
Last month, a survey by the Boston Consulting Group found that 48 per cent of Americans were willing to pay for news online (including mobile devices).At the same time, a Forrester Report found that only 20 per cent of consumers were prepared to pay for content.
In Britain, media consultancy Oliver & Ohlbaum concluded that paying as little as stg£2 a month to access national newspapers sites was unlikely to prove popular, particularly if every title introduced payment systems at the same time.
The report, based on 3,000 interviews, suggested that charging small sums for individual articles was likely to prove amore effective way of making money, particularly if they were introduced alongside online subscriptions that allowed users to access most, but not all, content.
It found that 15 to 20 per cent of respondents said they would pay stg£2 a month for their favourite news website if it was the only one that charged. This willingness was more pronounced among readers of the ‘quality’ press.
Globally, the Wall Street Journal remains the best example of a paper that has successfully charged for online content.
It is this paper, now part of the News Corporation, which is clearly inspiring the corporation’s founder and boss, Rupert Murdoch.
The Wall Street Journal’s wsj.com site has one million subscribers, and annual subscription charges now stand at €119. Murdoch said that making the reader pay was the only way to create future revenue streams: ‘‘The business model that relies on advertising only is dead. Online advertising is increasingly only a fraction of what is being lost from print advertising, and it is under constant pressure.”
Matthias Džpfner, chief executive of Axel Springer, recently said there were six areas people would always be willing to pay for: sport, regional news, money, power, sex and crime.
‘‘People will always be interested in these areas and willing to pay for it. It is wrong to think everything in the web world needs to be offered for free. It’s a very logical outcome for web communists, but it’s absurd,” he said.
How can Irish newspapers make their online operations pay? 2010 will bring some answers to this troubling question as publishers experiment in earnest with different kinds of paid-for content.