Times are hard, especially for the traditional media. In Europe and the United States, numerous printed publications are running deficits or have been closed down. It’s not so much the economic downturn that is killing them off. It’s the fact that their business model has been undermined by the rise of online media and readers’ reluctance to pay for content they can get for free somewhere else. In a recession, you’d expect weak players to wither and well-capitalized corporations to survive and, in the end, increase their share of a consolidated market. Instead, Rupert Murdoch – neither a lightweight, nor faint-hearted – has called on his competitors to stop providing content for free, in the best interest of the entire industry. If that’s not a wake-up call, what is?
The news industry’s future seems to be seriously threatened and it would be pompous for me to suggest that I have a worked-out, new and viable business plan on offer. (After all, this blog isn’t called The Quest for the Holy Grail. Although this never-ending story actually would be better told in a blog than a printed book. Odysseus, too, definitely would have a web log these days. Sorry to Penguin Classics.) …
Times are hard, especially for the traditional media. In Europe and the United States, numerous printed publications are running deficits or have been closed down. It’s not so much the economic downturn that is killing them off. It’s the fact that their business model has been undermined by the rise of online media and readers’ reluctance to pay for content they can get for free somewhere else. In a recession, you’d expect weak players to wither and well-capitalized corporations to survive and, in the end, increase their share of a consolidated market. Instead, Rupert Murdoch – neither a lightweight, nor faint-hearted – has called on his competitors to stop providing content for free, in the best interest of the entire industry. If that’s not a wake-up call, what is?
The news industry’s future seems to be seriously threatened and it would be pompous for me to suggest that I have a worked-out, new and viable business plan on offer. (After all, this blog isn’t called The Quest for the Holy Grail. Although this never-ending story actually would be better told in a blog than a printed book. Odysseus, too, definitely would have a web log these days. Sorry to Penguin Classics.) Back to the news business – my point is simply this: I believe that people are indeed less prone to pay for media content, but they are still prepared to pay for some of it. When and what for? It’s the media’s job to find this out. How? By doing customer analysis.
…like show business
Let’s look at the entertainment industry for inspiration. The biz has been facing similar difficulties: Internet radio, “sharing” of movies, TV series appearing on YouTube in violation of copyrights etc. At the same time, such new channels of content distribution open up new opportunities for the industry to promote and sell its products in a more efficient way, for example via Apple’s iTunes, or introduce new payment models like pay-per-view. For the industry, providing content for free can make a lot of sense if they get the usage data in return. The more detailed data from different channels they get, the better they can value the individual product or artist and understand what could be a reason for consumers to buy rather than use. Free and paid content, therefore, will continue to co-exist online.
Roll over, Rupert!
Admittedly, news and music aren’t quite the same. There is no copyright on news. And unlike music, you don’t want to hear the same news over and over again. On the other hand, online news sites allow for a very accurate customer profiling, which creates opportunities that have not yet been fully appreciated. First of all, more and more refined behavioral targeting combined with the demise of the competing printed media will sooner or later lead to higher advertisement prices. Large news corporations with a lot of media outlets will have a natural advantage here, as they can draw on a larger data treasure. Second, the revealed interests of online users includes not only cars, trips and cameras, but also their information needs – the demand side of the news market. As more and more readers are moving online, it’s becoming easier to predict what sort of content they would spend extra money on, and the media can tailor their offerings to that: is a scoop interesting enough for a sufficient number of people to buy the book to get the full details? Then it should be for sale when you are breaking the story. With their enhanced customer insight, media corporations can thus realize an extra profit at a lower risk than in the age before the Internet.
To be clear, I am not saying that commercial interests should interfere with the actual news reporting. Without editorial integrity, journalism would lose its raison d’etre altogether. I am saying that publishers need to find new ways of getting paid for the good work they do. And I think that more customer insight, higher ad prices and smarter content utilization might help to ease some of the pressure that the media are feeling. The future of journalism might not look as bleak as many people are thinking at the moment.
Mario Bonardo