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News & Insights

News & Insights

Time for a True Pay-per-Use Content Model?

Changing an information service’s business model is risky business. If you built your model the right way, there are several revenue streams (multiple advertising opportunities based on a variety of delivery devices, multiple subscription options based on delivery frequency and the volume/type of content, ecommerce hooks of every conceivable type) that can be fine-tuned as different revenue streams ebb and flow, making adjustments possible. In an election year, for instance, advertising surges so that the percentage of revenue from that particular stream increases relative to other streams. Trying to entirely change horses in mid-stream by switching from 100% advertising to 100% paid (or vice versa) is thus one of the greatest high-wire acts in publishing. Going from print-only to online-only is another of the riskiest things publishers occasionally do with their online and print periodicals. Starting a new, subscription-based service confined to one delivery platform with a deliberate (and rigid) emphasis on one revenue stream is, however, the riskiest type of risky model and only for the truly visionary or truly clueless.

The latter approach the one Rupert Murdoch took in 2011 with The Daily. He created a rich-media experience exclusively for the iPad and, once again, he bet an awful lot on it. At this stage in the media business Murdoch has become notorious for making these types of high-profile, high-risk moves. He dodged a bullet years ago by not buying the compelling yet bloated PointCast, only to dive into the abyss that is MySpace. In an apparent acknowledgment that he is better at than building brands and business models, he acquired the Wall Street Journal. He couldn’t help himself, however, and in 2009 he embarked on a plan to charge for his ad-supported News Corp web sites (thesun.co.uk, www.timesonline.co.uk, and the ill-fated newsoftheworld.co.uk). His timing was awful and, once again, it was a spectacular failure.

So, has The Daily gone the way of the dodo like Murdoch’s other attempts to find a winning media model? In short, it does not appear to be hitting its revenue targets so the question appears to be whether the product can try a mid-stream re-invention, or whether the death watch should begin on yet another Murdoch bright idea.

From my perspective I would venture to say that a rescue is still possible, but tough. News Corp successfully understood it needed to think more like interactive game designers than publishers to create rich experiences for their subscribers, but did the company push hard enough on the “appy-ness” of the product? Does News Corp’s political reputation inherently hurt it with the older, heavily female, well-educated demographic of iPad users? And, was The Daily’s model built well enough to be adjusted or is it simply too rigid to be fine-tuned?

Those are all very tough questions to answer. In terms of content, TMZ has a lot of Murdoch-like content (gossip, sensational news), but a beautifully simple business model based primarily on “hot” news-like content supported by advertising and viral marketing. The HuffPost and Slate models are similar with more highbrow content and, although they are both shackled to parent firms that are notorious for designing difficult content models (AOL and Microsoft, respectively), they are more mature and somewhat less risky than The Daily.

In terms of the model, I think that increasing the product’s “appy-ness” is critical, but that involves investment and the Daily’s experiment might not be able to afford that at this point in its short, troubled life. So, if the project is really doomed and/or a very expensive R&D project, then why not try a Hail Mary pass? How about re-configuring the subscription model to be a pay-as-you-go micro-transactional site? In other words, users pay, for example, a nickel per article with a cap at the current sub price. That doesn’t affect current subscribers who can be grandfathered (although News Corp managers would no doubt bring up the old red herring that monitoring usage means that people who subscribe but don’t use the service much might cancel) and it lowers the barrier to entry for new users. The micro-transactional approach is perfect for the iPad due to Apple’s iTunes umbilical cord and it may be its last, best hope. After all, iTunes exploded onto the scene selling products (music) for less than a dollar. Why not exploit the strength of that model?

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