What’s More Important: The Money A Paywall Web Site Brings In Or The Influence – Branding - Earned From Letting Everyone In Free?

Philip Stone September 9, 2010 (Follow on Twitter)

Jimmy Wales, founder of Wikipedia, says the Murdoch paywall at the Times and Sunday Times in the UK is a “foolish experiment” mainly because their readership online has dropped so drastically diminishing those newspapers’ influence in today’s social media digital world. But to Rupert Murdoch it’s all about the bottom line, knowing precisely who your readers are, and making them pay. Who has it right?

Both do. The social media solution is finding the right formula so that a site doesn’t lose 90% of its readership from a paywall, let alone most of its advertising revenue. It needs to have enough material to entice people for free reading, yet having meaningful information on the site for which people would be willing to pay.

The interesting thing is that it is a Murdoch property – Dow Jones, publisher of the Wall Street Journal – that seems to have found the right mix. About one-third of its material is available to anyone accessing the site but the really good stuff that has less likelihood of being found elsewhere is firmly behind lock and key. And that is probably what the Times and Sunday Times should be doing as well, although this is more difficult for general information sites than it is with a primarily business news site.

So far News International hasn’t released any real numbers about how the paywall has affected Times traffic since its inception a couple of months back. Murdoch a month ago would only say, “We’re not going to release the numbers at this stage. We think we are on the right strategy there and we think it is going very well.”

Skeptics would argue that if News International had good news it would shout it from the roof tops so keeping quiet just gives the perception the numbers are nothing to yell about. And that thinking got support this week when The Independent newspaper quoted a major media agency saying it was no longer placing advertising for big British companies on the sites because they have lost some 90% of their readership.

That 90% figure is really no surprise – it’s what News International executives expected. But whether they expected major advertisers to drop off is another matter. But for all that, the real numbers News International will be looking at is what the Internet earned the newspapers before the pay wall and what it is earning today given subscription revenue but less advertising revenue. Again, because the executives haven’t said the latter numbers are better makes those who actually wish Murdoch well in his venture very queasy that all is not so swell.

And if the real bottom line to Murdoch is the bottom line then News International officials may not be too concerned that their prestigious newspapers behind the paywall have lost much of their global influence.  A perfect example came from Jimmy Wales, the Wikipedia founder, who told Brand Republic a few weeks back that in the midst of the BP Gulf crisis he saw former BP chairman Lord Browne at an event and he asked him whether he would have handled the oil spill any differently to current management and The Times picked up on the question.

So Wales later Twittered to his followers, “The Times of London is reporting my question to former BP CEO Lord Browne” and he expected the digital world to light up. But lo and behold nothing really happened because when his followers tried to access the story in The Times the paywall stopped them. And they weren’t about to pay for the privilege.

Which in turn had Wales raging, “The Times has made itself irrelevant. It could not be tweeted and it could not be picked up by the blogs. No one is talking about it (The Times). I don’t think it will work.” His absolute conclusion: “The Times paywall is anti social-media.”

And The Independent’s story this week picked up on another example. The Times had a big exclusive by its crime reporter who was the only print journalist on a plane returning a big-name fugitive businessman to London from the Turkish enclave on Cyprus. Yet no search engine would have picked up on the paywall exclusive and so on the Internet it was really the competition that got the glory via their follow-up stories hours later on what The Times had originally reported. That’s as good an example as any why journalists, while appreciating newspapers need to make money, are wary of pay walls because they mean far fewer readers get to read their original words of wisdom.

But for all that, Murdoch’s tabloid News of the World is expected to start charging for its web site within a couple of months and The Sun may well follow.

And it could just be there is a grand strategy in all of this that dwarfs how much money the web sites actually bring in. Some media people believe what Murdoch is really after is consumer information on those who do pay as part of a much bigger picture. Remember, besides the newspapers Murdoch also runs the BSkyB satellite broadcaster that also provides high-speed Internet access and Murdoch has put in an offer to buy the shares he doesn’t already own.

So what you could have at the end of the day is good consumer information on your near 10  million satellite TV and Internet subscribers combined with similar information from newspaper print and online subscriptions and it’s all put together for not only targeted advertising but also for building multimedia packages – a marketing manager’s dream.

Now, if someone came to you with a really attractive offer to provide your broadband service, your satellite TV service and your choice of daily and Sunday newspapers, both in print and online would you be interested? And if you were to get special offers throughout the year on various deals which might not even be media related but looked like really good value might you bite? 

Put on your long-term marketing cap and the names and consumer information Murdoch is getting from those who are paying on his various platforms could later be worth their weight in gold.

See also in ftm Knowledge

Rupert Murdoch and News Corporation

News Corporation has a global, multi-media footprint. Whether on paywalls or pay-TV Rupert Murdoch has the ear of the media industry. Update includes Sky Europe ups and downs, competing with Google to Berlusconi. 144 pages PDF (July 2010)

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Media Business Models Emerging

After a rough transition media business models are emerging. Challenges remain. There are Web models, mobile models, free models, pay models and a few newer models. It makes for exciting times. This ftm Knowledge file examines emerging business models and the speed-of-light changes. 123 pages PDF (May 2010)

Order here