A New World of News

July 3, 2012

The press market has changed massively over the last five years; that much is not news. Press advertising spend fell off a cliff between 2008 and 2009, and between 2007 and 2011 overall, fell by 51%, ahead of the overall market decline of 42%. By 2011, only 34% of adults were reading a newspaper every day, compared with 51% in 2003. Unsurprisingly, the drop-off in daily readership is more pronounced at the younger end of the market.

paywalls

On the flipside, consumption of online media goes from strength to strength. The Irish appetite, once thwarted by broadband availability issues, is (according to ComReg) now the largest in Europe, just ahead of the UK, France, Germany and Spain. Unsurprisingly, the money is following the audience and between 2010 and 2011, Irish online advertising spend grew by an enormous 20%.

With this kind of pressure on newspaper publishers, and the massive migration of audience online, it’s no wonder that print brands are scrambling to find a way to make money from their online offerings. In essence however, there are only two ways they can do this; by selling content and by selling advertising.

Selling advertising is working, if not quite paying all the bills. Selling subscriptions is a little more difficult – how do you persuade people to pay for something that they can not only get elsewhere for free, but that they used to get from you for free? Sounds impossible. But then, Apple somehow persuaded Gen Y-ers who grew up with Napster and other file-sharing tools, to pay for their music, in some cases for the first time ever.

Pricing online content is incredibly complex, as Autosport Magazine discovered when they realised that more people would pay 88p for a single article than 89p for a week’s subscription. When our assumptions about how consumers will rationally behave are undermined like this, it’s very difficult for media owners to know how to sell. Thus far, ‘trial and error’ seems to have been the approach of choice, and finally this may be paying dividends.

At the extreme end is The London Times, which offers no access at all without payment. By contrast, some sites offer a certain amount of content for free, but put their ‘best’ content behind a paywall.  But it’s the ‘metered’ system now seems to be gaining favour – which allows you to see a certain amount of content for free during a particular time period, but will ask for a subscription when that time period elapses.

As online media owners come closer to optimising their revenue generation plans, we’ll continue to watch with interest. Ultimately, how this effects advertisers is still unclear. What is clear is that with continuing growth in demand for online media from both consumers and advertisers, this is one area where a seller’s market prevails.

 

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