Posts Tagged ‘ad-funded’

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Harding calls ‘the trickery and fakery’ of circulation figures

November 18, 2009

James Harding, Editor of The Times

Finally someone has said it.

The editor of The Times, James Harding, yesterday stated that circulation is not the be-all-and-end-all of online newspapers. And he went on to outline a number of ways he can add value for loyal (and presumably, paying) customers.

“We think it’s good for us and good for business to stop encouraging the trickery and fakery of the ABCs. We want real sales to real customers – that’s what our advertisers want too.”

The Murdoch show – followed closely here – rumbles on.

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Online media must not become a paid-for cartel

September 16, 2009

Rupert Murdoch once again gave a boost to media-by-subscription at yesterday’s Goldman Sachs Communacopia conference in New York.  In a speech where he reported a rebound in the advertising market, he reiterated that News Corp media had plans to increase non-advertising revenue.

The media is now lining up behind the idea that there is money to be made through subscriptions, via either a ‘freemium’ model, offering additional benefits to subscribers, or through micro-payments.

Their long reluctance to go down the paid-for route online suggests that their former view – that ad revenue lost through reduced reader/viewer figures could not be recouped by subscriptions – has changed.

So what makes the subscription model seem so appealing now?  Here are three suggestions:

  1. Ad revenue per media channel is projected to fall so far in the near future that the subscription model is now viable. This is quite conceivable, given the proliferation of media channels.
  2. New technologies such as mobile devices and electronic readers offer a point of difference worth paying for. With Spotify and the Wall Street Journal just two channels offering mobile content for a fee, it suggests mobile devices could boost subscriptions in a previously unachievable way.  As Murdoch said at Communacopia : I do certainly see the day when more people will be buying their newspapers on portable reading panels than on crushed trees.
  3. The mainstream media now believes it can corner the market for paid-for news/analysis.  Recent moves to centralise electronic media behind specific techologies, such as mydigitalnewspaper.com , Google Fast Flip and Journalism Online (which is specifically a payments system) mean the mainstream media may increasingly be able to behave like a cartel. Early moves towards paid-for models by the Financial Times and New York Times may be followed by a mass shift to paid-for online news.

Paid-for online services should theoretically be more customer-focused and financially sustainable than those that are ad-funded – but if pricing were to be set in an uncompetitive way, that would be an unfortunate outcome.

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Lionel Barber: Paid For Content The Future

August 5, 2009

Lionel Barber, editor of the FT, yesterday made the clearest case yet for paid-for online newspaper content.

In an interview with Benjamin Cohen at Channel 4, he made it clear the FT believes its subscription model is the future, although he also cited micropayments as an end-game for newspapers.

He said: “We use a registration model.  It’s a frequency model whereby people taste FT content, and after a certain number of articles, then they register.  After registration comes subscription and we’ve got 117,000 subscribers.”

Content, he said, has value – something that has been forgotten by newspapers over the past decade: “I think there is an inexorable momentum behind charging for content, for the simple reason that, one, the advertising that we once relied upon isn’t going to come back in the same way.  And two, that everybody has simply realised that, in this new internet age, they need to actually charge for content, and establish content as something valuable.”

On micropayments, Barber does not rule out a single system for all newspapers, saying he is looking at “the micropayments issue”.  There will be organisations, he said, that can help newspapers charge per article.  Indeed there are a number of different organisations that offer a wide variety of different electronic, mobile and micropayment platforms, and one of these could be adopted by newspapers en masse.

There is a good round-up of commentary on Barber’s interview at the Fee or Free blog.

If the alternative is content being paid for by the back door, either using an ad-funded model, or even worse, by special interest groups as the Washington Post was found to be doing, then Barber has to be nudging the newspaper industry in the right direction.  What do you think?

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The New York Times Will Keep Its Reporters

August 3, 2009

A lively debate has sprung up on the idea that the New York Times‘ top reporters and writers would be more successful if they were running their own paper.

On the face of it, these plans have much in their defence.  For example, they would create a far more dynamic institution than the monolithic New York Times currently is, allowing it to respond more swiftly to market demands.  But would they solve the problem of long-term financial sustainability?

Michael Arrington writes at Techcrunch that he believes the New York Times’ top 50 writers could write a paper delivering 50 per cent of the value achieved by today’s 9,300 staff.  So, half the New York Times, but at a fraction of the cost.

Meanwhile, on the Daily Telegraph’s blog, Andrew Keen suggests a similar plan, although his plan is to maintain the New York Times as the paper it is, just with far fewer staff – less drastic than Arrington’s plan, but with a similar outcome of slashed overheads leading to financial stability.

But these plans don’t solve the fundamental problem of earning a return from online content.  At present, venture capital backed aggregators, blogs and social media are competing on price for the delivery of news, and the price they have chosen is free.  Traditional newspapers cannot compete because their content costs more to create and they don’t have backers with deep pockets.  A great description of the ‘overheads’ underpinning traditional reporting is given by Ian Shapira in the Washington Post.

But how free is free?  Those investors supporting the technologies that have so ‘disrupted’ the newspaper industry will at some point seek a return on their investment, and it will be interesting to see how many of today’s ‘free’ services continue to be free at that point.

Nor can the ad-funded model support all the media that are currently fighting for survival.  The ad-funded model will self-select survivors largely on the basis of appropriateness to brand sponsors, who are notoriously cautious.  That is a very worrying outcome.

Both Arrington and Keen are right about one thing – newspapers need to embrace digital delivery of news and take this opportunity to reduce the overheads required by a clunky, paper-based delivery mechanism.  And then they need to support a move towards a world where people can pay for what they use, meaning the sources of media funding remain as diverse and wide-ranging as the tastes of the readers themselves.

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5 Reasons to Pay for Spotify

July 28, 2009

SpotifyI was recently singled out at a music industry event for being the only person of over 100 attendees to pay for Spotify Premium.

“So you’re the one” was called out. There were suppressed sniggers. One or two people actually booed me – which I still don’t quite get.

But what really hit home was the general consensus that I was naive for paying for something that is available for free elsewhere.

So why do I pay? Here are my five reasons for paying for Spotify:

  1. It’s excellent value.  This may not be true for everyone, but through buying CDs, second-hand vinyl and digital music on iTunes, I have spent between £10 and £30 per month on music since I was 18.  Spotify is, to a slightly above-average music user, a bargain.  And as the library grows, it gets better value every week.
  2. Adverts lead to censorship.  I don’t argue against adverts because of the quality of their content (though people tell me Spotify ads are particularly special in this regard).  Rather, I am opposed to the censorial impact advertisers can have.  It is something that has been well-documented, brilliantly summed up by Naomi Klein in No Logo.  For example, if a brand does not like swearing, and Spotify wants to carry that brand’s adverts, it will have to ban songs containing swearing.  Censorship is always just a dollar payment away.
  3. You can’t lose it.  Contrary to some people’s views, music you don’t own is more secure than music sitting on a shelf in your home.  I’ve lost a least 100 songs that I purchased on iTunes in the past two years – once through a computer failure, once through a relationship failure (the songs went with the laptop, TV and sofa).  It’s nothing new – think of all the fights there have ever been over who owned which bits of the vinyl collection.
  4. It’s going mobile.  It is likely that it will be available shortly on the iPhone and other 3G devices, for Premium users only.  If the user interface on the mobile devices is as good as it is on the computer (with the caveat that content discovery could be improved), it will be a huge winner.
  5. The economic sustainability argument.  The music ecosystem requires people to pay for it.  If everyone pays, the music industry and writers profit and there is downward pressure on the price for the service.  If nobody pays, the market fails.  In between, there is an equilibrium.

So, on the grounds that I really like the service, and I would like to pay as little as possible for it, I have to declare a big and blatant self-interest in urging others to join me and enjoy Spotify ad-free.

Update | 13.45 | 28 July  Official UK music industry figures suggest that I am actually quite a heavy music buyer.  According to a story in The Times today:

…Spotify [asks] customers to pay £120 a year for the service, when, on average, music buyers spent half that amount on music purchases last year, according to research for the BPI, the record industry trade association.

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Spotify or Soundcloud: future of music payment

July 16, 2009

Tonight, I was at a great event organised by Chinwag called “Music – who Pays the Piper?”, that examined future revenue generation in the music industry.  It was refreshing that the panel members were unanimous on one thing – music can’t be free.  Or, in other words, artists should be paid for creating something valuable.

But what was most inspiring was the range of ideas put forward about how music creation might be rewarded.  This is a very rough summary of some of the ideas put forward by the panel – Dave Haynes, UK Manager at Soundcloud; Dom Hodge, Associate Director at Frukt Music; Helienne Lidvall, journalist and blogger at The Guardian and a songwriter; Jon Mitchell, Sales Director at Spotify and Richard Jacobs, Head of Radio at MediaCom.

Dave Haynes: the age of the CD is over.  A premium will be put on originality – remixes and music created collaboratively will become more valuable – in fact, music can already be developed entirely in the cloud, enabling collaborative creation of the music itself.  This collaborative creation is where value can be added to the music – what happens then is not important – ad-funding, fan-payments or brand sponsorship – Dave does not really care!

Dom Hodge: one of the most important recent changes to the music industry has been the new emphasis on access, rather than ownership (e.g. the streaming model used by Spotify).  A solution to the stifling of innovation in the music industry would be for the major labels to acquire equity stakes in successful start-ups, rather than to shut them down – an intriguing idea. Fans will pay for music.

Helienne (pronounced as Korean): the obvious revenue generator is touring – but not everyone can make money this way.  The industry rule of thumb is that the break-even point is when you can fill the Shepherd’s Bush Empire (capacity 2,000). Other ways of making money don’t necessarily work: Helienne has received millions of plays on YouTube but been paid only about £30 royalties.  From online sales, record labels make about ten times as much as song-writers.  She argued against flat-rate fees for music.  Brand advertisers will end up funding music.

Jon: Spotify has reached 2m users within five months, but it is still a long way from making money.  The entire room was asked “who has not used Spotify?” – nobody put their hand up to that.  But when asked who pays for Spotify Premium, only one person in the room raised their hand – me.  Jon said artists must be compensated, and alluded to innovations and growth in the ad-funded Spotify service.  He also mentioned that – in the very long term – individuals should have access to Spotify too.  Ads will eventually pay for music.

Richard: brand relationships in the music industry are becoming more important and this is going to continue.  Media buyers such as MediaCom are hearing from countless new music streaming sites every week attempting to pick up ad revenue – but the vast majority are not worth looking at.  Fragmentation is nobody’s friend, and Richard advocated a collaborative approach to media selling among streaming services.  He emphasised that the biggest consideration is the connection between brands and the music site – and in that sense, media buyers are increasingly becoming the financial gatekeepers of the music industry – if the song doesn’t fit the brand perfectly, then it is Richard’s job to pull out of the deal.  He felt an ad- and sponsorship-funded music industry was inevitable.

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Bold step as New York Times charges for content

July 10, 2009

NYT BuildingGreat news that the New York Times is to start consider charging for content.  Somebody has to be the first to go, and after Murdoch’s recent revelation that he is considering this for The Times and The Sun in the UK, it sounds like a monumental shift is taking place.

The price mentioned by the NYT  is low.  At $5 per month to begin with, it is around ten pence per day in sterling terms.  Who could deny that is good value?  The big question is just how elastic demand for quality newspaper content will be.  In other words, how much will this price – albeit a very low one – negatively impact demand?

It sounds reasonable to argue the quality of reader will be superior under a payment model.  It will not include people landing on the page unintentionally, for example.  It will also likely drive up the readers’ “propensity to buy”, since it will be possible to be more targeted with ads (using reader information) and readers will be generally more affluent – all good stuff for advertisers.  This is an experiment well worth undertaking, and the economic knowledge gained might be so valuable as to outweigh the cost of being the first mover.  Let’s hope so.

One concern is with Journalism Online, the organisation that has established itself with the laudable aim of creating a single pay platform for all online newspapers.  This is a very powerful idea, but surely the best way to deliver it would be through a non-for-profit body owned collectively by the newspapers themselves, and perhaps representing also the interests of readers.

That said, until such a group is formed (happy to be corrected if this has already been done), Journalism Online is showing the way, and for that, they ought to be congratulated.