Rupert , you didn’t ask my opinion on this, but since when has that ever stopped me.
First the good news. You can sell content on the internet. People pay for content on and off the internet every second of every day. It’s easy to do. If you do it right. But before I get to the how to, let me throw out some interim suggestions:
1. Block aggregation sites that point to your content.
Too many that’s heresy. The conventional wisdom suggests that all traffic is good traffic. Every page view is more money. Why not take it ? Because its limited and you aren’t selling it.
The value of the traffic sent by most sites is minimal at best. Lets look at your best friend Michael Wolf’s site Newser.com. According to Quantcast he gets about 24k unique users every day. If 1 pct of those users went to a Fox Site, say the NY Post, and each looked at 5 pages, that would be a total gain of 1.2k Page Views. If you were able to sell 1oopct of those at $15 CPM, which you can’t. You would make $18 per day. About $ 6.5k per year. Best case.
More likely, in this economy, you are not selling 90pct of the inventory he sends you. Heck, you aren’t selling a big chuck of the inventory that you get on your sites anyway, so the marginal value of the traffic sent by Newser.com might be about zero.
Why would you help a site, that is a direct competitor for minimal incremental revenue ? It’s not worth it. You know what is worth it ? When someone is sent from the site,let them fall on a page that lets them know that you don’t consider Newser.com a valid news or reference site. Newser.com has chosen to front end our content and we don’t appreciate it. As a result, we are blocking access. To get up to the minute news, please go directly to NYPost.com (or whatever site). Of course Newser.com will quickly stop sending you traffic. But the loss will be theirs. There will be stories that you cover better than anyone. Michael will have to find someone else.
The real question of course is whether other major news site copy what you have done ? What if the NY Times and the Washington Post do the same thing ? What if CNN, Tribune Papers and MSNBC join in ? I will tell you what happens. The aggregator sites that try to front end the content you invest a ton of money to create will find themselves all relying on AP, Reuters and individual bloggers.
This is where all the netizens jump in and tell me Im crazy. That news sites won’t ever do this. Thats not the internet way. Which of course is exactly how they respond to every business question involving the net. The major news sites are keeping the aggregators that don’t originate news content alive. From Drudge Report on down. You are crazy to do so. Let the search engines send you traffic. Block the rest. Your revenue impact will be minimal. The competitive impact significant.
2.Other than the WSJ, don’t ever sell content ala carte. It only works for content that impacts company’s and individuals bank accounts in real time. The Wall Street Journal can sell subscriptions because if a businessperson or trader doesn’t have the information the minute its published, they could be in serious financial trouble. The WSJ moves markets. You can charge for it. Page 6 doesn’t move markets. Foxsports doesn’t move markets. People won’t pay for it by story. They won’t pay for a general interest or newspaper, tv or sports website by the day, week or month unless they absolutely have to know what you publish for business reasons. There aren’t enough of those people around to pay the bills per site.
So what should you do to sell your online content ?
The first thing you have to do is realize that internet consumers are only fine with paying for content when the following two criteria are met:
1. It is easy to buy.
2. It is easy for any consumer to assign a “perceived value” to the content and you charge less than that amount.
2a. Remind yourself that just because you assign a specific value, doesn’t mean the consumer will. Case in point are newspaper sites. Consumers might adamantly believe that your writers are better than AP writers. They might believe that your site uncovers news that MSNBC.com doesn’t, Unfortunately for you, because it’s all free to this point, they aren’t saying to themselves “wow, the only way I have EVER been able to get this is news is by paying $2.99 a week and now I can get it from Fox for only $ 2 per month. It’s not going to happen. Instead, it will be “I like the NY Post. I love Page Six. But I’m not going to pay to get what I have always gotten online for free. Not going to happen.
So what Fox, and any media conglomerate has to do is find DIGITAL or INCREDIBLY HIGH MARGIN products that have a perceived value to the consumer, that you can bundle with your online content.
Let me give you an example.
You could offer a “Newsjunkies Subscription” that includes:
a. Access to every Newscorp news website from around the world (excluding the wall street journal). From the NYPost to the UK’s Sunday Times, Sun and more.
b. Your choice of any 2 books from our Harpers Collins collection. That’s right. Pick any 2, from our Best Sellers list, or from the special list we have put together specifically for newsjunkies like you. Its your choice if you want them in hardback, paperback or e-book format.
c. A subscription to our news magazine, The Weekly Standard. The choice is yours whether you would like it delivered to your emailbox, printed and mailed to you or both !
d. A $99 credit at a special edition of The Fox Store that we put together exclusively for our News Junkie Subscribers. You can pick from newly released to DVD movies or from our classics. Its up to you !
So to summarize. In addition to Fox websites from around the world, a $ 79 dollar annual value, you get:
2 books from our Harper Collins collection, with a value of up to $79.
a subscription to the Weekly Standard, worth up to $ 64 (in a deal with its new owner)
a special $99 credit at The Fox Store where you can pick from an amazing selection of movies and tv shows.
For a total value of $ 321.
Because our Fox News Junkie Subscribers are critically important to us, we are offering this special package for a limited time only. This amazing package can be yours for the low low price of only…
$ 9.95 per month with a minimum commitment of 15 months !
Add a subscription to the Wall Street Journal Online for $ 5 more per month, or get both the WSJ online and daily delivery to your home for an additional $9.95 per month.
This example should serve to make the point. Its of course stealing a page from the old record and book clubs. Give the subscriber a significant start up value. The hard cost of all the products involved is probably close to $ 100. With some tweaking and limiting of product selection, it can be pushed dramatically lower. The important take away is that you can acquire subscribers for lower marketing costs and probably generate just as much money in margin dollars in the first year as you would selling subscriptions to the NY Post or UK Sunday Times outright.
Of course you could put together movie and tv lovers packages that you use to sell Rotten Tomatoes. You could put together sports lovers packages that you use to sell foxsports.com and other sports related sites.
Once you have the subscriber, the onus is on Fox to keep them happy. It’s really not that hard. This is where you use digital assets with a minimal marginal cost of delivery. You could let movie lovers, as part of their subscription, have a download to own title from a selection that you make available quarterly. You know which titles aren’t making you money on sell through. So why not use them to increase the value of your subscription ? Or given the number of DVD returns that are repackaged and sold at a discount, why not offer them to subscribers first ? “For subscribers only, first crack at our returned DVDs, pick 1 title a month and pay only for shipping and handling. Or if you are really in the mood to watch some great movies, pick any 10 titles for a one time charge of $19.95, plus S&H.
For sports lovers, you could do the same with sports movies. Free Fantasy Sports and other value adds. You could have chats limited to subscribers. Sponsor get togethers with athletes around the country that are limited to subscribers.
Im sure the people at News Corp are a lot more creative than I am.
I don’t know the culture of News Corp. But i can guess with the best of them. At this point, my guess is that everyone who works there is saying. “Yeah, it all sounds great, but you know what the chances of all these divisions working together are ?. They have their own P&L that they are responsible for. They aren’t going to help the internet group sell subscriptions. ” And there in lies the rub.
The challenge to Rupert and company is not whether or not they can charge for their content and make money. That is actually not the hard part. The hard part, as it always is for big, publicly traded conglomerates is to align all of their business units to a common goal. I know they can sell their content if they package it right. I don’t know if they can take care of corporate politics.
And while Im on the topic of Fox/Newscorp, lets jump over to MySpace. Here is my suggestion for MySpace. You have a strong (although appearing to weaken) position in Music. Take a close look at the economics of music and see how you can leverage them to your advantage. In this day and age, it seems like no one makes money from music. In fact, the “pundits” say no one should make money from music. They all should give it away and make their money touring. Well, its not my money, but I think MySpace should spend some money on music. I would take a page from Walmart. Walmart buys exclusives of CDs from artists that fit their target demo (older and still buying CDs). I think they have a deal with Foreigner coming up for their first CD in more than 10 years. They guaranteed them a minimum number of units with no returns (if its like other deals I have read about ). You will only be able to buy the CD from Walmart.
So why wouldn’t MySpace do the same thing with artists that fit their demo ? i don’t know how much money the artists on the Billboard lists will make in a given year from the sale of their music, but they all have a number. I would find out what that number is, and for the artists that match your demo, see if its economically feasible to buy them out for a one time payment and offer their music exclusively on MySpace. Then you can offer a subscription to their music for some number that seems ridiculously low. Say $1.49 per year for all the music the band releases in the year. Since you paid some finite amount (with some probable volume bonuses only if you make money), your mission is to sell enough subscriptions to cover the cost of to the band/label and then some.
At this point, MySpace’s core competency becomes arbitraging its ability to buy and sell music to its user base. The user base thinks they are getting a great deal, and the bands have a source of revenue that they are paid up front. I dont know if it will work, but it is sure worth exploring !
Lot’s of good ideas here, but like usual, locked in a paradigm. The solution is listed here, the proper method is not. It’s actually laughably simple.
Comment by manicmetric -
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It really does Sound like the cable TV model. Dont think the best way to maximize profits is by tiers. Too many options is a recipe for lost profits.
Comment by silksmoov -
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Wow, the news on Myspace’s potential deal for iLike certainly seems to support Marc’s recommendations for the site.
http://chaosoutoforder.wordpress.com/2009/08/17/ilike-deal-signals-myspaces-new-direction/
Comment by mbilinsky -
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Mark,
Znak it! is a company that already offers the type of content monetization solutions Mr. Murdoch and others seem to be looking for. We designed and presented our Znak it! platform back in early 2008, that is, well before the current “media crisis” and against the (false!) theories by Clay Shirky or Chris Anderson that “free” is always better. Since that time, we have been approached by people from HP’s Innovation Program Office and Yahoo who studied our solutions; we also presented Znak it! to many media companies, including Viacom’s VH1/MTV, Forbes, Hearst (its Interactive Media Division), Axel Springer and many others. I can only regret that nobody from News Corporation has ever responded to our calls — but then, Znak it! is not the only company that offers innovative content monetization platforms.
My point is that, contrary to the conventional wisdom, the Internet companies as well as major media, know very well about “the other” option (other than online advertising or long term subscription). The industries should also know that the pay-as-you-surf model is no longer “experimental” nor “risky.” As the latest VSS Forecast confirms (http://www.vss.com/news/index.asp?d_News_ID=183) people already spent more time on content they paid for than the so called “free” or ad-supported content.
So where is the problem? Why only a handful of media companies dare to sell their wast (and mostly idle) inventories of high-quality content directly to the Web users? Well, if it is not the market that seems to be supportive of paid content, nor the lack of appropriate technology and ready solutions like Znak it! for example, then it has to be the leadership of the companies — lots of them came from advertising or dot companies and they seem to believe in the (only seemingly) unchallengeable monopoly of the search engine firms and online advertising agencies.
Perhaps only Murdoch has the power and vision to change that. If so, kudos for Murdoch! Someone has to clean the “cesspool” of misinformation the Internet has become. But why does he need a year to do so? I can bet that the day after News Corp starts charging for its online content, all other media companies will follow the suit. I bet that even Google and its YouTube will find a nice philosophical justification to charge users 10 or 20 cents for each video stream or an ad-free search — as I said, the technology to do this already exists.
But, if Murdoch implements a pay-as-you-surf system tomorrow, then in a year, he might be able to buy Google.
Comment by znakit -
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Mark, this solution works for News Corp’s WSJ. What about other ad supported news sites that have general and vertically targeted content what chance do they have of making money online via ads? Or do they have to find other revenue models.
Comment by iojomlk -
Your cereal analogy…brings up thoughts of anger! Every time I go into Albertsons, I pay with a debit card. I buy the same shit every week. Why doesn’t Albertsons use that for direct marketing? Why dont they send me an email saying…”your fav coffee is on sale this week” or “hey idiot, your milk is bad”…
In addition, “click here to repeat your last order…refrigerated/frozen junk can be picked up at your local Albertsons…and the dry junk will be delvered tomorrow”…
Or…”hey, the peanut butter you bought last week can kill you…bring it back!!!”
Or…”you bought the May issue of SI that had “random superstar” on the cover…click here for special discounts on tickets”…
If Albertsons had half a freaking brain, they could probably predict the sex of my next child with the amount of information they have (or could have) on me….
And HELL YES I would consent to this type of infomation being gathered!! Makes my life simpler…I work 12 hour days and pay for all types of services stuff so I can do what I want on the weekends rather than what I have to do…
Comment by petergalttp -
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A friend just pointed me to this post as I shopped around a business plan very similar to this in around 2002. We called the company Swinging Gate, but ultimately scrapped the idea when online advertising revenue came back and no one wanted hear about subscription models anymore.
The model was the exact same as described above – we proposed to offer premium content subscription “channels” to users. Basically, bundles of subscription based Websites. We had hundreds of sites ready to join in and offer their subscriptions as part of a bundle. This approach is actually very popular in the online adult industry.
The big difference between Swinging Gate and what Mark wrote is that we were putting together a premium consortium of sites – not utilizing an existing portfolio like Mr. Murdoch has. If we had existing content that we wouldn’t have to share revenue with, the model would be a no-brainer.
The model is still valid, in my opinion. We crunched the number back then and they worked. I haven’t re-visited them, but I suspect they still work. I’d be willing to dust off the old business plan if anyone is interested. I might even bootstrap it, if I can get some time from my other businesses. But I suspect that as online advertising revenue stabilizes in the near future, talk of subscription models will subside. And I definitely don’t want to be holding that bag again. I lost a bundle on the idea back in ’03 when we scrapped it.
Comment by tonynwright -
In June I made a prediction that in the future, all online information, if its any good, will cost you money.
I would be interested to know if people agree with my analysis:
Web 4.0, Pay Day
Friday, Jun. 26, 2009
http://davidbrett.blog.ca/2009/06/26/web-4-0-pay-day-6399527/
Comment by dbrett -
Nice
Mark- you should format this in a nice binder and tell them it was written by a team of 24 year old MBAs from a major consulting firm (instead of an ultra successful serial entrepreneur/ investor) and charge $400k for the advice you just gave….. probably more likely to follow it that way also
Comment by brucefenton -
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In theory: why not? But, you have to look at the cost side: acquisition cost, customer churn, customer service and transaction cost. We have done the exercise. We will release the Excel file soon. It does not look so pretty. In addition, advertising finance around 80% of newspapers (more for magazine). If you loose 10% of advertising revenue, how many paid readers do you need to replace it? Any media exec that knows about subscription business knows how difficult and costly it is — FOR YEARS — to get new subscribers. In focusing in paid models, the media industry is focusing on the wrong issue. It is better to focus on how to try to keep advertising and improve the ROI of the advertisers. Better to focus on finding new sources of revenue.
Comment by jeffmignon -
OK Rupert, here’s my two cents (though you arleady have my two cents a couple of thousand times).
I pay for both a hard copy subscription to my WSJ, as well as an online subscription. When I recently bought my Kindle (which I love by the way), I was thrilled to see I could get the WSJ on there as well – until I found out that I’d have to pay a 3rd time for the same content I’ve already bought twice!
If that’s not enough – the PRICE of the content digitally (you’re costs are far lower to send it to my kindle than to print it) was 150% the price of what I paid for the print version!
Now I love my WSJ… almost as much as my CNBC, but I’m sorry – I draw the line on paying for the same content three times. If you take any of Mark’s advice (all good advice BTW), I’d also suggest you implement a PAY ONCE model, whereby if I am a WSJ subscriber, than I’m a WSJ subscriber period. I get my content how, where and when I want it.
You’ll continue to get thousands of “my two cents” every year from me if you, as Mark suggests, keep your subscribers satisfied. You’ll lose me in a heartbeat if you try to gouge me by making me pay 3X for the same content.
R.J. Lewis
http://www.e-HealthcareSolutions.com/blog
Comment by rjlewis68 -
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Industry studies consistently show that about 8% of the population is willing to pay for online content. The analogy to cable tv is a weak one as younger adults are now dropping their cable subscriptions. So if you can live off of the 8%, charge away. I don’t disagree that good content should be rewarded. But on the Internet, there will also be a free source of content that will replace guys like Fox News and keep them from charging.
Comment by ajbaer2 -
These are good ideas but they are still rooted in old world monetization of content.
I wrote a business plan to overcome this in 1994 shortly before my company went public and it’s still valid today.
I’m willing to share if you want to email an NDA.
Comment by manicmetric -
Brilliant post. Question for Mark – If WSJ and others go behind a pay wall Google and others will not be able to crawl them. Will that eventually lower the value of the search engine. Because they will not be able to crawl valuable content?
From MC> Of course there is some number of sites that if they all blocked google, google’s value would diminish. But I dont think its ever going to happen.
Comment by iojomlk -
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Bingo! (and I don’t mean Bing!) what’s needed is a simple user-centric tool that will enable publishers to ask for some kind of payment (traditional or alternative) and let users choose from among “many ways to pay.” That is, what’s needed is PayCheckr.com.
Comment by ahoving -
Sounds like the cable TV model. Bundle the content and make the consumer subscribe in tiers for access.
Comment by masonictraveler -
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The problem faced by news suppliers is that the web, by its nature, unbundles a newspaper or news caste. When we buy a paper, we pay for certain sections we don’t want to get sections we do want. Let’s say a lot of buyers want sports but not business, for example. We sit through traffic reports and the TV headlines waiting for the sports. That’s why sports is at the end!!
Mark, if you are saying no site will be able to charge for sports, you are saying they will not be able to leverage the profit maximizing bundle strategy. That’s bad news for papers.
I concur that the way forward will be a form of “mixed bundling,” where the buyer gets a subscription combined with pay-per-view goodies, like 50% off this or that download.
To make it, news media will have to link their most popular content to other less popular content, to ensure they get eyeballs to the ads on other pages.
Extra comment: people always talk about technology innovation. I think the real innovation in the coming years will be business model innovation. Figuring out how to make money off this stuff is still up for grabs, unless you are Google. They seem to get all the dough.
So nice to see the discussion and collaborative spirit on this topic.
David H Brett
davidbrett.blog.ca
Comment by dbrett -
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With growing social media sites (facebook, MySpace, Twitter) why not bottle up the news generation into its own distribution hub? All of us know the worthlessness of online ads, so why not monetize on the content itself.
By packaging it all into a one stop shop, you create a virtual Disneyland where consumers come in and enjoy the content, share it with other users, and send postcards out to non members saying wish you were here.
For the big conglomerates, why not leverage what you own? As a blogger, sure it’ll suck to not be able to riff off of news feeds, but then why wouldn’t I just make my own $9.99 account an internal blog to the new media fiefdom?
Comment by masonictraveler -
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The Wall Street Journal is to the Wall Street “gambling industry” (which is what stock market activity boils down to) as Fox Sports could be to the sports gambling industry. There is your monetization opportunity Rupert.
Comment by silkwhisper -
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You guys are all of the mark… Its all about the content. Why are news papers dying? Internet? No!… TV news? No!… They are dying because the content sucks!!!
-Give me information and news that I can’t get anywhere else
-Give me investigative reporting that is worthy of the 4th estate label
-Do your damn jobs!!!
All the newspapers, and TV reporters have become captured by whatever entity they are assigned to, be it the government or industry. It is completly discusting. Corruption has been rampant in all level of life. In fact, its endemic to some industries like the financial industry ( we all know that now). Corrupt individual and corrupt practices, are out there in the open. Infact in some cases, these corrupt individuals and practices are reported to the governing agencies like the SEC and the FDA.. Heck sometimes they are even reported to congress.. Gues what nothing is done about it. Where is the 4th estate during all this? Where is the investigative reporting? Where is our supposed wacth dog?
This is why no one wants to pay for news content! There is no news content that is worth paying for!!! They are all reporting what they are told to report, what they are fed… Heck any one can do that…Not worth a dime!!!
Lok at it this way.. Remember 60 minutes 25 years ago.. Hard hitting stories, take no prisoner approach, took on everyone, even the army… Now, for the most part, they are just another celebrity interview show… Gve me a break, you want me to pay for that!!! Go back to the drawing board Mark… You can package this crap anyway, you want, no one will buy it.
best,
The real zino.
Comment by zino0 -
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Newspapers already have a subscription model and that is NOT how they made money in the past. Twenty years ago, prior to the internet, did the Washington Post earn a profit from reader subscriptions? I don’t know the exact figures but I do know that newspapers made most of their money from advertising, classifieds, job ads, etc. How is the internet any different? Am I missing something?
Comment by Brian Baker -
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I don’t disagree with you too often, but I don’t think the media companies have to bundle services to attract subscribers. A Fox News t-shirt may have a “value” of $25 but no one in their right mind would pay $25 for a Fox News t-shirt so it makes the bundle significantly less valuable from the start.
You used the WSJ as an example in your post so it complicates my argument to some degree, but I’m amazed that I don’t have to pay for the WSJ content I receive on my WSJ Reader for Blackberry. I take it because it’s free but I’d gladly pay $5-$10 per month to have access to the content. Where my argument deviates from yours is that my reading the Journal has relatively little to do with my job. I read it because I’m interested in the markets and because I think they’re the best writers for what I’m interested in. I think I might go crazy if I lost my “Opinion” and “Tech” tabs from the WSJ reader so I would gladly hand over my credit card info and let them renew every month for access.
The point I’m trying to make is that the content has to be worth paying for in order for people to pay for it. This is Murdoch’s logic…QUALITY journalism costs money and people are willing to pay for quality. If the NYT tried charging for access to Page 6 the traffic would just flow to TMZ or Perez Hilton’s blog and there wouldn’t be any noticiable difference in quality.
I do, however, agree that paying for the content has to be as easy and painless as possible.
Comment by smithdew -
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Mark,
Great post! Excellent ideas.
When AOL merged with Time Warner the hope was that these kinds of synergies and bundles of products would produce great results. It didn’t work for the reasons you mentioned…corporate politics and separate P&Ls.
Perhaps Rupert can force changes where Steve Case wasn’t able to. Both are really smart guys. But, this isn’t about brains…it is about breaking down walls between divisions and making things happen.
Your ideas also point out the difference between an entrepreneur and a big company CEO. Entrepreneurs don’t know all the reasons why something won’t work, in fact they don’t care to know all those reasons. They just make it happen. Doesn’t matter that it has never been done before. If it had been done before an entrepreneur wouldn’t be interested in doing it.
Big company CEOs and management teams are all about avoiding risk and maximizing profits and efficiencies on existing things. They don’t think outside the box. They can recite in detail all the reasons why your ideas won’t work. They will tell you it has all been tried before…and it didn’t work. And they will be right.
What big company CEOs can’t see is all the reasons some new idea will work…why it must work…why they have no choice but to make it work.
Startups make ideas work because they must…they have no other options. Big companies have lots of choices, and they always pick the least risky, smallest change, with some hope of incremental profit or improvement.
I have no doubt that you could make your ideas work at News Corp if you were the CEO. You would keep trying different combinations and approaches until it worked.
But, only the CEO can break down the walls and change the rules necessary to make it work. Will Rupert do that? I doubt it.
Comment by dondodge -
My suggestion:
To increased news-site value to consumer, why not offer news with exclusive commentary after a story. If consumers find the commentary of a particular writer interesting and of value to them in their understanding or enjoyment etc… of a news story, they might pay to read the commentary.
Comment by nicholaspr -
Mark,
Fully agree that newspapers need to stop generating revenue for aggregators and SE’s. I think if the newspapers could act as a unified force, charging for content might work. I also think that newspapers have alternatives.
My solution would be to implement a Facebook Connect ID (hence, a login firewall). When users login with a FB Connect ID, they are immediately profiled demographically. This would allow advertisers to better target readers and newspapers to serve better ads with higher clickthrough rates.
Eventually, Facebook will take advantage of their growing ad network and advertisers will be able to purchase ads on newspaper sites directly through Facebook (a la Google AdSense). This would allow newspapers to ditch expensive sales teams. Furthermore, since the advertisers would deal directly with FB rather than the newspapers, the newspapers sole obligation would be to the reader, eliminating any conflict of interest.
AdSense generates close to $7BN per year in revenue. A newspaper-FB partnership could generate as much or more.
Comment by anvilmike -
1. News Corp is in a relatively unique position do pull something like this off. Others, not so much. The difference between those who watch/read, say Fox News vs. those that watch CNN is that those who love Fox News get their news from nowhere else. I have co-workers who go home, turn on Fox News and leave it on all night. They read ONLY foxnews.com at work for news updates. Every other news site is “liberal”. And by every, they mean “every”. On the other hand, those who read cnn.com might also visit foxnews, msnbc, nytimes, yahoo.com news sections, etc. One of the reasons Fox News has killed in ratings over the years is by pinning themselves as THE source for right of center news content. If you want left of center you have many options – none of which has a strong enough pull to convince you to pay for their content. Why pay cnn.com a subsciption fee if msnbc is still free? And as Mark points out, the same is true for the WSJ. If that’s what you read, that’s the only place you go for that content. Murdoch is sitting on magnetic content. If it appeals to you, it pulls you in. If not, you wouldn’t have bought that Bill O’Reilly book anyway, so he looses nothing by cutting off the aggregators. If I were Murdoch I’d install someone like Karl Rove as the face of this subscription model and let him preach to the choir. They’ll pay for it.
2. Myspace. Everyone is leaving off the key reason why Myspace needs to focus on music: credibility. They have it. The RIAA has none. Zipppo. Nada. Kids HATE the music industry. Napster took off not because the music was free (though that was huge), but because kids thought the industry was ripping not only the buyer off, but the artists as well. It was a stick it to ’em movement. Enter iTunes, another credibility fountain (at least compared to MS) and kids start buying music again. Myspace is in a position to leverage that buddybuddy relationship into an MP3 distribution store. And they can do it without it appearing to be an actual “store”. As if, back in in my day, my Echo & The Bunnyment poster on my wall wakes up and asks me if I want to buy one of their new singles? Sure! Hell, I know it’s just a canned line that all their fans received. But so what? That’s what Myspace is. Seemingly 1 degree closer to the arist – like a deal between they and you, instead of buying a track from a store.
Comment by tommyzib -
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Mark,
I just recently started reading your blog and this was a great article. Obviously all media companies can’t start charging for their content, however they should take another look at their business models and see if they can in fact re-package their current content in a complementary manner so they can then start charging for it (such as in your various examples).
Comment by kingme384 -
I really like the voice you are bringing to the debate. The issue is experimentation, and while many would like to loudly say that Free is the only solution the only way to figure that out for sure is by experimenting, not wandering cluelessly into the sunset when things aren’t working out. One argument that I think is seriously questionable is the idea that the distribution of all digital content will be permanently uncontrollable. Via political, technical and social means it is likely that control will be re-asserted over time (whether it is a smart business move is besides the point). One way to assure that those efforts won’t be draconian is to hope that content providers do find acceptable revenue solutions, which if they choose include subscription and direct pay.
Comment by Fred H Schlegel -
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I think the problem newspapers face is just more profound than this. Their best target audience isn’t news junkies, actually, it’s the intersection of “news-analysis junkies” and “people who enjoy reading,” which is a very nice but very very thin slice of pie that’s mainly dominated by the Economist.
There’s a tension between being a news junkie and being someone who consumes more than small bits of real-time information and analysis because by the time you’ve finished reading something substantial, its already stale. As a consequence, there’s very little content in most newspapers that’s unique enough to demand a subscription (local news ought to be one). I’m skeptical that “better writers” is enough of a differentiator. I like the notion of bundling, but if the only way you can get people to buy a product is to toss in a bunch of other stuff, I’d be pretty depressed about that product.
Comment by alanmiles1 -
This is the intoduction from a white paper my partner and I wrote call, “MySpace’s Key to Victory – Monetizing the MySpace Independent Music Community.”
MySpace has one thing that no other website has – nearly 100% of all musical artists anywhere on the Internet. It is MySpace’s greatest, but most under served, core asset. By immediately attending to the needs of this community and reinventing its strategy to serve and monetize it, MySpace can utilize a game changing advantage to dominate the Internet music space and create a mega million dollar revenue generating juggernaut.
Building this new music business financial model must become a major focus in the MySpace turnaround strategy. Implementing the steps required to make the necessary changes can be done over a fairly short period of time, using existing technology for the most part, and for a reasonable, easily manageable cost. To accomplish this change, MySpace will have to substantially alter its thinking and its corporate culture, letting go of some of those things that initially made it a great viral success. More importantly, it is essential that MySpace move quickly to consolidate its hold over its existing independent music community and keep them from migrating elsewhere or from no longer believing in and actively using its site.
Initially, MySpace needs to release itself from the tentacles of an old music business gone bad. MySpace needs to open itself up to the numerous cutting edge tools available to monetize artists and implement them within its artist community to build a viable 360 eco system. By aggressively taking the initiative, MySpace can take advantage of a game changing opportunity to reinvent the way the whole world does its music business.
Given that MySpace still has major cache as a big brand and is the only website on the planet that hosts virtually 100% of all musical artists, there is enormous potential for it to develop an all encompassing, scalable, lucrative and sustainable business model around its independent artist community. By controlling its own music business environment and using it to break its own artists into the mainstream, MySpace could easily supplant any need an artist may have for any kind of label involvement. Furthermore, artists will eventually be willing to pay for this opportunity. Ultimately, MySpace could cherry pick from its filtered, rising artists pool, help those it deems most worthy and market them to the world retaining a financial interest in them when they do.
Fans could easily become addicted to this new environment by becoming an active part of a reinvented music discovery process on MySpace. Motivated by power, big contests, and their emotional connection to music, MySpace could take their users’ involvement to a higher level in much the same way as when the millions of viewers of American Idol watch the show and become emotionally vested in its outcome. It is essential to seriously engage the fan population, motivate them to continually participate and monetize them every step of the way.
With all these artists, followed by their true fans, in a controlled environment, MySpace page views in its music community will become much more appealing to advertisers and sponsors. Advertisers will no longer be hesitant to put their marketing dollars into MySpace because of uncontrollable user generated content. They will know exactly who they are targeting, and will be able to sponsor specific artists or groups of artists. Additionally, by creating a viable 360 transaction based model to truly monetize its artists, MySpace will be able to generate income from every aspect of an artist’s career.
MySpace is still an immense social network and a powerhouse brand, which presents significant opportunities for other big brands to sell their products. Everybody who is anybody in the music world has a profile page on MySpace. Currently, the press has MySpace under tremendous scrutiny watching its every move and wondering if it will be able to survive into the future. With all of this attention thrust upon MySpace there is no better time to unveil a serious public relations campaign detailing what the MySpace of the future will look like and how it can become the dominant music focused site on the Internet.
Comment by davidsherbow -
I issued Murdoch with some similar advice here: http://econsultancy.com/blog/4388-murdoch-can-charge-for-content-online-but-can-anyone-else#blog_comment_11547
Comment by malcolmcoles -
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I’m still not clear on how charging for online will work for anyone but specialty, immediate media (i.e. WSJ, MLB, etc.). As long as I can get free news from an assortment of sites — I doubt CNN.com will begin charging anytime soon — there will be no need for any significant number of people to begin paying for news information.
Fine, if it’s the principal of the matter, then feel free to put up a walled, pay-to-enter garden. And watch your traffic, advertising dollars, and import decrease. In the age of free, trying to reverse the trend and asking people to change their behavior and begin ponying up money for something they have been getting gratis, is an exercise of Sisyphusian grandeur.
Comment by gbabitts -
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Agreed. I wrote an article a couple months ago about how the newspapers should form a consortium on how to deal with aggregators: The Counter Argument for Newspapers:
Why newspapers should opt out of Google News or Force Rev Share Agreements
http://www.bgtheory.com/blog/the-counter-argument-for-newspapers-why-newspapers-should-opt-out-of-google-news-or-force-rev-share-agreements/
Comment by ewhisper -
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Mark:
While I generally agree with your sentiments here. I think there are some holes in enabling this to happen and profiting from it.
1) Sites likes Newser beyond profiting from front-ending content, provide free branding and SEO value to sites like Fox and MySpace. Now granted, these sites are big enough to pack their own punch, but if you want this to succeed you better get people on the Bing bandwagon because Google’s PageRank strategy fosters this behavior.
Continually, with the mid and long tail gaining steam and more and more unique lens being put on content (and since media consumption is additive online), you’d be losing money to overall online revenue pie.
and more importantly….
2) Who’s going to be the first one to jump off the pier? Start charging for content and the stitching costs are so low, there will be tons of near terms profits for all the competitors. Beyond the WSJ (and this is subjective), I’m hard pressed to suggest that the NY Post for example would not be immediately replaceable with the likes of OMG for gossip, Yardbarker and Bleacher Report (as well as ESPN.com for content), etc. etc.
Supporting article: http://redeye.firstround.com/2007/03/the_first_penny.html
Comment by matthewsf -
Lessons that could have all been learned simply by observing the porn industry.
Comment by greggersh -
Excellent advice for Myspace, Mark! I think being a music platform is the best business plan for them. They have the audience with the right demographics, and the artists. For now… But they can’t pull it off with the website they have today. So the big question is, do they have the technical capability to support that business plan?
It would take a significant breakthrough, a next generation web application. It would have streaming, download and playback, syncing with devices, all better or at least as good as todays iTunes client/server combo. It would also have to be a great authoring/publication tool for artists to easily create a good looking online presence, perhaps even some actual post-production music features to create special samples and mixes…
In short, they need a site that is as different from today’s Myspace pages as, let’s say, Gmail in 2009 is different from Hotmail of 1999. The ingredients are available and ripe: after years of stagnation, browsers and web languages are in a period of intense innovation. But can Myspace pull them together to create a cool and, as Steve Jobs would say, “insanely great” technology for the new web-based music universe? I doubt it. I just don’t see any evidence whatsoever, at Myspace or anywhere else at News corp, of the level of technical depth required to lead the world into this new — dare I say it? — “web 3.0” music world. Still, you are right IMHO, it’s their best bet and they should at least try rather than wither away.
As for your recommendation for news sites blocking links from aggregators, as other commenters have pointed out, I just don’t think that could work — browser plugins can defeat it. Even if it did work, it would hurt the news sites search engine rankings, and not really hurt the aggregator who could just quote from or reference the article without linking and not lose much.
Thanks for the great post, when it comes to media/internet business, nobody stirs the pot as well as you do.
Comment by nemozen -
I hope they take your advice because my army of independents who have a much cheaper overhead are about to launch interactive transmedia for free. Ad-based but focused on purchase activation anchored, bouyed, and instigated by story architecture.
When a mouse goes through a maze if the cheese is through the door they need to do a trick with or around the corner… they go around the corner.
Comment by dlwillson -
I love the idea of bundling. Newspapers already do it, in fact most european papers offer huge incentives at newstands to pick up their products (free books with the Sunday edition, free CDs, concert tickets, etc.)
Two links I thought fit this topic:
http://whowhatwherewheny.wordpress.com/2009/07/27/the-onions-prediction/
http://whowhatwherewheny.wordpress.com/2009/07/28/more-twitter-stuff/
Comment by Devin -
This is what ESPN.com does similarly with Insider Access. Insider Access is bundled with a subscription to ESPN Mag. If you buy ESPN Insider Access from ESPN.com you also get the ESPN Magazine free. And if you simply subscribe to ESPN Magazine, then you get free ESPN Insider Access. And because these are different prices, it is cheaper, in this case, to subscribe to ESPN Magazine from Amazon.com and then get the free Insider Access.
Comment by therealmavsfan -
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Finally, someone on a blog/media outlet that acknowledges the reality that people are already paying for content.
Comment by dailypatricia -
What I want and WILL pay for is content without advertisements. I signed up for MLB.TV and was loving it until they started sneaking ads in the commercial breaks. I specifically signed up for the package so that I would not have to filter advertisements that are inappropriate for my two sons.
All content providers hear this, when I pay you for content I don’t want the #$@%ing ads. If you need to raise the subscription or have tiered subscription plans then do it but you’re losing out on me as a customer when charge for content and then stuff ads in my face.
And Mark, listen up. I’d be willing to pay a considerable premium for cable service that was ad free as well.
Comment by tbourdon -
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Murdoch improved both the content and the delivery of TV when he entered the market. Sports coverage, for example, has benefited from more live broadcast, more camera angles and more and better pundits. The article makes the point that the media content offered for sale has to be demonstrably worth the cost of purchase. My point was that in a exclusive/monopolistic content situation that scenario is not quite so true.
Comment by harmer1 -
harmer1: But with idea you aren’t really increasing the perceived (or real) value of the news content. You are piggybacking on the perceived value of other products.
I think if you want to have a full fledged technological solution to subscription internet news, you have to make the delivery much better than the competition.
1. Make your website not just be a series of links to articles. This is boring and exactly like every other news site. The google news search term “midair crash” produces 2,482 results. Why would I go to your pay site? Make the site feel like a real newspaper. Make it a totally web2.0 app, that brings in the feel of going through a newspaper page by page.
2. Include with the subscription Amazon Kindle delivery. Create an iPhone and Android app that delivers the content as well.
3. Create a twitter bot that automatically sends twitter @replies to subscribers when there is a breaking story (allow the subscriber to tag topics that might be of interest, to prevent flooding their twitter accounts with unwanted stories).
Something like that might justify a monthly or yearly subscription for a news service.
Comment by mateo2 -
Murdoch did some thing similar to this with TV media world wide (Fox, Sky,Star on the publishing side and Direct TV, Sky TV etc on the delivery side). Can you remember when your limited number of TV channels were free? ABNC, NBC, CBS etc. What would you have said 15/20 years ago if you were told that you would be paying $60 to $120/month for TV? It was not even thinkable then.
the model is as you state: improve the content package (OR THE PERCEIVED CONTENT PACKAGE) bundle it and charge for it. then may be introduce PPV when you can get your hands on exclusive content. It is the PPV content that really gets a customer to accept buying the overall package.
I am a Brit living in the US who wants to watch UK rugby and I pay for it through the nose in the form of both a regular subscription to Setanta sports plus an additional PPV charge when ever the big games I really want to watch ore screened. Why do I do this? because I have two choices: Put up and pay or shut up!
Comment by harmer1 -
http://news.ycombinator.com/item?id=750841
Comment by knightinblue -
Sounds like you’re asking people to pay $150 for two books, a magazine subscription, and a DVD. Pass.
I think the perceived value of news on the internet is too low to really monetize. But it’s also expected; you can’t simply remove it. It would be like going to a restaurant that doesn’t have salt & pepper. So what you have to do is:
1) Reduce costs as much as humanly possible.
2) Use it to channel people towards Newscorp’s profitable products. Use tagging on stories. Have a celebrity gossip story advertise that celebrity’s MySpace page. Have a story on the health care plan advertise a FoxNews special on why public health care is evil, etc.
As for MySpace, I think they simply guessed wrong on what the consumer wanted. They guessed that consumers wanted a homepage that they can easily share with friends. Facebook guessed that consumers wanted an inbox. I don’t know how to fix MySpace, but i don’t think pushing it further into an iTunes alternative is a good idea.
Comment by mateo2 -
Why is this any different from free vs. paid radio? There is a fundamental disconnect in trying to make a business out of something where the product is not scarce.
I have had 3 different opportunities to partake in satellite radio. 3 mos. 6 mos and 1 year respectively. (Both Sirius and XM before they were one.) These time frames corresponded to the free subscriptions that came with my purchase of an Acura, Cheverolet and BMW. When the free period was up, I did not feel the least bit compelled to stay on. Why? Because even the “captive content” (Howard Stern, MLB, etc.) weren’t enough to justify paying a monthly subscription for. Why? Because each one of these cars also had a “free” radio option and an MP3 Player hook up.
There is so much access to free driving entertainment, especially when I can bring my entire music, podcast and audio book library with me that the “special sauce” is just ketchup and mayonnaise. I can make it myself.
The correlation? What Fox News (and the other traditional media) has just isn’t that special. There are currently, and will be many more, alternatives. Sirius/XM has DJ’s and content deals. But look at what’s happening. Bob Dylan has done his last show for satellite calling it “an interesting experiment” and MLB, NFL and NBA all have direct marketing of their product that competes. (I can buy all the audio broadcasts to all the MLB games with an iPhone app that costs 9.99 one time.)
While I do agree that the aggregators bring no value to anyone in the food chain Fox and their brethren haven’t figured out how to get the content they create into the hands of the people that want it better than these companies. So they survive.
What Fox needs to do is rethink the news delivery business and get value for what they are good at. What they do at most of their publications just isn’t that special. Where it is they can monetize through subscriptions. (You’re point is a spot on regarding the WSJ.) But, charging mainstream America for mediocre content is a recipe for disaster. Learn from another business who thought they could charge for something that was ubiquitous. You may get a few people to send you a penny for 15 records. But plan on having all the rest returned to sender.
From MC> Actually, its the other way around. You have to recognize that you dont need to have 100pct penetration of a customer base in order to be profitable. While Sat Radio may not be profitable, the number of subscribers is significant. There are untold examples of people who pay for things that if they would wait, they could get for free. Or if they wanted to do the work, they would get for free. But the point I think you are missing is that the most valuable asset people have is time. People will pay to save time and simplify their lives. Listening on an IPhone that you have to pay huge ATT bills for is not exactly a cost savings.
Comment by roblevin -
I don’t think it’s going to work, Mark, in most cases, because whether it’s the NY Post or the Rochester Democrat and Chronicle, the newspapers (and other media outlets) aren’t producing exclusive news. At least once a day as it is, Drudge either links to an outlet that can’t handle the traffic (the story about all Sweden being afraid of an internet model yesterday is a good example) or puts up one of his “Developing…” links that doesn’t actually link anywhere. People just Google for the story and read it elsewhere.
Imagine that every piece of internet content can be ranked on a 1-10 scale. People may be willing to pay for the “10” version — but only if there’s no free version ranked (let’s say) “6” or above. The WSJ can definitely charge money, because it’s definitely producing “10” content, and no one else is breaking “4” or so — but can the New York Post say that? Can Fox News? Even the NYT wasn’t able to make that argument when they tried their Times Select thing.
Comment by researchrants -
A big problem with your theory is that the aggregators will still use your news anyways, just not link to you.
So they will still use your content, and then you’ll get no benefit.
Of course the source will have a problem with it, but this is exactly what every traditional media outlet does to bloggers now. It is the new media that believes a link is proper attribution, while traditional believes a mention is sufficient.
Comment by bjdraw -
In a down economy, readers have more time than money. The BeneVote service by Twixa is a cashless micropayment system that enables readers to pay for content with “time” rather than money. Learn more at Benevote.com and see a demo at http://blog.twixa.com.
Comment by micropatronage -
Mark,
You recommendation/advice has merit and certainly deserves discussion. The first question that came to mind after reading your post was how the Drudge Report plays into your plan?
Second, would this type of bundled offer eventually include access to other types of NewsCorp content, like television programing or even new studio film releases?
Comment by pmk3 -
Mark, your blog posts over the last year or so have reminded of the old guy who yells at the kids to get off his lawn.
I have been reading your writings for a long time, and I thank you for sharing your wisdom and insight. I really appreciate it, but now I must bid you adieu. I just can’t read your stuff anymore.
I wish you continued success and happiness, and I look forward to your Mavs winning a championship soon.
Comment by dinzer99 -
It worked so well for the New York Times, why not?
From MC> Did you even read the post ? What bundles did the NY Times offer ?
Comment by MrPlow -
Mark, I want to give you the concept InvestCast, it will create instant revenues for all content across the web. I can’t build it, I am not a code writer, but you can, and after reading all of your Blogs, I know how much you hate free, and how much you would love to beat Google. I know you get pitches all the time. I am not looking for money, you can have it. It encompasses everything you are doing. I am a stock speculator, not a code writer…
Comment by apple10lucia -
You’re retarded.
Comment by chanders -
The day after the news providers start blocking aggregators is the day a browser plugin is published to hide or spoof the referring site. I would bet that the next major release of Firefox and Chrome would then incorporate it by default, with IE avoiding it until the loss of market forced them to relent.
Interesting point about WSJ and time sensitive delivery of information. I believe that is the area where broadcast television can still be successful: Breaking news and sporting events. No fun watching a game after it is played – kills the illusion that you can psychically affect the outcome.
Comment by mattnelsen -
Brilliant advice, as usual. Gannett needs to do this, Tribune needs to do this, McClatchy, WashPost Co., ESPN, NBA, MLB, etc., etc.
Content producers must put their wares behind some sort of turnstile, get consumers to buy the product and then give them additional value items. It’s like Bat Day and Bobblehead Night at the ballpark – first sell the tickets, and let a sponsor pay for the promotional item.
When all the news and info producers protect their products, then the aggregators will be left with nothing but scraps/crap.
Comment by kencarpenter -