Pay vs Free

Two media experiments that are working so far.

While the FT’s website and Mail Online are successful in their business models – one a subscriber-only service and one free to read – both are looking at how to push their strategies further.

The FT’s parent company, Pearson Group, announced interim profits of £178m last month, attributing 25% of total sales to digital operations. Digital subscriptions were up 27% to 149,000.

But managing director Rob Grimshaw says the majority of its revenue still comes from advertising, although it wants to become less reliant on it. It seems, however, that ad revenue and subscriptions income is not mutually exclusive. “That is a balance we’d very much like to change, but the more subscriptions we sell, the more advertising revenue we make,” he says.

The publisher wants to be able to charge the same amount for buying the printed paper as accessing the website. Currently an annual subscription to is £285 whereas a paper subscription ranges from £312 to £468, depending on payment method and whether or not it is delivered. 

While advertising is strong, the publisher wants to create alternative pay methods such as micropayment, where users pay for certain sections or articles. “We are playing around with it. We have made it available to a small portion of the audience to see what difference it makes to overall revenues compared with the manual subscription,” Grimshaw says.

This means that marketers will be able to obtain more data about their target audience. “We can offer targeting segments that are, for example, people who have read the Lex business and financial column in the past ten weeks. We want to keep digging deeper into that information and expose it more clearly to advertisers.

“We want to create a system where, during or at the end of a campaign, advertisers can log on to a browser and see the demographic breakdown of the audience that has seen their advert, not just on their targets but also all the information we have on the audience,” explains Grimshaw.

We want to dig deeper into that information and expose it more clearly to advertisers

Rob Grimshaw,

His view is that many titles will take the paywall route. “Not many publishers will succeed with an advertising-only model and an awful lot will need more diverse business models online if they are going to survive. That probably will include selling content,” he says.

But DMGT appears to be succeeding with its free-to-view Mail Online website. Although DMGT posted third-quarter results last month that showed revenue was down 2% at £508m, BDO media analyst Andy Viner calls its digital platform “a well thought through success story”. The site has 40 million unique users, and showbiz content accounts for 25% of traffic.

Whether the website is profitable is unclear. A source at the publisher claims that it is, but refuses to give figures. Of the FT’s subscriber-only model, the source says it is a unique proposition, but that he wouldn’t rule out charging for some Mail Online content. “The FT is different because it isn’t in competition with anybody. If I wasn’t in competition I’d be charging.

“We are keen to come up with  content we could charge for, but that would be completely separate from what we are currently doing,” the source from the Mail says.

However, he rejects the argument that consumers that pay to subscribe to a newspaper’s website have quality eyeballs that might be more attractive to brands. “If you want to be part of the link economy and you want as many people as possible to see your content then you have to stay free,” the source argues.

The Daily Mail’s paid-for iPad app is being developed for launch, likely this year, but there is a “fundamental difference”, according to the source. “It’s on your device, you’ve got it all day every day.”

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