Left Bay’s Musings on the Media

Searching for answers in sales and marketing

Archive for 1

Metering the NY Times

How many users will pay for the online version of the New York Times?

Last week, the Times announced that they were implementing a metered system whereby they would start charging their high-volume users a flat fee to continue reading their articles. At what point that fee kicks in is still to be determined. In fact, how the entire system works is still very much up in the air, as the Times gave themselves until sometime in 2011 for implementation. But a question that I wonder — just how many users will pay for content?

And it turns out that I’m not alone in trying to figure it out. Frédéric Filloux of Monday Note crunched the numbers and produced a chart that shows that even a 5% subscription rate, priced at $2 to $8 month, would boost the Time’s online revenue by 7% to 29%.

But is a 5% subscription rate likely? Yes, apparently, as that’s about the percentage that the Wall Street Journal is getting, according to analyst Ken Doctor of Content Bridges:

“Isn’t it suicide to charge your best digital customers for content, while allowing others to get some for free? Not really. In fact, that’s what the Wall Street Journal has been doing for years. Remember the numbers: about a million paying online subscribers…..and another 19 million uniques, who get to Journal content through search engines and all manner of side doors for free.”

The Times isn’t saying what percentage of its readers fall into the category of “frequent readers,” the folks who will get hit by the meter. But pulling from the Pointer Online blog of Bill Mitchell, who takes from the Times David Carr, the number looks like 2 million out of 17 million uniques, which would be an ambitious 11%

So, maybe 5% – 10%?

That leaves plenty of room for a crowd-funded platform like Kachingle whereby users would voluntarily pay for content they’re otherwise getting for free. Would users do so? Look at public broadcasting. If the appeal is done right, if it appears others are giving, then yes, people will pay for free. Our models for Kachingle are based on a 1% – 2% adoption rate in year 1, jumping to 3%-4% in year 2, and then growing by 1% annually until it tops off at 6% – 8%.

You can mix free and paid. It can work.

Why 15-Year-Olds Won’t Pay For News

There’s a terrific journalist for the Financial Times by the name of Andrew Edgecliffe-Johnson whose articles on the media appear in my inbox with some frequency. Today, he wrote a piece, quoting a Morgan Stanley report, on the media habits of 15-year-olds that will come as no shock to newspaper publishers. These teens will find ways to ignore ads, and pretty much won’t pay for anything, from music to news.

Coincidentally, Edgecliffe-Johnson was also referenced in a separate story published in Slovenia’s Delo Saturday Supplement that lays out the global challenges content providers face in finding alternatives to advertising (and among other things, has some nice references to Kachingle). Reporter Sonja Merljak provides an overview of how charging for online content hasn’t yet worked, citing the New York Times “Times Select” attempt to charge access to its opinion writers, only to abandon it 17 months later.

But given the new desperation and fortitude of publishers, can they now get users to “pay for content?” Merljak asks. This is where it gets interesting. She pulls from Edgecliffe-Johnson piece How much would you pay an article online? Edgecliffe-Johnson figured out that it should cost about “10 cents” for the cost of his 2,000 word online article. How’d he come up with that?

“At about 2,000 of the 50,000 or so words in the printed version of the Financial Times, it should in theory be worth about 4 percent of the newspaper’s cover price – 10 US cents, 17½ euro cents or 8p.” He acknowledges that for some people, an article will be worth more than that; for others, less.

“Micropayments will be only a small part of the solution, but the fact that such ideas are being pursued demonstrates the extent to which online advertising, media owners’ current dominant business model, is failing to live up to its promise.”

In our own informal surveys, most users can’t tell you if an article is going to be worth 10 cents — or more or less — until after they’ve read it. But that’s not how most proposed micropayment systems will work. You’ll get a two or three line synaposis upfront and then be asked to pay. Will you click, or like the 15-year-olds, look somewhere else?

Says Edgecliffe-Johnson: ‘Digital delivery encouraged the unbundling of the album, allowing consumers to buy only their favourite music tracks. Now other media owners face the threat that customers will want to pay for just the online equivalent of the sports section or their prime-time hits, leaving them struggling to sell less valued parts of the paper or broadcast schedule.”

Who has the time to figure what an article is worth? A different model — a better model — would automatically distribute funds you’ve already set aside for paid content. It would allow you to mark the stories and sites you liked, and then at the end of the month, split up your $5, $10 or however much, fairly. With Kachingle, we’re building such an easy-to-use approach. Sign in once and tell the world what you support. Stay tuned.

Why Pay Walls Won’t Save Newspapers

I’m reading an online New York Times article about how “Pay Walls Alone Won’t Save Newspapers.” Of course I’m not paying anything to read this piece, or any other, as I peruse today’s headlines. But will I in the future? Author Eric Pfanner argues that though the case for charging for online content seems pretty clear, “if only because publishers have nothing to lose.“ But pay walls, he predicts, will only likely be a “transitional step.” Why? There are too many advertising dollars to lose, and too few people willing to pay for content.

Look to the music industry for an analogy, he says: In spite of iTunes and laws against unauthorized sharing of digital music, industry analysts suggest that 95% of music is still pirated “and record industry sales are still falling at double-digit rates.”

Pfanner says that while pay walls may be a start, few people are going to want to dozens of newspapers online. Instead, it might be possible to get people to pay if access to newspapers were bundled with other things people want from the Internet, like “films, music, games, and social networking.”

I think we’re going to have to try lots of different options. But what we’re creating at Kachingle seems the most simple of all. Erect no pay walls. Continue allowing articles to be freely distributed in order to maximize advertising. At the same time, put the power to choose to pay in the hands of the users. Put aside a fix amount of money each month. Allocate it fairly by the percentage of daily visits to Kachingle-enabled sites.

Above all, make it easy to use.

Still Trying to “Save” Journalism

There are a lot of ideas being floated about for “saving journalism.” None alone may work, but all should be tried. We at Kachingle are developing our own model, of course, one that combines an easy contribution approach with social recognition.

A lot of folks believe a subscription approach may still work. In mid-April, we heard about JournalismOnline, which will be a subscription model with a passport key to access member-publisher’s websites. “The website will provide a way for publishers of quality journalism to charge whatever they believe is a reasonable amount for their content in ways that are seamlessly convenient for readers,” explained co-founder Leo Hindery.

The challenge with such a model is that most users have shown they won’t pay for something they haven’t read. That’s the problem with all subscription-based models – there are too many free alternatives. Clearly, JournalismOnline wants to get a critical mass of publishers signed up. The question is, can they do it?

Now comes word that News Corp’s Rupert Murdoch has assembled a high level team that is devising a system to charge for web content. The New York Post reports that the team is looking to create a “user-friendly device akin to Amazon’s Kindle“ to deliver content from News Corp newspapers, like the Wall Street Journal, The Times of London and the New York Post.

Traditionally, print advertisers have preferred paid subscribers to free recipients because there’s a higher perceived value if someone is paying for the product. However, one of those perceived advantages – demographic data – has diminished as online cookie-based behavior-tracking has allowed publishers to back out data about its visitors, which in turn, has helped advertisers better target their message.

It’ll be a neat trick if they can make it all work.