Digital paywalls vs the sidebar of shame

Profile picture for user slauchlan By Stuart Lauchlan July 23, 2013
Summary:
Every print publication needs to have its own digital version of course. How it monetizes that has been a subject of great debate over the past few years. The Sun newspaper is about to face a major challenge.

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Mr Murdoch

It's long been speculated that the digital age will bring about the death of traditional print publishing for newspapers.

Every print publication needs to have its own digital version of course. How it monetizes that has been a subject of great debate over the past few years.

The right-wing Daily Mail in the UK has for example turned its free-to-air Mail Online into an international success through a potent combo of 'hate bait' articles to drive outraged traffic to the site, depressingly now second only to the New York Times in terms of readership.

Mail Online grew its monthly browsers by 7.99%, to 128.6 million, compared to April, according to the latest Audit Bureau of Circulations, boasting figures averaging more than 8 million daily browsers for the first time.

All this incidentally from a newspaper which wages eternal war on the likes of Google, blames the internet for every social evil and can surely only be one overly-well-lunched copy editor away from calling for Tim Berners-Lee to be tried for crimes against humanity!

But the Daily Mail has never struggled under the burden of accusations of double standards and there is a lot of money to be made.

For the six months to the end of March this year, Mail Online revenues rose 61% to £20 million, while the print versions of Daily Mail and Mail on Sunday fell 6% per cent year-on-year to £287 million.

Free titillation and outrage 

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Spoof Daily Mail 'sidebar of shame'

But Mail Online remains free of charge. It costs nothing to join millions of others in railing against paedophiles while admiring the 'all grown up' teenage girls in their bikinis and attending film premieres in the 'sidebar of shame' on the right hand side of the home page.

But will readers pay for the same privilege? Rupert Murdoch inevitably has been at the forefront of this debate, arguing that newspapers have to start charging online readers to survive in the digital age amid declines in print readership.

Back in 2010, he took the step of putting The Times newspaper behind a paywall and proclaimed it a success. News Corps also stuck the Wall Street Journal and New York Times behind the fence.

The next few weeks will be particularly interesting as the UK's highest-circulation newspaper The Sun finally goes behind the wall as well, pitched to its readers as a case of the publisher:

offering our valued Sun readers a bigger and better experience than they have ever had before -- one that in addition to FA Premier League clips will offer a full and attractive subscription model across digital and print.

Murdoch has made a success of subscription business models before of course with his BSkyB cable empire, but will the average Sun reader be ready to put hand in pocket for an 'enhanced' opportunity to get the topless views of curvy Carly on Page 3 as she offers up her opinion on the main political matters of the day?

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The Sun's Page 3 girl offers her erudite analysis of the day

Some large advertisers seem wary. For example, grocery giant Tesco - which has an annual digital advertising spend of around £11 million - is said not to have committed to run ads on The Sun home page once the paywall kicks in. It does currently use the non-paywall site.

Marks & Spencer and Currys are both also reported in the advertising trade press as having similar qualms.

Paul Hayes, managing director, News UK Commercial, told Media Guardian he understood their nervousness:

"We understand that advertisers are keen to know more about the size and scale of The Sun+ audience, and naturally some might hesitate to commit large sums of money until they have a fuller picture.

"However we are confident this will prove an irresistible opportunity, and are greatly encouraged by the fact that weeks ahead of launch we have already secured two multimillion-pound sponsorship deals."

City analysts estimate that The Sun will need to attract more than 250,000 subscribers to cover the loss of online advertising and recoup the £30m-plus it paid for the digital Premier League football highlights.

For the record, The Sun already claims to have 16,000 subscribers pre-signed, with a target of 500,000 by the end of the year.

Mike Darcey, the CEO of News UK, said recently that he would rather "generate meaningful revenue" than focus on growing the size of a paper's web audience, arguing that measuring web traffic is often only "good for the ego."

Addressing The Times CEO Summit in London earlier this month, Darcy declared:

"Some people have argued that the problem with a paywall strategy is that you lose reach, while others who maintain a free web presence continue to enjoy large numbers of unique users and page views.

"This reach doesn't generate any meaningful revenue, and the pursuit of it undermines the piece of the business that does make money."

"If your purpose contemplates still being here in five to 10 years' time, then the choice seems clear: it is better to sacrifice reach and preserve sustainable profitability."

Digital fix

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Digital revenue increases have been cited as helping Guardian News & Media (GNM) - publishers of The Guardian and The Observer - cut its losses significantly to £30.9 million in the year to March 2013. For the comparable period in 2012, GNM recorded a loss of £44.2 million.

That's still a loss of course, but encouragingly for GNM digital revenues increased 28.9% year on year to hit £55.9 million. Print revenues came to £140.4 million during the period.

The Guardian newspaper is not behind a paywall with Guardian Media pitching instead what it calls an open journalism advertising campaign, drawing eyes to its website by encouraging exchanges between reporters and readers, thus building online engagement.

A prime example is Guardian Witness, a platform sponsored by EE which allows consumers to provide photos and video to supplement Guardian coverage.

At the end of the financial year, Guardian Online recorded an audience of 78.3 million monthly unique browsers, up from 67.8 million in March 2012, according to the publisher’s latest ABC numbers. That makes Guardian.co.uk the third largest English-language website in the world by visitor numbers.

Andrew Miller, Guardian Media Group, CEO, certainly places credit on the digital push for throwing a lifeline to the publishers:

“Investing in the future is a key part of our strategy for this news organisation – every bit as important as the target of taking £25m out of the cost base by the end of 2015/16. Thus far, we are meeting or exceeding all our targets in this respect.”

The digital newsman

The digital push goes on with the recent appointment of broadcast marketing veteran Tim Hunt as marketing director to accelerate the newspaper’s “digital first” output.

GNM's chief commercial officer David Pemsel says of the appointment:

“[Hunt] has brilliant media industry experience, and brings a wealth of digital and technology marketing expertise that will really help us continue to drive forward our ambitious global digital growth plans.”

Those digital marketing skills seem now to be as, if not more, important than traditional publishing and editorial ones.

Time Warner back in 2011 appointed Laura Lang as its chief executive with the stated goal of driving the digital direction of titles such as Time, People and Sports Illustrated.

It was her background at Digitas, a digital agency, that seemed particularly important to the executives at Time Warner and made her:

“perfectly aligned with both Time Inc’s and Time Warner’s strategy for growth in the digital age”.

This month it's been announced that as Time Warner spins off its magazine arm, it's appointing Joseph Ripp as the new CEO of that operation. Once again, it's his digital expertise that's being played up by Time Warner CEO Jeff Bewkes:

“Joe is a seasoned executive who has been immersed in the intersection of digital, advertising and publishing for the past decade."

Most recently, Ripp was CEO of OneSource, an information services company that aggregates information on corporations and executives and then sells that information to salespeople and marketers.

For his part, Ripp's made it clear already that he sees digital as the only future for the firm, going so far as to declare:

“We’re not going to be a magazine company at all.”

The role of a newspaper man has changed - forever?

Verdict

I like newspapers.

I like sitting in a cafe or a pub or on the bus reading a printed newspaper.

I know that probably makes me some kind of digital luddite, but there you go, it's just not the same on a Kindle or an iPad.

What has changed in my reading of newspapers over the past few years is that I now have a complementary mix. I'll read a print version in the morning, but visit various online versions during the course of the day.

But critically, I don't pay for any online content at the moment.

The imminent launch of The Sun as a paywalled online publication is a huge gamble for News Corp. The potential backlash from its traditional readers could be enormous.

Are exclusive football clips really going to make Joe and Jean Public change their consumption model for The Sun?

A lot will be learned in the weeks to come I suspect - for everyone with skin in the future of digital publishing.