How Google Could Help Attract Paywall Subscribers (it’s a bit of a leap)

Micropayments and digital media haven’t exactly enjoyed a happy relationship so far, and this is a bit of a travesty according to Greg Golebiewski.

Who is Golebiewski? You might not be surprised to learn he is the CEO of a micropayment provider, Znak It. So his argument is a little self-serving, but still valuable. In the age of newspaper paywalls, Golebiewski  tells Paid Content newspaper publishers are missing a trick with not using micropayments to, say, offer a single article for a few pence to entice new readers. One of the schools of thought around paywalls is they’re not half bad for monetising online readers, but sub-par when it comes to growing a reader/subscriber base.

Says Golebiewski, “it’s extremely difficult to break that notion, the theory that micropayments don’t sell. [Critics] don’t have any data… it’s very difficult to go to them and say we have a flexible system for payments and then when they figure out it’s micropayments, they stop listening.”

Speaking of data, Znak It has some to back-up the CEO’s enthusiasm for micropayments. The company ran five pilot projects to see how many participants would buy a range of digital content; videos, music and written. Some 1,281 “buyers” emerged from a total of 43,000 unique users. According to Paid Content, “as many as 5 percent of the unique users wound up becoming buyers (paywalls usually get about one percent conversion).”

Znak It whitepaper

So what’s going to get micropayments into the mainstream? Google/YouTube might be the answer. Stick with me.

Google’s online video behemoth has been linked to the idea of a subscription model service, supplementing the traditional ad-revenues, for quite some time. Fresh rumours emerged in this weekend’s FT, with a report declaring “Google is on the verge of unveiling an à la carte subscription service for some of YouTube’s specialist video channels” (alternative info here for those sans an FT sub).

YouTube

“A la carte subscription service” is a little vague, as rumours tend to be, but the article goes on to say users could subscribe to channels “as little as $1.99 a month”. I guess that’s a la carte in the sense you pick a channel to subscribe to, rather than ‘subscribing to YouTube’. Whatever the specifics, this isn’t a million miles away from a micropayments system. True you’ll be subscribing to an entire channel rather than a single video, but chances are it’s a single video that will be the trigger to purchase in the first place – so not so far from buying one newspaper article through micropayment. The relatively low cost is another similarity.

The new system, combined with the prevalence of YouTube, could bring the concept of micropayments to a mass user base. It’s simplistic thinking, but it’s a start – and not the first time a big technology company has kick-started a digital content payment trend. How many people would have spent a few quid on a small software program for their mobile in 2006?

It could happen. Bit ironic potentially too – if Google ends up helping newspaper publishers develop a revenue stream from micropayments, after the ‘evil’ Internet got them into this fine mess in the first place.

FT Digital Media Conference discussions on the sounds of innovation

***Note:this post was originally written by a Racepoint client 7digital, and first appeared on the 7digital blog.***

Last month our own head honcho Ben Drury was at the Financial Times’ annual Digital Media Conference, speaking on the Sound of Innovation panel. It was an interesting debate, and the panel discussed everything from the growth in mobile and digital music to the revenue streams that were kicking around some 2,000 years ago.

7digital FT conference

Geoff Taylor, CEO of the BPI, started the discussion on a positive note. While it’s been a tough decade for the music industry, the BPI is seeing positive growth in digital music globally – as shown in their latest report. And the good news for British artists is digital is growing faster in the UK than the majority of global markets.

Ian Hogarth, Co-founder and CEO of Songkick, made some interesting observations of the trends in music over the last 10 years compared to the last 2,000 years (which raised a few eyebrows and smiles). His point was, until relatively recently, the music industry had made the majority of its revenue from live music. This changed for a, relatively, short period as the ability to record and distribute music on records, tapes, and ultimately CDs became possible. The decline in physical, he noted, led to live music revenues overtaking recorded revenue 3-4 years ago in the UK.

Also on the history side, Ben thought back to 2004 when he founded 7digital. Back then, everyone thought he “was crazy” to get into the music business, and no one would pay for music again. Today, the digital business is worth $6bn globally, and the average music fan can access the world’s music catalogue through their smartphone. Our own technology platform is helping partners like Samsung and HTC tap into this world of opportunity.

Responding to a comment that a lot of younger music fans access music for free and this is a ‘hard habit to kick’, Ben noted 7digital is actually seeing a lot fans using free services, like YouTube and SoundCloud, to discover music which they go on to purchase  – either through downloads or subscription services. He also noted people are becoming more and more happy to pay for subscription services, but the “sweet spot” for a monthly fee is still elusive. £10 a month, or £120 a year, is more than the average music fan spent at the height of the CD market.

The entire panel agreed the digital and Internet revolution has changed the way the music industry operates, making it easier for artists and acts to develop a fan base and sell music internationally. In particular some British artists, such as One Direction, have managed to break the US by initially developing a fan base on social media – instead of focusing on the US radio scene, as many have tried and failed to do in years past.

Talking on mobile, Ben observed how music has gone from being one item on a long tick list of smartphone specs to being a top priority and necessity for the likes of Samsung, HTC, BlackBerry and more. So much so, over 70% of 7digital’s revenue is now coming through mobile.

Finally, an audience member asked a question on the important interoperability for music services – that is, the ability to move your music, playlists and collection from one device to another. This particular conference attendee noted he has a large amount of music on his iTunes account and it was making him think twice about buying a new Samsung Galaxy S4. This was the most important point raised in the discussion. Music must be accessible wherever and whenever a fan wants it, and on any device they’re using. In today’s innovative, multi platform digital music world, having your collection locked to platform makes no sense whatsoever.

You can watch the panel discussion in full on the FT’s website.

7digital FT conference video

FT vs Guardian: The Ongoing Paywall Debate

The Financial Times has been held up as something of a pioneering newspaper, but its latest digital expansion comes at cost to the print.

The paper has done a good job of adapting to the digital world, attracting large numbers of paying subscribers to both print and online. It’s usually the default pro-paywall example; although with the note its content has the advantage of being unique enough to attract paying readers.

FT guardian paywall

Long standing editor Lionel Barber announced on Monday a renewed focus on digital, and is hiring 10 new employees specifically under a digital remit. The knock-on effect is 35 current FT staffers face the chop – or more accurately being offered a ‘buyout’ according to Paid Content. 35 of these buyouts will save the paper £1.6m this year, according to an internal email sent yesterday.

Barber says “The intention is to reduce the cost of producing the newspaper and give us the flexibility to invest more online”. There’s also a mandate to focus more on “priority stories”, an streamlined international presence and new products in the coming year.

Interestingly, Barber sees less competition with rival papers and more with social media channels, “Our common cause is to secure the FT’s future in an increasingly competitive market, where old titles are being routinely disrupted by new entrants such as Google and LinkedIn and Twitter.”

On the surface it may look like hard number crunching (+10 -35 isn’t tough maths), but these are the hard calls publishers and editors are being forced to make in the digital world. Ultimately is does mean we’re looking at smaller editorial teams, but it also means more focused teams delivering the content readers want to consume and pay for. What Mr Spock might have called ‘the needs of the many’. Although there’s no way around the fact it’s tough times for the 35 potential buyouters.

At the sometime Barber was tapping out his email, Andrew Miller, CEO of Guardian Media, has reaffirmed the group’s commitment to “open journalism” and shunning of the paywall model. Miller is one who has argued the FT’s paywall works because subscribers were always willing to pay for the premium business and financial content – something his paper can’t match. In an article with The Economist last week, he wrote:

“The overriding business task is to monetize the online audience…when we talk of ‘audience’ we still mean our readers…newspapers have always used a blend of different funding mechanisms to extract revenues for their ‘product’. That’s why I am unconvinced by those who say that the only model that works is to build paywalls. This is not an area where one size fits all.

“In some news organisations where growth in readership may not be so important and in particular where there is a strong existing print subscriber base to build on, a pure paywall may make excellent business sense. The Economist and perhaps the Times spring to mind here. It also makes sense in other publications which feature business-critical information – for example, the Financial Times and, in the Australian context, the AFR.”

In short, the FT et al can afford to monetise content and focus on digital because they don’t have to worry about growing their readership – but The Guardian does.

So where The Guardian is competing with paid-for titles and grabbing readers wherever it can, even in Australia now, the FT is more concerned about monitising content and developing a profitable digital business. The idea of “open journalism” is a noble one, and one I hope works out in the long term. But for now, it seems making the tough calls is the better option for newspapers looking for a firm foothold in digital.

Top Gear iPad app launches

Top Gear magazine released an iPad version of popular monthly print issue this week, which launches to coincide with the ‘Cars of 2012’ issue.

From the brief demo shown at the launch event, the app looks to be a good one. The ‘pages’ of each issue look similar to the print addition, but certain aspects of each come alive in various ways.

TopGear iPad app

For example, this month’s cover features images of the Cars of 2012 under spotlights. By tapping each, you get playback of the engines firing up and revving, a la Clarkson. Nice for the Ferraris and Maseratis of the world, but you wonder what will happen when they feature a family saloon on the cover.

Or actually, you don’t. The guy presenting (who didn’t introduce himself, sadly) told the audience each cover would be interactive in one way or another, with the production team “finding ways” to bring them alive.

Deeper inside the iPad addition there’s more treats, such as videos from presenters Clarkson, Hammond and May as part of their monthly columns, images in slideshow format and an interactive feature that allows the reader to open the boot, bonnet and doors of a featured auto. Quite nice when you’re looking at one of the more extravagant supercars with gull-wing doors (or Back to the Future Delorean doors for non-car enthusiasts).

TopGear iPad app

In fact, the iPad addition easily overcomes a few inherent issues with print. The buyers guide that lists the specs and prices of all makes and models on sale in the UK is much, much easier to flip through on the iPad’s endless scroll-column compared to print. And there’s almost limitless space for hi-res images of each car, excellent news for a magazine that’s all about showing off big shiny things.

The launch event also featured everyone’s favourite white-overall-clad mute, The Stig. Stiggies’ actually become quite a good PR and marketing tool in his own right. He was a bit of a pull for the event, and while he was on stage for a bit he soon ‘got bored’ and wondered off – and thus left the audience to focus on the app demo.

The app is in iTunes now, £2.99.

Also, here’s me with The Stig.

TopGear iPad app

Paid Content: All you need is love…and tablets…and smartphones

Paid-for news content is having a tough old time in the Internet age. Us readers are so used to getting news for free that even the lowest cost news and online content is shunned in favour of free site. According to two separate reports, from Forrester and the Columbia/Indiana University, there are two lifelines for news content – the rise of tablets and smartphones and…umm…’love’.

Easy one first. Analyst house Forrester has released its predictions for potential grown in the paid content market in the coming years. It’s being driven by the increasing number of smartphones and tablets out there. The firm predicts the market for music, games, film, TV and news content will grow by 65% by 2017 – bringing it to a total of £8bn. ‘Digital news’ specifically is expected to shoot up to almost £250m, a 77% increase in spending from us consumers.

Which all sounds like good news for those news outlets with paywalls erected around their content – the FT, The Times and New York Times and so on.

Forrester states the change will be driven by the appeal of new services available on cutting edge tech, although how this relates to news specifically isn’t clear. Forrester’s own Darika Ahrens says “Demand among European Internet users willing to pay for digital content grew between 2009 and 2010, but the number of online buyers didn’t due to a lack of compelling service offerings.”

So we need some more compelling services. And also a bit of ‘love’. That’s according to a study from  Columbia/Indiana University titled ‘Paying for What Was Free: Lessons from the New York Times Paywall’.

As the name suggests, the study examined New York Times reader habits and motivations for paying for the paper’s content post-paywall. The 954 participants were shown two “justification paragraphs” that explained why the New York Times had opted for a paywall model.

One focused on the publisher making a profile from editorial, while the other emphasised the charge was needed to avoid the paper going out of business. The respondents were then asked to rate “how the information changed their support for the paywall and their willingness to pay”. By far and away, they were more likely to pay when facing up to the prospect of the paper closing.  Sadly, according to Paid Content, guilt is “not a guaranteed way to get readers to pay”, as most readers chose not to pay at all, regardless of the statement they read.

There are a few bright spots in the paid content space, but it’s a long slog toward a healthy, stable and profitable market. Love and smartphones are not enough.