The Customer Calls The Tune And It’s No Coincidence

Michael Hedges November 2, 2015 Follow on Twitter

By most accounts, print circulation seems to have bottomed out. Losses from the digital decades are starting to reverse, albeit slightly. Print advertising, however, may never recover. Digital advertising, which benefits Facebook more than publishers, seems to have stalled except for mobile ads, expected to overtake TV sometime soon, maybe, unless the ad blockers take over. All of this is just opportunity.

Publishers, digital and otherwise, were nearly speechless, gasping on reports, the Guardian and Financial Times (October 30) leading and others following, of the UK tabloid Sun’s online edition dropping the paywall. The news came from an email to staff from recently returning News UK chief executive Rebekah Brooks. Cracks in the Sun’s online paywall started appearing last summer, lead stories and high-value opinion writers free to all.

The Sun’s online paywall went up in August 2013, surprising those looking at the huge print circulation figures - 2.25 million daily though falling - and viewing digital products nothing more than interesting branding devices. Others noted the paywall preference of News Corporation chairman Rupert Murdoch, owner of News UK - known as News International until June 2013. Online editions of the (UK) Times and Sunday Times were fenced off by paywalls in 2010, along with just about every branded company website. “An industry that gives away its content is simply cannibalising its ability to produce good reporting,” said the Chairman, quoted by the BBC (August 6, 2009). The Sun was the exception, in many ways.

For The Sun - and News UK - the paywall had become a lead weight, sinking digital traffic, contributing little if anything to the tabloid’s print marketing and scaring away ad revenues. Before plugging in The Sun’s paywall and unplugging public audit online traffic was 30 million unique monthly visitors per month. Our Ms Brooks was “excited” to tell staffers, in last weeks’ widely quoted email, of “a new chapter for The Sun.” ABC audited daily average online visitors for September were a scant 1.1 million, reported the Guardian (October 15), far below Daily Mail’s MailOnLine at 13.365 million and the Guardian’s 8.37 million.

“This will mean setting The Sun predominantly free in the digital world from November 30,” announced Ms Brooks in the staff email. “By happy coincidence, this is also Cyber Monday, one of the best-performing days of the year for online retail.” The other happy coincidence announced was the appointment of Keith Poole from the MailOnLine US operation as The Sun’s digital editor. As Ms Brooks returned in September to the News Corporation fold after a four year forced hiatus Daily Mail deputy editor and former Telegraph editor Tony Gallagher came on-board as The Sun’s editor-in-chief. During Ms Brooks absence print sales for The Sun dropped by a third.

Online general interest publishers, even those presented by traditional print media, have been shifting away from hard paywalls. For want of digital traffic - mobile traffic even more so - paywalls interrupt the digital ad flow. More importantly, hard paywalls are brand killers; disappearing from search engines means disappearing. Digital subscriptions are growing only for video (read: Netflix), music (read: Spotify) and sports, rights to which are furiously bid up by pay-TV broadcasters.

Softer, more nuanced paywalls, typically metered, seem to offer the best solution, so far. Super-users - those visiting a site zillions of times - are easily identified through the miracle of big data collection and, therefore, targets for specialty subscription and, logically, content offers. It’s a very traditional retail concept: the best customers are the most important.

Casual visitors - likely far more in quantity - fall off the subscription revenue stream radar but generate data-driven ad revenue. A portion of those causal visitors are new eyeballs, potentially subscribers if treated right. But digital subscriptions across major online publications have stalled. Digital publishers are learning another old concept: cost of acquisition.

The Sun will be “cooperating” with Facebook’s Instant Articles platform geared for mobile devices that grabs native content into a RSS-like feed and allows publishers to grab a little ad revenue. There’s a “partnership” arrangement with Apple News, similar in thrust and design. "We have a chance to make our outstanding journalism go further and reach more people than ever before and I know everyone working here will relish that opportunity,” said Ms Brooks.

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