BEARNE ON MEDIA
Times paywall makes a lot of sense to me
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It seems silly that people keep banging on that The Times will see a dramatic fall in online readers when it brings in its paywall in June. Of course it will.
But with online advertising in its current form not bringing in significant revenues, why can’t we champion News International for being so brave?
I’m not expecting every single publisher to follow suit, and of course News International needs to offer a slicker and worthwhile experience for the money, in terms of usability and content. But this model has been thought through for months by commercial chief Katie Vanneck’s customer direct division. This isn’t a spur of the moment, ill-thought-out decision. There’s intelligent rationale behind it.
First, News International is well aware the bulk of users will depart. But actually, who cares? With an increasing number of publishers talking about how people who dip in and out of a site are becoming less valuable to them, perhaps this decision is on cue.
The remaining users who love the brand – perhaps up to 5% of Times Online traffic – will become its bread and butter. Remember, newspapers don’t gather the millions of people in circulation their online operatoins boast but they attract a regular, loyal readership.
So this loyal online userbase will be worth a substantial amount. They’ll have provided more personal details which can be used to target them with more relevant ads and offers.
And the site will still get some extra traffic from the free-to-access home page.
I think News International spot on with its pricing model too. Currently 20m unique users access Times Online. Even if this drops to 100,000 subscribers paying £2 a week, that’s revenue of £10.4m a year, excluding advertising.
However, I would have preferred a similar model to The Financial Times, which teases users to sign up by allowing free access to a small number of articles a month.
This is a space we’ll all be watching with interest. If such a model turns out to be a success for News International, it could have a domino effect on its rivals.
Readers' comments (5)
Mark Bishop - Mark Bishop Associates LLP | Tue, 30 Mar 2010 3:09 pm
I applaud News International for taking this step, because it will enable other publishers to watch and learn without having to take the (potentially commercially suicidal) decision themselves.
If five percent of users did indeed subscribe, resulting in annual revenue of £10.4m, this would be barely more than half the £18m pa my analysis indicates that the site currently generates from advertising. And, of course, a more typical conversion rate would be two percent, not five.
Granted, you say NI could generate advertising revenue in addition to subscription income, but with so little traffic it won't be significant. And while there's good money in affiliates, sponsored emails etc, you've got to have users in order to tempt them to provide their details so they can be monetised in this way. And NI is about to drive away 98 percent of them...
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Darren Davidson | Tue, 30 Mar 2010 5:55 pm
I've been an avid reader of Times Online and sun.co.uk for years and I'm prepared to pay for them. I can't see myself getting by without them for current affairs, biz news, entertainment news and sport, but the sub model sounds like a frequent hassle. A monthly sub similar to the one I pay for the Sky Mobile app on my iPhone is a better solution i think. However, avoiding paying by the day or weekly when i want to visit everyday might encourage me to pay for a print sub which offers online access bundled in. They'll surely lose millions of passive online users who offer no great value to advertisers but they might see a rise in subs to the actual newspaper. Maybe that's one of their aims with introduction of the new online sub model.
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Jack Wallington | Tue, 30 Mar 2010 6:32 pm
Darren - I'd imagine (and hope) that there is a rolling or annual subscription option too. I don't want to pay every week either.
Mark - you raise really good points, but I have a lot of confidence that this move will actually improve advertising revenues because it will a) make the audience more loyal b) content will have to remain high quality to retain loyalty c) more audience demographic data will be available through the subscription. All of this ads up to premium content that advertisers will want to associate themselves with.
I've had a number of senior buyers already say to me they'd rather buy premium advertising space to reach this targeted audience. Buying against multiple targeted audiences gives you reach without waste.
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Mark | Tue, 30 Mar 2010 6:56 pm
How funny that NMA should believe the NI paywall makes a lot of sense, considering they have recently adopted such a similar policy themselves.
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Christopher Peat | Mon, 26 Jul 2010 7:23 pm
I think that the numbers will fluctuate and the real importance here is the business model that the times have chosen to adopt in these trying times. Promotion may work but there will certainly be some hard lessons to learn, and The Times will be the first mover in this market, with stiff competition from the BBC.
It is certainly a great subject for debate:
http://www.binarydesigner.co.uk/2010/07/do-we-agree-in-online-paywalls/
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