For a while now, the consensus has been that the way to monetize content on the web was through garnering attention. Scott Karp declared the web to be a “link-driven attention economy,” and Kent has addressed the subject several times, notably here and here. Newspapers like the New York Times bought in, and abandoned their subscription-based access plans, assuming that the greater level of openness would bring greater levels of attention and generate greater levels of income.
Unfortunately, things haven’t worked out that way so far. For a variety of reasons, the NY Times, like many other newspapers, is in dire financial straits. Rupert Murdoch has recently led the charge for a return to subscription-based access, declaring,
“Quality journalism is not cheap and an industry that gives away its content is simply cannibalizing its ability to produce good reporting. . . . We can be platform-neutral but never free.”
This announcement (along with the AP’s increasingly bizarre strategies), has generated the response you’d expect from the blogosphere — Murdoch is a dinosaur guilty of trying to maintain an outdated business model, and he’s dooming his publications to irrelevance:
If you put a price – any price – on an article in the Wall Street Journal, people will not be able to share it. Sites like Mashable won’t be able to link to it. Digg, Twitter, StumbleUpon . . . any content behind a paywall will receive zero traffic from all these social sites.
And that fact alone is enough for the entire system to fail, because the benefit of receiving money from a small portion of the readers will be outweighed by the fact that fewer people will see the content . . .
But what good is all that traffic when it doesn’t bring in any revenue? Despite the sound and fury coming from the usual echo-chamber spokesmen, no one seems to have any real suggestion for how all that attention is supposed to result in profits. The promised ad money from those linked attention-payers hasn’t materialized. Chris Anderson openly admits as much:
SPIEGEL: But where’s the Web-based business model for it?
Anderson: We’re still figuring that out.
The idea of running a publishing house on hopes and dreams until a new business model emerges is proving problematic for many, and some are looking beyond the current era of free content with no monetization.
Tim Luckhurst, professor of journalism at Kent University . . . argued that what Murdoch is “very clever,” and . . . “he has realised that 1,000 users paying to read your title online are worth more than 5m doing it for nothing.”
Luckhurst said: “The simple reality is that it’s a myth that content is given value by links… The link economy is an old-fashioned model…a smaller group of online readers dedicated to their newspaper sites of choice was more beneficial than promiscuous surfers.”
But that still leaves the tricky transition of getting people to pay for something that they’re used to getting for free, which is going to be an enormous hurdle Murdoch must clear if he’s going to succeed.
Mark Cuban recently wrote an open letter to Rupert Murdoch, with some intriguing suggestions of how to pull it off. First, Cuban takes a detailed look at the actual economics of linking, using traffic from a big aggregator like Newser.com to see what it adds to the bottom line. His conclusion is that the common wisdom has it backwards, and that the aggregators need the news sites much more than the news sites need aggregators providing links:
According to Quantcast he gets about 24k unique users every day. If 1 pct of those users went to a Fox site, say the NY Post, and each looked at 5 pages, that would be a total gain of 1.2k Page Views. If you were able to sell 100 pct of those at $15 CPM, which you can’t. You would make $18 per day. About $ 6.5k per year. Best case.
More likely, in this economy, you are not selling 90 pct of the inventory he sends you. Heck, you aren’t selling a big chunk of the inventory that you get on your sites anyway, so the marginal value of the traffic sent by Newser.com might be about zero. Why would you help a site, that is a direct competitor for minimal incremental revenue?
This is where all the netizens jump in and tell me I’m crazy. . . . That’s not the internet way. Which of course is exactly how they respond to every business question involving the net. The major news sites are keeping the aggregators that don’t originate news content alive. From Drudge Report on down. You are crazy to do so. Let the search engines send you traffic. Block the rest. Your revenue impact will be minimal. The competitive impact significant.
He goes on to argue that while the idea of charging per-article is a non-starter, there’s a great variety of packages Murdoch could put together, using material from across his media empire, that would attract subscribers. He elaborates further in his follow-up posting:
My model is that companies should inventory all the assets they have and try to find optimal ways to deliver those assets in a way that is profitable to the company and of value to the consumer. In an era where the marginal cost of delivery of digital assets, and many cases physical assets are falling, why not package those assets in a manner that consumers want to buy ?
The suggestions presented should be food for thought for academic publishers like university presses and societies. Most of us produce products beyond our subscription journals, things like books and videos. Combine these with the other exclusive material within our domains (access to meetings, course lecture material), and some obvious packaging opportunities arise.
Newspapers face challenges beyond their business model, the biggest being the homogenization of content, where any one source can substitute for another. Murdoch’s toughest obstacle may be producing quality material that is unique enough that it can’t be easily replaced by a free alternative that is “good enough.” But if he can pull that off, there’s an argument to be made that a smaller market penetration consisting of paying customers is preferable to a wider penetration of freeloaders.