Alliances with retailers are future for online publishers

In common with rival media owners, it is a source of constant regret at The Telegraph that our valuable, well-written journalism is offered gratis to a worldwide audience of Internet users. We have rationalised this pain in pursuit of the young, Net-friendly ABC1 readers that our advertisers crave.

The pioneering days of the Net fostered an anti-commercial atmosphere which still lingers. But the Net is having to grow up. Billions of dollars have been invested through global stock markets and grown-up busi-ness plans require payback.

Already we have seen the down-sizing or closure of some online publishing ventures. To thrive, content providers must grapple with a more varied approach to online business models.

As publisher of Electronic Telegraph, I have been very close to these shifting strategies. However, my view has not changed dramatically over the past three years:

Advertising (banners) will provide an ongoing, but unspectacular source of revenue for the few most successful publications.

Sponsorship in this medium can be dynamic, flexible, effective and profitable; classified advertising will grow quickly to become much more important than display.

Electronic transactions and e-commerce, whether as commissions on goods/services generated or actual direct sales, will soon outpace advertising as a revenue source for the successful new media publishers.

And what of content? We have seen recent initiatives by Micro-soft, the Wall Street Journal and, closer to home, The Economist and the FT, to introduce subscription or pay-per-view mechanisms. There is certainly a better opportunity for publications whose special competence is to add direct commercial value – company reports, stock quotes and so forth.

Such services can be of immediate use in business, and furthermore the costs can be justified (and therefore paid) by the employer.

But an explosion of freely accessible editorial content from a range of well-known publishers has made the development of paid-for publishing services aimed at the mainstream consumer more problematic than ever.

As a publisher of news and general interest, it is harder to see short-term potential for charging.

Instead, the real revenue opportunity for online publishers must lie in developing commercial alliances with a wave of retailers which are beginning to move onto the Web.

We are witnessing the rapid growth of a significant (and significantly wealthy) online shopping audience.

Retailers will gain from the brand credibility of partnering trusted media brands – as well as from the scale of exposure.

And online readers? They will gain from a range of trusted retailing and promotional offers. Online shoppers will gain huge time and cost advantages over Negroponte’s digitally homeless – but that’s another issue.

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