News Digital Media’s Richard Freudenstein today gave Sydney’s Advertising & Marketing Summit his vision for the future direction of the industry. In this extract from his speech, he discusses the future of content.
I’d like to talk a little bit about the future of journalism online, and then charging for content.
As the world turns digital, almost every industry has been affected.
The internet has opened up incredible opportunities for businesses, but it has also brought significant challenges.
Content creators – including newspapers, magazines, online, TV and radio – have had to watch as others replicate their content, often negating the need to visit the original site.
More often than not, these bloggers and third party sites then sell advertising on their sites, thus making money from content without investing in its creation or reimbursing those who did create it.
I’ve heard the argument that these sites pay their dues by linking to the original source, but the reality is that the very aim of these sites is to aggregate enough content from different sources so that people don’t need to visit the original site.
There’s no doubt that the best way for traditional publishers to compete is to be even better at producing unique and compelling newspapers, magazines, websites, mobile sites or any other platform.
But contrary to what you might think, we think it is great that anyone can start a website and get involved.
In principal, we think blogs are a great idea – in fact many of our journalists have them. And we are delighted by the success of The Punch.
The problem is that even the best intentioned amateur blogger doesn’t hold the same standards of accuracy or accountability as a professional journalist.
Many bloggers write up rumours and half-truths as fact, confident that there will be no repercussions if they get it wrong.
Inevitably these inaccuracies quickly spread and you get a situation like we had the last month, when huge numbers of people believed a rumour started on Twitter.
Let me play you a short video…
My point here is that, whilst there most definitely is a place for alternative media and commentary, we have to protect and support quality journalism.
Because, when a big news story breaks we inevitably turn to the traditional news brands.
If a massive story broke, right now – another 9/11 or Victorian Bushfire… what would you do?
My guess is you’d do one of three things – go to a world-class news website, turn on the TV or turn on the radio.
And when you wake up tomorrow, when you want a thorough rundown of the day’s events, with insight, context and educated opinion?
My guess is you’d return to a world class newspaper – be it in print or online.
Of course you’d also check Twitter, discuss events with your friends on Facebook or MySpace, and check your favourite blogs to see what was being said.
But when it comes down to it, people want the news, and they want news they can trust.
The problem is that such news is very expensive to create.
Here in Australia, most of the expense of investigative journalism, insight and educated commentary has been borne by the newspaper industry.
Almost inevitably, the biggest domestic stories are broken in newspapers, with TV and radio reduced to reporting on what the newspapers are reporting.
But online advertising revenues simply aren’t making up for what may be lost from newspapers. Something has to change.
Which brings me onto my final topic – charging for content.
Right now, this is probably the issue I get asked about most.
It has become a topic of conversation at BBQ’s and dinner parties, even for people not in the industry.
Friends, family, and even people who I’ve just met, they all want to know the answer to three questions –
- One – when is News going to start charging for content?
- Two – how much are we going to charge? and
- Three – do we really think anyone is going to pay for it?
Well, these are the biggest questions facing most large publishers around the world right now.
The problem is that the traditional advertiser-supported model is not enough, by itself, to pay for the level of investment in journalism that society needs.
So to make up the difference we have to look at charging for content.
The question is having been given it for free, will people now pay for online news content?
The first thing to remember is that people happily pay for news every day.
Indeed nearly 19 million newspapers are bought in Australia every week.
So clearly there is a healthy market for news.
Encouragingly, a recent report by PriceWaterhouseCoopers found that two-thirds of readers across the six countries surveyed are willing to pay for general online news content.
But of course, they are only going to pay if the content is of value to them – that is, it’s relevant, compelling and unique.
This is what News is looking at right now. And if anyone can get it right, we will.
After all the Wall Street Journal is the only newspaper in the world to successfully find the balance between free and paid content with over one million paid subscribers online.
So, we’re spending a lot of time looking at our newspaper content and the paid digital model.
We’re looking at every part of our portfolio and doing a good deal of consumer research in different countries,
Assessing how many people are likely to pay and how much they would be willing to pay.
And then we’ve got to work out the best method of delivering that content to them across multiple platforms.
As you can imagine this is a complex challenge.
I’m part of a global steering committee which is leading groups in New York, London and Sydney.
The guidelines are to be bold and come up with industry changing ideas and products.
We’re encouraged by developments in other mediums.
Subscription TV is a great example of customers willing to pay for a service when it has more compelling content and delivers it using better technology than the free alternative.
Pay TV is in more than 90% of homes in the US, over half of homes in the UK and around a third of homes in Australia.
In each of those markets at some stage all television was free and in each of those markets the common wisdom at the launch of pay TV was that it would fail.
Online video is another example.
As you probably know, Hulu is going gangbusters in the States – inventory is sold out and in many cases is selling for a higher rate than traditional TV.
But even its success and that of other free sites like YouTube is set to be eclipsed by the rise of paid video content – that is downloads, digital rentals and subscription services.
A recent report in the United States found that this year paid online video revenue – which includes services such as Netflix WatchNow and Xbox Live Video Store – is set to overtake free and advertiser supported video for the first time.
So the opportunity is there – people will pay if they are given good reason to do so.
You have to make the content compelling and then package it and market it in a way that is relevant to the individual.
We’ve done a lot of work in assessing the value of our newspaper content and the best way to deliver it online, but there’s a lot more to do.
Certainly nothing is imminent here in Australia, but when it happens it will be big.
We will be platform agnostic – content is king and we want to be providing content for whatever platform is out there, provided the terms are fair for us.
That includes your computer, your TV set, your mobile, and any of the myriad of portable devices that are coming in the not too distant future.
We don’t have any intention of building e-readers ourselves, but we are in close contact with the key manufacturers
The really interesting e-readers are probably a couple of years away but the potential is enormous.
Imagine a high-definition full colour e-reader, containing all your favourite newspapers and magazines from around the world, not only managing your subscriptions, but also making recommendations for other content you might be interested in.
It will deliver high definition ads,
Which, when touched, will run a video, give detailed product information, download a brochure, or run a price comparison across local retailers.
An exciting proposition, I’m sure you’ll agree.
Indeed, uppermost in our minds is that whatever the platform is, it must work effectively for not only our readers, but also for you – our agencies and advertisers.
We’re confident that the combination of print, online, mobile and e-reader presents a terrific opportunity for advertisers.
We’ll have a large, highly engaged opt-in audience,
Who are open to advertising messages,
And with their permission, we’ll have their full registration details – location and demographic details,
We’ll know their consumption habits,
And we’ll be able to target them across multiple platforms.
Talking about a product that is as exciting to publishers as it is to advertisers is, I think, probably a good place to finish.
I returned to Australia and joined NDM three years ago. In that time, I’ve been privileged to at the centre of the unprecedented growth of online.
The digital economy has exploded – reaching a mass audience far quicker than TV, radio or newspapers ever did.
I’m confident that this growth will continue and with it will come opportunities for marketers that would have been unimaginable just a few years ago.
- Richard Freudenstein is the CEO of News Digital Media. Prior to returning to Australia he was chief operating officer of subscription TV operator British Sky Broadcasting