How to charge for online content
I am going to tell you how to sell content in a moment. First, let me say that I know most publishers will not be able to charge for all the content published on their websites. Efforts to try this almost certainly would be suicidal.
There is no way anyone can hope to charge online visitors for such generic fare as sports scores, stock prices, government press releases and breaking news like the recent air crashes reported so dramatically on Twitter.
Given the open and unfettered nature of the web, it is unreasonable to believe generic news can be effectively sequestered behind a pay firewall. A publisher attempting to do this simply would divert readers from his site to some else’s, throttling the traffic that is the lifeblood of any media business.
There. I said it. OK?
Now, on to the business of trying to save the media business.
If we are going to save the tradition of professional journalism, it is vital for publishers to begin producing content that is sufficiently unique, authoritative and valuable to motivate consumers to pay for it.
The need for the traditional media companies to produce more and better content could not come at a worse time. Newsroom budgets are being gutted by historic declines in ad sales, aggravated by the need for many companies to generate unreasonably large profits to service the heavy debt they incurred to fund ill-considered and ill-timed acquisitions.
As a direct consequence of the breakdown in the traditional media business model, publishers today are cutting the quality and quantity of the content they produce at the very moment they should be investing more aggressively than ever in the sole distinguishing capability that powerfully differentiates them from the millions of websites that are siphoning away their readers and advertisers.
As the most challenged of all the distressed media companies, newspapers are so strapped today that they are producing ever less original reporting. In but one example of the decimation, the number of reporters covering the nation’s capital for American newspapers has dropped by half since 1995 to 300 correspondents.
This is not merely a step in the wrong direction. It is a leap into the abyss.
Fortunately for publishers, for-pay content doesn’t have to be the Watergate investigation of the future. People will pay for all manner of content on the web, it if it is thoughtfully conceived and marketed.
U.S. News and World Report sells access to school rankings and other detailed college data. Consumer Reports gets paid for rating refrigerators. Congressional Quarterly sells high-priced, inside-the-Beltway dope. The New Yorker makes money off reprints of its cartoons. Millions are spent on Kindle books, iPhone applications and even ring tones.
The Wall Street Journal, which claims more than 1 million paid subscribers to its website, is the most notable among newspapers in charging for access to some of its content. How does it get away with charging, when so much business information is available for free from places like Yahoo Finance and 24/7 Wall St.?
The answer is: Original, authoritative reporting and the power of its brand.
Notwithstanding the recent layoff of a small percentage of its staff, the Journal continues reporting at essentially full force to get ahead of and behind complex stories involving business, investing and the economy.
The Journal’s generally reliable and insightful reporting – which is flashed immediately across a variety of interactive and mobile platforms – provides critical and actionable information to executives, investors and policy makers. To steal an old tag line from Forbes, it is an indispensable capitalist tool.
By aggregating an audience of business people willing and able to pay to view its contnent, the Journal also has created a premium audience for advertisers, who pay top dollar to reach it. Thus, selling content reaps the additional benefit of boosting ad revenees.
The Journal isn’t the only newspaper charging for content. You also hit pay walls at places like the Arkansas Democrat-Gazette and the Santa Barbara News-Press. But the story is different in each place.
Walter E. Hussman, the publisher of the Little Rock paper, admitted in a recent email to being on the “wrong side” of the paid-content debate for more than decade. And he couldn’t be happier.
“I think the most compelling argument [for charging for content] is our paid circulation,” he said, noting that his average daily sale of 176,275 was 1.7% higher in 2008 than it was 10 years earlier. This contrasts starkly with the sharp circulation plunge suffered by the rest of the industry in the last decade.
Like the publishers of many small and medium papers, Hussman is fortunate to have scant competition in his market. With by far the largest force of reporters covering Arkansas, his paper is a must-read for anyone who wants to know what is happening in the state.
As long as the Gazette continues to publish exclusive and authoritative local news, Hussman can continue charging for access to his site. His ability to charge, it should be emphasized, is what helps support the production of the valuable content that gives his brand an unfair advantage over any would-be competitor.
By contrast, the Santa Barbara News-Press is living proof that geography and a long-standing franchise won’t let a publisher successfully charge for content that isn’t perceived by readers as being unique and valuable:
While the News-Press could scarcely be more isolated from California’s several large media markets, its for-pay website has been overtaken by a free site operated by the upstart Santa Barbara Independent.
The 53,817 unique visitors to the Independent site in January were more than double the traffic at the News-Press site, according to Compete.Com. In the last year, significantly, the Independent’s traffic rocketed by 48% while the News-Press audience fell 10% in the same period.
The weakness of the News-Press web strategy was revealed during the devastating fire in November that destroyed more than 100 homes. Scant information on the fast-moving blaze was available for non-subscribers at the News-Press site. At the same time, however, the Independent.Com brimmed with up-to-the-minute bulletins, first-person reports and even fire photos emailed from a Santa Barbara resident to his brother in Ohio, who posted them on the site because the California brother had lost his Internet connection.
The lesson here is not that free content trumps pay (though, all things being equal, it will) but that there has to be much more to a pay strategy than a publisher’s desire to want to be paid. This goes double when the publisher has been giving his valuable content away for free for the better part of two decades, as most newspapers have done.
The trick to charging for content, therefore, is coming up with unique and valuable information that people will pay for. The converse is to let information be free that ought to be free. Things, for example, like the life-threatening commnity emergency in Santa Barbara.
What are some good ideas for paid content? Here are a few for free:
The Financial Times this month is launching “China Confidential,” a fortnightly digital newsletter and website promising “premium, exclusive analysis and predictions on investment themes.” Its slogan, which could be the mantra for many pay-content initiatives, is “Premium Investment Intelligence.”
The New York Times could have done the same thing as the FT if it added a bit of original reporting and some exclusive features the new environment section it launched last week. At the moment, the section merely repackages stories previously printed in the paper. But there is a world of po$$ibility in the Green Inc. blog aiming to deliver insights on “energy, the environment and the bottom line.”
Paid content doesn’t have to be business-oriented. It simply has to scratch the itch of a large enough niche of readers to make it worthwhile to produce the content.
Although the Milwaukee Journal Sentinel provides plenty of free coverage of the Green Bay Packers, the paper for years also has published a premium “Packer Insider” newsletter. Judging from the enormous number of people you see at Packer games wearing $17.95 plastic cheese wedges on their heads (not to mention the $34.95 cheese bra), the team should have at least 25,000 die-hard fans willing to shell out $44.95 annually for the newsletter. Assuming there are, the newsletter would be grossing more than $1 million a year.
The biggest mistake a newspaper can make is to cheap out on premium content. A few years ago, the Sacramento Bee tried selling an expensive newsletter that promised a wealth of exclusive insider news from the state’s capital. It should have been a hit.
Instead of profound insights, exclusive tips and actionable information, however, it was padded with things like the governor’s schedule for the next day. So, the newsletter flopped. Not because people won’t pay for content but because it failed to deliver enough unique, authoritative and actionable information to merit a premium price.
If you happen to be a publisher wrestling with how to move from free to paid content, don’t let anyone tell you that you can’t charge for it. If it’s good enough, readers will pay. If you attract the right audience, advertisers will pay, too.
This concludes my free advice on the subject of paid content. If you want more, hire me as your consultant.