The News Limited paywall isn’t about revenue. It’s about data
In this guest post, ninemsn’s editor in chief Hal Crawford argues Fairfax Media and News Limited’s new paywalls won’t draw much revenue, but will generate data. And they’re late to the data party.
When I first learned that ninemsn’s major digital competitors Fairfax and News Ltd were going to introduce paywalls across their mainstream properties, I was excited.
Every obstacle thrown in the way of their audiences is an opportunity. People hate friction and anything that makes life difficult on a rival site is a chance to get them on yours. This business is tough. You sweat over every thousand visits, every incremental click you can squeeze out of your page design or your pitches or the stories. It’s sweet to hear your competition is going to run the race with a ball and chain.
You can imagine my disappointment when the details of the paywall going up on The Telegraph and The Herald Sun came to light. The model allows readers to access more than 80 articles a month (Telegraph) in exchange for registering at no cost. For the Herald Sun, it’s 65 articles a month.
According to Nielsen, the average Telegraph reader accounts for 56 page views every month, well under the free allowance. For the Herald Sun, it’s 32 page views a month. Given that a fair number of those page views are going to be hompages, slideshows and autorefresh (multiple page views only accounting for one article under the paywall scheme) it’s going to be a rare reader who encounters the paywall proper.
So the “paywall” strategy isn’t a subscription revenue play at all. It’s a data play. I would be surprised if the paywall itself hit 10 percent of the total audience. Of those, some will pay and some won’t. A bunch of people will drop down from being power-users to sitting just beneath the pay threshhold. For those who fall in the “register to read” band there will be a drop-off because of the hassle, but if the product guys make that process relatively painless, these sites won’t be taking much of a hit. Ten to 15 per cent?
It’s better than nothing, but not the massacre I had been hoping for.
I think you can tell from the above that ninemsn won’t be introducing a paywall anytime soon. It’s not an ideological question. It’s practical. We don’t need it because we are profitable on our digital display revenue alone. We don’t want it because we value every member of our audience. When you are mainstream, reach is important.
According to reports, staff at the Telegraph were sat through a lengthy meeting on Wednesday listening to the logic of their imminent paywall cloistering.
They were told they know they are going to take a traffic hit, but it’s a good move because all news publishers are heading that way and everyone would end up with paywalls eventually.
So that bit’s not true.
And if it’s not true, what happens?
The mastheads lose some ground, say 15% of ground, and they gain data about their users. If that were unique, it might be a decent strategy. But it’s not unique. These guys are late to the data party.
The revenue from subscriptions is not significant, so that is not going to help. Looks a lot like News was forced to introduce a paywall and made the best of it. It’s a retrofitted strategy that has nothing to do with the audience and everything to do with the emotional and fiscal needs of the company.
The world does not exist to support any particular media company. The assumption that the model must work because there must be some way to support newspapers at their current cost base is wrong. Good strategy arises not out of the needs of the publisher but the needs of the customer, and any plan that ignores that will fail.
- Hal Crawford is editor-in-chief at Ninemsn
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Hal,
What is the pay wall in its current incarnation is a baby step towards introducing a stronger pay wall in the future or if it has a completely different motivation? If I were Fairfax/News Limited, I certainly wouldn’t want to introduce a pay wall (proper) overnight – it could result in massive declines in viewership.
On the other hand, if they introduce it softy softly:
* it won’t annoy many people
* they get the infrastructure in place for the future
* they gain customer information as you suggested
* they can deliver higher quality targeting for advertisers
* they may be able to up sell their print subscriptions
* they may be able to up sell their digital subscriptions
I think the value that point #4 brings to the table is compelling, advertisers could target users with far more specificity. This might bear fruit in the form of thousands of smaller businesses being able to find cost effective advertising strategies that are traditionally out of reach due to the media buying costs on the big sites.
Al.
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Hal forgot the other practical reason why Nine won’t have a pay wall. It’s run by a free-to-air TV network. Even if it wanted to, it couldn’t.
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I don’t mind paying for news.
What I object to is my data being harvested, which is why I don’t use flybuys, shopping incentive programs, or register on news sites…
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This is rich from an organisation that invests more in ripping off content from other publishers, particularly News and Fairfax, than it invests in creating its own content.
Opinion is exactly the way to describe this article. Uninformed opinion is another.
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Today I learned people use ninemsn.
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I can’t see how paywalls are more about data than revenues. Yes there is a data benefit, but the last time I checked a business can’t pay its bills and staff with rich data subsets and billions of data points, they generally need cash.
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I am always mystified by Ninemsn’s traffic figures. Who goes there? I’ve never had anyone say to me, “did you see that story on Ninemsn”, or send me a link.
Anyone care to enlighten me?
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This is funny. You could have done a post on Mumbrella 2 years ago about paywalls working and you’d be laughed out of town.
Now it seems it has gone the other way?
Aren’t media industry types supposed to be leaders, not followers? Will paywalls save newspaper businesses? Will they fail?
That’s right, none of you have any idea. The majority of you are a clueless bunch of sheep.
At least Hal sees the opportunity for what it is. When paywalls go up it works for advertising funded content providers.
Beyond that, anyone with a strong opinion on subject should be writing the horoscope section of their employer’s newspaper.
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Another self-serving piece from Hal. Ninemsn “doesn’t need” a paywall because, as davo points out above, it barely produces any journalism (which is expensive). It’s almost all AAP copy or rewrites from other sources. But, by all means, you’re welcome to claim that no having a paywall is about ‘valuing your audience’.
As for Mike’s question about Ninemsn’s traffic figures. You’re not aware that every Australian Hotmail user gets redirected to Ninemsn’s homepage when they log out? That would boost their figures to the tune of millions of page impressions per month.
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“We don’t need it because we are profitable on our digital display revenue alone.”
Are you paying full freight to Nine for the video you use? If not, what does it do to the bottom line should that cross-subsidy end?
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I just have to pick Hal up on his judicious use of Nielsen research, which is the basis for his premise that the paywall will have little effect. Unfortunately individuals are not averages. I quote
”The model allows readers to access more than 80 articles a month (Telegraph) in exchange for registering at no cost. For the Herald Sun, it’s 65 articles a month.
According to Nielsen, the average Telegraph reader accounts for 56 page views every month, well under the free allowance.”
Unfortunately the average, in this instance, is not a great reflection of common behaviour but just a mathematical calculation. You will find two significantly sized groups at opposite ends of the pole.
One group who view a handful of articles (Hal’s made up 15% but probably much larger) who will probably be put off by the registration process. The second cohort of regular readers some of whom have migrated from print to online, who are serious consumers of news, will now be expected to pay. The experience in other markets (UK for one) would suggest that both groups are driven away in numbers, one out of idleness and one to find similar content for free. To suggest this is just a data play is lunacy.
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Hal, you’re not a news publisher until you actually publish some.
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Overly convenient and contrived arguments. Some might say shallow, Hal. Shallow.
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it appears the flock has spoken
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