Tuesday, February 24, 2009

Supply + Demand: Making the News Pay

[Today's post is by Diane Martin, Group Account Manager at R+K]

A recent article in Ad Age Media Works--entitled “Wanted: Online Payment Plan for Print”  by Michael Learmonth--is worthy of a quick read (here). There are a couple things to note, none of which have to do with media’s continued denial that the paradigm has permanently shifted.  

First of all, and much more interesting than the whining, is that this article points out how technology enables increasingly rapid paradigm shifts. For example, the online ad market went from $0 to its peak of $20 billion in about a decade.  

Next, the Arkansas Democrat-Gazette example is interesting.  Their attitude and approach resonate with me in that they seem very honest about where they can compete and what their audience wants.  They’ve made it palatable--or at least inoffensive--to pay for an online subscription  – an online subscription of $4.95/mo that is less than half the cost of full-service home delivery at $13/mo.  Perhaps more interesting is the AD-G’s CPM differential for display advertising:  $35 print vs $1 online.  

The paper’s owner and publisher, Walter Hussman has some choice quotes about where and how he’ll compete.  "I always ask people, 'When was the last time you bought something from looking at a banner ad?" he said.  

And he knows that online advertising is not a viable, long-term revenue source for his paper. The article quotes Mr. Hussman on the possibility of losing a few $1 CPMs to Yahoo. “So what? If we want the traffic, we can get it in an instant,” he said. “The traffic does not translate into revenue.” 

Finally, while I’m stunned by the notion of taxation to underwrite a model sorely in need of repair, I’d prefer to address the comments from  Jim Spanfeller of Forbes.com and Robert Thomson of The Wall Street Journal regarding editorial quality. Indeed their organizations put out fine news products. But it appears they believe news organizations such as theirs are the arbiters of journalistic quality, not the readers.  Obviously they need to drink a little of the kool-aid that Charlie Tillinghast, president of MSNBC.com, drinks.  "Consumers won't pay; it's just that simple." They'll read amateur blogs and everything else first before they pay for general news and information. Those are the physics of our business."  

But perhaps the fact that I’m sharing commentary on an article from Ad Age Media Works suggests that Mr. Tillinghast isn’t 100% right – I pay my annual online subscription for Ad Age.

1 comment:

  1. Interesting approach to pricing the online paper lower than the print version: as it should be...no distribution or printing costs.

    Interesting as well that CPM rates online don't often seem to reflect the lower costs of distribution as well...let alone the expanding inventory.