Dear Rupert, have you lost the plot? #paywalls

July 22, 2010

The Guardian is somewhat cheerily reporting this week that its arch-rival for British eyeballs, Murdoch’s The Times has suffered what appears to be a catastrophic drop in site traffic since ducking behind the paywall last month.

According to the Guardian‘s analysis (which you might discount on grounds of competitive one-upmanship)  traffic to the Times website has fallen as much as 90 per cent since the 15th of June this year.

The results also seem to confirm my analysis – soon to be published in News 2.0: Can journalism survive the Internet? – that the revenue streams from online subscriptions and daily paid visits are going to be a drop in the bucket compared to newspaper publishers’ overall income generating capacity:

There are approximately 150,000 Times print subscribers who get a free online registration, but if the estimated 15,000 daily online users who agreed to pay opt for the £2 a week deal, the paywall will generate £120,000 a month – £1.4m a year.

[Halliday, 20 July 2010]

That £1.4m a year is not going to cover the wages bill, let alone all the associated costs. It certainly is not a positive income stream.

I know that some commentators are suggesting that Rupert’s lost the plot – he is nearly 80 – and that the Internet has overtaken his usually sharp business brain because of its lightening speed; but I’m not so sure.

If you look at Murdoch’s strategy in New York, he has gone for a more traditional print-based newspaper war there; pitching the Wall Street Journal against the New York Times by upping its local coverage in a special section for the city that never sleeps.

To me this indicates a deeper game plan and a multiple strategy play that is yet to completely unfold. I’m not suggesting that Murdoch is going to be the ultimate winner here, but he is hedging his bets.

News International is also working on other aspects of the exclusivity of brand that the paywall might suggest. If you sign up and pay your 50 quid you get access to deals on executive travel, wine, books, etc. All aimed at the wealthier and older end of the scale. I’m shaking my head as I write this because not only is this approach nothing to do with the quality of the news on offer; but it also seems like a sinking lid strategy.

An older audience eventually gets smaller – it’s just the attrition of age and infirmity really. At the same time there’s nothing in the data to suggest that newspapers are generating interest in a younger audience – there is no long tail in this strategy.

The other clear observation is that no one has yet cracked the Holy Grail of the new business model for newspapers. It is obvious that in the short to medium term erecting a paywall means you take a hit; but it’s too soon to tell if there will be gains in the long run.

For readers, grazers and news surfers it means one less outlet, but in the crowded online market, the still-free alternatives are available to absorb the 90 per cent of Times‘ visitors who’ve given up on the once dominant masthead.

As one of my colleague remarked though, Times readers (at least those who have been loyal to the brand) tend to be conservative and may not like the more lefty tone of the Guardian or Independent.

It would be interesting to know where they’re going. Is it to The Sun, The Express or The Telegraph, or are they going off-shore for their news fix.

The next set of data on traffic, downloads and unique visitors to other news sites will be interesting, particularly if there’s a spike somewhere that might correlate with Rupert’s deserters.

I was on The Wire today discussing this issue.

Hirst_paywalls_the_wire_22_July


Murdoch’s UK paywall – set to change the world of online news

May 26, 2010

Rupert Murdoch could never be accused of stupidity. Rash behaviour at times, certainly, but he’s ruthlessly smart and totally focused on the bottom line.

In a few weeks time Murdoch’s most valuable (in terms of reputation and cache, if not profitability) media assets in the UK will disappear behind a paywall.

The Times and The Sunday Times will cost you real money from some time in June 2010. Already if you want to check-out the still free content you have to sign-up to go past the front page.

Next time you visit The Times, take a moment to register...have your credit card handy too.

Paywalls are controversial; supporters argue that without significant injection of subscriber funds there will be no more quality journalism, while detractors say that paywalls are anathema to the very ethos of the Internet.

One critic, Future magazine’s CEO Stevie Spring says she wishes Murdoch well, but remains unconvinced that the paywall experiment can work:

“Perishable news – like that News Corporation is talking about, for instance – is ubiquitous,” she said. “The basic rules of marketing say people will substitute and not pay for what they can get free. Good luck to them, I really hope it works but all the norms of marketing say it won’t. [However] it is an experiment they can afford to make.” [guardian.co.uk]

Roy Greenslade also puts the strategy under the financial spotlight, pointing out that subscriber numbers would have to jump exponentially to cover the costs of the newspapers’ £100 million editorial budget:

If 100,000 people agreed to pay £2 a week for access to the papers, it would result in annual revenue of £10m. It’s a sobering thought that the sum is but a tenth of the papers’ editorial budget and less than an eighth of their current joint annual losses. [Greenslade blog] Read the rest of this entry »


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