Metering: The First 2010 Test of Paid News Content
Important Details: Paid content has finally found a face, after a year of US dailies considering how to wring reader payment out of their emerging digital audiences. That face is metering.
Most publicly, the New York Times announced that it has opted for a metering system, with plans to launch it a year from now. McClatchy has announced it too, and will test a metering system at at least one of its dailies. Journalism Online will launch its paid content experiments in March or April, with its leading model being the meter.
The metering approach is one borrowed, at least in concept, from the London-based Financial Times experience. The FT has tweaked a three-tier consumer model over the past several years, allowing readers some free, unfettered page views (currently, a single one) and then 10 more free page views for those who register. After that, readers must subscribe. Subscribers who pay $186 a year get access to most material on the site. A premium subscription for $299 comes with extra material. Or for $397 a year, FT subscribers can get the printed newspaper and read the web site.
The FT model is based on “propensity modeling.” That’s a deeply analytics-based system of carefully monitoring the kinds of news usage its readers demonstrate. The FT’s view is that it must understand who among their readership — amid all the miscellaneous referrals sent to it by search engines – really values FT content and the brand behind it, and then charge those readers a subscription fee.
The FT now has 1.8 million registered visitors to its site, up 80% over last January, and 121,200 paying subscribers in the most recent count, up 22% from a year earlier.
The FT recently said that its content-based revenues – from a collection of print and online subscriptions and direct content licensing to institutional customers – are expected to exceed its print ad revenue by 2012. That’s a milestone for publishers concerned about the permanent change in the nature – and level – of advertising spending throughout the Western World.
Implications: Outsell’s own survey (News Users 2009) confirmed that the pool of digital news readers who express any willingness to pay for new online or on mobile devices is no more than 10%. That number is one shared by the architects of the metering models now in progress.
The broad idea of the metering is to use smart analytics to find that 10% or so willing to pay – without losing the great majority of less frequent and committed-to-brand readers. Keep bringing in those non-core readers, sifting through the data to figure out which may be converted to regular customers and monetizing all of them through advertising, sponsorship and niche content products. The idea, though, is untested among general circulation newspapers. Yes, the FT and the Wall Street Journal (through a “freemium” subscription model) have innovated successful paid content models, but they are both business news-based. Readers will pay for high-value, high-quality content where significant sums of money are involved, a notion confirmed by Consumer Reports’ own model.
So the set of experiments about to be launched on the metering model represent a hedged bet. Understandably, the metered model attempts to prevent massive defection of traffic should high and wide pay walls go up, walls that other daily publishers may soon announce.
In Outsell’s opinion, that hedged bet is one worth testing. While those in the news business would like to return to the halcyon days of a two-legged model based on robust advertising and circulation revenue those days cannot simply be revisited. Internet distribution, the centrality of aggregators, the reduced output of newspaper content and reach, and the increasing arrival of more local news competitors all combine to indicate that newspapers’ pricing decisions are now complex.
Metering allows publishers to tweak the dials of who is asked to pay at what level of readership and then keep a close eye on the resulting data. Then, tweak again. Outsell’s concern: the industry needs to move and tweak quickly.
Already, the Times’ announcement raises a big question in timing. Why announce, in January 2010, that you’re going to launch a new model 12 months into the future? The reasons are two-fold, and they resonate throughout the news industry.
Number one, the delay indicates that it’ll take time to lay the foundation and infrastructure for the sophisticated metering system required. It has the taken the Financial Times several years to develop the analytics and tracking technologies to optimize its metered system. Further, the Times made it clear that it wants paying subscribers to enjoy a seamless experience across digital products, products that will soon include desktop/laptop access, smartphones and tablets. That’s easily said, but requires all kinds of technology integrations and customer relationship coordination and service. Among them is the seemingly simple issue of being able to match up its print-based customer identification with that of its digital readership data.
Secondly, these paid content/metering decisions are being made at a time of great publishing and advertising marketplace change. That gives the Times, and all who are moving forward with metering pause. How will a metering approach line up, just for instance, with the arrival in the marketplace of the Apple iPad? How might tablet reading change consumer habits, and thus value perception? It’s a tricky question, and one that only the marketplace will answer.
All in all, it’s clear that 2010 will move beyond the pay wall throat-clearing of 2009. The more experience, the better. Out of such uncertainty, only daring innovation – some of which will succeed, some of which will fail – is required.