Publishers forced to revisit pay barriers

Publishers are being forced to examine online subscription models to offset flagging ad revenues.

Publishers such as Independent News & Media, News International and Bauer are investigating payment models for their online properties in the wake of falling ad revenues during the recession.

The moves come as the industry looks for new potential revenue channels as the print businesses continue to suffer and sees the sector revisit the subscription debate, which has seen publishers experiment with paywall models over the past decade.

The FT.com, which already charges for its premium content, expects a number of rival publishers to introduce paid-for sections as the market tightens.

Rob Grimshaw, MD of FT.com, said, “The ad-only model is under strain, it’s clearly difficult to make money from advertising only. In the UK there’s pressure on rates and it will force publishers to think hard and look for alternative ways to make money.

“If they can’t come up with a viable online model they’re going to find themselves in trouble,” said Grimshaw.

William Yarker, director of the media team at consultancy Deloitte, said moving content behind a paywall is the only option left for a number of struggling publications.

“The trend is turning back to having to pay and because ad revenue isn’t much online, opting for a paid model and losing a few subscribers could be the best option.

“It will be much harder for consumer publications as their customers are less likely to put their hands in their pockets for the content. It will be a confident organisation that says put your hand in your pocket for our online content,” added Yarker.

Magazine publisher Bauer, which owns titles such as Grazia, FHM and Empire, told new media age it was investigating a charging structure.

A spokeswoman for Bauer said, “It’s a business model we keep a close eye on and continue to investigate its potential, but for the time being our consumer-facing digital brands remain free.”

Recent speculation has indicated News International, owner of the Wall Street Journal, a part paid-for online title, is also investigating making readers pay for some Times Online content.

The move would extend the title’s existing premium areas, such as the Times Archive.

Zach Leonard, director of digital strategy and development at Times Online, was unable to comment on the speculation, but said, “We’re always looking at other options.

We know there are absolutely ways to make additional revenue beyond advertising.”

Earlier this month, Independent News and Media CEO Gavin O’Reilly told the Telegraph, “We will see more content moving to subscription…We are looking at some charge structure.”

The moves come as publishers scramble to find ways to boost revenues online.

new media age has learned the Association of Online Publishers (AOP) is in talks with The Institute of Practitioners in Advertising (IPA) to launch research focusing on the benefits of advertising across publisher sites to attract more advertisers to the sector.

But some publishers remain opposed to subscription models, which they maintain will not work and urge the industry to look for new models beyond display advertising.

Adam Freeman, commercial director at the Guardian News & Media, said, “Publishers need to have a range of business models, so we have ecommerce, clubs and dating services. We’re going through a cycle and now it’s tough, but in three to five years time we will have more digital ad income.”

Edward Roussell, digital editor at the Telegraph, said a combination of free content and niche paid-for products could be a compelling offer for publishers.

“Consumers don’t like paywalls. But a way to leverage that audience is to develop areas where users pay for content such as fantasy football and dating.”

This story first appeared on newmediaage.co.uk

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