14 October 2009

The "unheralded" benefits of paid-for content

With Rupert Murdoch describing some aggregators as "content kleptomaniacs" and with regional media organisations looking for potential business models for their hyperlocal journalism, the debate over paying for content continues to rage.

Dorian Benkoil at Poynter Online has provided an interesting argument for the benefits of charging for some content.

Recalling a calculation he made on the effects of making the Wall Street Journal free, he explains how by charging, the Journal (and other publications) can say to an advertiser that they have a "committed, consistent" audience. A free Journal, he calculates, would potentially result in a 60% drop in its ad rates.

Besides obvious benefits such as minimal production and distribution costs for digital subscriptions, he also looks at some of the "less intuitive" benefits, as described by Gordon Crovitz, former publisher of the Journal.

He says: "charging for online subscriptions can help increase the perceived value of the print subscriptions, spurring more sales. Presumably, the psychology of saying "this is worth money" works across media.

"Bundling print subscriptions with online can help sell both. Crovitz found after data analysis that WSJ readers preferred buying online and print as a package over buying one or the other separately for less.

"Selling print subscriptions online greatly decreases the cost of acquiring new subscribers. This makes perfect sense. When someone uses an online form and payments system, he or she doesn't require phone agents or mailings or other costly infrastructure to handle it.

"The cost of sales goes down, too. You don't have to pay as much for advertising if people reading your material online then click to subscribe."

Benkoil acknowledges that getting the mix right is tricky and publishers must consider the risks, such as driving away core audiences or losing valuable page-view statistics, and shouldn't "plunge in" to payment systems.

But he believes that with incremental experiments and continuous improvement it should be possible to create a digitally-based business model that bolsters the print product as well.

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