Hard As It May Seem, Digital Maturity Emerges

Michael Hedges December 16, 2013 Follow on Twitter

Encouraging signs for the year ahead are everywhere. Gone, mostly, are the forecasts of gloom and doom for the media world. Much of this year and last looked like bouncing on the bottom, not much to cheer but at least business wasn’t getting worse. Like that well-known proverb about interesting times, the digital era has so much more to offer.

Six months after erecting a paywall for tabloid Bild, big German publisher Axel Springer reported “incredibly encouraging” results.  A bit more than 150,000 customers are paying for the recast BildPlus online portal since the June launch, 1.1% of monthly web traffic. Average daily print circulation is estimated at 2.6 million, drifting lower and lower each quarter.

“It’s an incredibly encouraging result,” said Axel Springer CEO Mathias Döpfner to a press gaggle. (December 17) “A payment culture seems to be taking hold of people’s heads. If this trend holds up, it will become really interesting for ad customers as well.”

The BildPlus paywall is not rigid, most content remains free-to-access. A metered paywall, limiting viewers to a set number of pages, was rejected in favor of the ‘freeemium’ model with editors selecting material for which to seek payment. Multimedia content, notably football highlights, is nestled behind the paywall. Customers pay €4.99 per month for the basic service, €2.99 more for the football highlights and twice the basic charge for access to the daily e-paper. Most are choosing the basic charge.

The best news from Herr Döpfner’s announcement is that publishers – joining all content producers using the web, actually – are experimenting. The ‘freemium’ model is one, metered paywall another, pioneered by the Financial Times and used by the New York Times. Some publishers have opted for hard paywalls and others no paywall at all. There’s more than one way to skin a cat, said Mark Twain.

The digital era continues to trash all sorts of conventional wisdom. No longer are nascent business plans floated to investors claiming “we’ll make lots of money from advertising.” Fears that nobody pays for content have largely disintegrated as publishers learned to dismiss web surfers as fatuous. Trickier for publishers has been the belief that paywalls won’t work for tabloids, popular press.

News Corporation’s UK tabloid The Sun introduced a hard paywall, the company standard, to its revamped website Sun+ in August. Traffic immediately crashed. Three months later – aided by a substantial marketing campaign plus movie and restaurant discounts as well as a very popular Sun+ Lotto – traffic has started to recover with 117,000 folks stumping up £2 a week. Next year video highlights of football matches will be added.

Mail Online, an offshoot of tabloid Daily Mail and every bit a racy, remains free-to-access and attracted more than 130 million visitors a month earlier this year. The Guardian, also free-to-access, follows with a mere 83 million. In the US, the San Francisco Chronicle dropped its paywall over the SFGate.com web portal this year after only four months. And San Francisco is so close to Silicon Valley.

It’s “the year of the paywall,” announced Bloomberg Businessweek (November 14). Publishers, pioneers excepted, are merely following the trend…or the obvious. Subscription models abound, from cable and pay-TV to satellite radio and, of course, video-on-demand services like Netflix. All forms of content might “want to be free,” as digital luminaries say repeatedly, but producers of that content want to pay the rent. The first step to digital maturity is understanding that it’s really the year of the customer.

See also in ftm Knowledge

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. 137 pages PDF (January 2013)

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