As the newspaper and magazine industry faces a general decline in print circulation and falling advertising revenues, many are beginning to consider ‘paywall’ or other subscription models to help monetize their online content.
Data released by the New York Times at the end of last year shows how profitable these subscription models can be – this year, for the first time, the company is expected to generate more revenue from subscriptions than from advertising.Setting up a paywall is a big and almost irrevocable step for an industry that has previously relied upon advertising revenue rather than charging readers directly. So how do you make sure you get it right?
Must-Have… a mission?
During a presentation and panel session at the Westminster Media Forum last week, MB Christie, Director of Online Product Management at the Financial Times (FT), asked the audience whether the key to the FT’s paywall success was the fact that it provided business people with ‘must have content.’ I joined in the audience’s general sense of agreement and so was surprised to hear her claim that the key wasn’t the FT’s premium business information, but its ‘clear editorial mission’ to ensure that all the website’s content ‘had value’.
This seems to be something of a distinction without a difference – if the content doesn’t have value, subscribers won’t pay for it. The FT’s ‘editorial mission’ may be the way it embeds in its corporate culture a focus on valuable content, but subscribers aren’t directly motivated by corporate culture.
And an editorial mission to ensure content ‘has value’ seems a little weak; in contrast, Bloomberg’s editorial criteria focus on content and information which has actionable value – that is, information on the basis of which people can make trading and investment decisions.
But the FT is clearly doing something right, as its subscription revenues (over half of which is online)) are expected to have overtaken advertising revenues when the 2012 results are made available.
Choosing not to monetise
Andrew Miller, Guardian Media’s new CEO and another Forum attendee, spoke of a different publishing mission: the pursuit of ‘open journalism’ and a broader reach through multiple platforms. The Guardian is now the world’s third most read newspaper website. Yet despite this broad user base – and $70m loss last year which needs to be filled – Andrew Miller does not see a paywall on the horizon. A paywall is not a ‘one size fits all solution,’ he explains, and it’s clear that it will be hard to get people to pay for un-differentiated content which can easily be picked up from other sources.
He asserted that a paywall can work well in markets with differentiated content, where a publisher has a large existing base of users that it can monetize via subscriptions, especially when it serves a specific niche (such as business or finance). However, for those online publishers trying to reach new, potentially global audiences, a paywall may not be the right model.
This accords with our experience. Livingstone has had a great deal experience working with online publishers and related companies. Most recently, in September 2012, Livingstone negotiated the sale of Inframation Group, a provider of business information and senior-level events for the global infrastructure finance community, to the Mergermarket Group, the leading publisher of intelligence and analysis for investors, advisors and corporates.
Earlier last year, we also sold TVC Group, an award-winning marketing communications agency that specialises in a content-driven approach to public relations and marketing, to the Economist Group, which has its own sophisticated paywall strategy.
Our experience suggests that the single most important driver for successfully implementing and monetising a subscription-based model is genuinely-differentiated, must-have content. People won’t pay for content they can obtain freely elsewhere, and won’t pay for content they don’t need. But if it gives them a genuine commercial advantage – be it actionable trading data or increased levels of insight and understanding – and they can’t obtain it anywhere else, they will happily pay premium prices and will cheerfully renew their subscriptions year after year.