As I said in my previous post, I am working on a project to help newspapers monetize their content by charging some of their readers for some things. As I read about the debate about this, go to conferences and talk to people, I've been repeatedly struck by two common assumptions that, I think, are mistaken and stand in the way of solving the problem.
Here they are:
Myth 1: you can only charge for unique content
The thinking here goes like this: in the internet, all content is just a click away. If people want to read about something that you don't cover for free, they'll just go to someone who does.
This may be so. But most of the time people are not in this frame of mind. Consider these two examples:
- You receive an email from a colleague that says "did you see what the Times said about us today?" Or from a friend: "check out this rant about Paris Hilton – well said". Both emails then include a link to the article in question.
- You arrive at your office and, as you sip your coffee and get ready to start work, you quickly check your usual news sources – perhaps Google News, the Drudge Report, Twitter or even a newspaper's front page – and find a link to an article you want to read.
In all of these cases, by the time you've clicked on a link the competition is irrelevant. What you want is a specific version of a news story – a specific page – and no alternative will do. If you face a pay-wall you may or may not be willing to pay, but you won't go somewhere else for "alternative coverage". You only get to chose where you discover content (your email correspondent, Google News, your Twitter contact, etc – i.e. your aggregator), but you can't chose the content you are sent to.
What about the people behind the aggregator? Yes, they may refuse to link to a site that charges its readers – but then they may not. At any rate, at this point in time they are in a different market than you – they are in a different contextual segment – and publishers can choose to treat them differently.
Finally, what if the people who put together the aggregation are the same people who put together the content – like a traditional online newspaper? If all the content promoted on the paper's front page is behind a pay-wall, this may dissuade you from coming back – but then again it may not. Your choice of aggregation – of who you rely on to give you a daily menu of content – is much more durable than your interest in any particular article. Regular readers of the Guardian won't switch to the Telegraph simply because the Guardian decides to charge. Some may go away (perhaps to Google News) but they won't be indifferent, and some will be willing to pay.
Myth 2: you can't afford to turn away your users
The last paragraph suggests that some of your loyal readers may be prepared to pay. But these are a small minority of your audience, and if you put a blunt pay-wall you will turn away everybody else.
Well, that might not be such a bad idea financially (the loss in editorial impact is another matter). A recent study (see slide #40) concluded that while loyal readers account for about 25% of online newspapers' reach, they account for about 85% of their page views. And for local papers, regular readers' share of revenue is likely to be even higher than 85%, since these are overwhelmingly in-market and command higher CPMs than out-of-market visitors.
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This is not meant to suggest that the solution is easy. Should you just slam a pay-wall and focus on your core readers? Should you just forget about the ad revenue you get from other readers, or is there a way you can preserve that while charging your core readers? Will some of your less-frequent readers pay? How much? If you shut out everyone but your loyal readers, will your customer-acquisition costs go through the roof? And would you lose editorial impact? Should you make a deal with aggregators so that their links to your site bypass your pay-wall?
These are tricky questions and at The Publishing Project we are working with newspapers to answer them for each case. Charging may not work for everyone, but it may work for more papers than the nay-sayers think.
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