If You’re The Biggest Can Free News Pay Off On The Internet?

Philip M. Stone April 22, 2010 Follow on Twitter

The cpm model has proven time and again that you can only make decent Internet money if you have huge numbers of eyeballs checking out your site on a daily basis. So, if your newspaper site has the most eyeballs in your market does that mean you can make big profits off free general news? In other words, survival of the fittest still applies?

Rupert Murdoch has announced his two quality UK national newspapers – The Times and The Sunday Times – are going to slink behind pay walls in June. The newspapers are losing a combined £1.5 million a week and Murdoch, who before he took over the Wall Street Journal thought free was best, now is the leading advocate that really it is fee that is best. But his two biggest UK competitors disagree and so come June the world is going to have a ringside seat to see if free or fee is the way forward.

Murdoch got fee religion because he saw that model works at The Wall Street Journal. But the WSJ is not a general interest newspaper, no matter how much Murdoch is trying to turn it into such especially with his local New York section that hits the streets of the Big Apple next week, and it is one thing to get money for the depth of business and financial stories not really available elsewhere and which can readily be expense-accounted, and quite another to get money for news that everyone else has.

So Murdoch’s plan has to rely on his columnists being an exclusive  required read, and that his journalists are constantly coming up with stuff the competition doesn’t in order to persuade people there is enough exclusivity to be paid for. For the sake of argument, let’s say that should be some 10% of current total output -- Is that enough to get people to pay £1 a day or £2 a week? The New York Times showed a couple of years back with its TimesSelect that its columnists were popular enough to get people biting, but do the UK columnists have that same clout or there is just so much competition in that market that if you lose one favorite columnist you quickly find another?

Betting that Murdoch’s pay walls will only be good news for them, the two largest UK newspaper web sites are vowing to remain free. The Daily Mail bluntly declared this week, “Readers will not pay to consume general news on the web.”  And with Mail Online  fighting it out monthly with the Guardian as the country’s leading website with around 2.25 million unique viewers daily – about double that of Times Online -- it believes that it has eyeballs enough to continue with the advertising model. Martin Clarke, in charge of The Mail’s digital business, told shareholders this week that its site was now large enough “to make the advertising model pay.” And no doubt he hopes that many of those Times Online readers will drift along, too.

The real battle here might be between The Mail and The Guardian with both newspapers having similar numbers of daily users and both declaring that free is best. Their orientation is different – The Mail particularly focuses on celebrities – so there could be room at the top for two. Clarke told shareholders in a presentation, “Like it or not, the web is free with one or two players in each sector becoming big winners."  His bottom line, “A pay-wall might make a little money – we will make a lot.”

That UK debate is a common one globally. Last week the American Society of News Editors (remember when ASNE stood for the American Society of Newspaper Editors?) debated the very question of “What next” and basically came up with no answers.

It brings to mind a presentation a young Reuters media executive gave about multimedia to the then chairman of the board during the early days in the Internet revolution. The young executive gushed about how having text, still pictures and video combined within one media platform was the future, and he was right! But the chairman took him down a peg or two when he responded, “I understand what multimedia is; I understand how it greatly improves the editorial product; but what no one has so far been able to explain to me is how we will make money out of it!”

And some 15 years later that seemed to be the ASNE question, too. Everyone recognizes how technology has moved forward and is presenting all sorts of opportunities for beaming the multimedia message in ways not thought possible even a couple of years back. But the major underlying question is still, “How do we make money from it?” What is for sure is that print will not see again the billions in lost advertising – AP’s Tom Curley told ASNE that US newspaper revenue will be $30 billion lower in 2013 than it was in 2007. How do you make up that lost revenue and add more? There seemed to be general agreement at ASNE that was no turning back. The reset button has gotten firmly pushed.

And if The Mail and The Guardian in the UK are proven right – that money can be made out of free on the Internet, but only by the very largest players – then what about everyone else? There’s good reason why iPads, Kindles and other media consumption devices have become newspaper speak for the distribution platforms of the future, but are those third-party platform owners leaving enough meat on the bone for publishers to make a decent profit, too?

Everyone is looking, too, at mobile – and not to make the same mistake there as with free Internet, but as for the Internet itself for most that horse may have already bolted.

See also in ftm Knowledge

UK Newspapers

The newspaper market in the UK is among the worlds most competitive. The publishers are colorful, editors daring, journalists talented and readers discerning. ftm follows the leaders, the readers, the freebies and the tabloids. 83 pages PDF (October 2010)

Order here

Media Business Models Emerging

After a rough transition media business models are emerging. Challenges remain. There are Web models, mobile models, free models, pay models and a few newer models. It makes for exciting times. This ftm Knowledge file examines emerging business models and the speed-of-light changes. 123 pages PDF (May 2010)

Order here