Ever wondered what the whole fuss with paying for content online is about? Well here we go, as I’m writing my column for next month’s businessman.pl, I gathered some research here, so you can inform yourself. For free ;)
Rupert Murdoch fancies himself a bit of a visionary. In 2005 he claimed that online news will in the future live entirely off of advertising. Now he revealed the plan to make the consumer pay for online access to his newspapers, like The Sun, and seems pretty positive other publishers will follow suit. But had he been right with his first prophecy, he wouldn’t be making the second one.
The debate on this – or mainly on whether consumers will indeed pay for online news in the culture of internet’s something for nothing – has been heated in the industry. The reason is simple – investments in advertising in all of the ‘old’ media is shrinking, with only Internet’s still growing (and that growth has in UK slipped below double figures last year). That has obviously to do with general economic crisis, investments in most industries are getting rather humble, as there is not much money (of real value) to go around. Except in entertainment, which seems to be doing pretty well (check out the prices for footballers in Premiere League this summer, if you don’t believe). By the looks of it Internet hasn’t yet killed neither filmmakers nor musicians. But news are scarcely entertaining, lay-offs in media are massive and the general panic amongst journalists and publishers is growing.
The problem here seems to be also that for all the talk about new media so far the old measurements have been applied to it – which lead into the dark corner. The massive audience of online news turned out not to generate as much profit from advertising as expected. Yes, one can have hundreds of thousands of unique users visit newspaper’s website per day and look at the online ads. This is what the advertisers paid for. Some of the users might even click on the ad – that has been even more valuable. But how many of them actually buy the product? This is the real measurement, because in the end no matter how many people see the ad, if they don’t buy the product there will be no profit to invest in further advertising. Oooops.
There also is the old argument of creating brand recognition – in the longer run, the more we see the ad for certain washing up liquid (car, tv, cereal) the more the brand gets carved into our brains and finally, once we are in the super-marked faced with the choice between 20 brands, we will more than likely go for the one we somewhat recognize. Or will we?
The generation of new consumers, like myself in their 20s and 30s, especially the part that is active on-line might be getting their brand loyalty from somewhere completely else. I don’t care for the brand of my washing up liquid. I’ll buy according to the price or the design of the packaging (seriously, think about the latter point next time you buy every day stuff you don’t care much about). Once I have kids I might start caring about what brand of yogurts I buy for them, but if I’ll use Internet to inform my choice I’ll rather go on some sort of mum-forum and ask other more experienced mums, than relay on google ads. And to convince a bunch of mums you need much better strategy than to show them something when they read their everyday portion of news. So no, Rupert, you won’t live from advertising online (or maybe you will, but not the journalists at the end of your food-chain). In this sense it is a more general crisis of traditional advertising – this is not the 50s and it’s not Madmen. Media’s problem is that it lived and planned to live of off this advertising, practically imposing the old ads onto new media, for ever.
There is a whole industry that needs to be fed of these shrinking profits. The only realistic solution to this so far seems to be imposition of the so-called paywall. There are few models of these already in practice (subscription, payments for access to premium content, pay-per-view for materials, paid access to archives), that sometimes do work. The burning question is, however – will it sustain the entire army of media professionals?
Stay tuned for part 2 this weekend.
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Comments ( 2 )
I like your point about trying to force the old advertising model onto the Internet. It’s very true of a lot of things. My particular soapbox subject is the music industry, as you know. They are still trying to impose their 1930′s practices on the net by law, rather than adapting and changing their model. I don’t know how this will change until a lot of the people running those corporations (some of them actually from the 1930s) die off. It sounds harsh to put it in those terms, but it’s the truth. A lot of people will have to die before our generation make it to the boardroom. By that time we might well be fighting something else we don’t understand that’s new. Who knows.
p.s The mum-forum sounds like a good idea, I wonder if Rupert has started this yet? :D
Dan added these pithy words on
Aug 14 09 at
12:18 pm
oh i’m sure Rupert will soon be on it. as i hope his cash cow the sun goes to hell where it belongs ;)
ana added these pithy words on
Aug 15 09 at
8:10 pm