I'll be specifically interested in seeing what CPM rate they get compared to ungated content. I've heard Mr. Murdoch before suggest that one of the advantages of the paywall is specifically a higher CPM -- fewer pageviews means that there is less inventory (i.e. less supply) but the inventory is still heavily demanded because it is seen by a self-selected and *paying* group of readers.
I also want to see if that works universally. It makes sense that it would work nicely for the WSJ but the same logic does not necessarily apply to the New York Post. But like you, Mr. Wilson, I'm glad someone with scale is going to try this.
David Semeria
· 4 months ago
Great point
Piepiepie
· 4 months ago
That's an interesting point, but even if it is taken at face value it does not mean higher revenue or higher net earnings.
incr. cpm x decr. in inventory. (decr. host exp) v. decr. cpm x incr. in inventory (incr. host exp)
Beyond what could be a push in actual net revenue there is a more substantial competitive problem. If there is a viable business model from the presentation of free content, you have immediately given your competition a competitive advantage in an area that they can both gain market share and still be profitable.
Venkat
· 4 months ago
I have a sneaking suspicion NOTHING besides advertising will work universally.
awilensky
· 4 months ago
I would pay for AVC. That's one out of 400 feeds that I skim everyday.
fredwilson
· 4 months ago
That's not in the cards. I get paid every day by the people like you who engage here
farhanlalji
· 4 months ago
Awesome post Fred, the reason I asked for you, Chris and Umair is that I thought the opinion would be a bit spread and help clear my own thoughts on this.
At first I thought this is silly, no way would this work. Having read your post, I agree that it's a solid and good move to trial, I just hope that News corp does it as an experiment and not as a dive in policy. Would hate to see Fox news, the Sun, News of the World's readership go down... oh wait a minute, on second thought...
Either way, it's good to see experimenting and trial with business models, I do believe action creates clarity and if nothing else Murdoch and News corp are acting.
slowblogger
· 4 months ago
Paid news(and other contents) will work. If he fails, someone eventually will make it work.
I appreciate Fred's cool and reasonable response. I hope some people on the free camp, who seem to confuse their emotion("I don't like paid contents!") vs. reason("I don't think they can make money with pais model because...), to be like him.
Wan-Qi Kim, Investor
· 4 months ago
Fred, amex just asked the same question citing a guy kawasaki panel. Guy's kids said they hijack wifi, never click ads and feel no loyalty or guilt. The amex open forum writer concluded Rupert's plan would fail.
#amexfail.
On a venn diagram, guy's kid and rupert's base are on different sheets of paper. And if you watch fox news, yes, you can be manipulated with guilt.
fredwilson
· 4 months ago
I wrote a post recently about my son's passage from bit torrent to legit streaming services. Maybe my kids are just more honest than Guy's but I don't think so.
David Semeria
· 4 months ago
Fred, here is the Kawasaki video, I found it fascinating.
Basically the kids have no allegiance to anything, except perhaps GMail. They said if FB started charging they would all walk away.
fredwilson
· 4 months ago
Guys kids are different than mine. My kids would pay for FB but they are never going to have to so its a moot point
Towards the end Guy asks the kids what they would do if FB started charging, and they all said they would walk away. They appear to have no allegiance to any product (regardless of their emotional capital invested) except, curiously, GMail.
fredwilson
· 4 months ago
My kids don't have an allegiance to gmail. But they could not live without blackberry messenger. That's the one service they'd pay almost anything for. And its free
Wan-Qi Kim, Investor
· 4 months ago
Fred, re bb messenger. There's an old Daoist saying, "people will always flow in the direction of lowest resistance." (Or was that samuel clemens??)
Regardless! I built a community of over 1000 active school aged kids by observing the behavior of over 20,000 of my youtube education themed subscribers. Youtube's socializing features, profile pages, discussion reply notification, etc are all high resistance. Linking is 100% impossible. So creating my own site was obvious.
the reason it works is because the site provides a much lower resistance to a preexisitng demand: much like bb messenger, access to friends. More like twitter however, there is added value in meeting new friends who are out of reach through any other means.
But alas, per my last comment, since making the site $7.75/m... new signups have halted to the level of waterboarding in subsaharan africa.
direwolff
· 4 months ago
looks like we got one of those east coast-west coast things going. are the kids gonna throw down now? :)
fredwilson
· 4 months ago
Not likely.
Wan-Qi Kim, Investor
· 4 months ago
Fred, I did indeed read that post re streaming. If the channel or suggestion engine can do a good enough job, it beats itunes all day long. BUT NOT for the obvious reasons. The size or freshness of the music library is NOT a factor.
What's more, these reasons do not carry over to the news media. So rupert's really got to innovate.
In music, there is intrinsic value to random serialization. In the news, none.
farhanlalji
· 4 months ago
Think your kids value their time a bit more then Guys kids. For a lot of peeps like your son it's whatever's easiest, quickest and with the least amount of pain.
Here's an idea, a subscription hub. One place where you can pay for your different subscriptions whether it's the WSJ, FT, NYT etc. If they made it dead easy to pay and get content from everywhere I might believe the paid for content model has more legs.
ShanaC
· 4 months ago
Hi, at age 15 you may or may not have a debit card. The NYPost is a buck for page 6, which duplicates a lotle of content from People, which your mom may or may not read (just like you were reading Tiger Beat at age 11.) At age 11, up you need micropayments. For a group of people who may not have full access to banking yet. And they want to buy things, like Comics and Music, and early stage gossip rags.
Even if they did, may not understand how it works. I got my first (and I think last) CDs around 3rd grade. The guys were obsessed with Marvel. If you can get a payment model that works around a variety of media needs across a family in Micropayment form, you'll be able to have a self sustaining model.
Buy micropyament subscripition credits for in advance? With a slightly higher fee if you go over. Like Cellphone minutes, except for articles. (Though I think personally this shoots a certain people in the foot)
farhanlalji
· 4 months ago
Micropayments for content / sites could work, you could do it via parents subscriptions, kind of like the netflix instant views package that Fred was talking about in that other post.
Fred pays his son an allowance for his son to decide which sites he wants to subscribe for, make it dead easy for both Fred and his son and you could have a winner.
ShanaC
· 4 months ago
Big question here: people spend a lot of time online, and on computers, and on cellphones. Kids probably spend more than parents (My family, your family, and Fred's family might not be rules quite yet)
How old are we talking about for the youngest age to be involved in the buying? I know of one family who is proud of their two year old (or maybe younger at the time) for recognizing The Elmo Icon (SesameStreet) and being able to use a mouse. I'm pretty sure even in a Lockean world, two year olds should not be buying anything.
Also how much are we charging? One cent? It adds up after a while, and I don't think anyone is going to do a time model (Rewind to AOL portal), but it just feels, strange. Add ons for the right to unlimited tweet ala text messaging? It would make the AP happy, to be sure....
farhanlalji
· 4 months ago
You let the community decide, you provide the option and people decide. My guess is the two year old is surfing on a parents lap.
The model can be developed on the fly, and dependent on the site.
It's about making experimentation by the likes of News Corp easier.
ShanaC
· 4 months ago
Uncle actually, this was a few years back, ex-boyfriend talking about how proud he was playing with his niece.
Children are big drivers of purchases. Take a look at Minivan commercials next time you decide to watch a commercial. They always stick toys in the back, and children playing in them because they found out that when deciding between two roughly comparable minivans, parents will ask their kids input, and the children will relate to the children they see in the minivan commercials. Localizing how much access you want to give between parents and children, as contentious as this sounds, means you might drive how this technology is charged and used.
I keep thinking how SMS in the US is very much a young person thing, but now you see parents using it, and hence the development of (overpriced) infinite text messaging packages with infinite picture text packages because of the kids, not the parents. The kids asked, the parents saw the first phone bills, and they got. Then the parents started texting themselves, and such is life.
fredwilson
· 4 months ago
There is a startup called journalism online that wants to do that. I don't think murdoch or sulzberger really wants to be part of a hub though
farhanlalji
· 4 months ago
Think the wsj is the exception rather than the rule, will be interesting to see how long the try this with the other news Corp properties.
Wan-Qi Kim, Investor
· 4 months ago
Farhan,
You're paid hub idea is brilliant. Saddly, it will fail. If everyone worked from yours, mine, and apparently fred's perspective, paying for "streaming newsic" would be a hit.
Saddly, it won't. Especially with kids.
My parents sent me to every single SAT, GATE, DHS, AND EVEN IQ training camp. Which btw were always 100% exclusively filled by minorities and that one token "white kid (now I know who's son he was)."
What I'm saying is that most people pay for entertainment over education. So I believe Rupert will indeed succeed. WSJ readers aren't most people. And his bigger major holding, fox news... is entertainment.
ShanaC
· 4 months ago
I wouldn't say that. And I don't think we are heading towards Fahrenheit 451, thanks.
I taught as an adjunct? teacher part time in a class that was lower to lower middle class, with third graders. 32 of them. I grew up in a Middle, to Upper Class community. I got the WSJ every day, and sometimes brought it to class, and would read skim it to them occasionally so they would know about other parts of the world and politics. There were always students, usually not the "so called smartest" ones who would come up to me and ask about the newspaper. Sometimes there were other ones. There was even one student who asked me to practice reading an article about AIG. They knew that life outside was important, they just couldn't connect to how.
Young people read newspapers: http://ir.comscore.com/releasedetail.cfm?Releas... So says Comscore. They just are not loyal to a website, and are only somewhat loyal to the print/television brand, but only somewhat online. It is all about the content.
kidmercury
· 4 months ago
most of the kids i know have no remorse over sharing/"stealing". moreover, let's say i was one of those kids and i was at my friend's house, i would just plug my mp3 player into my friend's computer and begin copying over what i liked. if the friend hated on me, it would be a social penalty for the friend, not for me. at least that is the impression i get from all the college and pre-college kids i talk to about how their media sharing culture is. sharing is becoming a social reward, not a social cost -- that is why i think "stealing" is part of the disruption in media,
also, no need to put the smackdown on guy's kids, boss. i mean your kids probably are more honest than guy's (and smarter) but i think it is a bit uncalled for for you to rub it in. but with that said if you need me to write a song about it and put it in itunes just let me know.
David Semeria
· 4 months ago
Just for the record, they were not Guy Kawasaki's kids. Guy hosted a panel with a bunch of kids, and asked them about their online habits. See video link above.
kidmercury
· 4 months ago
aw man, that totally ruins my joke! damn. but of course it is always good to know the truth, so thanks for delivering the bad news.
David Semeria
· 4 months ago
.. but of course it is always good to know the truth..
Not just good, essential. Always, even if it hurts.
fredwilson
· 4 months ago
Can you really know the truth?
kidmercury
· 4 months ago
sure, of course. but knowledge is not so important, it is belief that counts. i always try to bet on believing the truth. most folks prefer to deny it, although that's why i call them youngsters.
David Semeria
· 4 months ago
That's deep Fred. For the most important questions, perhaps not. But the key thing is to move closer to the truth, as I'm sure you'll agree.
fredwilson
· 4 months ago
I used to have a mantra on the upper right of this blog that said 'there is no truth. Just your truth and mine. This blog is my truth'
But I tired of it
David Semeria
· 4 months ago
Since you studied engineering, I'm slightly surprised you prefer personal over objective truth, but then again, I suppose the key thing is to be free of dogma. The capacity to review the evidence and change one's opinion is the mark of a truly flexible mind. I have a video of the great Feynman doing it mid-sentence.
fredwilson
· 4 months ago
Send me that if you can. I want to see it. I love changing my mind and do it often
David Semeria
· 4 months ago
I did some digging on youtube and found the relevant clip there.
In the clip Feynman starts off by explaining why he finds it more interesting to talk to scientists rather than people from other fields, them abruptly (at about 4min) he says "I take it all back", and goes on to argue a different thesis.
Disqus has been very odd lately. I posted this about 6 hours ago. The re-post will probably follow.
fredwilson
· 4 months ago
The link came through this time
ShanaC
· 4 months ago
Interesting thought. I always thought that was the paradox of PostModernism: The Truth is that there is no individual truth: and That we must all strive with our small nonobjective view to see down some deep rabbit hole to see the objective one...
fredwilson
· 4 months ago
Thanks for clarifying that. Makes me feel better
fredwilson
· 4 months ago
I'm not looking to get into a spat with guy. I just see different behavior with my kids. That's all
kidmercury
· 4 months ago
that's cool. if you ever do want to get in a spat and need me to help you out in any way just holla at me, you know i'm good for it.
Dan Lewis
· 4 months ago
Does the publisher want Guy's kids as readers? I'm not asking facetiously.
Take a look at http://www.nypost.com/seven/08062009/sports/gia... -- it's a somewhat random page from a News Corp publication. It monetizes via a bunch of what looks like remnant banner ads and a pop-under, and a decently targetted CPA ad. Even if the page grinds out $25 CPM, which is probably an order of magnitude high, the value Guy's kids' visit brings is 2.5 cents -- and likely no more, as they aren't loyal readers and maybe see one or two more pages a month. Let's be even crazier and call it ten pv/mo, or $0.25 in monthly revenue.
Losing that reader may not be a big deal. Heck, losing 90% of your traffic if it comes in that way may not be a big deal if you can make it up with a $2.50/month subscription for the other 10%.
ShanaC
· 4 months ago
If Guy's kids are male, maybe. There are certain demographic of pre-pubescent kids who they want on that page just to barely start getting them exposed so they are locked into wanting lots of sports pages later on in life.
Dan Lewis
· 4 months ago
Yeah, it's a big maybe. At the volume these readers are doing -- one to three interactions/month -- there's little reason to believe they are going to build any relationship with the Post's brand. To the extent that the readers are beginning to show interest in the sports content, that's going to happen regardless. The Post's strategy, in theory, would be to go after them in 5++ years when they're looking for premium NY-regional sports content. Locking them out today, when they cannot buy access, may actually make future subs more likely.
In short: it could go either way.
ShanaC
· 4 months ago
It's a huge unknown. It also might make them never discover the page, and hence never want the page. They might never discover that passion in watching that particular sports team, which is bad for all the products and brands surrounding the sports team.
I have a huge theory that impressions, especially for advertising are fleeting: it is where they comes from and the amount that count. A combination of bombardment and influencers is what makes a product a product. The same might be true of this case. I don't truly believe in Reed's law anymore. What do you call interlocking networks and the rate of it's growth? News Corp would take care to think on that. So you might not get someone to click the advertisement on the page ever in the next three years? Did they end up either a) buying it in the fourth year? B) spreading that product to someone who did buy it? C) buying the same or similar product from another vendor? (especially when it comes to physical products, like say, watches)
Let's pretend I keep looking at vintage watch blogs, and modern design blogs, because I am interested in certain aspects of midcentury design, particularly how Bauhaus got transplanted into the US and into everyday products. Google and the NYT now shows me really beautiful and very expensive watch advertisements from a very high priced vendor. All very flashy. Let's pretend at the end of this, I fall in love with a watch face from Alessi. I end up going to the loss leader after four weeks of looking at these ads, trying to find a certain watch under the market retail value cost. Does it matter that I never clicked on an ad from Alessi's point of view? Did they get their money's worth in advertising, even if all of their distributors never got a dime because I shopped around?
Dan Lewis
· 4 months ago
Yeah, it's a big maybe. At the volume these readers are doing -- one to three interactions/month -- there's little reason to believe they are going to build any relationship with the Post's brand. To the extent that the readers are beginning to show interest in the sports content, that's going to happen regardless. The Post's strategy, in theory, would be to go after them in 5++ years when they're looking for premium NY-regional sports content. Locking them out today, when they cannot buy access, may actually make future subs more likely.
In short: it could go either way.
JacopoGio
· 4 months ago
Only exclusive, first and complete news data will be payed, not the rest. Perhaps autorative comments could also make it.
... and Sex & Sports of course.
" "When we have a celebrity scoop, the number of hits we get now are astronomical." ... Murdoch singled out the Daily Telegraph's run of stories about MPs' expenses as an example of news for which consumers would be willing to pay, describing it as a "great scoop": "I'm sure people would be very happy to pay for that."
henryyates
· 4 months ago
I can see that the problem The Times may have is that they do not have a differentiated enough offering from other news sources to be able to charge for their content. People will simply switch to another paper such as The Telegraph. If all the newspapers follow the UK news industry still has the problem of having a very strong public broadcaster in the bbc. bbc.co.uk will cover most people's basic news needs. The Sun may stand a better chance particularly if The Mirror follows. Anyway, I agree, it will be fascinating to watch.
Jan Schultink
· 4 months ago
20 years ago, you used to be able to find a newspaper that was your primary source of news, matched your political views, talked about all the things you wanted to know about. You were happy to pay for it.
Today, there is no such thing as a single news destination anymore (Maybe The Economist?). The news market is fragmenting, no reader is the same.
I am curious to see how Rupert's experiment fares. I also would be happy to pay a newspaper-like fee to someone who offers me the news I want in one place. I just haven't found it yet.
Dan Lewis
· 4 months ago
How high is "a newspaper-like fee"?
With marginal distribution costs falling to near-zero, I think the online versions of newspapers are not going to have to charge $5.85/wk (the NY Times rate for my zip code) to deliver the content to me. in fact, I hope it'd be closer to that per month or even per year.
Remember that newspapers typically break even or take a small hit on the subscription costs; that is, it costs the Times roughly $5.85 just to print and deliver that weeks' worth of newspapers. Online, the cost of that is probably closer to $0.000585. So it is unlikely that newspaper-like fees will be of the order of magnitude you are used to paying for the print version.
fredwilson
· 4 months ago
The ny times is pretty close for me. That plus blogs gets it done for me
millarm
· 4 months ago
Fascinating - particularly as some of the "Dead tree" competition is experimenting with free, advertising supported models.
In the UK the free, daily paper Metro has a circulation of 1.3m For comparison The Sun has a circulation of 3m (with a 30p price, and of course it contains advertising)
Getting this right is going to depend on having the content that's valuable enough to persuade people to pay (in the Sun's case it's the topless model on page 3?) and having the brand awareness to persuade people to part with their cash. The challenge for online content is the best way to prove your content has value is to give people access - which suggests that Freemium could be the lowest cost content marketing strategy.
I'll enjoy watching the experiment
im2b_dl
· 4 months ago
Fred Tell me there is not a little excitement / hope that they start charging for FoxNews. OH what it could do for our democracy. Perhaps if they had a co$t wall in 1999 ...we would not be in the situation we are in. ; ) I think as I have said so many times...it's going to be the channel that offers content for free with various other ways of instigating revenue that will win. I think if their wall is on 3 steps off the ground floor of entrance...they will eventually lose. Gobs of revenue have never been their problem... scale is their problem...like Polaroid and others before them... corporate and revenue mobility is the strangle hold that slowly kills them. Being second or 1 step removed in a paradigm shift that results in redundancy is what suffocates anyone..(new platforms and technology included)...the walls of charging imho - just that intuitive panic reaction that often turns to most likely restrict even more. ...imho ; )
benjaminjtaylor
· 4 months ago
In terms of speed to market, Neiman Journalism Labs published a story about Newport Daily News’ new experiment with paid content [Nieman Labs] http://bit.ly/LPnPe - i.e. just getting a subscription model out the door. I don't think their goals are in line with the way in which we participate and share content, but credit their effort.
The Newport Daily News' subscription model does not address the complexity and nuance of implementing a successful model for a news reporting business the size of the NY Times, but it does demonstrate how remarkably cautious mainstream newspapers are with pay models.
I would still like to see a flexible and scalable subscription model based on my reading preferences. I want the Times to know about my preferences. The A la carte, or "pay for all" lacks intelligence - to your point. Technically, "smarter" subscription models can be built and implemented, even across brands like the NY Times.
Nigel Eccles
· 4 months ago
My impression is why the are all talking about it and none of them are doing it is they are trying to get their nerve up. Also, it is clear that no one wants to go first on this one. In fact what they would really like is a cartel where everyone charged.
In the UK the big problem for them charging is that the BBC is the biggest online news site feeding out a massive amount of high quality news content. There is no way the BBC is going to charge (we already pay for it) so for if the Times goes paid then they are betting that enough people are willing to pay for something when they can get something for free only a mouse click away.
I think the only thing they will learn is just how fungible their news content is.
fredwilson
· 4 months ago
And that is a big part of why I want to get on with it
Nigel Eccles
· 4 months ago
You are like Nick Denton, cheering them on over the precipice! :-)
fredwilson
· 4 months ago
Denton could be this century's Murdoch
RichardForster
· 4 months ago
The FT have tuned their subscription model over the years, although they have always had the freemium element as far as I can remember.
Whether News Corp will be as successful in their implementation is another matter. Personally I think the FT is a site with valuable content that is pretty much unrivalled and thus I am willing to pay for it, I am not sure that can be said of any of the News Corp titles. The Times already has a subscription element to what is the most valuable part to me, the crossword! The rest of the (generic news) content is pretty much duplicated for free across the web.
Ryan Graves
· 4 months ago
If this thing flops it will at the very least serve as great PR. Murdoch is no idiot.
Riaz Kanani
· 4 months ago
It is definitely going to be interesting and Murdoch is not stupid..
I tend to agree with your take on a frequency based charging model - I don't see people bothering to go through registration walls to read a single news article but maybe a prompt after a few views within a certain timeframe could work..
Regarding obtaining content over time some research we did at Silverpop found that it was not the number of questions asked that put people of surveys; rather the speed and ease with which you could answer the questions. Therefore answering more questions over time in return for being able to read an article might be a good way to go. It would result in the ability to provide more targeted advertising which is more revenue for the newspapers..
pfreet
· 4 months ago
If they do go with a frequency based model, very quickly everyone will learn how to clear cookies regularly and get it for free.
Riaz Kanani
· 4 months ago
not if you require a login.. maybe ask for an email address at first entry - it would be the lowest possible barrier.. then for example ask for age after 3 entries.. job title after that .. etc etc
pfreet
· 4 months ago
Much of the news traffic comes from links in blogs, fb posts, twitter. Adding the extra friction of a login process will mean that fewer people will include links to those sites, creating less traffic. They'll create links to non-subscription sites instead.
Riaz Kanani
· 4 months ago
completely agree - there will definitely be a drop off - and a significant one at that I think.. I guess Murdoch is betting either the money will offset the loss in advertising revenue.
No one has mentioned micro-transactions in a long while..
ShanaC
· 4 months ago
Didn't we have this discussion about the FT- they cookie you over there.
fredwilson
· 4 months ago
Totally. I don't like to link out to anything that is not completely friction free
fredwilson
· 4 months ago
Yup
fredwilson
· 4 months ago
I know how to clear cookies. I know how to use limewire and bit torrent too. Just because I can do it doesn't mean I will
pfreet
· 4 months ago
I wouldn't bother either, I'd get my news somewhere else. But surely you don't mean to imply they are equivalent. Clearing cookies is the same as copyright infringement?
fredwilson
· 4 months ago
I'm not suggesting that at all. I'm just saying that people know how to cheat a system but not all of them will do it
fredwilson
· 4 months ago
I'm not suggesting that at all. I'm just saying that people know how to cheat a system but not all of them will do it
DonRyan
· 4 months ago
I don't thing a full on subscription model will work for most NWS properties. The Wall Street Journal works because there is a hard core business readership. Fox News may work as well because of the devoted readership but that content is available on television. As for the Post and such, I don't visit those sites unless someone links me there. I can't imagine a huge subscription following but I could wrong. I do agree that the FT.com model is excellent for newspaper sites. I'd like to see it more. Other than NYT and WSJ, I can't think of any other newspaper sites I'd pay for.
Khyle Keys
· 4 months ago
As always, the comments are great here. None of this charging stuff makes any sense to me at all.
The problem to me is that for general papers (not financial), there are no scarce goods. The facts of a story aren't scarce. In my area, there are maybe 5 different papers that report on the general stories. At some point, some one will provide that content free, and I don't need the other 4.
For editorial, or in depth reporting, and whatnot. There are generally blogs\non-traditional media who have as good or better content that will be free and\or more convenient.
You can struggle with different methods to protect the size of your old business all you want. It doesn't make the goods more scarce. Papers need to actually create actual value (i.e. scarce goods) if they want people to pay. As of now, I don't see any.
William Mougayar
· 4 months ago
Nuff said, I agree. The dice has been rolled. This is the crux of the problem: "NAA/Nielsen stats show newspapers own less than 1 percent of U.S. online audience page views, time spent" http://bit.ly/UvpUZ A highly recommended read. If the newspapers could get and monetize more traffic online, they wouldn't have the urge to charge. It's always better to shoot yourself in the foot, rather than have someone else shoot you in the head.
ShanaC
· 4 months ago
I still think there are ways to monetize. I even wrote a plan of why over here. They've been panicking since the rise of TV...poor form
fredwilson
· 4 months ago
Oooh. I love that last paragraph. Did you come up with that?
William Mougayar
· 4 months ago
Lol. I did,- probably 13 years ago when speaking about the Internet to big corps that needed to take the plunge online. If they didn't canibalize a part of their business, someone else would take more of it away. Same analogy, different decade.
jarid
· 4 months ago
Along the same line, @alacra1 always said "Someone is going to eat your young. Might as well be you."
fredwilson
· 4 months ago
Right. Steve's a smart guy
Arvind Ashok
· 4 months ago
Related to this, personally I think Jeff Jarvis' ideas on the link economy (http://www.buzzmachine.com/2008/07/28/the-imper...) make a lot of sense. Because it obviously means a person or entity has to have enough of a reputation, thereby sending enough traffic to a link elsewhere, and sharing in the money generated.
marko
· 4 months ago
I hope this breaks ground for the long-tail also. Most of my favorite places on the web are by starving artists (expert/talented individuals chasing their passion without immediate financial upside). I'm fully aware that if I, as one of their enthusiastic fans, don't help support them financially....there is a high risk they will drop what they are doing now and get a 'real' job. I am compelled to contribute. I hear more and more people discuss this lately. Nothing groundbreaking per se....but i think we will see an increase in the age-old models of patronage (donation) and membership (subscription). And I think this underlying logic of 'users increasingly active as owners' is the fundamental shift that will shape large-scale business models....the buzz words are being thrown around now but we haven't seen it actually implemented at scale yet (maybe Twitter will try?).
Note to Fred: My understanding is that you feel you get enough indirect benefits from this blog that you consider it a fair exchange.....otherwise it would definitely be on my patronage list :)
Its great! I think they are exactly on the right curve. Not knowing anything on their future plans I see two openings..... 1) What about pure B2B, deep site integration and fade into the background? No need to be the destination and channel for discovery. I don't think, "I have 20 extra bucks, where should donate it?" I think, "I love this site, how can i help?" Many donation aggregators failed in the past partly due to this. 2) From what I can see the focus is on the donation model. Which is cool. But from a biz perspective I think this will be a small slice of the pie. Users as owners is more scalable. I love Wikipedia and happily donate....but couldn't help feel the need for more transparency and influence for that donation. 'No taxation without representation'.
This is a great story: www.myfootballclub.co.uk/ ....seems so obvious afterwards.... why aren't many companies financed and run this way? I think they will be.
fredwilson
· 4 months ago
Thanks for that feedback
K. Warman Kern
· 4 months ago
@fredwilson re: Murdoch move to paid media. Could this be the end of replicating a failed b-ness model and the beginning of real innovation?
1) Will Reuters, Paypal, et al develop a 1-click transaction system that rewards good content, rewards media experiences that foster responsive audiences, and rewards audience participation with integrity? http://twurl.nl/uxd6hp 2) Will content creators start thinking beyond the internet as an incremental distribution point for content that originated on a passive, one-way medium? http://twurl.nl/m7wp6v 3) Will technology developers begin to focus on emulating the "gold standard" of communications and entertainment - the live event http://twurl.nl/7uzyy2
Fred, they won't be able to make news more scarce and expensive through the collusion model, ie basing online subscriptions on creating a wall around several respected brands..... there are just too many other quality sources from which to choose.
Do I REALLY need to pay for Walt Mossberg when I can have John Gruber for free?
My favorite headline on this: "Newscorpse" to begin charging for their websites, Democratic Underground http://bit.ly/grxqt Ouch... My favorite joke (just made it up): Q. What will you do when they start charging for the news? A. I'll read it free on Gawker after they steal it. Ouch again...
Reeder
· 4 months ago
I really like Fred's comment on this issue. There are some technologist talking heads that are dogmatic on this issue to the point of being ridiculous. Fred has a good point that it is time to start testing and iterating. Google didn't reinvent business in perpetuity with its free model. There is still room for others to challenge the model (at their own risk of course).
liza
· 4 months ago
Hear hear!
slowblogger
· 4 months ago
I wrote a short post about this. Here is the first paragraph.
"Defined too loosely, Freemium is pointless. I wonder whether that's not what some people are trying to do, by arguing that News Corp's move is Freemium. Maybe true, but then what's not so Freemium? Free samples existed forever and everywhere."
I'm just excited to see what's going to happen. If the paid model works (I don't think it will) but if it does, than I wonder how that will change other forms of content access beyond written words i.e. video. I'm sure Hulu's studio base would be more likely to push the service into charging for content.
fredwilson
· 4 months ago
Yup. That's why we need to get on with it
benjaminjtaylor
· 4 months ago
As an aside, Neiman Journalism Labs published an article on Thursday, "Before Rupert Murdoch learned to love paid content, he said this" http://www.niemanlab.org/2009/08/rupert-before-... it's an interesting look back on a speech from the 2005 ASNE convention and Murdoch's position on the the industry, the revenue model, and having a "conversation" with users which speaks directly to posts on AVC about comments and user engagement. *Link to Murdoch's full speech in the Neiman post.
kidmercury
· 4 months ago
criminals like murdoch are not going to bring us the new media revolution. IMO the key to the media revolution is very similar to the "power to the people" notion you've talked about, and the web businesses that empower independent publishers is where we'll get the digital media revolution. murdoch is an incumbent in an extremely consolidated industry (mainstream media) that is threatened by the "power to the people" nature of the internet. any attempt he makes at going digital will thus be what any incumbent does when they see a disruptive threat, which is acquire and kill. in many ways he is the anti-VC: you guys buy to build and grow, he buys to kill.
MattCope
· 4 months ago
I guess I'm a little late to the party - but let me contribute this tidbit about the WSJ paywall.
It turns out that you can get any WSJ content you want via Google. I browse through the Business, Markets, Tech, etc. sections; and Google the headlines that grab me - and I get linked to the entire article, free. Free to me, anyway.
I'm not sure I "get" why this structure would be beneficial to News Corp. (Maybe it's an artifact of a search deal negotiated a few years ago?) Whatever the reason, I think I'm living on borrowed time - so I'm making the most of it.
All Comments
I also want to see if that works universally. It makes sense that it would work nicely for the WSJ but the same logic does not necessarily apply to the New York Post. But like you, Mr. Wilson, I'm glad someone with scale is going to try this.
incr. cpm x decr. in inventory. (decr. host exp) v. decr. cpm x incr. in inventory (incr. host exp)
Beyond what could be a push in actual net revenue there is a more substantial competitive problem. If there is a viable business model from the presentation of free content, you have immediately given your competition a competitive advantage in an area that they can both gain market share and still be profitable.
At first I thought this is silly, no way would this work. Having read your post, I agree that it's a solid and good move to trial, I just hope that News corp does it as an experiment and not as a dive in policy. Would hate to see Fox news, the Sun, News of the World's readership go down... oh wait a minute, on second thought...
Either way, it's good to see experimenting and trial with business models, I do believe action creates clarity and if nothing else Murdoch and News corp are acting.
I appreciate Fred's cool and reasonable response. I hope some people on the free camp, who seem to confuse their emotion("I don't like paid contents!") vs. reason("I don't think they can make money with pais model because...), to be like him.
#amexfail.
On a venn diagram, guy's kid and rupert's base are on different sheets of paper. And if you watch fox news, yes, you can be manipulated with guilt.
Basically the kids have no allegiance to anything, except perhaps GMail. They said if FB started charging they would all walk away.
Towards the end Guy asks the kids what they would do if FB started charging, and they all said they would walk away. They appear to have no allegiance to any product (regardless of their emotional capital invested) except, curiously, GMail.
Regardless! I built a community of over 1000 active school aged kids by observing the behavior of over 20,000 of my youtube education themed subscribers. Youtube's socializing features, profile pages, discussion reply notification, etc are all high resistance. Linking is 100% impossible. So creating my own site was obvious.
the reason it works is because the site provides a much lower resistance to a preexisitng demand: much like bb messenger, access to friends. More like twitter however, there is added value in meeting new friends who are out of reach through any other means.
But alas, per my last comment, since making the site $7.75/m... new signups have halted to the level of waterboarding in subsaharan africa.
What's more, these reasons do not carry over to the news media. So rupert's really got to innovate.
In music, there is intrinsic value to random serialization. In the news, none.
Here's an idea, a subscription hub. One place where you can pay for your different subscriptions whether it's the WSJ, FT, NYT etc. If they made it dead easy to pay and get content from everywhere I might believe the paid for content model has more legs.
Even if they did, may not understand how it works. I got my first (and I think last) CDs around 3rd grade. The guys were obsessed with Marvel. If you can get a payment model that works around a variety of media needs across a family in Micropayment form, you'll be able to have a self sustaining model.
Buy micropyament subscripition credits for in advance? With a slightly higher fee if you go over. Like Cellphone minutes, except for articles. (Though I think personally this shoots a certain people in the foot)
Fred pays his son an allowance for his son to decide which sites he wants to subscribe for, make it dead easy for both Fred and his son and you could have a winner.
How old are we talking about for the youngest age to be involved in the buying? I know of one family who is proud of their two year old (or maybe younger at the time) for recognizing The Elmo Icon (SesameStreet) and being able to use a mouse. I'm pretty sure even in a Lockean world, two year olds should not be buying anything.
Also how much are we charging? One cent? It adds up after a while, and I don't think anyone is going to do a time model (Rewind to AOL portal), but it just feels, strange. Add ons for the right to unlimited tweet ala text messaging? It would make the AP happy, to be sure....
The model can be developed on the fly, and dependent on the site.
It's about making experimentation by the likes of News Corp easier.
Children are big drivers of purchases. Take a look at Minivan commercials next time you decide to watch a commercial. They always stick toys in the back, and children playing in them because they found out that when deciding between two roughly comparable minivans, parents will ask their kids input, and the children will relate to the children they see in the minivan commercials. Localizing how much access you want to give between parents and children, as contentious as this sounds, means you might drive how this technology is charged and used.
I keep thinking how SMS in the US is very much a young person thing, but now you see parents using it, and hence the development of (overpriced) infinite text messaging packages with infinite picture text packages because of the kids, not the parents. The kids asked, the parents saw the first phone bills, and they got. Then the parents started texting themselves, and such is life.
You're paid hub idea is brilliant. Saddly, it will fail. If everyone worked from yours, mine, and apparently fred's perspective, paying for "streaming newsic" would be a hit.
Saddly, it won't. Especially with kids.
My parents sent me to every single SAT, GATE, DHS, AND EVEN IQ training camp. Which btw were always 100% exclusively filled by minorities and that one token "white kid (now I know who's son he was)."
What I'm saying is that most people pay for entertainment over education. So I believe Rupert will indeed succeed. WSJ readers aren't most people. And his bigger major holding, fox news... is entertainment.
I taught as an adjunct? teacher part time in a class that was lower to lower middle class, with third graders. 32 of them. I grew up in a Middle, to Upper Class community. I got the WSJ every day, and sometimes brought it to class, and would read skim it to them occasionally so they would know about other parts of the world and politics. There were always students, usually not the "so called smartest" ones who would come up to me and ask about the newspaper. Sometimes there were other ones. There was even one student who asked me to practice reading an article about AIG. They knew that life outside was important, they just couldn't connect to how.
Young people read newspapers: http://ir.comscore.com/releasedetail.cfm?Releas... So says Comscore. They just are not loyal to a website, and are only somewhat loyal to the print/television brand, but only somewhat online. It is all about the content.
also, no need to put the smackdown on guy's kids, boss. i mean your kids probably are more honest than guy's (and smarter) but i think it is a bit uncalled for for you to rub it in. but with that said if you need me to write a song about it and put it in itunes just let me know.
Not just good, essential. Always, even if it hurts.
But I tired of it
In the clip Feynman starts off by explaining why he finds it more interesting to talk to scientists rather than people from other fields, them abruptly (at about 4min) he says "I take it all back", and goes on to argue a different thesis.
Enjoy.
Here's the full link: http://www.youtube.com/watch?v=mvqwm6RbxcQ
Disqus has been very odd lately. I posted this about 6 hours ago. The re-post will probably follow.
Take a look at http://www.nypost.com/seven/08062009/sports/gia... -- it's a somewhat random page from a News Corp publication. It monetizes via a bunch of what looks like remnant banner ads and a pop-under, and a decently targetted CPA ad. Even if the page grinds out $25 CPM, which is probably an order of magnitude high, the value Guy's kids' visit brings is 2.5 cents -- and likely no more, as they aren't loyal readers and maybe see one or two more pages a month. Let's be even crazier and call it ten pv/mo, or $0.25 in monthly revenue.
Losing that reader may not be a big deal. Heck, losing 90% of your traffic if it comes in that way may not be a big deal if you can make it up with a $2.50/month subscription for the other 10%.
to three interactions/month -- there's little reason to believe they
are going to build any relationship with the Post's brand. To the
extent that the readers are beginning to show interest in the sports
content, that's going to happen regardless. The Post's strategy, in
theory, would be to go after them in 5++ years when they're looking
for premium NY-regional sports content. Locking them out today, when
they cannot buy access, may actually make future subs more likely.
In short: it could go either way.
I have a huge theory that impressions, especially for advertising are fleeting: it is where they comes from and the amount that count. A combination of bombardment and influencers is what makes a product a product. The same might be true of this case. I don't truly believe in Reed's law anymore. What do you call interlocking networks and the rate of it's growth? News Corp would take care to think on that.
So you might not get someone to click the advertisement on the page ever in the next three years? Did they end up either a) buying it in the fourth year? B) spreading that product to someone who did buy it? C) buying the same or similar product from another vendor? (especially when it comes to physical products, like say, watches)
Let's pretend I keep looking at vintage watch blogs, and modern design blogs, because I am interested in certain aspects of midcentury design, particularly how Bauhaus got transplanted into the US and into everyday products. Google and the NYT now shows me really beautiful and very expensive watch advertisements from a very high priced vendor. All very flashy. Let's pretend at the end of this, I fall in love with a watch face from Alessi. I end up going to the loss leader after four weeks of looking at these ads, trying to find a certain watch under the market retail value cost. Does it matter that I never clicked on an ad from Alessi's point of view? Did they get their money's worth in advertising, even if all of their distributors never got a dime because I shopped around?
to three interactions/month -- there's little reason to believe they
are going to build any relationship with the Post's brand. To the
extent that the readers are beginning to show interest in the sports
content, that's going to happen regardless. The Post's strategy, in
theory, would be to go after them in 5++ years when they're looking
for premium NY-regional sports content. Locking them out today, when
they cannot buy access, may actually make future subs more likely.
In short: it could go either way.
Perhaps autorative comments could also make it.
... and Sex & Sports of course.
" "When we have a celebrity scoop, the number of hits we get now are astronomical."
... Murdoch singled out the Daily Telegraph's run of stories about MPs' expenses as an example of news for which consumers would be willing to pay, describing it as a "great scoop": "I'm sure people would be very happy to pay for that."
Anyway, I agree, it will be fascinating to watch.
Today, there is no such thing as a single news destination anymore (Maybe The Economist?). The news market is fragmenting, no reader is the same.
I am curious to see how Rupert's experiment fares. I also would be happy to pay a newspaper-like fee to someone who offers me the news I want in one place. I just haven't found it yet.
With marginal distribution costs falling to near-zero, I think the online versions of newspapers are not going to have to charge $5.85/wk (the NY Times rate for my zip code) to deliver the content to me. in fact, I hope it'd be closer to that per month or even per year.
Remember that newspapers typically break even or take a small hit on the subscription costs; that is, it costs the Times roughly $5.85 just to print and deliver that weeks' worth of newspapers. Online, the cost of that is probably closer to $0.000585. So it is unlikely that newspaper-like fees will be of the order of magnitude you are used to paying for the print version.
In the UK the free, daily paper Metro has a circulation of 1.3m For comparison The Sun has a circulation of 3m (with a 30p price, and of course it contains advertising)
Getting this right is going to depend on having the content that's valuable enough to persuade people to pay (in the Sun's case it's the topless model on page 3?) and having the brand awareness to persuade people to part with their cash. The challenge for online content is the best way to prove your content has value is to give people access - which suggests that Freemium could be the lowest cost content marketing strategy.
I'll enjoy watching the experiment
The Newport Daily News' subscription model does not address the complexity and nuance of implementing a successful model for a news reporting business the size of the NY Times, but it does demonstrate how remarkably cautious mainstream newspapers are with pay models.
I would still like to see a flexible and scalable subscription model based on my reading preferences. I want the Times to know about my preferences. The A la carte, or "pay for all" lacks intelligence - to your point. Technically, "smarter" subscription models can be built and implemented, even across brands like the NY Times.
In the UK the big problem for them charging is that the BBC is the biggest online news site feeding out a massive amount of high quality news content. There is no way the BBC is going to charge (we already pay for it) so for if the Times goes paid then they are betting that enough people are willing to pay for something when they can get something for free only a mouse click away.
I think the only thing they will learn is just how fungible their news content is.
Whether News Corp will be as successful in their implementation is another matter. Personally I think the FT is a site with valuable content that is pretty much unrivalled and thus I am willing to pay for it, I am not sure that can be said of any of the News Corp titles. The Times already has a subscription element to what is the most valuable part to me, the crossword! The rest of the (generic news) content is pretty much duplicated for free across the web.
I tend to agree with your take on a frequency based charging model - I don't see people bothering to go through registration walls to read a single news article but maybe a prompt after a few views within a certain timeframe could work..
Regarding obtaining content over time some research we did at Silverpop found that it was not the number of questions asked that put people of surveys; rather the speed and ease with which you could answer the questions. Therefore answering more questions over time in return for being able to read an article might be a good way to go. It would result in the ability to provide more targeted advertising which is more revenue for the newspapers..
No one has mentioned micro-transactions in a long while..
The problem to me is that for general papers (not financial), there are no scarce goods. The facts of a story aren't scarce. In my area, there are maybe 5 different papers that report on the general stories. At some point, some one will provide that content free, and I don't need the other 4.
For editorial, or in depth reporting, and whatnot. There are generally blogs\non-traditional media who have as good or better content that will be free and\or more convenient.
You can struggle with different methods to protect the size of your old business all you want. It doesn't make the goods more scarce. Papers need to actually create actual value (i.e. scarce goods) if they want people to pay. As of now, I don't see any.
This is the crux of the problem: "NAA/Nielsen stats show newspapers own less than 1 percent of U.S. online audience page views, time spent" http://bit.ly/UvpUZ
A highly recommended read. If the newspapers could get and monetize more traffic online, they wouldn't have the urge to charge.
It's always better to shoot yourself in the foot, rather than have someone else shoot you in the head.
Note to Fred: My understanding is that you feel you get enough indirect benefits from this blog that you consider it a fair exchange.....otherwise it would definitely be on my patronage list :)
I'm curious what you think of it
1) What about pure B2B, deep site integration and fade into the background? No need to be the destination and channel for discovery. I don't think, "I have 20 extra bucks, where should donate it?" I think, "I love this site, how can i help?" Many donation aggregators failed in the past partly due to this.
2) From what I can see the focus is on the donation model. Which is cool. But from a biz perspective I think this will be a small slice of the pie. Users as owners is more scalable. I love Wikipedia and happily donate....but couldn't help feel the need for more transparency and influence for that donation. 'No taxation without representation'.
This is a great story: www.myfootballclub.co.uk/ ....seems so obvious afterwards.... why aren't many companies financed and run this way? I think they will be.
1) Will Reuters, Paypal, et al develop a 1-click transaction system that rewards good content, rewards media experiences that foster responsive audiences, and rewards audience participation with integrity? http://twurl.nl/uxd6hp
2) Will content creators start thinking beyond the internet as an incremental distribution point for content that originated on a passive, one-way medium? http://twurl.nl/m7wp6v
3) Will technology developers begin to focus on emulating the "gold standard" of communications and entertainment - the live event http://twurl.nl/7uzyy2
Sincerely,
Katherine Warman Kern
Katherine (at) comradity.com
Do I REALLY need to pay for Walt Mossberg when I can have John Gruber for free?
You might want to take a look at this: http://www.digitalmediaminute.com/article/3491/...
My favorite joke (just made it up):
Q. What will you do when they start charging for the news?
A. I'll read it free on Gawker after they steal it. Ouch again...
"Defined too loosely, Freemium is pointless. I wonder whether that's not what some people are trying to do, by arguing that News Corp's move is Freemium. Maybe true, but then what's not so Freemium? Free samples existed forever and everywhere."
http://www.slowblogger.com/2009/08/dilemma-of-f...
It turns out that you can get any WSJ content you want via Google. I browse through the Business, Markets, Tech, etc. sections; and Google the headlines that grab me - and I get linked to the entire article, free. Free to me, anyway.
I'm not sure I "get" why this structure would be beneficial to News Corp. (Maybe it's an artifact of a search deal negotiated a few years ago?) Whatever the reason, I think I'm living on borrowed time - so I'm making the most of it.