There has been much written over the past few weeks about newspaper and magazine publishers wanting to return to a pay-for-content model. There is widespread belief forming among these publishers that they have content so unique and so compelling that people will pay money for it.
But this approach hasn’t worked in the past, so why would it work now? Time Inc.’s traffic boomed after the curtain was removed from their content. Restricting the content isn’t the answer, it’s how to increase the value of their content (or the advertising attached to their content), how to create new, online-only content that has value, or how to leverage other assets (like customer information) to generate new revenue opportunities.
I have read several articles where media executives point to The Wall Street Journal as an example that paid content works. They are failing to realize that WSJ online subscriptions are business expenses, and most are reimbursed on expense reports. Also, people in financial services use WSJ content to make major decisions daily on their jobs. Sites like People, The New York Times, and Newsweek are read for personal enjoyment, entertainment, and information – not as decision making tools – personal expenses that would likely be low priority in a down economy.
Some magazine and newspaper companies are discussing experimenting with revenue models without doing the due diligence necessary to determine the validity of a model. They are failing to study return-on-investment or cost-benefit analyses that time after time have shown that the paid content model only works in very specific instances. They are failing to understand the implications of the current recession and a new generation of readers that are making their most basic business assumptions invalid. For example:
- Most people under 25 have grown up viewing all online digital content as free – not only will they not pay for magazine or newspaper content, they also don’t believe in paying for music, movies, or online games. They are willing to accept that advertising is what makes that content free. Even the record companies realize they are fighting a losing battle against free content
- Even in cases where some people agree with paying for content, it is generally for content that is used multiple times – like music, movies and games. Magazine and newspaper content is generally read once and discarded, which eliminates any residual value in owning the content
Revisiting the paid content model reinforces the basic problems that traditional magazine and newspaper companies need to accept and fix:
- They lack a sophisticated understanding of online publishing
- They tend to view online only in terms of how it extends their existing brands
- They lack ideas on how to make money online and recycle ideas that have failed in the past
- They fail to study the viability of ideas before they act on them
The biggest downside of experimenting with these recycled models is that it will consume significant resources that could otherwise be developing and implementing new models that may work in the current economic and social environment. Due to the large number of layoffs, resources are scarcer than ever before, and cannot be wasted on initiatives with negligible or unknown value.
For an example of how to do it right, look no further than Hulu.com. NBC and Fox formed a partnership and produced a new site built specifically for the Internet, not simply an extension of their off-line brands. Hulu is one of the top video destinations on the web and one of the keys to its success thus far has been an independent management team focused on the site as an independent destination.
Before the newspapers and magazine companies make plans public to resurrect old revenue models that have failed in the past, they should look to examples in “new media” for ideas that will generate new revenue based on what people want and are willing to pay for, and determine how that revenue will be generated. While it is fair to say that online advertising isn’t the be-all, end-all revenue model for traditional publishers, the idea that people will pay for ubiquitous content online is not the answer.
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