How to make people pay for media

We all consume media on a daily basis.  We love the stuff but we are paying less and less for it as our parents die and we all get our content online.  And as we all know, news online is almost all FREE.  Free isn’t a business model that really works for media.  Good journalism is expensive and tough to support through online advertising.  Rupert Murdoch has responded aggressively to this by putting a charge on many sites such as WSJ.com.  This hasn’t worked too well in part because you can still get to the content through a Google search for free.  He’s threatening to change all that though for the simple reason that they are struggling to make the economics work even with an online subscription model in place.

I have a suggestion for Mr Murdoch and other media moguls.  In the same way that we pay a cable fee in this country and even a TV license in the UK, why not charge a monthly media fee that would enable you to access all the media without having multiple subscriptions.  You’d need an aggregator such as Apple’s iTunes to get in to the mix but I’m pretty convinced that in the same way as people will pay $10 a month for satellite radio, they’d pay $10 a month to access the top 100 publications in the US.  Now there’d be a challenge figuring out which magazine or newspaper got what out of that $10 each month but I’m pretty sure it could be worked out.  It would also enable one player to take over the challenge of managing the online advertising for a host of publications, instead of having a fragmented model as they do today.   It would also mean as a user that you would only need one login.  I’d almost pay $10 a month just for that as I keep forgetting what username and password I have for various online titles.


Why News Corp has made a mistake

murdo_1457305cNews Corp’s decision to start charging for its web content is in my opinion a mistake.  A huge, can’t believe they really have done this, mistake.  Now I fully appreciate that media content companies are struggling to find a meaningful source of revenue in an online world BUT the move to charge readers in this way is, in my view, a mistake.  The traditional print media world is so different form the online world that applying the same model is flawed.  When you subscribe to a newspaper or magazine you make a lasting commitment for sure.  But your choices are limited.  If you want to get your printed news from a different source one morning you can but it takes effort.  You have to physically go and get it.  The same decision online is a matter of clicks.  Furthermore, news is essentially now free and people don’t want to pay for it.  They can get the basic news from thousands of sources for free so why pay one to deliver it?  What they may pay for is a unique and valued perspective.  BUT that need will change with the content they are viewing. Again, paying for a single day’s perspective in three month cycles or longer isn’t attractive to most people.    Last, thanks to blogs people are becoming more attached to people who create perspective than they are to publications.  Signing up to subscribe to a publication that is online seems to be like renting all the magician’s equipment for your kids birthday party and then finding out that the magician has gone to work elsewhere.

I don’t envy the challenge the media faces here.  It isn’t easy to see a great solution to the revenue challenge other than advertising revenue.  That said the ad revenue model should be something that can be made to work.  Online publications ought to be far more cost effective to produce and thus require less ad revenue to support.  Online publications are also more able to track how users really use their sites by the hour, so they can improve their product far more efficiently.  Indeed when you look at all the advantages online media offers it seems even more sad that News Corp simply defaulted to the old way of charging for media consumption.


Murdoch plans to make online readers pay


On his quarterly call with analysts, News Corp chairman Rupert Murdoch said he intends to start charging people for access to their online content. He said the Wall Street Journal has proved it can be done. I wonder if he’s right. Right now you can access most of the WSJ for free. As an iPhone user I can access a good deal of WSJ content using the WSJ app on the iPhone. Also if you Google any WSJ news headline on your PC you can often see the entire article without a subscription.

Aside from the fact that the WSJ is free to many people, I also wonder what happens when he tries to take his publications behind a subscription wall. I suspect many of his readers will opt for a rival publication that doesn’t charge or for well written blogs. I also struggle to see the typical Sun reader paying a subscription. I know the news media business is struggling to find a profitable business model right now and that the subscrioptn model is an obvious place to look. I just don’t see it working for mainstream consumer publications. I can see people paying a blanket subscription in the same way they might do for cabel TV or satellite radio but for that thye need a broad range of titles to be the equivalent of channels on these properties. Murdoch is no fool and has made some shrewd moves in the media business. Launching his own media channel on the web that you can subscribe to but which contains news media from both his print AND broadcast properties. Now that I can see working if the price is right.


The high price of Tech

When I blogged on the importance of Facebook the other day I have to admit I would have struggled to put a $15Bn valuation on the business. That said, Microsoft has effectively done that today making both the purchase of MySpace by News Corp for $580m and Google’s acquisition of YouTube for $1.65Bn look like bargains. It will be fascinating to see what this deal does to the Facebook express train. With this amount of cash they can presumably go global and invest in their platform at a pretty aggressive rate. It will also allow the senior executives to get on with running the company instead of having to go through any rounds of VC funding. That said, it is pretty clear that they’d have had no problem raising money via that route if they’d wanted.

What I find more interesting is that Microsoft took such a small stake. It is pretty clear that they simply wanted to block Google rather than get executive control at this stage. Of course beyond the stock deal there is the ad rights portion. This is where the deal starts to make a lot of sense. The deal effectively gives them the rights to one of the biggest online properties on the planet and for that reason alone you can see why the valuation makes sense.

We have seen Tech valuations rebound quite dramatically this year. We had the VM Ware IPO which has been an amazing success story and now we have this deal. It certainly seems like the investment banks are keen to recoup the losses the banks have made in the mortgage business by some bold tech investments. It will be interesting to see which tech property can outdo these deals. One things for sure – someone will!