Paying for digital news:
The future or folly?
Steve Outing
Future of journalism nerd*
Boulder, Colorado
http://steveouting.com | steve@outing.us | 303 834 7810
* Media consultant, journalist, researcher, columnist, blogger, etc.
The face of panic?
“We intend to charge for all our news websites … If we’re successful,
we’ll be followed by all media.”
-Rupert Murdoch, Aug. 11, 2009
* I think that some of the statements of industry leaders recently have come across as a bit simplistic, or perhaps just purposefully vague.
* E.g., Rupert Murdoch appears to be saying he wants newspapers to stop giving away news. Does he mean ALL news?? I doubt it.
* But I hope he doesn’t want to set the paid line on NYPost.com or Foxnews.com at the same place as on WSJ.com -- won’t work.
But it’s not that simple
“There’s not a silver bullet -- the
industry is in severe disruption and
folks need to change their models,
almost building a new business
from scratch, throwing
out old assumptions.”
-Dorian Benkoil, Teeming Media
* Some of the posturing by news leaders seems to imply a simplistic view -- that there’s one or maybe two solutions.
* Ads alone won’t support a substantial news website, of course.
* Paid content alone, or subscriptions won’t do it alone.
* After 15 years of the news industry trying to figure out online, it’s obvious there is no silver bullet.
We need lots of ammunition
* So one important message is to recognize that you’ll need to cultivate multiple revenue streams.
* Fire a lot of bullets. Occasionally you’ll hit something. ... A lot of shots will misfire, or miss the target; but that’s good.
* I hope in our discussions over the next 3 days, we don’t get stuck on any one solution being THE one.
* Paid content has been popularized in recent months as being a quick solution ... add to advertising and life will be good again. Not charging was a mistake, some say. Not
a chance.
* Let’s come out of this conference with lots of ammunition -- of all sorts, because different news entities need different solutions.
We need lots of ammunition
“How do you think newspapers should make money online?”
Informal poll of PBS MediaShift readers, Aug. 2009
* Informal poll recently from PBS MediaShift.
* Audience of media experts and journalists, news managers.
* 2/3 say try anything and everything -- include me in this camp.
* 1/4 say just focus on advertising. (Why wouldn’t you try other stuff? So much competition for online ads)
* less than 1/4 say charge for special content -- freemium model.
* Smaller slices like focus on charging for ALL content or take donations and go non-profit.
The MBA view of paid content
What will online consumers pay for?
Dorian Benkoil
Teeming Media
Dorian@teemingmedia.com
* Let me spend a little time considering what online consumers will pay for.
* First, I asked this of Dorian Benkoil, a journalism business consultant. Dorian has worked for ABC News, ABCNews.com, the AP, Washington Post.
* Couple years ago got his MBA from CUNY ... he thinks there’s a shortage of journalists with solid business credentials.
The MBA view of paid content
“People will pay if it's valuable and they can't get it
another way:
•Really intensive stats about their beloved sports
team(s)
•A directory or information organized in a way
that's much better than free
•Really top-notch business analysis
•Training or information that will make them Dorian Benkoil
money, long- or short-term” Teeming Media
Dorian@teemingmedia.com
Psychology of paid content
Will online consumers pay for
news content online?
BJFogg.com
Stanford Persuasion Technology Lab
bjfogg@stanford.edu
* Recently I interviewed this guy, BJ Fogg, Stanford pyschology professor and director of Stanford’s Persuasive Technology Lab.
* I would urge any of you who want to get money from online consumers to consult BJ and his research.
Psychology of paid content
• Even if 90% of news publishers put up pay walls,
other 10% would become VERY popular
• That would be a grand gift to emerging news
replacement entities
• Too many free sites to put up barriers to entry
• Majority of online users will accept a lower-quality
alternative if it's free
• Young people unlikely to pay (even as they age) BJFogg.com
• Paid news strategy attracts older audience Stanford Persuasion Technology Lab
bjfogg@stanford.edu
* Based on his studies of online users behavior from psychological perspective.
* Well known for his studies on Facebook users’ psychology.
Psychology of paid content
• Online users will pay for content they’re passionate
about (Focus paid strategy on niches)
• Simplicity is critical: “We’re becoming 1-click culture”
• “If a target behavior (paying, donating) isn’t simple
enough, many people won’t do it”
• Really difficult to get lots of people to jump the first
hurdle (i.e., signing up for account)
• Look for physical-world successes in target behavior;
try to adapt that for online (or mobile) BJFogg.com
Stanford Persuasion Technology Lab
• Test, test, test ... Strive for best results bjfogg@stanford.edu
Caution: Paywall ahead
• Metered paywall: Punishes your best customers
• Many will circumvent paywall (e.g., 10 visits/month: delete cookie; new e-mail;
open in different browser)
• Tiny percentage will pay, so you’ll need a HUGE audience
• That goes for mandatory payments AND voluntary
• General news, watchdog/investigative journalism: Probably needs support by
readers, foundations, philanthropists, and unrelated supporting revenue streams
• Major risk online in setting pay wall too high
• Freemium strategy has great promise ... if you do it right*
* Compatible with retaining advertisers, retaining Googlejuice, reader-support solutions, syndication strategies
* From the many experts I’ve interviewed about the idea of news sites putting up paywalls ... I’ve come to these conclusions.
Caution: Paywall ahead
“We are not contemplating a pay “I am a staunch believer that
wall, nor as far as I’m concerned people will not in large numbers
would we ever. They are a stupid pay for news content online.
idea in that they restrict It’s almost like there’s mass
audiences for largely replicable delusion going on in the
content.” industry.”
-Emily Bell, The Guardian -Vivian Schiller, NPR
Ways to get (someone) to pay
• Individual or group subscriptions
• Micropayments
• Tipping, donations
• Network donation solutions
• Memberships
• News-everywhere
• Tracking abuse and using it as marketing
opportunity
• Tracking frequent linkers and marketing
to them
* Gordon already spoke about all the variations for paid content that Journalism Online plans to offer.
*
Digital subscriptions
Positive ...
•E-readers (Kindle, et al) ... perhaps bundles or packages of titles
•Ditto for smartphones?
•High-value niche news and/or data (d’uh!)
•Personalized news and/or data
Negative ...
•If subscription hides commodity, non-unique content from Google,
prevents social sharing of content
* Packages: e.g., several sports pubs for $10/month. (consumer chooses 5)
Micropayments
Positive ...
•E-commerce offers
•Contributions to writers
•Simple system; as close to 1-click as you can get
Negative ...
•When they create barriers to social sharing
•When mental transactions create user fatigue, site flight
•People are cheap online! Free is a completely different price point
than 1 cent (see Dan Ariely’s behavioral economic research)
Tipping, donations
Positive ...
•User decides if and how much to donate
•OK for bloggers, non-profits
•On every piece of content (Payyattention)
•Support favorite content creators (Payyattention)
Negative ...
•Probably not much money
•”Why should I tip a site that has ads?”
•Hassle, mental transaction cost for users =
modest donations
* Tip jars been around for a while.
* New spin is Payyattention: 1-click donate (10 cents) attached to every story.
* Useful for non-profits, bloggers, but ALSO potential for free or freemium (mostly free content) news sites.
Network donation schemes
Positive ...
•”Reader-supported media”; user decides
• User commits $5/month (or ?) to support online content
• Spread among:
- Sites you say you like AND visit (Kachingle)
- Sites you visit (Contenture, in-a-moon, Sprinklepenny)
•Network members get extras from participating sites
•Visible social persona: Who I am, based on who I support
•Power of social network linkage: Influence friends to pay
•Low to no mental transaction costs
•Compatible with other strategies (e.g., freemium)
Negative ...
•New concept; don’t know yet how well this will work
•Big initial hurdle: User creating account, using credit card
* Reader-supported media: people coming to recognize that to keep content they like coming, they need to pitch in.
* Power of large network of sites -- Not just one NPR station or one website begging for money.
* Much more powerful, potentially.
News memberships
Positive ...
•Maintain free/mostly free online news
content
•No impact on site ads + new elite audience
for ads
•Extra free (or low-$) goodie for print subscribers
•Higher price for non-print subscribers
•Can create tiered membership plans
- Free | Silver | Gold
Negative ...
•Implementation not simple: Control content access by member status
•”News junkie” market not enough to make big bucks
* I know of some smaller and medium size papers working on this concept.
* Guardian and NYTimes are both considering this model.
News memberships
Recommendations ...
•Small number of tiered memberships (don’t overwhelm)
•Think beyond news-related membership benefits
> Silver: News junkie member, $5/month
- Special content, services, features, archive access closed to non-members
- Access to journalist chats; ability to comment; elite members social network
- Free tickets or preferred seating to newsmaker events, lectures, debates
> Gold: All Silver benefits + valuable offers from advertisers, $15/month
- Member card (or phone app): discounts and freebies
- E.g., 2-for-price-of-1 dinner once per month at advertising restaurants
- 5% extra discount at advertising grocery chain
> Niche memberships: E.g., sports fan: premium stats, sports discounts
• Even those not into news support news operation because they want deals
* Do this right and you have a wonderful new opportunity for advertisers.
* Newspapers lost classifieds, pretty much; that was a revenue stream disconnected from the news product.
* “Gold” memberships partly disconnected from news product. So what? Potentially large revenue stream.
News-everywhere
• Set your FULL content free ... but still profit from it
• Include ads that travel with content
• Include links back to your site
• Embed monetization widgets in distributed content
- e.g., Kachingle medallion, Payyattention 1-click donation, membership offer ...
• Easy monetization for embedded video, audio (e.g., MSNBC.com videos)
Content abuse = opportunity
Turn a negative into a positive
•Attributor study: More readers of
content on other sites
•Your options:
1. Punish, shut them down
2. Make money from them
3. Ignore inconsequential
infringements
•Track who’s stealing your FULL content or overstepping fair use
•Make them offer: Remove your content OR share ad revenue content earns
and continue publishing it (content owner sets revenue split)
•If they refuse either option, report infringement to search engines, ad networks
they use (In effect, shut them down)
* Conventional wisdom: people stealing our content is bad.
* But you can’t stop all of it; too costly.
* So turn the problem on its head ... make money from some of those content thieves!
Frequent linker strategy
Marketing opportunity!
•Track who’s linking to your content regularly
•Identify best potential syndication customers for publishing full content
- E.g., medical company website syndicates articles on list of diseases
- Food site syndicates your full recipes
•Valuable sales list for syndication reps
•Search engines, aggregators: Full-content syndication customers?
•Publisher sets syndication rules (none; link-back required; ads and monetization
widgets intact...)
I hope we’ll discuss ...
In the next couple days:
•Mobile news revenue strategies ... not like the web
•What content can news entities create that’s worth paying for?
•How can we leverage PERSUASION instead of FORCE to bring in revenues?
•Can network effect, social media turn user donations into major money?
•Are news memberships a better opportunity than paywalls for content?
•How can we make lots of money by getting others to publish our content?
•Can we repel forces that would have us repeat music industry’s mistakes?
Steve Outing | http://steveouting.com | steve@outing.us | 303-834-7810