What if Fairfax and News charged for news online?

When announcing Fairfax’s latest results, CEO Brian McCarthy said he was open to talks with News Ltd about charging for new online as a way of solving their respective revenue dilemmas.

On Tuesday, ACCC Chairman Graeme Samuels gave this general warning.

“I would think it would be best for them to speak to their lawyers before they talk to each other.”

Crikey ran a story here – http://www.crikey.com.au/2009/08/24/crikey-says-70/ – which interestingly wasn’t credited to any specific writer – that offered the following advice.

“The message? It’s complex, but here’s something the Fairfax board can have for free: don’t charge for news content like Rupert Murdoch wants you to. Why should Fairfax surrender its leading position to level the playing field and improve Murdoch’s second-class online status in Australia?”

So, imagine for a minute, what would happen if these two players charged for news online?

My feeling is people will pay for something they can’t get elsewhere with a reasonable amount of effort for free.

Also, take this for what it is … one persons opinion.

So what do these 2 providers offer that can’t be found elsewhere and not behind a paywall?

General AU News – no … This is available pretty much across most websites such as ninemsn, Bigpond, Yahoo!, ABC etc. Charging for general news would be tough

Entertainment news – no … again too much supply locally and internationally for free. Not to mention most of the stories on FD and NDM are generally sourced from the o/s outlets

Sport – Possible but doubtful. As an AFL fan both NDM and FD have pretty strong content and exclusive editorial. Would I pay for it? Probably not as I get enough news and opinion from the same names on TV and AM radio. I would prefer, personally, to keep reading this content in the paper and listening to it on talkback as it’s a more dynamic and easier to digest format to get sport opinion.

World News – no. Reason for this same as entertainment, far too much international competition that is available free of charge. Plus this is covered via ninemsn, Bigpond etc reasonably well for basic articles. For in depth world news you wouldn’t be going to a FD or News site.

Business – possible but limited scope. My feeling with business news is you will only pay for content that will provide you with a tangible competitive advantage … or information that you need to trade. WSJ can get away with it as it’s considered a mandatory within the finance industry … is this the case with the local providers? It would be very difficult to consider charging at all if a title like Business Spectator remained free.

Technology – no. Most serious technologists have other ways of getting their news around the area – techmeme, Cnet, ZDnet, Gizmodo, Techcrunch, Engadget etc.

Opinion – doubtful. Will Australian’s pay for opinion online? Some people pay for Crikey but mainly because it’s an alternative to Fairfax and News titles.

Travel/Video/Lifestyle – no/no/no. Again too many quality alternatives free of charge.

My takeout as a user is there’s not a whole lot on offer here I can’t get somewhere else.

And the risk cannot be underestimated. Both of these suppliers trade almost exclusively off large user volume – that is their point of difference in the market. Sure, Fairfax still trades somewhat off the legacy of it being a ‘premium’ provider … but I am unsure this is the case online as it’s hard to be ‘premium’ when such a large percentage of the online population use your sites.

My feeling is you could only look to create paywalls for pieces of content that right now aren’t getting much CPM based advertising traction. Otherwise the risk is too great. Media and marketing content seems like an obvious fit. Content that targets specific areas of the public service is another.

So what’s the other possible option to consider for these two groups?

Maybe they’ll look more at charging advertisers to create content.

If they can’t charge users to read it … they might look to charge advertisers to create content it in certain high yield areas like finance, travel, auto, technology. All categories with decent investment online and all areas where the lines between editorial and advertising may blur more than they currently are.


9 responses to “What if Fairfax and News charged for news online?

  1. Guess research may reveal the answer.

  2. Thanks for taking up my suggestion, Ben. My opinions on the sections:

    General AU News – Actually, maybe some of it. Yes, the other networks have wire feeds, but one major core strength of FFX/News is their original hard news reporting, which I think could be charged for. I could certainly see a series of investigative reports on a particular topic being paywalled on a micro level, say $1 for a 6-story series.

    Sport – This has wide scope for a freemium model, IMO. Just look at ESPN Insider. Exclusive content works in sport.

    Business – Agreed on this, it’s difficult.

    Opinion – Yes, Crikey has revenue, but it’s a pittance compared to the $400m hole in Fairfax’s last quarter revenues. I don’t think this is a viable option.

    Entertainment , World, Technology, Travel/Video/Lifestyle – Agreed, no.

    There are two further thoughts I had. First, isn’t the business model of FFX/News to bundle their product, thus they would be more inclined to ignore the above section-specific arguments and just put the whole box and dice behind a single, simple paywall?

    Second, if they do go with a section-by-section approach, wouldn’t that make their paywalled sections more vulnerable to attack by category killers?

  3. talkingdigital

    hey paul,

    re sport – do you think AU has the volume for freemium sport? The US can handle it but they have 300m ppl and a lot of sports mad guys. I think some people would pay for content aroudn fantasy AFL but it’d be limited volume. That said – the majority of killer fantasy content is not housed on Herald Sun or Dreamteam.

    I reckon putting the whole thing behind a paywall is extremely risky. If it tanks the repercussions are big, really big.

  4. I don’t think fantasy AFL is ready for freemium on its own. It all has to be free until the mass gets critical, which is at least three years away. At least, that’s the way I will personally be pushing. 😉

    The ESPN Insider model can be sustained in AU on a relatively small budget, I think. I mean, the Hun and Smage have heaps of journos lying around the office doing not much these days with smaller paper sizes. Get them on the case doing exclusive player interviews, extensive training reports, live chats, more and more content. The two buzzwords should be exclusive and live. They should be competing more with Fox Sports than each other.

  5. Paywalls are not going to work in almost any category. There are too many alternative sources.

    And News have to be incredibly careful commenting on any discussions with other publishers about pricing.

    In the UK the very act of discussing this could lead to criminal charges and huge fines under The Competition Act. Ditto the US. A good example would be British Airways recent fines exceeding £300m.

    We are all going to have to be more inventive.

  6. It’s interesting to note how nbr.co.nz is performing since launching their subscription model in late July.

    Using Nielsen data, their UBs and PIs don’t appear to have fallen. In fact, one of the weeks since launch was their biggest for some time.

    However, not all their content sits behind the paywall (they’ve restricted it to so-called opinion and commentary you wouldn’t easily find elsewhere), so it’s difficult to quantify how many of their PIs are being paid for. (Although one could hypotheise that if they haven’t had a reasonable subs take-up, then their non-paid PIs have seen some pretty good growth.)

    What the long term prognosis is remains unclear.

  7. What if McCarthy and Harto’s conversation was not about charging for their consumer sites but about AAP? Seems to me this has been the missing piece of the paid content debate in Australia. FXJ and News are majority owners (with WAN as a minority owner), and AAP is the biggest source of commoditized news in our market. It would not necessarily contravene ACCC rules if the owners decided to prevent anyone else having access to AAP wire feeds for their websites. It would be a total bummer for ninemsn particularly. But it would also place an instant premium back on to the main Fairfax and News Ltd sites.

  8. I know that the AFR caters to a much more limited market (but maintains a much better standard of reporting), but they’ve been doing this for years. And seem to be doing ok.

    You say that ‘people will pay for something they can’t get elsewhere with a reasonable amount of effort for free’ and I think that is totally spot on. The thing is, you can find the trashy type news elsewhere easily. It is virtually worthless and costs next to nothing to produce. Have you noticed how many stories on both cartel members sites are based on stuff found by “reporters” surfing the net? My thoughts are, that, if News and FFX are going to compete for the trash market, there is not much to be gained there by putting it behind a paywall.

  9. Why not charge to reprint press releases? Right now, half the content is press releases they’re rewriting and printing for free. Seems like a business model to me.

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