Commentary
Rupert's Right
- by Ari Rosenberg , Op-Ed Contributor, June 24, 2010
Who benefits when publishers that charge for print media, give it away for free online?
Before you scream "consumers," consider this: paying for the privilege to read high quality content was often a competitive advantage for consumers. If you paid to read the New York Times and Wall Street Journal every day, you were more informed than the person who didn't -- and didn't that advantage feel both nice and well-earned? Those paying for content are better prepared to share a more educated opinion than someone who didn't put forth the monetary commitment to self-educate himself. Now that this content is available to everyone for free, that privileged advantage has all but vanished.
What types of companies have benefited the most from the decision all publishers have made to offer free access to their content online?
Try this list on (in no particular order): Ad servers, Ad Networks, Rich-Media Vendors, Behavioral Targeting Companies, Online Agencies, Data Mining Companies, Analytics and Research Companies, Malware, Search/Portals, Content Aggregators, Yield Optimizers.
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When do publishers arrive on the guest list for the party they threw? This is not complicated. Free content means far greater page views and subsequent ad impressions for sale. This helps the companies listed far more than the very publishers producing the underlying "product" driving supply -- and worse, has resulted in self-inflicted harm to the publishing business.
How it hurts
Publishers must convince advertisers they deliver consumer engagementbefore anything positive can happen. In less poetic terms, a publisher's sales force must demonstrate the person consuming their content cares more because of where that content was produced.
So why are publishers struggling to define the consumer engagement they deliver online? It's because their content is not directly paid for. When content is purchased, engagement is a given. That's why print CPMs lived in a stratosphere north of other media. Without a solid engagement story online, a publisher's sales force works with a weakened pitch. This in turn backs them into narrowly focused conversations with buyers about campaign performance -- a battle they cannot win -- causing prices to slip, and negatively affecting a publisher's overall core value.
Great content should be purchased. Inferior content should be voted off the island. The difference between the two can be found by measuring the commitment consumers make to embrace it. By lowering the level of commitment required online, publishers have lowered their own value. That's the mistake Rupert is brave enough to own.
Now what?
Implementing a pay-for-content strategy online today comes with relatively small issues in terms of execution. The question instead becomes: Do content publishers have the stomach to turn back, this far-gone in the wrong direction? Rupert does.
When that switch is flipped, he and any publishing brethren brave enough to follow will be left with far fewer impressions to sell than they have now. But in return, they will deliver the "right number of paying customers" they can deliver on this digital platform, not an inflated number driven by those just window shopping. As a result, Rupert's sales team will have an online engagement story that will drive higher value and prices while embarrassing much larger free sites. It will be like selling a paid-circulation magazine versus a freely distributed circular.
Those in the ecosystem of online media making money but not producing a lick of content will throw up on this concept. They'd get even sicker if publishers of all sizes came to their senses and pulled the plug on free access to their content online, rebuilding their digital businesses based on paid engagement.
Publishers mistakenly think they are part of a twenty-plus-billion-dollar online industry. The reality is they are being used like a trampoline to inflate the market with impressions others benefit from, while their own value gets trampled.
In the history of media, if all content started off free, where would we be now? Ride on, Rupert, ride on.
Funny this article could have been written in 2000 since that is when a few of the points you made first surfaced.
As you point out it may be late for some, but I believe that consumers will pay for content if they perceive that the value prop is in their favor.
All is not lost--I think this is Darwinian and the new species (whatever that turns out to be) will thrive.
The problem I see here is that much of the highest-quality content (where quality is measured as a function of currency & accuracy) is no longer behind pay walls. That in turn is a product of de facto crowdsourcing.
To make paywalls into containers for quality (again?), you have to be either talking about an area where the amount or complexity of the data makes analytical aggregation a service worth paying for (e.g., financial markets), or you have to put the genii back in the bottle.
To get that genii back in the bottle, "Rupert" is going to have to overcome the seductive allure of Teh Free (to paraphrase Mr. Anderson's phrasing). It's pretty seductive: Generations (if not hundreds of years) of experience should have taught us by now that the relationship between quality and cost is non-obvious, but tends to favor cost.
Put another way: If quasi-crowdsourced / "free" content can get us 80% of what paid content will get us, then "free" will very likely carry the day. Everything I'm seeing to date suggests that's going to be the case.
Call it crowd source or call it open market. It's the same thing only in our speak one has a price connotation and the other does not. Clearly content providers can't force people to pay for substandard content any longer. But if Ari - or Rupert or you - can produce strong content on a regular basis, and I need/want the info, he wins - I'll pay. The bar is now higher for publishers and that is never a bad thing.
Plus, think of how much better off our society will be when we turn the incredible brain power being tied up in all these "leach" industries get turned toward a higher purpose.
Eric, I am suggesting to put the genie back in the bottle -- all of it. 'Free" is not helping publishers -- it's hurting them.
Thanks for your feedback/insight -- Paul -- yours as well --
I think we are on the same page.
I'm surprised no one has tried to mimic the cable-TV model and aggregated a common payment "subscription" that allows you access to a group of quality content sites on a limited or unlimited basis. If you think about how consumers are conditioned to budget for paid content consumption in TV, it's a pretty easy thing to sell. Cable consumers now pay a flat rate to access thousands of channels, although they probably only use less than 50 of them on a regular basis. The super-premium content floats the niche guys. While customers sometimes grouse and say they wish they could cherry-pick the channels they pay for, they ultimately would not like the hassle of a monthly line-item bill or having to cut payments for 50 different companies (and the total bill would likely be much higher than the subscription they used to pay).
The problem is that even within a single company like Hearst, the properties all have their own separate businesses and rarely if ever "share" solutions or ideas. It's ripe grounds for a 3rd-party company to arbitrage the opportunity, as long as the publishers would play along. And they should.
Like where you are going Dana -- Steven Brill has started a company that will do just that (if I understand you correctly) -- via micro payments for content behind a wall from many different publishers.
The only thing we have to lose from going to a fully paid model are page views and impressions -- and we have far to many of those now to begin with.
You are right, paying for content is one of the measures of engagement.
The difference online is the jusifiable 'free mentality' that accompanies online products. Readers and advertisers know and understand that 86% of old printed media costs went to lumberjacks, forest lots, truck drivers, paper mills, printing presses, carriers and postal workers...costs which have been eliminated from online publishing.
Publishers can not hope to, nor do they need to, charge nearly as much for online publishing.
P.S. It would be a mistake to think that free media consumers, like those who watch the super bowl on TV or listen to the business report on their favorite radio station are not engaged as well.
What if content had started out free? You mean like broadcast radio, then broadcast TV? You mean like the penny papers that popularized newspapers to the masses?
Ad-supported media _have_ been around since their beginnings. That doesn't mean that premium content isn't worth paying for; it means that the general public will search out free or micropayment content when it can't see any reason to pay for the expensive version.
You could just as easily ask, "Who benefits when TV networks broadcast their content for free?" Obviously, the TV networks do, and so do the production companies that create their shows. There are plenty of folks living in Beverly Hills mansions and Malibu beach houses who'd disagree that "free content" is a bad thing.
Another thing to keep in mind is how the Internet (or, more specifically, the Web) works. Thanks to browser address lines and search, the Web is a "pull" medium, not a "push" medium, and readers tend to go looking for what they want--not for what a publication's editors have chosen to give them that day, week, or month.
In many cases, Web users are more like visitors to a public library than newspaper or magazine subscribers: They're researching specific questions (anything from a refrigerator purchase to a medical problem to airport transportation in Stockholm). They aren't going to subscribe to Appliancereviews.com, Medicalsymptoms.com, or Airportgoundtransportation.com to get an answer to a one-time question, and they aren't going to cough up micropayments to read pages that may or may not supply the information they need.
Trying to impose an old medium's business model on a new and different medium is futile, and Rupert Murdoch isn't a visionary: Like the dinosaurs, he's headed for extinction, and we can only hope that he doesn't end up polluting the Gulf a few million years from now.
1. I know editorial not only does not play nice with advertising, they do not play at all. The travel editors would not even let the ad department know the location of their feature articles in advance in order to target advertisers because they did not want to be bothered with requests to do stories about them. Fact. However, more importantly, it is extremely important and the major reason for independent editorial is that advertisers do not influence any story including investigative. 2. A part of this discussion would disappear if those who paid for print could also get the pub on line with either no extra charge or a very small one. All the media extras is too expensive to keep adding to its family. 3. Reading one article or partial article on line without charge is not the same as giving away the cow. Links with credit are a good thing like free advertising/PR. 4. No question - value perception = higher costs. And as you know, perception can be more real than truth. Perhaps a lesser cost for an online sub - no distribution, color or paper and some production costs - could be the great contributor to a great equalizer. 5. The great content providers have employees who are paid well in an environment that is expensive to keep. Take away the egg (advertising bucks) and the number of chickens decrease. 6. So Rupert may be right to an extent; it's how he does it that can make it sound wrong. You know, being right and a quarter (OK $6) won't alway get you a cup of coffee. 7. Get these first 7 points on track and this discussion may be entirely fruitless.
Audiences have never paid for content. Rupert may be right but he is trying to get consumers to pay for something for the FIRST time. Ari is ill informed and focused on the wrong things. Recommended reading...
http://tinyurl.com/yk9m2wl
Glad I checked in again and read your comment Mark. I appreciate the difference of opinion you bring to the table but you lost me at "audiences have never paid for content."
Of course you must have meant digital content right because everyone knows consumers have paid a publisher directly for content in print. But "never" is also incorrect when it comes to digital content -- uncommon perhaps -- but never is incorrect.
As for me being ill informed, etc....well, I guess you are entitled to your opinion regarding that as well -- feel free to chime in any time you like on my columns -- I love learning what others believe even when it contradicts my own thinking.
Ari
I would seriously consider paying for online content, but only if the publisher will first answer me this question: Will you make the browsing and reading experience more user-friendly for me in return for my money? Or will I still have to put up with jumping animations and all sorts of other ad-related delays and interruptions that come with "free" content? I asked the Wall Street Journal, but they didn't answer. Why can't anyone admit that screen ergonomics are a part of the value equation and just might affect engagement?
I agree with Eric. If the philosophy of the net is all the world's information made available for anyone, anywhere, I'm not sure adding gates and inviting only those who can afford it will ever work anymore, at least not in the traditional sense.
I think this isn't black and white however. Someone, somehow will find a way to better differentiate what's worth paying for. The net revealed that much of the value offered by publishers and columnists was work a blogger in his pajamas could do faster and quicker. There still has to be a place for well researched, well schooled journalist to uncover corruption, report on the state of countries or wars or for string informed opinions and if presented in the right way people will pay for it. Most of Rupert's content, right now, is not that however, it's just regurgitated from the wire and will be available elsewhere for free.