No turning back, but the money’s the thing

Last week, The Guardian’s publishing company changed its name – Guardian Newspapers became Guardian News & Media. The change recognises a fact long implicit in the huge investment put into guardian unlimited. Wholehearted commitment to the internet is integral to survival in publishing. We know. We’ve done it ourselves: Centaur, né "Publishing" and, briefly after our flotation, "Holdings", recently became "Media."

But if the internet is now a fact of life, monetising it efficiently is certainly not. Most traditional media (particularly newspapers) have effected the transformation badly, The Guardian being a shining exception (its UK online operations are now at break-even, it is said). Yet this is not a problem which can be characterised solely as the old failing to deal with the new. There are plenty of difficulties inherent in online transactional models that are now becoming painfully apparent. Some of these spell trouble for the exponential growth (so far) of advertising revenue regularly accoladed by the Internet Advertising Bureau.

The first is the psychology of the consumer. So much empowerment has brought with it a profound sense of entitlement to free information, and goods and services at bargain-basement prices (of which more below). This makes the subscription model for content problematic. The music download business, caught between piracy and extremely low margins, is a fine case in point.

Then again, the advertising model may not be all it is cracked up to be. True, plenty of advertisers are currently diverting their budgets online, which must imply an underlying confidence in the medium (or is it panic?). Granted, too, that Google appears to be sweeping all before it in the search game. But problems there are, particularly in the contentious click-fraud area. As Yahoo! – which has suffered a 45% drop in its share price over the past year – can attest.

Why stop there, though? All the big beasts in the internet media world have been trying to get their hands on user-content sites, often at exorbitant prices. It barely needs pointing out that no one has yet found a way to monetise social networking organically, although Rupert Murdoch has cleverly circumnavigated the issue by striking a deal with Google that handsomely covers the cost of his initial investment.

Worse, intellectual property lawyers are beginning to rear their heads, with serious but unpredictable results for future revenue streams. Universal Music girded its loins and started to sue YouTube for copyright infringement; while IBM has taken on Amazon, claiming the online retailer leveraged its success on infringed IBM software patents.

Lastly, a piece of research recently published by BMRB indicates that increasing consumer scepticism is holding back e-commerce. Apparently, the average spend per online shopper is growing far more slowly than the growth in the number of shoppers. What this means is that UK shoppers don’t believe there is much difference between online and high street prices these days, once you take packaging and delivery costs into account.

So, the gloss is off and it’s just got harder (or maybe that should be harder still). But there is, of course, no going back.

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here