Free vs paid-for e-content is not a black and white issue

Three weeks ago proponents of free online content were celebrating victory. The New York Times had announced it was scrapping its Times Select service, which put a subscription barrier around its columnists and archive facilities. And the Wall Street Journal, for long the bastion of paid-for newspaper content online, was widely rumoured to be planning a similar move under its new owner, Rupert Murdoch.

All of this must have caused something of a stir at the Financial Times, which two weeks later announced its own revised charging model. Readers will be allowed access to 30 stories a month free, with registration required after the first five. To get more than the 30 stories, you need to be a subscriber.

The argument for paid-for online content has always been the need to protect print revenue. If readers can find material from the print edition of a newspaper free online, why should they continue to buy the paper? This rationale was then extended so that it was the material exclusive to the publication that was protected; the analysis, the commentary and so on. Although the New York Times has abandoned this position, it’s still held by the FT.

At the other end of the spectrum, publishers make as much content as possible free and rely on its quality to drive traffic and therefore advertising revenue. And in between are the models that require readers to register for access to some or all of the publication’s content – allowing greater targeting of advertising – an approach used by Guardian Unlimited, for example.

This would suggest the decision whether to charge or not is a straightforward one, based on the balance between subscription and advertising revenue. But it’s complicated by another factor – search. The spidering technology used by search engines to rank content can’t look behind subscription walls, so any subscriber-only content is invisible to search engines. In addition, bloggers rarely link to subscriber-only content, reducing the number of links to a site and therefore lowering its ranking on the search engines. So while you might be getting revenue from your subscribers, you’re dramatically reducing the ability of potential subscribers to find you, even if you allow micropayments that would let them try your content without subscription.

This is the bet the FT is making. It hopes the new charging model will allow the site to appear further up the search rankings, attracting more trials and extending its reach. According to publisher Ien Cheng, registrations on the site have soared in the two markets where the new approach has been tested. Meanwhile the hardcore online readership should continue to pay for premium content. Cheng believes that this combination of registration and subscription allows for the better targeting of ads, avoiding the risk of the free content audience becoming an undifferentiated mass, unattractive to advertisers.

Some of those who believe in the advertiser-funded model for newspapers argue that content brands are becoming less important. They believe that all barriers to content should be removed, allowing readers navigating via Google and the blogs free access to everything.

This view is certainly gaining hold in the world of television. All the channels are concerned that video search will result in all their careful scheduling being replaced by viewers choosing programmes via a search engine on the basis of recommendations in other media, in blogs or by their friends. This is particularly a concern for those channels, such as Channel 4, that primarily show content produced by other people.

But this isn’t the case with newspapers. Their content, its quality and its viewpoint, is their identity. The global success of Guardian Unlimited suggests that, far from The Guardian brand being eroded, it is being discovered and recognised by an increasing number of readers in tune with its liberal view of the world.

The problem for most newspaper brands is that competitors have eaten away at their primary sources of revenue, such as classified advertising. And while many newspaper sites are now making a profit, the profits they make are not even close to replacing those made from print in its heyday. At the same time news has always been an expensive business, and the increasing overlap of print and video news sources online, coupled with the rise of blogging and citizen journalism is making it more so. So the need to find ways of protecting revenue is paramount.

But to close the debate over advertiser-funded versus subscribed content seems to me a little premature, as the landscape for news is still far from stable. Talking about the FT decision, Cheng said the organisation would respond nimbly to the results of its new model. In this changing landscape, it makes sense for all such decisions to be provisional.

Michael Nutley is editor-in-chief of New Media Age

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