What business models can newspapers copy to bring in more revenue?

12 August 2009 , , , ,

Courtesy of Rupert Murdoch’s announcement that he wants to start charging for access to online content from News International’s titles, starting with the Sunday Times, the question of charging for online newspaper content or services is very much in the news.

A collection of tabloid newspapers. Photo credit: franckdethier, FlickrAlmost all the discussion, however, has been based on the implicit assumption that the only business model available is “put some content behind a login that requires people to pay”. Up against that is the argument “but lots of other news is available for free, so why would anyone pay?”

Looking round at other successful examples of charging for content, there is quite a wide range of business models, from small variations on the basic “put content behind a pay wall theme” through to radically different approaches.

As I don’t pass my own test for pontificating with confidence on this matter, I’m not making any firm predictions but given the range of business models available it would be surprising if we simply see everyone ending up trying the same approach.

So what are the models?

The existing model

Both the Wall Street Journal and the Financial Times have shown how paywalls can work. It hasn’t worked for some, but is there any reason to believe the current demarcation is set in stone with no scope for future changes? No. The Guardian looks to be thinking about a variant on this where the paid-for content is more like the benefits of club membership than the specialist news approach of the FT.

Update: Malcolm Coles on Econsultancy has a good post on the numbers behind charging models.

The loss making model

Losses aren’t fun and don’t sound good, but … we’re surrounded by industries that repeatedly make large losses. Some survive because people are willing to put money in for the status, fun and other benefits it brings. Some survive because of fundraising from other sources – such as appeals to support public radio in the US. Some survive because the state puts money in. The last may sound implausible, but Alan Rusbridger has floated a version that may be palatable – public funding of a Press Association-style system to ensure that there is minimum factual reporting of local public sector bodies such as councils. That would both reducing the costs for newspapers and allow them to give better local coverage.

The Gmail model

Access is free for everyone, but a small group of heavy users pay for extra services to fit their heavy use (you can pay for extra storage space). Possible newspaper version: you get charged if you want to visit more than a certain number of stories in a time-period.

The Flickr model

Access is free for everyone to this photo-sharing website, but a small group of heavy users pay for extra services to have more data and to sort their data (you can have more sets). Possible newspaper version: you get charged for advanced search and sorting facilities. It is easy to see how this would appeal to business users – who are often willing to pay much more heavily for services than the normal consumer, as we see with train and airline tickets.

The (smart) music industry model

For some in the music industry, songs are now the free taster in order to sell more merchandise and tickets to events. Polly Toynbee being a sell-out at Wembley stadium? Hmm… but could there be more scope for the media to organise events for the public at which their journalists are the star turns? Could the star columnists’ writing end up being tasters for events where they turn up in person?

The radio industry model

In the early days of the US radio industry, radio manufacturers paid for content to be produced because that raised demand for radios. The clearest analogy is with Google: they want lots of good content easily available online because that ends up producing more advertising revenue for them. So why shouldn’t Google pay? It’s hard to see how we could get from here to there, but then looking round at the radio business now, it’s pretty hard to see how that original model could ever have been in place – yet it was.

The DVD industry

It’s littered with boring and bizarre “special extras”, but where done well – such as on the BBC’s range of Doctor Who DVDs – the DVD can add significantly to what is available already through numerous other formats, at lower or no price. Finding out how a story was put together, the trails that turned cold, the extra background details and so forth – perhaps there could be a market for regular “how the news was made” background information, which again might be of particular appeal to the willing to pay business audience?

The format splitters

It’s increasingly common for goods to be free in one format but paid-for in another. Chris Anderson’s new book, Free, does just this. You can listen to it for free or pay for a printed version. A printed version has sufficient benefits that some are willing to pay. News that you can read on your mobile phone – especially if it works when out of signal range – could provide that sort of benefit people are willing to pay for.

The book industry model

Bbook publishers don’t employ lots of staff to write books. Instead, they provide the infrastructure for editing, publishing and promoting books. The actual content production is done by a large army of individuals. There are two particular benefits for the publisher: first, they can pick and choose which content they think is good enough to publish and, second, as many authors have non-monetary motivations for wanting to get published, they can offer lower financial rewards to authors.

The newspaper industry could switch to a similar model. It would be a massive cultural shift, though we’ve already seen some hints of what it might be like with The Guardian’s Comment is Free. Although some Guardian staff write for it, it is in many ways a publishing platform to which others contribute – and as the contributors often have non-monetary motivations for writing, those contributions are frequently either not paid for or only paid relatively modest sums.

And so…

What is common about many of the models for getting people to pay is that only a small proportion of people have to pay in order to support a large number of people who don’t pay. The small proportion of people who pay for Flickr, for example, support a large number of people who don’t. Add in that many consumers of media are businesses who in turn make money from their quick and detailed knowledge of the news and there appears to be plenty of scope for getting some people to pay, by some means.

Update: cross-posted at Liberal Conspiracy.

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2 comments
Thomas Byrne
Thomas Byrne

Very interesting read, although no matter happens I think that if newspapers move to a paid model bloggers will have their chance at mainstream readers.

Goldfarb Andy
Goldfarb Andy

There is a lot of talk recently about which models newspapers should use. The news industry is changing rapidly, and this article and others are creating a lot of discussion about it. Check out www.colby.edu/lovejoy to read the blog. It's quite thought-provoking.

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  1. New business news What business models can newspapers copy to bring in more revenue …: Courte.. http://bit.ly/17Aisq

  2. [...] this year I went through the wide-range of different business models that newspapers could look to copy in order to survive in an age when so much news is found for free [...]

  3. [...] with one of the possible business models for newspapers wanting to charge for online content that I wrote about last year: The Flickr model Access is free for everyone to this photo-sharing website, but a small group of [...]

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