The return of paid information
By Juan Antonio Sacaluga, 7th May 2009
In the last few weeks there has been a flurry of articles and analyses regarding the viability of once again charging for information on the Internet as a means of compensation for the press editors in view of the crisis. Understand why the free party is over.
(Madrid) ARE THE DAYS OF FREE NEWS on the Internet numbered? It looks like it. As with so many other things, the United States will set the trend. And that which has reached our shores from the other side of the Atlantic is reason to believe that the crisis overwhelming the written press has sparked a search by the owners of the conventional media for desperate alternatives.
“There is a feeling in the air that finding a solution to the problem instead of alleviating it could only serve to accentuate it”
Some titans have already shown their hands, including the biggest of them all, the icon of the current media-driven capitalism: Rupert Murdoch. The managing director of News Corporation and the owner of Fox and Sky Televison made a serious effort to purchase the Wall Street Journal from the family that had owned it for decades. The operation was practically considered a personal whim of the Australian tycoon, who was excited by the resistance to sell that was exhibited by the former owners during the negotiations to acquire New York’s emblematic newspaper.
THE PARTY’S OVER
Murdoch’s first promise was to make the newspaper available for free on the Internet. Now he has become the pioneer of paid press, following the television model. He announced this a month ago, during a cable provider convention in the United States.
In the last few weeks there has been a flurry of articles and analyses regarding the viability of this initiative as a means of compensation for the press editors in view of the crisis.
There is a feeling in the air that finding a solution to the problem instead of alleviating it could only serve to accentuate it, simply because it is feared that web surfers have become accustomed to not being asked for money in order to get their news online.
“The strategy suffers from undeniable weak points. In fact, when newspapers first made the jump to the Internet, the service was not free”
In reality, this blanket statement is not entirely correct. Some newspapers charge their readers and others do not, or some of their features are free and others are not. But what is now being proposed is charging FOR EVERYTHING. The party’s over.
Those in charge of designing the unpleasant conversion are employing arguments and strategies that have had certain success in similar situations in other sectors of the consumer market. It’s all related to the principle of conferring an added value to the product, which would be a great stimulus for the potential consumer to pay for it. Here is the most successful example of this principle being applied to the Internet’s closest industry: At one time, television programs were not interrupted by commercials.
“As such, newspaper owners have a double challenge: they must prevail over this crisis and the sagging advertisement market and overcome the culture of free Internet use”
The strategy suffers from undeniable weak points. In fact, when newspapers first made the jump to the Internet, the service was not free, but since the strategy did not attract clients they decided to make their content available for free and resorted to advertising to finance the cost.
Later on, some of the big American newspapers once again tried to get their clients to pay directly for their services, but the venture was met with very little success. Advertisers were scared by the audience’s weakness, and the owners of the web portals were forced to rectify the situation.
THE CONDITIONS OF THE FREE SERVICE
However, some analysts believe that the error did not necessarily lie in the paid strategy itself, but in the conditions under which the services were offered. In other words, in order to attract those readers who are willing to pay, on one hand, they must be offered something supplementary to the paid product itself and, on the other hand, they must be guaranteed that the content that they would be paying for is much better than that which could be obtained for free.
“The drop in profits obtained from the sale of advertisements has been unusually quick and sharp”
There is not much room to work with when it comes to ensuring the viability of the paid press, and this demonstrates the importance of hitting upon the right strategy. And of doing it quickly, because the crisis is continuing to destroy opportunities.
As such, newspaper owners have a double challenge: they must prevail over this crisis and the sagging advertisement market and overcome the culture of free Internet use.
THE FALL OF ONLINE ADVERTISING
The drop in profits obtained from the sale of advertisements has been unusually quick and sharp.
If during the present decade the increase in advertising revenue has fluctuated between 25 and 30 percent annually, across the board it fell to 10 percent in 2008, and to 3.5 percent for television. But in the United States, newspapers were hit the worst: advertising revenue from their online editions actually fell 1.8 percent in 2008.
Proponents of the paid strategy cite some successful examples: those of the Wall Street Journal itself and the Financial Times. Both, curiously enough, are newspapers that specialize in financial content, which means that their readers have a high purchasing power.
“Proponents of the paid strategy cite some successful examples: those of the Wall Street Journal itself and the Financial Times”
These papers - and other forms of media - offer very attractive additional products for segments chosen by press readers. They argue that it is necessary to think of them, and not of the general market, which is rather depressed and saturated by the offer.
This favorable vision contrasts with the scant success of some exclusively online news experiments that have recently launched in the United States.
THE PILLAR OF INFORMATION
Just barely a few months ago, the Hearst Corporation decided to stop publishing the daily Seattle Post-Intelligencer as a result of its losses, but to continue with its online edition (www.seattlepi.com), with a tiny fraction of its staff. Around the same time, employees of another extinct newspaper, Denver’s Rocky Mountain News, made an effort to revive it on the Web (www.indenvertimes.com). Neither experiment has gelled just yet.
“If the traditional press encounters more difficulty remaining in business with each passing day, and the online press does not manage to consolidate a sustainable space of their own, we will have to ask ourselves what must be done”
If the traditional press encounters more difficulty remaining in business with each passing day, and the online press does not manage to consolidate a sustainable space of their own, we will have to ask ourselves what must be done in order to ensure that one of the pillars of citizenship education does not disappear. Whether it has a price or not.