Murdoch takes a gamble on future of newspapers

The publisher of The Times and The Sunday Times is embarking on the high-risk strategy of digital subscriptions in a bid to ’super serve’ its most valued readers.

Vanneck
Vanneck: Valuable relationships

News International’s decision to charge for The Times’ and The Sunday Times’ content online is part of a strategy to “super serve” valued readers.

The publisher is introducing a “simple and affordable” payment model for The Times and The Sunday Times websites from June. Subscribers to the print product will be given free access to the online version and other pricing models include £2 for a week’s access and £1 for a day.

Katie Vanneck, managing director of customer direct, is charged with overseeing all brand touchpoints and building a direct relationship with readers.

She told Marketing Week that it is a long-term strategy. “News International knows it will lose online readers by erecting a pay wall. We will have fewer but more valuable customer relationships. We will know where those customers are and have a direct billing relationship with them.”

She adds that the publisher has been moving towards a position where it can “super serve the more valuable customers” and that News International has been building the right platforms for loyalty and customer management for the past two years by avoiding a “promiscuous promotional strategy” and investing in initiatives, such as the online membership club Times+.

News International is trying to ape the financially robust subscription model of sister broadcast company BSkyB, which is less reliant on advertising revenues. However, Sky has exclusive sports and film content. What can The Times and The Sunday Times offer?

Vanneck says the company will invest in “creating great quality journalism” and that consumers are sophisticated enough to differentiate between what they get for free and what they pay for.

Dominic Woolfe, press director at SMG, says: “It’s a high-risk strategy but News International needs to find new revenue streams. However, with such a wealth of information available for free it’s going to have to be super content.”

By seizing the initiative the publisher is demonstrating sector leadership. The Guardian says its website content will remain free, but former Guardian marketing director Marc Sands, now director of audiences and media at Tate, says: “The commercial future of newspapers will one day require that content is paid for in some way. Free is never sustainable. The experiment of the last decade has clearly indicated that the advertiser model alone is insufficient to pay for quality journalism.”

The Telegraph Group may already be developing digital products that it can make money from, but its attitude towards a pay wall is unclear. It recently stated that the volume of traffic to its websites was no longer its primary concern. This could signal pay walls at some point.

Vanneck admits that News International does not expect it all to be plain sailing, saying that it’s in “uncharted territory”. However, the strategic thinking has to be about a “digital subscription” and not just a website. The arrival of the iPad and the increasing penetration of smartphones will change the game plan for distribution of content.

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