Posted by: structureofnews | November 1, 2010

The Economics of Paid Content

At ClickZ, Ross Settles dissects the economics of charging for content online, and brings a refreshing level of detail to the debate.  Rather than delve into the ideological underpinnings of the free-vs-paid debate, or theorize about how people might behave, he actually digs into the experiences so far and the business underpinnings of if, how, and what to charge.

Ross, a former colleague at the South China Morning Post who’s now helping out Malaysiakini – both paid sites –  lays out the issues in nice detail, from questions of “pilferage” to managing ad inventory to the multiple types of audiences that come to a site.    This isn’t news to any manager of a for-profit website, but is well worth recapping for those of us on the other side of the journalism-business divide, who often have fairly simplistic notions of how business operates.  Especially if we’re trying to figure out where we want our industry to go.

As Ross notes, there are a lot of moving parts when it comes to figuring out how to monetize content online.

Traditional publishers will consider (advertising, audience, content and brand) the same ones that go into any media decision. Precisely. But the inputs are more complicated. If a newspaper or magazine media decision is arithmetic, then the online decision is calculus.

And he links to a scary – or sad, or both – list compiled by Paid Content that shows how local publishers in the US are faring when it comes to getting people to cough up real money for an online subscription.   It’s not pretty.

The key problem for many publications is simply putting up a pay wall because they want to.   And that’s where the ideologically-driven debates don’t help – either on the information-wants-to-be-free or the you-should-pay-for-my-content-because-I-worked-hard-to-create-it side of the discussion.

The most difficult aspect of the analysis for many content producers is the factual evaluation of their product – the content that they produce. Is it truly unique or will the same story be heard for free on the evening radio? Given its unique attributes – speed of delivery, uniqueness, depth of analysis – is the cost of creation justified? Does the brand reflect an institution that the audience trusts and supports? Without candid answers to these questions and plans to address shortcomings, your pay platform will fail. No publisher ever successfully built a business, selling commodity content, produced at high cost through a commoditised channel.

We need more clear thinking like this about what we’re doing and what value it might bring readers.


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