Murdoch Banks on Rooney Hooker, Coke Binge to Push Paywall Plans‏

Bloomberg

 

James Murdoch’s plan to charge for online access to U.K. tabloid News of the World shows he’s extending his paywall model even as advertisers flee websites of two of his other newspapers where Internet readers have to pay.

News of the World, which this month featured a video of boxer Ricky Hatton purportedly snorting cocaine and published an interview with a prostitute who said she had sex with Manchester United footballer Wayne Rooney while his wife was pregnant, will seek payment from Web readers from next month. The move follows Murdoch-controlled News Corp.’s July push to get London papers The Times and The Sunday Times into the online-pay arena.

With more people getting their news from the Internet, newspapers are increasingly charging for online access to make up for lost revenue from print advertising. Murdoch’s strategy to put all stories of his U.K. newspapers behind an online paywall differs from the approach of some other newspapers such as the Financial Times which first gives access to some stories online before it starts charging.

So far, The Times and The Sunday Times have seen readers leave to access free news elsewhere, with advertisers following suit. “I can go to the Guardian or CNN and get an audience,” said Chris Bailes, digital trading manager at Starcom MediaVest Group, a media buyer owned by Publicis Groupe SA. “No one is indispensable.”

Starcom MediaVest, which has placed ads for the Emirates airline and Continental Airlines Inc., has cut its advertising on the Times and Sunday Times by more than 50 percent, Bailes said. News Corp.’s international unit hasn’t communicated with media buyers about its online figures, he said.

“We wouldn’t put our money where we don’t know the numbers, just as you wouldn’t invest in a stock,” Bailes said.

Fewer Visitors

James, Rupert Murdoch’s son, is the chairman and chief executive officer of News Corp.’s European and Asian operations that oversee the U.K. news titles. A News Corp. spokeswoman declined to comment on Times readership or advertising since the paywall was installed.

Visits to the website of The Times fell to a third as of July 20, several weeks after the paywall was put up, data compiled by Experian Hitwise showed. Murdoch has not publicly commented on the traffic.

The News of the World might be able to turn the paywall model into more of a success, some analysts said.

News of the World will re-launch its site in October and make it available for 1 pound ($1.6) a day or 1.99 pounds for four weeks, News Corp.’s international unit, News International said in a statement yesterday. An Apple Inc. iPad application will follow for 1.19 pounds a week. Access to the site of “Fabulous” magazine will be included in the pricing, it said.

Tabloid Model

The News of the World website “will be the third of our titles to launch a paid-for digital proposition in under four months,” News International Chief Executive Officer Rebekah Brooks said in the statement.

“News of the World has a lot of content and videos and it could be easier to attract paying readers,” said Benedict Evans, a media analyst at Enders Analysis in London. “People buy the paper to read about a footballer having sex, so why not do the same online?”

The Financial Times and Murdoch’s Wall Street Journal already charge for online access, and have enjoyed a degree of success because they offer premium content for a niche group of readers, analysts said.

Paper Paywalls

“I couldn’t imagine the same would happen for the New York Post or even Bild in Germany because they are general,” said Karsten Weide, a research vice president for digital media and entertainment at Interactive Data Corp. Bild is Germany’s biggest tabloid and the New York Post is an U.S. tabloid owned by News Corp.

Paid-for online versions of The New York Times and Washington Post could also do well because their readers are typically wealthy and better educated, Weide said. The paid-for online model could also work at local newspapers, where the content isn’t widely available, he said.

The New York Times plans to erect an Internet paywall next year. The newspaper will see “some effect” on readership after it implements a paywall next year, New York Times Co. Chief Executive Officer Janet Robinson said in June. “We feel that we will protect as much of the audience as possible” with a “metering” approach, that allows free access to a limited number of stories, she said at the time.

Different Approaches

The difficulty for general titles such as The Times is that similar news is available free from many more websites, including those of competing U.K. newspapers the Guardian, the Independent and the Daily Telegraph.

Stories from The Times online aren’t even available on the Google search engine so readers have no idea what the Times’ journalists are writing about, according to Enders’s Evans.

“The Financial Times paywall approach is better because it allows you several free articles a month and you can at least see what the stories are and share the content with your friends even if you cannot open all the stories,” he said.

Rupert and James Murdoch have both lobbied in the past for governments to do more to protect copyright online and prevent people from taking online content without paying for it.

The money an online reader generates is about a third or quarter that of a print reader. That’s because online ad rates are lower and the average online reader skims through about five pages, while an offline print reader averages 70 to 80 pages, Enders’s Evans said, citing figures by researcher ComScore.

IPad Effect

With contact details on a small base of loyal, paying online readers, marketers target users. Also, News Corp. could bundle newspaper subscriptions with TV offerings from pay-TV operator British Sky Broadcasting Group Plc, which it controls.

Paywalls are about developing a closer relationship with readers, said Alan Brydon, head of trading at the MPG media buying agency, owned by France’s Havas SA. The paywall allows marketers to target more effectively and send tailored messages to users to start a dialog, he said.

“I thought a year ago that paywalls were rubbish, but then you see the iPad and that’s how people will read a paper,” said Brydon. “In three to five years when iPads are as ubiquitous as iPods you will see people subscribing.”

MPG has probably cut its ads on the Times and Sunday Times by 90 percent, from advertisers including Air France-KLM and Sporting Index, Brydon said.

“There’s no shortage of places to go online to advertise, but if you have a database of 10,000 people with their details then that becomes very interesting,” he said.

The Rise of Content Farms

The Economist

Can technology help make online content pay?

 

 

THIS week the Wall Street Journal, the pride of News Corporation’s stable of newspapers, launched a 12-page daily section of local news in New York, in a direct challenge to the New York Times. The premise behind the launch is that expensive, thorough reporting will pay for itself by attracting readers and advertisers. Indeed, Rupert Murdoch, News Corp’s boss, recently proclaimed, “Content is not just king, it is the emperor of all things electronic.” However, a new brand of media firms dubbed “content farms” takes the opposite view: that online, at any rate, revenue from advertising or subscriptions will never cover the costs of conventional journalism, so journalism will have to change.

Newspaper articles are expensive to produce but usually cost nothing to read online and do not command high advertising rates, since there is almost unlimited inventory. Mr Murdoch’s answer is to charge for online content: another of his newspapers, the Times of London, will start to do so this summer (the Journal already does). Content farms like Demand Media and Associated Content, in contrast, aim to produce content at a price so low that even meagre advertising revenue can support it.

Demand Media’s approach is a “combination of science and art”, in the words of Steven Kydd, who is in charge of the firm’s content production. Clever software works out what internet users are interested in and how much advertising revenue a given topic can pull in. The results are sent to an army of 7,000 freelancers, each of whom must have a college degree, writing experience and a speciality. They artfully pen articles or produce video clips to fit headlines such as “How do I paint ceramic mugs?” and “Why am I so tired in winter?”

Although an article may pay as little as $5, writers make on average $20-25 an hour, says Mr Kydd. The articles are copy-edited and checked for plagiarism. For the most part, they are published on the firm’s 72 websites, including eHow, answerbag and travels.com. But videos are also uploaded onto YouTube, where the firm is by far the biggest contributor. Some articles end up on the websites of more conventional media, including USAToday, which runs travel tips produced by Demand Media. In March, Demand Media churned out 150,000 pieces of content in this way. The company is expected to go public later this year, if it is not acquired by a big web portal, such as Yahoo!, first.

AOL, a web portal which was recently spun off from Time Warner, a media giant, does not like to be compared to such an operation. Tim Armstrong, its boss, intends to turn it into “the largest producer of quality online content”. The firm already runs more than 80 websites covering topics from gadgets (Engadget.com) and music (Spinner.com) to fashion (Stylelist.com) and local news (Patch.com).

In AOL’s journalistic universe there are three groups of contributors. The first two are salaried journalists and freelancers with expertise in a certain domain, who currently number more than 3,000. Then there are amateurs who contribute to individual projects, for instance when AOL recently compiled profiles of all 2,000 bands at the SXSW music festival in Texas. (Contributors were paid $50 for each profile.) All this is powered by a system like Demand Media’s that uses data and algorithms to predict what sorts of stories will appeal most to readers, what advertisers are willing to pay for them and what freelancers should therefore be offered. So far, however, the numbers are small: in the week of April 25th, 61 writers published 155 articles in this way on 33 AOL sites.

Predictably, many commentators are appalled. Demand Media has been called “demonic”. But, argues Dan Gillmor, a professor of journalism at Arizona State University, “the firm is at least interested in what people want to know—which is nothing to sneer at”. And unlike many other services that take advantage of “user generated content”, he says, Demand Media actually pays its contributors.

The problem with content farms, Mr Gillmor and others say, is that they swamp the internet with mediocre content. To earn a decent living, freelancers have to work at a breakneck pace, which has an obvious impact on quality. Moreover, content that is designed to appear high up in the results produced by search engines could lose its audience if the search engines change their rules.

In AOL’s case, the question is whether the infrastructure for the three tiers of contributors will work financially, not just journalistically and technically. Clay Shirky, a new-media expert at New York University, suggests that content produced cheaply by freelancers could serve to fund more ambitious projects. If AOL can make that work, the pundits will cheer.

Britain's Johnston Press Experimenting With Paid Content

Times Online

Britain’s most prolific newspaper publisher began charging yesterday for some of its online content, in a closely watched move that could be copied across the country.

Johnston Press, which owns more than 300 local newspapers including the Yorkshire Post and The Scotsman, put “paywalls” around the websites of six of its titles. It is the first regional publisher to charge for online news.

From yesterday, readers of three Johnston titles, the Northumberland Gazette, the Whitby Gazette and the Southern Reporter, will pay £5 for a three-month online subscription. Three others papers, the Carrick Gazette, the Worksop Guardian and Ripley and Heanor News, will post summaries online and tell readers to buy the paper for the full story.

John Fry, the chief executive of Johnston Press, said that his industry had become more open recently to charging for content. “In the last six months the nature of the conversation has changed,” he said.

Mr Fry will judge whether the experiment has been a success before deciding whether to extend the scheme.

Rival publishing groups await the results of the three-month trial. Like them, Johnston Press has been bombarded by both recession and a declining readership. Advertising revenues at the group slumped by 42 per cent over the past two years. Although the decline is bottoming out, executives across the newspaper industry are looking at new ways to boost earnings. “It’s clearly an interesting opportunity for the industry,” said Lynne Anderson, a spokeswoman for the Newspaper Society, which represents local titles. “We would expect more publishers to start exploring whether consumers would be willing to pay for different sections of local content.”

The Johnston scheme follows the announcement by Rupert Murdoch, the head of News Corporation, that he intends to introduce fees for all of the group’s news websites, including The Times. Mr Murdoch’s plans were boosted this month by a Boston Consulting Group survey which found that 48 per cent of British and American consumers would be willing to pay for online news.

But other surveys have reached different conclusions, and some media commentators still think charging for online content is risky. “If you have content which broadly can be found somewhere else you’re going to really restrict people coming to your website,” Emily Bell, director of digital content at the Guardian, told Radio 4 yesterday.

Mr Fry emphasised that his local newspapers offered a “unique” service which readers may be prepared to pay for. Reports on local court and council meetings, for instance, could not be accessed elsewhere.

In America, newspaper paywalls have had varying degrees of success. In 2007 The New York Times scrapped its premium subscription programme for online access to columnists and its archive. But the Arkansas Democrat Gazette, which charges online, has maintained its circulation and income.

Specialist publications such as the Financial Times and The Wall Street Journal, another News Corp title, also have subscription services.

Mingling with other regional newspaper executives at a lunch hosted yesterday by the Newspaper Society, Mr Fry also accused the BBC of “nicking content” through its local news websites. The corporation was “threatening to collapse the news pyramid”, he said. A BBC spokewoman said that the corporation was “a strong contributor to original local journalism”.

Speaking at the lunch was Lord Mandelson, the Business Secretary, who said there was a “strong case” for alternative public content providers to keep the BBC “on its toes”.

A national roll-out of independently funded news groups is scheduled for 2013, he said.

Last week Mark Thompson, the Director-General of the BBC, hinted that he would rein in the Corporation’s online local news output. Mr Thompson said that a strategy review to be announced in the New Year would make sure that the “many millions of pages that are up there need to be there”.

“It might be a slightly smaller website,” he said. “It might be stronger, making sure we are playing to our strengths.”

Reader reaction

Whitby Gazette

In the Yorkshire fishing port of Whitby the idea of paying £5 to subscribe to the online version of the local paper for three months did not impress the residents (Andrew Norfolk writes).

Jane Legge, 58, said that the Whitby Gazette would be “lucky” if people subscribed to an online service that was “not very easy to look at and navigate around. I think that paying for news online has got to happen eventually, otherwise newspapers will go under, but I wouldn’t subscribe. To say there’s not a lot going on in Whitby would be an understatement.”

Worksop Guardian

Online readers of the Worksop Guardian are being tempted by the first sentence of each story, then told that they should buy a copy of the paper (Andrew Norfolk writes). Residents questioned yesterday whether anything ever happened in the town that was exciting enough for a single-sentence summary to make them eager to spend 60p on the paper.

Dawn Hamilton, 19, a student, said: “I don’t think putting teasers on the internet will work.” But Daniel Hall, 24, said: “£5 for three months wouldn’t be very much.”

Murdoch To Try Making Paid Content Stick

from Media Buyer Planner

Rupert Murdoch plans to use the Sunday Times as a test for his new push to charge for online content, beginning in November.

The Sunday Times website is currently combined with sister title the Times, but it will be launched as a stand-alone site in the fall and will begin charging a fee to access content, according to the Guardian. So far, it is unclear whether the site will charge a fee for each visit, or whether it will offer a subscription model.

Following the announcement of huge financial losses in its fourth quarter, News Corp. chairman Rupert Murdoch said earlier this week that the company will charge for access to all news websites, including FoxNews.com, by the middle of next year. News Corp. revenue fell 11% to $7.7 billion in the quarter ended June 30; the company’s loss was $203 million, down from a $1.1 billion net gain last year.

The Sunday Times is the largest of the weekend newspapers in the U.K., with more than 1 million copies sold per week. It has long offset losses at the Times, but is now thought to be losing money.

Murdoch’s public announcement that he plans to charge for all titles indicates he may be subtly encouraging competitors to do the same, industry executives say. “[Murdoch] knows that this will work better if all the main competitors do it,” Andrew Neil, former editor of the Sunday Times and a key executive in Murdoch’s empire, is quoted as saying. But Neil said the online version of the paper will have to change significantly and have a distinct character, different from the print version, if a pay model is to succeed.

Meanwhile, readers of the News Corp.-owned Australian news site, news.com.au, are threatening to quit News Corp. sites should Murdoch make good on his plan to charge for content. More than 140 replies from readers were attached to Murdoch’s announcement, with most of them opposed to the move.

Murdoch is likely aware the move will not be a popular one among readers - but if he is successful in prompting enough other newspaper companies to charge for content, readers may have little choice but to ante up for the news. “Quality journalism is not cheap,” Murdoch said (via Australian paper The Age). “An industry that gives away its content is simply cannibalising its ability to produce good reporting.”

Murdoch is not alone in his claim that quality journalism does not come cheaply. BusinessWeek points out that New York Times executive editor Bill Keller, for example, used a similar phrase in an interview last December with NPR.

The most prominent newspapers that charge for content online are the Wall Street Journal and the Financial Times. Both offer some content for free but charge fees to those who want complete access.