FIPP 2009: …And What They Couldn’t Agree On, Namely Charging For Online Content

The crux of the conference was sustainable online revenue, but it took until the final panel for someone to articulate the uncomfortable truth: “It’s not profitable… we try to hide it but it’s true”, said Torsten Klein of Gruner+Jahr International, who have only 5% of their overall revenue from online. And how to solve this problem proved to be the most widely disputed topic of the conference.

Roberto Civita’s frank summing up – “we have to end up charging for content” – echoed the voice in everyone’s head that people have been up until now trying to smother with a combination of faith in advertising, belief that free content translates into physical sales, and letting their internal monologue play “LA LA LA” at full volume. But now online advertising is clearly not sustainable, it’s time for charging online.

Rob Grimshaw, managing director of FT.com (pictured below), said their paid model, with 20 free articles a month for registered users and subscription thereafter, “is working great for us”, with their 109,000 subscribers generating “millions and millions” of pounds. I caught up with him after his panel, and put it to him that while this was true, the FT was in a unique position given its content and affluent subscriber base.

“We have some natural advantages for sure, I think the brand and the content is universally acknowledged to be quality, so that helps us a lot, but I don’t think there’s anything to say that such models can’t work elsewhere”, he said. “I suspect that one of the biggest factors will be other publishers, particularly in the consumer space, will have to think a lot harder about, is making subscription or content payment very quick and easy. Here I’m really thinking about iTunes-style, Amazon-style quick and easy, and it’s not easy to do that, to get that one touch, instant payment – so easy almost that you don’t even think you’re paying. That takes a lot of hard work on the back end, and technology investment to do it.”

He suggested than rather than it being toughest for consumer titles to monetise online, it was going to be worse for traditional news sources. “You don’t need 100 versions of one newswire story, and what publishers have done is taken a model that works in the print world, taken it online, and it just doesn’t stack up. We’re just going to need less outlets, there has to be some sort of big consolidation for that part of the market to start working properly.

“I think a lot of publishers are going to have to go through the painful process of persuading people to pay for something that was previously free, and that is not going to be something that’s a great deal of fun. But most magazines occupy fairly defined niches, and often they’re the only magazine in that niche. Well, what are you waiting for guys? The consumers doesn’t have anywhere else to go!

“There will be some sites that make it work just with advertising and there will be some sectors where it’s so competitive that that’s the only way to approach it. But for most consumer magazine markets, they’re fairly niche, they’re fairly concentrated. They can make it work, they’ve just got to take the plunge. But they’ll have to get used to the idea than rather than having 3 million unique users, they’re going to have 40,000 subscribers. But they’ll probably be making more money.”

He mooted “some kind of payment platform that the industry would use so people can buy individual articles or access to content over a period, but takes care of the back end of the billing, the issues involved in doing micropayments.” When I spoke to Christie Hefner, former head of Playboy, she expressed support for Steve Brill’s plan to build exactly that. “I’m not as pessimistic as some may about what Steve Brill is attempting, that if we could make the payment process simpler, and micropayments really easy, the possibility is that more content providers would become a part of that consortium. And consumers would get used to the idea that after a certain level of content, they would have to pay.”

But others aren’t so sure. James Spanfeller, president and CEO of Forbes, said of charging for online content: “I don’t know if we’re going to get that pony back in the barn”. This is the worry that as consumers have had free content for so long, it’s going to be difficult to start bringing in payment. Continuing the doom-laden equine metaphors was Stevie Spring, CEO of Future Publishing, who I chatted to at the Saatchi Gallery afterparty over a steady stream of pineapple canapes. “Frankly it feels like the horse has bolted”, she said. 

“The UK is a buyers market, because when you start with quality premium content delivered from major sources with no profit criteria, like the BBC, like the Scott Trust, it makes it incredibly difficult for any content provider to charge for content.” This is something that, in a case of the pot calling the kettle black, Carolyn McCall of the Guardian had noted earlier: “If you have the BBC, it is very difficult to charge for content”. (She also hinted that Media Guardian would start charging, much to the surprise of Media Guardian writer Stephen Brook, who told the final panel that he had no idea about any such plans).

So will people always choose the free options? “As long as there’s a choice, and as long as there’s a belief that that content is substituteable”, Stevie says. “It’s all very well saying I have a food magazine and my recipes are trusted – you cannot tell me that you’re going to go to bbc.co.uk and you don’t trust the BBC’s recipes, or you go to Top Gear and don’t trust that. There is an absolute trust there.

“You have to be able to offer something that is literally not available anywhere else. When most people are talking about charging online, they’re invariably talking about business to business, the ‘must have on my desk’ information. There’s really very little consumer information that would fall into that category.”

For every steadfast print evangelist at the conference, like Conde’s Jonathan Newhouse or BBC Worldwide’s John Smith, there was another voice of reason like Maurice Levy: “Who can expect the youth to ditch their iPods and move back to print?” There were constant reiterations of Stevie’s assertion that online content must be unique, high quality and high value, and as Rob Grimshaw says: “You don’t just have to offer content online, you can offer tools, services, things which will enhance the user’s experience on the web, and when you’re adding those on the site you can try charging for those rather than the content.” It was slightly depressing that the only person to look at e-commerce at any length was Matt Brittin, UK MD of Google, who amid his hawking of Google products suggested that Amazon-like recommendation engines are a no-brainer for publishers to set up on their sites. This is the kind of thing that needs to be done – it’s time for the big consumer titles to stop mucking around with Twitter, and start thinking of ways to properly monetise their online space.

Posted by Ben Beaumont-Thomas in Creative Economy | May 8, 2009 10:46AM |