Murdoch’s paid online access strategy for The Times might just work for The Australian
So we now know a little about Rupert Murdoch’s plans for online paid content.
And the model – for the UK at least – is a triple-tiered one. You can subscribe to The Times by the day, by the week, or get online access along with a subscription to the print edition.
(The first question, by the way, is whether this model will be replicated in other News Corp markets. It would make sense to try different models. Micropayments – a few cents per article – is another way to go, of course. Or even a Foxtel-style subscription menu featuring a number of products. News Corp has the luxury of having a big presence in the UK, Australia and the US. so it would make sense to try a number of different approaches.)
But let’s assume for now the same model as The Times, and roughly the same price, is applied in Australia. That’s the first of several escalatingly large assumptions from me, by the way.
The signs point to The Australian being the first, as News Corp has started upmarket in the UK. Particularly since Richard Freudenstein (Rupert’s digital honcho) was put in charge of The Oz earlier this year. (Saturday saw them announce an iPad app).
Assuming it follows the same pattern as the UK, we’re looking at an online subscription of about $1.50-2 per day or $3-4 per week.
But the situation is not the same as the UK. For starters, the way that print subs works in the two countries is different.
British newspaper owners generally know their regular print subscribers a little better than they necessarily do here.
Both countries for the most part have home delivery of the print edition available. Clearly those subscribers are relatively easy to identify and give an online log-in.
But there’s a second group of readers who I’d count myself amongst. I read The Australian every day but generally buy it from a different newsagent, depending on my movement on any given morning.
As a loyal reader I’ll resent being asked to pay again. If the principle is to pay for the content, not the platform, that’s gonna rankle (and it’ll also be a missed opportunity for News Ltd).
That’s where the difference with the UK comes in. They’ve got a nifty solution. You can subscribe to newspapers for a set price and be sent a book of tear-off vouchers for each day’s edition. Obviously you could include an online password with that easily enough.
The other difference though is in favour of it working for News Ltd in Australia – its market dominance. As John Pilger observes, we’re living in a Murdochcracy. And The Oz is the only general upmarket daily.
Another factor to take into account is that it doesn’t need to be a runaway success to be a success.
According to Nielsen, The Australian currently has just over two million unique browsers a month.
Let’s be generous and say that 5% of those pay for $4 weekly access (the State of the News Media 2010 report suggested 7% of web users might be willing to pay to access their favourite site) . That adds up to just over $1.6m per month.
But this is where it gets interesting.
What of the lost 95% one might ask? The Australian currently does more than 30m page impressions per month. Multiply that by a relatively generous average cpm of $5, with four ads per page. And that’s about $600,000 in monthly ad revenue.
(In fact, it’s might be a bit lower than that again. Analysts in London, for instance, reckon The Times has an annual online ad revenue of around $30m from about ten times the number of monthly visitors. Being generous, if The Australian pulls in 20% of that (our market is far less screwed than the UK media market), that’s $6m per year, or $500,000 per month.
And you wouldn’t expect to lose 95% of page impressions because your paying subscribers would probably consume more pages per user. And you’ve also got a strong argument to charge the advertisers a higher CPM if you know who these readers are, can offer a bit of demographic info and obviously argue that these are committed readers. They’ve just paid, haven’t they?
But there’s more. You’d be mad to discount print from this equation. “Free” online access is a powerful means of selling print subs, or at the very least shoring them up.
If I’m in the right ballpark, The Australian needs to persuade less than 50,000 or so people a month to pay in order to put it ahead of its current online ad revenues. That’s 2.5% of the current unique browsers.
It’s still obviously a gamble, but it doesn’t sound quite so mad now does it?
Tim Burrowes
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Nice analysis Tim, but it still sounds mad to me.
If The Australian online decides to put in a payment wall then expect a bloodbath and I’m sure the ABC (and the BBC) will be first to the scene, mopping up the spilt impressions.
We Australians have already proven our inability to part with credit card details online for fun things like DVD rental, movie tickets and music, I see news being an even tougher sell.
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Marc – one of the interesting and brilliant things in Apple’s content distribution system is they only have to lure people in to put their credit card in once, and from then onwards, they have the card captured for one-click purchasing. So it won’t be quite as hard to get people to spend the money on content on the iPad, I’d predict.
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This is all very similar to the music industry.
You can paddle up stream all you like but in the end you will just have to go with the flow.
You can’t use traditional consumer thinking to solve a non traditional consumer movement. Digital is not equal to bricks and mortar so don’t try and make it so.
The cards have already be dealt. The business model is there to be had, it’s just that no one has yet found a way of making it profitable (assuming that its not already).
By going backwards and making people pay for information only opens the door for a competitor to find a way to make money while offering it for free and then they will really be paddling up stream.
The consumer is telling business loud and clear that they want access to digital information for free.
Don’t try selling the sausage, focus on the sizzle people and offer the customers perceived value to get your $$$$. Give away the paper and focus on everything else about what makes money online.
What they are basically saying is that they have failed at marketing and advertising online because there are successful models out there making millions from it.
My prediction is that someone like Google who understand how to give stuff away and make money will step into this space and look out Murdock.
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To this avid reader the problem with online news seems to be the format of ads. They are either in your face or clunky, or else marginalised. Traditional media ads were conveniently blocked (broadcast) or spread (print); and in both cases could easily be made more eye catching than the editorial content without dominating it, especially for the discerning reader. What does that leave but sponsor style banner ads and static niche ads that invite readers to drop what they are doing and drill into the advertisers domain? Classified google style ads only work at the entry to an informational portal.
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I’m with Tim. FB are about to shoot all but the handful of passengers who will pay for the platform, and their bottom line will benefit ~overnight. Done.
Rupert’s job is tougher. Short of launching a purpose built ‘no ads’ domain (not dumb) there’s a tough sell ahead of any domain designed to furnish ad sales alone.
This is not health care or essential services. Who gives a shit what people without the will or the means think of the model?
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I do agree in principle Tim, but let’s be careful when we say they’ll lose 95% of their impressions, when we mean 95% of their uniques. This will bring them down to 100,000 uniques which is far from a must have on a schedule.
However, the loss of impressions is no loss as most of that 95% would have been going for 80c or a dollar as performance. Your $5 was very generous! The impressions that do remain will be able to be yield managed the old fashioned way, something the newspapers are traditionally very good at. Also, don’t pity the NDM rep, they will have that friend of the sales person “scarcity”, something that has been no more than myth in digital up to now.
Quality content produced by experienced journalists generating subscription revenues and an advertising proposition that can be yield managed, hell CpMs may even go up! That’s got to be worth risking the current non-viable situation for!
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Unique user counts? What do they mean? I access news sites from my work IP address, my iPhone and my home laptop. Am I two or three readers?
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Graeme,
You’re right, of course. As you probably know this is something Nielsen have been addressing with their panel system.
But I wonder if the thing that gives us more accurate data will be, funnily enough, the paid sites.
Once people are paying to access, the publishers at least will know how many genuine uniques they have.
Cheers,
Tim – Mumbrella
@Shaun – that’s an impressive list of mixed metaphors – I counted six, not including embedded ones like “consumer movement” or “opens the door”. Kudos!
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Mixed Metaphor Arts? Is that sort of like Ultimate Fighting for digital guys?
Hmmm…. the other count is that I pay for it, and read it but my wife reads it as well. I guess that ‘s the same as I buy the newspaper, and then she reads it, either before or after I have. Is that one or two readers from a business perspective?
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I use a proxy and clean out cookies every time i log off. So am I 30 UBs a month, and are advertisers really interested in a browser that appears to be coming in from Spain or whatever?
It’s an arrogant old man’s fantasy, and the tragedy for News shareholders is that the compay lacks a single senior executive brave enough to tell Rupe that is a profoundly stupid fantasy.
For proof of that, read Mark Day’s column in yesterday’s Oz. It’s a straight regurgitation of Rupe’s talking points. Day knows who signs his pay cheque, that’s for sure.
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what you have ask is do you want to pay for “Red Ruperts” view of the world?
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@ Al
Thanks Mate….i think…lol
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Running a subscription based website myself, I’d rather the independence I have not having to sway editorial comments to agencies and advertisers.
Much less hassle with admin too!
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the big question has to be … if people are paying to subscribe online, are they going to cop ads on the page as well? especially when the ads surround the content they’re paying for and potentially get in the way of it.
not sure people will tolerate both (yes i know they do on STV and magazines and print etc) online
I don’t envy poor Richard Freudenstein having to carry the can on this. NDM hasn’t pegged back Fairfax in revue terms since he took over, now he is saddled with making his employer’s deranged fantasy come true.
We can expect him to be very short with people as the frustrations grow.
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Why bother to pay for it. The ABC Online and radio uses most of the news stories from Murdoch media so it will only be necessary to go to the ABC.
The difference will be in missing journalists like Megalogenis.
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Here’s the oddity: the Oz is given awayt inb office towers and many, many other places. Their “business” sub in Melbourne offers three copies for $1.20. They have a zillion freebie deals with hotels etc.
Why, oh why, would anyone pay anything?
Or do they plan to take a HUGE cut in audit?
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BTW: their demographics are crap (which is why they hate Gary Morgan).
So you have to wonder whether Rupert’s planing to cut his losses (88million quid in London?) and stop printing these titles, at least on weekdays?
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I don’t buy Murdoch newspapers because I have no desire to make Rupert any richer. Sure I read the rubbish when it is free on line but if I have to pay for it……… I will find other things to do.
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I subscribe to the print edition of The Australian, for which the only option is home delivery. The voucher alternative (redeemable at newsagents) could be attractive if it was cheaper than home delivery.
Will my loyalty to the Australian entitle me to a free/discount sub to The Times? The terms and conditions http://bit.ly/9XXhza don’t rule that out, eg the definition of “Website member” in #1
‘ ” Website Member” means a private individual who either: a) has subscribed to or registered with the Website; or b) is expressly entitled to access the Website and the Services by virtue of subscription to another product or service provided by a member of the News International Group in accordance with the terms and conditions thereof.’
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Must be a lot of Sydney-siders out there willing to pay for TheAustralian online – not many Melbournians have ever heard of it let alone would think about paying for it!
(With respect of Murdoch’s notorious media bias, e.g. Mark Day, that Nazi fool in the Melb Herald-Sun and that ridiculous Murdoch sycophant Albrechsten bird (also on the ABC Board!), check-out Eric Beecher’s take in Crikey. Basically says that Murdoch has strategic ‘print’ papers that are loss-leaders for his lobbying of other major media interests e.g. Sky’s monopoly in the UK etc, apart from his ‘simple’quest for old man power before he dies).
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Your analysis is quite accurate Tim. Keeping your focus to inverting, media, and politics, there is no surprise if I find Rupert Murdoch to be the most fascination, albeit controversial, investors to study. Hands down, indeed he is the most influential men in the last century. However, I don’t really agree with Murdoch’s paid online access strategy. But why would people bother to pay for the online access when ABC online and radio uses the same new stories of Murdoch media. You can access the unpaid content of ABC rather than paying hundreds of pounds each month.
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