Now this is based around Newscorp but is more about wider issues.
“Online short changed, over to you Rupert” reads the headline.
News like it so much they’re passing it off as editorial on their The Australian media section.
Basically it covers off 3 areas
– charging for newspaper content
– Google’s settlement for $125 over the Google Books fiasco and therefore newspapers being able to charge Google for aggregating content
– Online being significantly cheaper than newspapers for advertisers.
Here’s some points I didn’t really agree with …
“This leads us to ask: what is the difference between a user who reads the news in print and one who reads the news online? If anything, online should attract a premium because newspaper companies are able to extract more information (ie viewing habits etc.) from the user and onsend this to the advertiser. Quite simply, the justification used by advertisers that the value of an online ad is diluted due to the amount of inventory online just does not stack up.”
Hrm – I think it does stack up … given pretty much every publisher can’t give advertisers any business changing/assisting audience information beyond Morgan/Nielsen. Right now it’s the same as buying print – you are buying an eyeball opportunity to see. There can only be a premium, ONLY, if the insight/targeting provides a measureable benefit to an advertiser. Don’t forget this.
“Advertisers know full well that the space they were buying in newspapers for tens of thousands of dollars a quarter page is going online for 5% of that. Media buyers know it too. But then they really don’t care. In fact, they
love it, because they are getting around half the newspaper audience at the cut price online rate. A thirty thousand dollar in print, reaching half the number of readers for $1,500. All they have to do is pretend that noone
(or no-one who is a buyer of whatever is being sold) is reading online. And newspaper sales people are letting it happen. From the advertisers’ perspective, it’s almost too good to be true.”
You know what they say about things that are too good to be true right … they generally aren’t. That is the case with the above bizarre statement (‘all they have to do is pretend no one is reading online’ … who wrote this, the work experience kid?). The reason newspapers online can’t extract the same dollars as their print brothers isn’t due to lower CPM … it’s due to the a la carte consumption of users and the way this is charged out – and this isn’t going away. Comparing unique audience across print and online is barely scratching the surface of a much bigger problem. This is worthy of another post.
“In the end, newspapers managements must recognise the true nature of their business – that of distributing eyeballs to advertisers. In almost every sense, newspapers were the original internet businesses, operating on the principle of “if we build it they will come.” “They” in this case is not only the readers (though it certainly is them) but also advertisers, which provide the true subsidy for publishers – by selling Lexus ads around it. The really important part, and the part that will take time to pervade the industry’s thinking, is the bit about selling online inventory at less discounted rates.”
Again disagree. Is the nature of the modern publisher/ad business to distribute eyeballs or is it to ‘solve problems’. I know solving problems is a wankterm … but I think most of those in digital want to move beyond just buying eyeballs and move to a more accountable currency. Just running Lexus ads around content isn’t going to sustain them – discounted or not.
“The issue with readers having to pay for news online is not that they don’t want to (iTunes proved that with the 99c song), it’s that they don’t like having to make a $300 one year subscription commitment when they only want to read one article. Newspapers work because the cover price itself is a micro-payment.”
Hrm – because some people buy music off itunes means they’re prepared to pay for news online. Really? Like … REALLY? I’m not sure I agree … users are willing to pay for something they can’t get for free, and unless the news providers (all of them everywhere in the world) get together I can’t see this happening.
“The legal principle on which Google is relying is one of “fair use” which means that a small part of the original may be reproduced without payment (but with attribution). But by selling ads on its news website, Google is pushing the bounds significantly. It is in essence arguing that by aggregating many hundreds of news sources, in tiny quantities and attributed, that the company is not breaching any copyright rules (which technically it isn’t) so it can therefore sell advertising on that product. In our view, that’s like saying because you are only taking a tiny bit from a lot of different people, it isn’t really a problem at all, since nobody even notices the loss.”
This is a more prickly area. The author talks about the Google Books settlement and how this helps with the Google News issue. I’m not so sure as the Google Books incident saw Google scanning loads of books in their entirety without asking for permission. Google isn’t running entire news articles – they are linking out through aggregation … the problem is they’re now taking ads. The difference, still, is significant. The key thing to remember is Google is the all-knowing trusted brand now … it’s the go to guy on the web … not the news mastheads … and people are using it in this way. Lets also not forget the mountains of traffic the Goog pushes to these news providers when people search for topical stories on Google and are pushed out to the latest news. The benefits Google brings these guys far outweigh the negatives. If the newspapers are truly serious they would shut off the Googlebots access to their stories … let’s see that one happen in this climate. Cutting off Google might actually force the news companies to market their online efforts to consumers rather than relying on a mix of SEO and paid SEM to drive traffic increases.
His last point is bang on …
“What’s missing here is for some leadership on the part of newspapers, from a player big enough to matter.”
Couldn’t agree more. It’s now time for these digital investments to start, y’know, making money or at least breaking even … which will lead to some tough, but no doubt interesting, decisions around their ad models and their approach to content.