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by Dave Morgan
, Featured Contributor,
November 12, 2009
"Web communism" and "ubiquity is the new exclusivity" were among the lines being traded in a lively debate this morning between Huffington Post's Arianna Huffington and Mathias Dopfner, Chairman and
CEO of Germany newspaper publisher Axel Springer. The topic: whether or not people will pay for news content online, and if news aggregation was undermining journalism. Their discussion was part of
today's opening session at the Monaco Media Forum.
On the issue of free content, Huffington took the position that the only long-term sustainable business model for most content online was to
give it to users for free, since that's was users want, with advertising being the primary monetization.
Dopfner argued that putting news content behind payment-based firewalls and making
users share the costs was the only long-term sustainable business model that could support the cost of professional newsgathering.
We've all heard this debate before. However, I can say that
this was one of the livelier and more entertaining versions that I have witnessed. Huffington found appropriate places to quote ancient Greek and scolded Dopfner for suggesting that link aggregation
was "stealing." Dopfner charged that Huffington's promotion of free content online was advocating a form of "web communism" and that "free" was a "big structural mistake we are going to fix
step-by-step."
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Having sat in the front row this morning, I can tell you that there is nothing like watching a strident German argue with a passionate Greek-American, all being moderated by a
not-so-neutral and very proud French journalist (Christine Ockrent, CEO, France 24). It's one of the reasons that I love to go to conferences.
But I believe it's time to end this debate. Like
a U.S. presidential election that has dragged on too long, it's now time to take this issue to the voters -- the users. It's time for all of those media companies that believe their content is so
scarce, valuable and expensive to produce and publish that users must pay to view it online, to follow through with their beliefs and to try to make users pay. There are some very good companies out
there today to help, like former WSJ publisher Gordon Crovitz's Journalism Online. While I have never been an advocate for putting news content behind online paywalls, I now believe that some
publishers need to do it -- for no other reason than they need to find out once and for all whether users will pay. Only then will they be able to put this issue behind them.
Companies that
believe that a "knight in shining armor' in the form of user payments will show up and save them from massive editorial cost structures originally designed for analog businesses will never be able to
truly transform themselves profitable digital businesses. What will happen? Some companies will find success in online payments. I believe that. Most, however, won't. But at least they will know, and
at least they will get on with making their business work for the future. What do you think?
This is such an interesting topic, because so much is at stake. It'd be great if the publishers could test a subscription model to see if people bite, then change and/or get rid of it if it fails. However, I am not sure if they are able to do that. I think that, in the end, it will come down to this: all publishers with paid writing staffs will have to charge for it. Advertising revenue can take a company only so far. The thing that I think is going to have to happen is that all of them will have to charge, however. If a small percentage of them do not charge, then the whole model collapses. If they can somehow succeed in doing this, and ensure that their content is not re-published on blogs, etc., then it might very well work.
Bravo, Dave. And ignore the preceding comment. Why is it that when people don't have anything relevant to say, they just spew crap?
Yes, it is time. They either will pay or they won't. Or some will and some won't. And then, we will know. And we can quit debating.
Did I already say "Bravo" .... excellent work.
@shellykramer
ps and I didn't think about where my comment would end up, but the word "preceding" is inaccurate. I think you will have no problem identifying the comment to which I was referring.
Jon Romano-- Google does not produce content, my friend, they point you to the places where you can get it. The places that give you the news, such as the New York Times online, need to answer this question. If companies like them were to go away, then Google would not be able to point you to them any more, now, would they? Google is only as good as the websites it indexes. 99% of Google's revenue comes from advertising, and even THEY are trying to figure out ways to change that.
This debate will go on as long as the old try and hang onto the new.
Clay Shirky just has an article in McKinsey Quarterly here http://whatmatters.mckinseydigital.com/the_debate_zone/will-people-pay-for-content-online and he does a good job at addressing the issues.
Since content is an influence over an audience maybe a new model could be designed which monetizes information, influence, ideas, talent and conversations. The actions taken by an audience as a result of content that is in context to their wants and needs creates value for a marketplace of consumption. The value of content consumption has yet been quantified, qualified or defined. Instead of wasting time, energy and brain cells trying to create a "bridge" from the old to the new why don't leaders spend their "social capital" on innovation that creates a new model of consumption.
I don't yet know what it would look like but I am sure there are creative people in the audience who could create it
I canceled my personal wsj.com subscription yesterday. My first year the rate was $99, which I found acceptable. The second year it was raised to $119, which didn't notice because it was on auto-renewal and I didn't notice it. The renewal notice I received a few days ago indicated that the new rate would be $197; I don;t believe the Wall Street Journal is worth that much online. I'm going to trade in some airline miles for the print edition instead.
On the larger issue, I think the genie's already out of the bottle. Most people won't want to start paying for what they've been getting for free.
I'm confused about the "problem" of paying for content.
Professional news gathering cannot be supported by advertising alone. As online advertising becomes more and more reliant on custom content and integration, news will not be able to survive on banner cpms alone.
For years, people paid for their news in the form of newspapers and magazines. Why is it so awful to consider paying for it online? Huffington can afford to get away with her business model because she isn't news. She is opinion. Thus she can do all kinds of slick stuff to integrate advertisers in her less than bipartisan commentary.
Just like pop music, now we have pop news. And while you can buy a rihanna album you can also listen to her stuff on pandora, free to the listener, but paid for by the venue. Why is this so hard for supposedly intelligent journalists to understand? They don't need the papers; the papers need THEM.
Who DOESN'T know what will happen when the pay barriers go into place? Other than the people who are banking on their success, I mean? 'Web Communism' could be one of the most shockingly incorrect descriptions yet of what is, much to many journalists' dismay, the best example humans have yet attempted of unfettered freedom of speech in all its noisy, beautiful, misinformed, clever, offensive, profound glory, on a global scale.
It's hysterical to me that the idea of ad supported media is being considered "communistic." The anniversary of the Berlin Wall was 20 years ago this week and yet we have forgotten that under communist rule media was NOT ad supported, not a source of information and entirely controlled by party aparatchiks. I was lucky enough to assist in "free media" development in Eastern Europe in the '90s -- and yes, I taught those journalists from Belarus to Ukraine how to sell ads and do interesting things with their classifieds.
No one has yet opened the kimono enough to show that an online newspaper -- albeit much stripped down from what the New York Times represents (food!, weddings!, style tips! CE reviews and all that content that is essential to being an informed American) would be impossible to support with online advertising. Newspapers -- online or off -- will always reach an influential audience -- they just need to sell accordingly. Agree with Dave: put up (the pay walls) and see what happens or shut up.
Google indexes everything, not just websites. Searches render any form of content -- sites, blogs, videos, etc. Google is trying to reconfigure its revenue model because search results are much more complex now and unfortunately, not as meaningful to companies trying to demonstrate the ROI of their SEO/SEM spend. Paid (even natural for that matter) is an entirely different beast today. For users, its great. For companies, its a tough sell. As a marketer, it's becoming harder and harder to point users where you want them to go.
As far as paying for content is concerned, like social media, you have to let this one sort itself out. Ultimately I think people will be willing to pay for content. I pay for access to NYT and WSJ without hesitation. I like the content and don't like papers piling up in my recycling bin. Doctors pay for access to medical journals because its convenient, but more importantly, because they have to. Many professions require access to authoritative, legitimate content. I think many average users feel the same way. Sometimes UGC is just not sufficient. Legitimacy is important and UGC does not always provide this.
You know, I keep hearing that everything should be free, because that's what consumer wants.
What my 5-year-old wants, is to eat nothing but candy all day.
Is that really a justification for putting her on the Hershey/Mars diet? It is, after all, "what she really wants."
The inevitable consequence of sucking the profitability our of content creation, is that there won't BE any more content. No journalism, no professional musicians, no novelists.
Just an endless sea of ad-supported tweets. Which is great, if you have a ton more inter5est of he Kardashians than I do.
I'd like to add I agree with Kathryn that the concept of ad-supported news being "communistic" is laughable. But there are harsh realities being faced in the news world today. As banner and video CPMs continue to fall, the amount of revenue generated will be entirely dependent on size of audience.
Size of audience is (usually) dependent on quality of service (or in the case of some news, quality of entertainment news provided). Opinion, entertainment, and socially topical news sites will survive using banners on the basis of loyal followers and low cost of news collection.
True news, on the other hand, requires a non (or bi) partisan professional newsgathering force. This is going to be terribly hard to support on the ridiculously low CPMs we are seeing in the market.
In the meantime, you cannot integrate your advertisers into your content if you are a news site - doing so calls into question the validity of your independence.
Subscription models, for real news, will be the only way to go eventually.
There is no saving an outdated business model.
My best guess is that big box journalism has jumped the shark. I think the model of the future will be small, specialized journalism sites. Probably run by one or two people, some garnering enough ad income to allow their operators top eke out a living; some operating purely as hobbies; and the occasional (but very, very rare) gold mine. Think, your daily paper broken into a bunch of small businesses run by the journalists; who also do the administration work.
Maybe also, the occasional conglomeration. One large company that owns several journalism websites (and possibly other types of sites) all operating as independents with the benefit of having the large company handle the administration stuff.
But that's just my guess...Nobody's really gonna know for a good while. The walled garden thing, however, looks like denial in action.
"They don't need the papers; the papers need THEM."
Monica
I'd like to expand on this point because I don't think people understand the value behind the actual CONSUMPTION of content. People who advocate for "paid content models" don't understand the value behind the actual consumption of the content as being more valuable than the actual content itself.
"Huffington can afford to get away with her business model because she isn't news. She is opinion. Thus she can do all kinds of slick stuff to integrate advertisers in her less than bipartisan commentary."
Richard
This is a mute point. The debate is whether or not consumers should/would pay for an inferior or similar good. Ignore the simple economics of supply and demand; just consider what the WSJ is to a stock broker. It is a publication you pay for in hopes of extraction valuable information that will give you (as a broker) an edge in trades. Your ability to charge for content is only leveraged when you can prevent other people from accessing that same information. The only way companies can CHARGE FOR CONTENT is if they exclusively own information. So unless you come up with copyrights for the local news, then content consumption on a broader scale CAN and SHOULD be free.
Tried to make sense in a rush... I don't think I was very clear with my points. Let me try this again.
The WSJ is only valuable if they have information that no one else has. And the only way they can prevent other people from publishing the same information is by claiming ownership of a piece of information. I don't think WSJ can claim ownership of a breaking headline or merger. They can report it in a unique way and copyright that, but they can't copyright the news piece itself. You can't own a breaking headline.
Conclusion, you can charge for something that is distributed freely short of shooting every other reporter in the room.
I believe that the call to end the debate will not happen as the writer Dave Morgan suggested. Why? In business where billions are at stake, there is no democracy here. Corporations are top down Only big money to be gained and protected by those who stand at the crossroads of a titanic shift.
People that we call "consumers" can no longer be placed inside of a small monolithic box that metrics no more complicated than 3rd grade math can figure out. The freedom of technology and the information access coupled with the demystification of MEDIA creation as created as acceptance of FREE that no amount of wishful thinking will push back the clock on. There is a disconnect with what we are seeing as evidence in the landscape of what our customers want in media and the legacy business models that has made many of us a clear US$100k earners and enough people US$300k earners. That disconnect is akin to a lifetime of eating poorly and refusing to adjust one's lifestyle to compensate.
We've got thinking along related another crisis that has been professorially expressed here on the Harvard Business web site (http://blogs.harvardbusiness.org/haque/2009/11/facebooks_scam_ads_and_the_loo.html?cm_mmc=npv-_-DAILY_STAT-_-NOV_2009-_-STAT1112) that speaks of the massive fraud potential in digital advertising. This is also causing old media nightmares. The distrust in business has become a distrust in metrics. Like statistics, anything can be spun towards your point of view. Now in the era after the economic slowdown, where capital is tight, we can't hide behind bubbles of promises. Businesses are demanding proof and verification.
The proof of trust: Financiers to corporations to media brands to content quality to customers access to technology to find all angles to a story equals near evaporation of silos of predictable revenue based on the media skeptical, fact-checking news seeker (who further uses social web to crowdsource).
Twitter: @MATSNL65
Nothing is free. Freedom is not free. Let's us stop confusing the difference between liberty and freedom. Dave, as long as there will people who believe it is better to try something than do nothing, then as usual, you are right on target.
Those who ignore (or rewrite) history are condemmed to repeat it. I've been working on databased information systems before there was an internet and from a historical perspective here's the skinny: you can only charge for financial information and porn - end of story. Everybody from Disney to magazines to cable companies have tried (and failed) to charge for online content. Look, if it COULD be done, people would be doing it now. Just because the newspapers are in epic fail mode doesn't mean that consumers are ready to pony up cash for journalistic headlines - this is a myth they're trying to foist off on investors and creditors so they don't go into free-fall destruct. A paid Hulu is a dead Hulu - remember where you heard it.
Apple introduced the Newton in the 80's. It failed. They introduced the iPhone a few years ago and well... you know. Different products but both designed to do the same things but make a telephone call.
Timing is the issue here. When, and if, we publishers agree that our business model requires payment for IP, or that we will not offer it w/o it, then the paid model will work. Until then we'll struggle w/ how to gain traction and Ad dollars.
If fk rich's "Apple" analogy holds - then paid online journalistic content will command less than 9% of the market - just like Apple. If online newspapers can make a go of that - more power to them. Something tells me they're hoping for a bit of a higher conversion rate. The iPhone is a fluke that is soon to be crushed by the mighty Droid. Who will get one? iWill.
Let the newspapers continue to sell newspapers on the street. Just finance them with revenues from a completely different approach online.
Print needs to understand what its real assets are. It's not their newspapers/magazines. It's their writers, their creatives, their editors and editorial review. These are the people and talents that are most valuable to the Internet. How hard can it be to monetize these things with something other than a newspaper? Move outside the box you old guard stick-in-the-muds. Wake up, you are literally sitting on the golden egg.
Bruce M: You forgot, as most do, the other most valuable product of the newspapers is the salesforce from where all the "money" comes, not subs. However, the ivory towers do not appreciate nor understand nor want to understand or have regard to how to use their assets. Their employees are seen as adversaries. Personal experience from me and my "comrads".
When we talk about advertising-supported media, it doesn't necessarily mean that the ads support the content. Ask the old guys still around from the golden ages of radio and television - or anyone who knows his advertising history - and they'll tell you it was content supporting the ads.
Once again I'm reminded of the line from Play it Again Sam in which Woody Allen's Bogardesque alter ego comments on his protoge's concern regarding too much after shave: "Somewhere you got turned around, kid. She's suppossed to smell good for you."
@Paula, you are absolutely right. In my little scenario it is the salesforce team that drives a stake through the heart of the bloodsucking PPC organizations. The Salesforce brings the time tested "Rate Card" back to the advertising table to the collective sigh of Industries around the world.
Content finally gets produced in perfect niche vertical markets by professional news organizations. The readership is precision targeted for that content. Advertisers salivate at the opportunity to reach exactly whom they want to when they want to.
Want to know about "Prostrate Cancer?" No problem, you don't have to search for anything. You have an editor that has culled 5 years worth of research into one simple to read "product". He's basically done all the Google searches for you so if you're technically challenged and running out of time, you know exactly where to get solid information. And remember..the advertisers in that product are reaching exactly the market they always wanted to.
@MikeE, different time period. Advertisers controlled content because television and radio were "buckshot marketing." It's like that guy said .., "Yada, Yada, problem is I don't know which half of my advertising is working."
We don't have that problem today. Today advertisers just want to reach their market. As an SEO, I can say, we can deliver exactly whom you're looking for when he's looking to buy or research your product or service...And that's why the money has shifted to the net. It's all precision marketing at low cost (SEO). It's also why we are in high demand. ;)
http://www.emarketingsilo.com/ (see chart)
Bruce,
To quote you: "Today advertisers just want to reach their market. As an SEO, I can say, we can deliver exactly whom you're looking for when he's looking to buy or research your product or service...And that's why the money has shifted to the net. It's all precision marketing at low cost (SEO)."
If you really think about what you're saying, the reason search works at all is because it drives consumers to the branding destination - exactly what worked for advertisers in the beginning when they put their names on the curtain and co-branded the content.
The fact that marketers have been chasing string in all the wrong places for 60 years speaks more about the idiots in the middle than it does about the efficacy of any given model.
The more things change, the more they remain the same, as you describe -even if you don't realize it - in your remarks.
By the way, the reason online ad costs are so low is because they don't work, not because they do. CPM impression deals for a dime say it all.