As this blog and many others had assumed would happen, News Limited has announced that it will start charging for on line access to the Australian and later for the Herald Sun and Daily Telegraph. The Australian will $2.94 cost per week. This is the first major daily to go behind some type of subscription wall. Why have they chosen to do so? Richard Freudenstein, the CEO of the Australian and News Digital Media made the announcement in a Key Note Address at the mumbrella360 conference (Everything under Australia’s media and marketing umbrella) in Sydney on 7 June. This blog looks at his speech.
Richard is the CEO of News Ltd which is part of the larger company, News Corp. He started by extolling the success of that company over the last 60 years.
In Australia, newspapers are the major medium for breaking stories and for holding governments and public institutions to account.
TV and radio news, he claims, rehash what has been said in today’s (Blog note: and sometimes yesterday’s) newspapers.
The digital age brought a huge advantage to newspapers. They are now accessible through the day, and can bring in new content without running the presses. They can therefore directly compete with the continuous access the public has to radio and TV
6.2 million Australians visit News Ltd on line publications pre month, he claimed.
Social media traffic largely has its roots in digital news. He presented data from a mix of both news sites, like the BBC and CNN and newspaper sites, like the Guardian and the New York Times. More than 99% of links from blogs come from these sources. Similarly news organisations make a huge contribution to Twitter traffic. (Blog note: although again, news organisations make a more important contribution that digital newspapers, at least so far).
But, Richard reminded us, traffic is nothing without converting the audience into income. (Blog note: They are in business after all, and they do have shareholders). Monetisation comes from classified advertising, transactional revenue, display advertising and subscription revenue. The trick is to grow these print sources of revenue in the digital news area.
Allowing digital news to be free has constrained some of these forms of income. Richard sees huge growth potential in tablets and modern phones. Not surprisingly he is keen to get access to it. He wants people to pay for what he produces. The counter of course is: why pay for something I can get for free? The business answer is to provide value in the way content is delivered and presented. The Australian newspaper has continued success in content. He is simply keen to convert this success to money in the digital area as well as the more traditional print area.
Will it work. The Times went completely behind a subscription wall. Although this has been ctitised, the 76,000 digital subscriptions they now have make more money for the Times than 20 million browsing hits had done previously.
The New York Times digital subscription introduced recently has exceeded expectations.
(Blog note: The model is of course perfect in a business sense. Digital editions already exist, so there is no direct cost in putting some or all of that behind a wall. Display advertising, a major source of income remains since sales of the paper version are unaffected. And there is an immediate increase in income from the digital subscriptions. So, the paper has time to allow the digital side to grow while at the same time growing revenue.)
Finally, Richard commented on advertising in digital news. Of course that will continue since advertising is an essential part of newspaper income. The trick with digital news is to align the advertising to the need of the audience.
He finished with a quote from Andrew Swinard president od Starcom MediaVest: “Advertising is about adjacency. I’m paying for an engaged audience, and if that audience is willing to pay, that demonstrates how engaged they are.”
Blog summary: there can be absolutely no doubt that more and more of Australia’s print newspapers will go behind some type of subscription wall in the next 12 months.
There can also be no doubt that the height of that wall will continue to grow as the uptake of paid subscription increases.
The news companies will make money, and we will pay to read the news.
Do you agree?
{photo from freedigitalphotos}
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