The evolution for online news

The search for a sustainable business model for online news sites was once a stark proposition: offer free, ad-supported content or die. But with the cost of content becoming dramatically cheaper - and in many cases free, if user-generated - and digital marketing becoming increasingly sophisticated, the decision facing media owners to either make the consumer pay or to give free content has become an easier one to make.

Owners are making more money than ever before and they are increasingly clever about how they generate the revenues. The business model has changed, with the media owners prepared to take a little revenue from a lot of people. Devotees of the paid-content format have largely shifted their models to a hybrid style that derives its greatest share of revenue from advertising. Content hidden behind the pay wall is now the icing on the cake because the consumer must have free content. No consumers equals no traffic, and nothing screams out no advertising revenues quite so loudly as tiny page views.
The exact revenues are in most cases jealously guarded, but it is clear the online properties of the big-name broadcasters and newspapers are increasingly becoming profitable.

The Guardian website, for example, turned the corner in 2006, recording a £1 million (US$1.7 million) profit. Meanwhile, media mogul Rupert Murdoch recently said he planned to ramp-up The Wall Street Journal online subscription revenue by US$300 million a year. The recently revamped web site draws about $80 million a year in subscriptions and Murdoch is hopeful it could soon generate $100 million a year in ad revenue.

Media planner Radhikarani Sengupta, regional director for interaction at MEC, argues that the advantage for news is that it is easily commoditised.
“In the online space, the way users tend to access news is different from the TV or newspaper,” she says. “Users who need regular and constant updates tend to use RSS feed readers and daily e-mailers from multiple sources. For such users, news is very much a commodity as their need is to stay updated.”
The job then for media owners is to package their online content and differentiate it from their regular offering. Advertisers demand more innovation from online advertising, so unique slots are ideal, says Sengupta.

Last month’s overhaul of Time Warner’s Time.com website includes new advertising spaces and custom placement for a price. Meanwhile, the sales staff at Forbes.com are so confident of their pulling power they offer marketers a money-back guarantee if key criteria such as awareness are not met.

In TV news, the power of the BBC brand means the BBC World News website can continue to offer free content, supported by ad revenue from over 300 different clients. “As a broadcaster steeped in public service history, making information available as widely as possible is part of the BBC Global News divisions’ core objectives,” says Colin Lawrence, vice-president of advertising sales.

“The reach numbers, combined with our scale of usage makes a compelling and competitive advertising proposition, so we were comfortable that in the news arena, we would succeed with being ad supported.”

A tradition of news gathering and reportage works in a site’s favour but so too does fresh content, and, increasingly, user-generated content.
“Our ambition is to continue to do what we do well, but seek to enable localisation, personalisation, and where possible interaction, participation and sharing of content,” says Sian Kevill, the editorial director of BBC World News. “In June, we launched our embedded video product, which offers users a tele-visual experience via the web.”

CNN.com also takes the free content model but adds a twist - some value-added services cost the end user, in this case a rich-media mobile news service.
Nick Wrenn, vice-president of CNN International Digital Services, says striking licencing deals with telcos for exclusive content rights has boosted revenues and brought profit to the network’s digital properties. For advertisers, that means double and triple plays.

“It used to be that it was seen as a bit of an add-on, but advertisers these days not only expect digital content, they demand it,” he says.
Consumers still want breaking news from CNN but they are also engaging with the brand by following journalist’s blogs, giving instant feedback and watching unique content online - an aspect of the service that Wrenn says is “very, very important”.

For the additional man-hours needed to provide the service, the pleasing spin-off is the creation of new properties that CNN says attract a mobile, professional, international audience.

The channel’s Business 360 blog and US anchor Jonathan Mann’s coverage of the American presidential campaign attracted record high hits for the year, with the numbers of comments posted also increasing sharply. Unique content, video, mobile and blogs are the cornerstones of CNN International’s drive to increase revenues this year.

The decision to hide content behind pay walls is divisive. While it may help the bottom line, it frustrates fickle online consumers and does nothing for the Internet’s high and mighty aim of being a free repository of information. The homogenisation of news means the content is more or less the same and users will cancel a subscription if they are not getting value.

The FT.com and wsj.com have both relaxed their subscription-only policy in favour of hybrid set-ups that give consumers access to some free content while hiding premium niche content behind the pay wall.

Of the big players in online news, perhaps only The Wall Street Journal remains the strongest adherent to a paid content model. Olivier Legrand, the Hong Kong-based general manager, Asia, at The Wall Street Journal Digital Network, makes the argument that more than 1.1 million subscribers worldwide cannot be wrong.

“We are not making very much money but we are making money,” he says. “It has been a successful model and we have 1.1 million people subscribed. When you get to that level you would say that it has been a success.”

FT.com




Once tucked away behind a pay wall, FT.com has gown into a strong and profitable website since switching to a hybrid model - code-named Mockingbird. By hiding content away, the online property of the newspaper capped its ability to attract readers and attract advertisers, says the FT’s regional online director Asia-Pacific, Hiroko Hoshino.

“Our previous model was free content versus paid content where paid mostly referred to our best content,” she says. “As a result, we missed out on traffic for our best content and put a lid on advertising revenues. The new model, which we introduced in autumn 2007, is a perpetual subscription conversion funnel that catches everyone who comes to the site and converts some free readers to subscribers.”

Registered users are growing at more than 13,000 a week, with page views up 70 per cent, year-on-year, she says. Hoshino is at pains to stress that the newer hybrid model does not signal the abandonment of a paid-content model. “This third way fits all purposes, from light users who are happy with less engagement with the site, to our core users who would pay to get unlimited access to our content,” she says.

But creating a ‘have’ and a ‘have-not’ means the brand is forced into offering more to all consumers. A premium subscription includes access to the Lex column and email updates. Additionally, subscribers have mobile access rolled into the package.

Since the relaunch last October, The FT says traffic by known users has “dramatically increased”. Better tracking and regular visits means the company can sell targeted advertising and charge at least “10 per cent premium on run of site rates”

“Videos have become increasingly popular with both readers and advertisers and our editorial team now produces at least 60 to 70 videos a week,” says Hoshino.