Tag Archives: convergence

Free News and Faster Horses

We are going through a once in a lifetime shift in the media business, an inexorable move away from the economics that sustained ‘Big Media’ for the majority of the 20th century. From Chris Anderson’s Freemium to The New York Times erecting pay walls, the issue of paid content is about as hot as it gets right now. The underlying notion that you give the content to readers and pay for it through advertisers is going away, to be replaced with a plethora of different ideas about how it may (or may not) be possible to monetise content online.

All this in the face of multiple studies that consistently show only a minority of customers say they want to pay for content online:

  • PCUK/Harris Poll (5% of 1,888 UK adults said they would pay if their favourite online newspaper began charging).
  • Gfk (total 18% of UK adults in international survey of 16,800 said they didn’t want to pay for “content”, ie. “news,
  • entertainment and information sites such as Wikipedia”).
  • Continental (total 37% of 500 UK adults said they would pay micropayment, larger fee or monthly/annual sub for online newspaper/mag).
  • Olswang/YouGov (total 19% of 1,013 UK adults and 536 teens said they would make micropayments frequently, a subscription or otherwise pay for news articles online, on mobile or ereaders if there was no free alternative).
  • Oliver and Ohlbaum (“15 to 20% of respondents [survey of 2,600 UK consumers] said they would pay £2 a month for their favourite news website if it was the only one that charged”).
  • Forrester (total 19% of 4,711 US consumers said they would make micropayment, pay a sub or buy a bundled print/web/mobile package for online newspaper).
  • Boston Consulting Group (48% of 5,083 regular internet users in nine countries, including 506 in UK, said they would pay for online news).
  • KPMG (11% of 1,037 people aged 16 and over “currently spend anything on online media” – findings vary for different media types).

Taking all eight studies in to account, the average proportion of consumers who would pay for online content is 21.8%.

While this is interesting, it is pretty well documented that people are poor at understanding what they want. It surprises me therefore that we continue to treat these numbers as if they actually mean something about whether people will pay for content online, or whether there are workable models for paid content.

We need to start looking at these surveys with a healthy dose of scepticism.

While Rupert Murdoch seems to be treated as a sort of mad uncle of the internet currently with his “crazy ideas” to make people pay for content, in reality what he understands is that it is not a case of customers never being prepared to pay, just that they’d rather not. Sky cracked the subscription TV market in the UK with the introduction of Premiership football.

We seem to be treating a mass media meltdown as a certainty, when in fact there are still opportunities for the big players to make their existing models work – with a few tweaks. What if Murdoch included a subscription to The Times with Sky TV packages for an extra £1 per week? Give customers a workable concept and they may just sign up. Ask them to come up with the concept themselves, and they will be lost.

I would suggest checking out Bad Science by Ben Goldacre for further demonstration of how what people say is often miles away from what they actually think, or may think given different options.

A final example, and this is my favourite, that perfectly encapsulates how consumers have difficulty in really getting to grips with what they want, comes from Henry Ford, who created the mass market for automobiles. He was once asked about the importance of the ‘voice of the customer’ in his business. His reply was surprising: “If I’d asked people what they wanted, they’d have said ‘faster horses’.”

There is always opportunity for a person or organisation with strategic vision to come up with an idea that changes the game. Given a different context, people will have hugely different ideas about what they want or need.

In a world of horses, people don’t want cars. They want faster horses.

In a world of free news, people don’t want to pay.

The customer is not always right. Or better put, the customer does not always have the imagination to be right.

Leaked FT strategy document points to the future of online news

Cutting a print edition, appointing dedicated “news integrators” and a properly articulated online news presence are all part of the Financial Times’s “Newsroom 2009” plan, detailed in a leaked strategy document which has found its way online.

The document sets out a new publishing model designed to unite its cross-media processes, and ensure journalists put online at the front end of the editorial chain in every case:

  • Reporters are expected to add links, company data, write headlines and check for length on their stories, plus build on them once online.
  • Editing desks then check everything, link the content to ready-made newspaper subbing templates, before the subs desk finish the cycle and press the publish button.

Further emphasizing online as the place to break news is the decision to replace the third printed edition in London with a later second edition.

This does appear to be a genuine web-first publishing strategy, and a step forward from the FT’s current model which holds back some stories for its print editions.

It’s worth noting that the FT already does the two things digital refuseniks are always insisting will save newspapers: they charge a subscription and they focus on quality content. But the point is that the future of newspapers requires greater change than that.

It’s pleasing to note that the FT is really getting involved in Newsroom 2009 and beyond.

The Future of Media with Martin Sorrell

I caught a very interesting discussion about advertising and the future of media last night on BBC Radio 4’s “The Bottom Line”.

Sir Martin Sorrell shared his views about some key issues in marketing and media from an agency perspective, including the future of advertising, the benefits of scale, and how long the present financial crisis may last.

Also present were the CEOs of Vodafone and Eurostar respectively, both talking about the huge impact of digital marketing and media on their business.

The key take aways were:

1. Agency revenues are increasingly tied to consulting fees, and moving away from commissions.

“What we’re seeing is clients looking for us to harness the talent that we have in more effective and efficient ways. We’re seeing clients asking us to put teams together – for example we have a team Vodafone, a team Unilever, a team Ford or whatever it happens to be – to put together the best talent to deal with the issues in the marketplace.”

2. The rise of online and the decline of traditional media vehicles.

“The average client worldwide is spending 10 or 12% of his or her budget on internet. You and I spend, according to the statistics, 20% of our time online, so the weighting should at least be 20%. By the time we get to 20%, you and I will probably be spending a third of our time online.”

The balance has shifted. So TV, instead of being a third in a normal market or worldwide, probably will go to about 15 to 20%. Newspaper and press will go to 20 to 25% with internet, mobile, video content making up the balance.

3. Customer insight is increasingly becoming a viable revenue stream

“For us, there have been three engines. One is the new markets which are now 27% of our business; second is new media or digital, which is now 25% of our business; and third is consumer insight, which we think is becoming more and more important.”

All parties were fairly bullish about digital, and the structural changes occurring in media, feeling that even as existing revenue models collapse from both an agency and publisher perspective, new ones are forming to take their place.

In many cases this has meant a greater engagement with online, although the impact of new media is being felt as much by website owners and digital agencies as by owners of traditional media vehicles.

Link to listen again and transcript.

Online Video news views surge 600%

Interesting to see online video news views on YouTube increasing by 600% in 2008 according to some reports.

This is significant for a couple of reasons:

  1. Online video is beginning to mature. As users increasingly turn to online news sites for their “print” news, a similar revolution appears to be gathering momentum in “tv” news.
  2. YouTube is moving beyond being an online aggregator of entertainment clips, and into the serious business of competing with more established broadcasting brands. Although much of the video news in question on YouTube is provided by established broadcast brands (i.e. the BBC YouTube channel), so there is a certain circularity here.

The most important take away is that online video is gaining authority.

One of the side effects of this is that online video advertising revenue will increase, as premium brands begin to see the relevance of online TV.

Crucial for companies such as the struggling ITV, but more significantly an interesting step on the path to online video convergence and a viable business model.

UPDATE

Beet.tv has an interesting post on how news videos displayed on YouTube have been organized to be timely and relevant to the news of the day through the integration of Google News into YouTube News.