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The Slow But Steady March Toward Paid Content

Confucius 02

Confucius 02 (Photo credit: Wikipedia)

Publishers Weekly is reporting that the New York Times will be launching a series of short e-books. This is significant in a lot of ways, not the least being the attention being lavished upon the Times’s partners Byliner and Vook. Now, if you don’t who or what Byliner and Vook are, don’t tell anybody, as your ignorance will mark you indelibly as an Old Media type, and you wouldn’t want that, right?  But now that the Times is playing in this sandbox, you have to pay attention, as the paper’s death throes compel the imagination.

So what’s this all about? One version of the story tells of the new forms that digital media make possible. Once upon a time, in the Print Era, most text-based publications fell into relatively well-defined categories, aka “buckets” or “containers” — the book, the article, the magazine, the newspaper. But with digital media you can do anything you want to do; you can even go “bucketless” and develop your own format. This is all well and good, and if my sense of irony is getting the better of me, it’s because the long road from editorial idea to successful business enterprise is infrequently travelled and often not even anticipated. But as Mao said, or Confucius, or someone, a long journey begins with the first step.

Thus, the Times is experimenting with the medium-form text. It’s a good idea, and I wish them well. But it’s the backdrop that intrigues me most of all, inasmuch as these texts will be sold as content, not supported by advertising. This is a very big item, more important than the switch from print to digital, as it points to the growing interest of traditionally advertising-supported businesses in the entirely different model of paid content. This shift, if it truly can be accomplished, will change everything.

People unfamiliar with how the media industry works, may not know that for many media ventures, the product is not the World Series or episodes of CSI or the news content of the Washington Post. The product is the audience, which is attracted, aggregated, packaged, and then sold.  The customer is the advertiser. Thus, as a regular reader of the New York Times and viewer of Yankee baseball, my attention is being directed to the presentations of Manhattan retail stores, myriad financial services companies, and Ford, Toyota, and Verizon Wireless. Some of these advertisements apparently have worked on me (I bought my wife’s Christmas gift at a New York store, we own a Toyota, etc.). Being the product is not necessarily a bad thing, but it is a different thing from being the customer.

The problem that advertising-supported businesses have when the Internet comes along is that online advertising has so many places to go. The inventory is immense. Thus, a publication in print that earns $1 in advertising revenue goes online and finds it can only earn one-tenth of that. The internet turns dollars into dimes. And this is true for every segment of media, including advertising-supported or subsidized scholarly journals.

What is happening now is that the attempt to build a comparable advertising business online is proving to be fruitless for all but a handful of players, notably Google and Facebook. The now-famous paywall of the Times, and the higher paywall of the Wall Street Journal, is but the first step in the direction toward paid content over advertising. The short- or medium-form works the Times is contemplating are another step. There will be more. Over time the dream of online advertising will fade for content companies, replaced by paid content and content that directly supports transactions (called “advertorials” in the Print Era, but now called “native advertising”). This in turn will morph the nature of the content itself, as it will have a new kind of customer to please. Content — journals, books, newspapers, sporting events — is shaped by the market if faces. We should contemplate this with the emergence of Gold OA, which faces a new market, the author — or the funding agency. What shape will it ultimately take? Only the market knows.

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About Joseph Esposito

I am a management consultant working primarily in the world of digital media, software, and publishing. My clients include both for-profits and not-for-profits. A good deal of my activity concerns research publishing, especially when the matter at issue has to do with the migration to digital services from a print background. Prior to setting up my consulting business, I served as CEO of three companies (Encyclopaedia Britannica, Tribal Voice, and SRI Consulting), all of which I led to successful exits. Typically I work on strategy issues, advising CEOs and Boards of Directors on direction; I also have managed a number of sticky turnarounds. Among other things, I have been the recipient of grants from the Mellon, MacArthur, and Hewlett Foundations, all concerning research into new aspects of publishing.

Discussion

12 thoughts on “The Slow But Steady March Toward Paid Content

  1. Joe, interesting article. The question arises regarding aggregators who provide limited stories for free and an unwilling audience who has become accustomed to getting things for free. The Times is selling short fiction and its advantage is a solid base of subscribers who have given their addresses to the Times.

    When Hegel ended up owning Collier Magazine and the encyclopedia, he quickly realized that the only thing he really had was a subscriber list and defunct encyclopedia. He revised the encyclopedia, hired a sales force and sent them to call upon the subscribers. The Times is basically doing the same.

    The question to me is can media companies like the WSJ and the NYT generate enough cash to support themselves? Newspapers never really relied upon the price of a subscription to support themselves. The subscribers were needed to attract the advertisers.

    Posted by Harvey Kane | Dec 19, 2012, 10:10 am
    • Not unlike the other body who once suggested in jest along the line that they don’t have ‘issues’ in these ‘Times’ but rather whole (the desire to purchase and own whole) ‘subscriptions’ that therefore limit the ‘noise’ in the ‘signal’ ratio such that one is willing to endure to gain access to ‘useful information’.
      A $1 – $35+dollar bill annual (and or micro billing) to cancel the noise of the nasal clarion ‘call to get and spend’ and or be compelled to share private information to – just read the news – of the day via the paper as it is presented in these Times – for the sake of my own and the general public’s; http://en.wikipedia.org/wiki/Signal-to-noise_ratio writ large is a my message to the managers of the media.
      Further subscriptions to delivery customers though micro printing w/ the ad base can and will go on as ‘fish wrap’ if kept around. That product is a vital as well as the web for advertisers as well as readers because of the very real ‘power’ of the fresh printed word of which there is and always will be a place for a daily paper — over coffee in the morning.

      Posted by C.J.Copek | Dec 31, 2012, 5:11 pm
  2. I worked in broadcasting before I moved into scholarly communications. In the 1980s the television networks faced the same business model challenges that print media face now. Some of you will remember the advent of cable TV as a distribution vehicle and how HBO came along and was viewed as the brainchild — extracting payment from the consumer rather than the advertiser. Ad-supported TV continues but with many tweaks to the model (and probably much lower margins).

    Posted by Mary Summerfield | Dec 21, 2012, 2:09 pm
  3. “Word to print” — or the digitzation of print to electronic media– is nothing new. nor is it the “problem.” McGraw Hill, Time, Newsweek were all digitizing since the early 1980s. The issue is how do we get the “audience” to READ or SEE or absorb the content for which the “customers” i.e. advertisers pay? The value of the NY Times or WSJ or Scientific American in print is the audience that seeks an article of interest, but also sees other material alongside it or between it and thus the entire package becomes invaluable. I read my print newspapers cover to cover, but I skim online pages for only what interests me. Guess which version delivers material I NEED but perhaps did not perceive I need? That is the dilemma we have in the digital world. It is the same in education: if we only teach what children are interested in, now do we deliver much needed math skills to those who love literature or literature to those who love physicss? I am coaching a CEO now who grew up in that “demand” world of education. He excelled in physics but was not keen on literature or history…. to his demise once he became CEO. It was fine when he was hired just for his scientific knowledge, but once that passes, as time does do to scientists, engineers, and mathematicians who do not keep up, what do they have to gude them? We read widely to become well versed in history, science, literature, and math. But sometimes there are folks who will not be able to read widely without guidance. How many people actually asked the librarian for help? That is the issue; we have the content. We have not yet discovered the best medium to educate the public.

    Posted by Merja Lehtinen | Dec 26, 2012, 8:55 am
  4. Sorry for the typos on the previous!

    Posted by Merja Lehtinen | Dec 26, 2012, 8:57 am
  5. Interesting that in the academic world, the clear trend in publishing is the exact opposite – among scholarly journals, the traditional subscription-based journal is being replaced by more and more “open publishing” journals, available online for free to any who wish to view or download the research articles contained therein, and apparenlty supported entirely through advertising.

    Posted by Bob Parsons | Dec 27, 2012, 11:23 am
    • I don’t think this is true. The core of the open access to scholarly information is in the author-pays models of companies such as PLOS. Such services are not advertising supported.

      Posted by Joseph Esposito | Dec 27, 2012, 2:03 pm
      • True. And neither were the old paper based scientific journals advertising supported. Digitizing academic content results in a payment shift from reader (library) to author (research funder). I am not sure what can be learned here from the paradigm changes that NYT or WSJ have to undergo.

        Posted by Leo Waaijers | Dec 28, 2012, 6:11 am
    • Maybe the extreme number of competitors will improve the quality of the content.

      Posted by greaternater | Jan 1, 2013, 9:33 am

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