Murdoch makes the big gamble for the future of newspapers

The publisher is introducing a “simple and affordable” payment model for new 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 touch points and building a direct relationship with readers. Her department will play a large role in communicating the online changes and encouraging “buy in” by existing and potential readers.

Vanneck says that it’s a long-term strategy and that News International knows it will shed online readers by erecting a pay wall. “Changing customer behaviour is not something that will happen overnight… but 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 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 +.
.
Vanneck says that the publisher has been moving towards a position where it can be “superserving the more valuable customers” rather than chasing online browsers and footfall traffic.

News International is trying to ape the financially robust subscription model of its sister broadcast company, BSkyB, where the reliance on advertising revenues is much smaller. BSkyB has been investing in technology to develop services, such as telephony and mobile apps, which are devised to attract and retain subscribers.

However, Sky has exclusive sports and film content that people will pay for. What can The Times and The Sunday Times offer?

Vanneck says that 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.

Industry observers say that this could be borne out in the long term, as, while other publishers are offering free content, the decline in advertising revenues is forcing them to make editorial cuts that cannot help but eventually be reflected in the quality of journalism. Dominic Woolfe, press director at SMG, says: “It’s quite a high risk strategy but they need to find new revenue streams – but with such a wealth of information available for free it’s going to have to be super content.”

News International’s move has been expected but by seizing the initiative the publisher is showing sector leadership. How other publishers react will be intriguing. The Guardian editor Alan Rusbridger has long said that online content from his brand will remain free.

However, former Guardian marketing director Marc Sands says: “This move was signalled well in advance and represents few surprises. 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 play for quality journalism. It is time for consumers to pay.”

Management upheaval at The Independent and The Guardian is not going to help speed any response from rivals. The Independent titles are about to come under the ownership of Alexander Lebedev and Guardian Media Group chief executive Carolyn McCall is leaving to take up a CEO role at easyJet.

The Telegraph Group has already set up a separate hub to develop new digital products that it can monetise 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 and that could signal the introduction of pay walls at some point.

Vanneck admits that News International does not expect all to be plain sailing, admitting 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 increasing penetration of smart phones will change the game plan for distribution of content.

“Customers want to be given a choice about how to access The Times and The Sunday Times in the way that best suits them, adds Vanneck.”

News International has been gathering customer data via channels such as competitions and sign up for email bulletins and Vanneck points out there is a strong springboard for digital take up in the form of the 130,000 paying subscribers that already exist for the newspaper.

“It’s about bringing our existing customer base with us and once we are beyond launch, the rolling out of a future acquisition strategy.”

Sands adds: “It may not be a wholehearted success in the short term but in the long term a version of this form of direct consumer payment seems the most likely route to financial stability for newspapers. The commercial meltdown that newspapers are currently experiencing will ensure ’trial and error’ is the only sensible way forward.”