Posts Tagged ‘subscription’

The Daily dose of hands-on news

February 4, 2011

Now that The Daily, the first iPad-only newspaper, has arrived I wanted to provide a quick analysis based on my first impressions.  For starters, the iPad is clearly a game-changer for news designers.  The content is designed specifically for the iPad and the interactivity is impressive.  The Daily  is visually appealing with fun hands-on elements and in-app video streaming.  The Daily gets high marks for its interactivity, design and ease of use.

No offense to those involved in the publication, but the journalistic quality of the content is average at best.  Of course, you get what you pay for.  At 14 cents per issue, I don’t expect the type of quality, explanatory, long-form interpretative journalism that I could find in, say, The Wall Street Journal or The New York Times.  In pricing The Daily so cheap and devaluing the content it offers, Murdoch may actually be improving the value of his other newspapers.  I’m certainly willing to pay a premium price for content from The Journal.  The Daily dishes up journalism-lite.  But the lack of breadth and depth make for a quick daily read.

In pricing The Daily at 99 cents per week, Rupert Murdoch has effectively invented a new digital business model.  In essence, Murdoch has created a subscription micropayment.  For news content, micropayments are the idea of consumers paying pennies or less per article.  For non-news content, micropayments are usually priced from about $1 to $5.  The iTunes model of charging $1.29 per song download or the mobile modile of selling ringtones for a few bucks are examples of successful media micropayment models.  The Daily, however, offers 100 iPad pages of content per day in a weekly subscription rate of 99 cents.  Subscription strategy meets micropayment price.

The pricing point and iPad-only distribution strategy could very well work. The Daily could prove to be immensely popular and ultimately a success. But what works for one of the world’s biggest media barons does not a successful business model make for the rest of the industry.  While there’s a lot to like about The Daily, the product still remains a destination-seeking site.  You must find the news by downloading the app, pay the subscription and log on and in, rather than news stories finding you through social networks.

I have serious doubts that this app-fueled micropayment-subscription hybrid iPad-exclusive content model could ever work for the majority of the newspaper industry.  Certainly, most of the local daily newspapers with circulations less than 50,000 would lack the resources and capital to create and staff such a publication.  Few, if any, would be able to draw enough readers to justify the ridiculously low pricing point.  This does not even factor in all the non-daily community newspapers with strong print products.

The purpose of offering digital content and digital pricing structures is to obtain new paying customers.  For Murdoch, The Daily will almost certainly achieve that aim.  Other newspapers, with strong print subscribers but few paying online customers, need a platform that will allow them to earn revenue off new readers whose stories find them through the Social Web.  Micropayments are needed.

Imagine this scenario: You are the owner of a community newspaper.  An odd tragedy strikes your town that captures national attention. The national media converge on your town to cover the story, but no media outlet can provide the same level of coverage as you.  Your reporters write compelling, original pieces that no other media outlet carries but the public is clamoring to read.  In essence, your paper has a viral news story.  With a micropayment platform, you could charge a small amount per article.  Suddenly, you have a new revenue stream from thousands of new readers. Granted this is a one-off source and you wouldn’t want to bank on a once-in-a-lifetime occurrence to add money to your coffers, but the principle ideas behind this scenario remain relevant.

The bottom line about The Daily is it is right for Murdoch, (mostly) good for journalism, but the wrong approach for the newspaper industry.

Nevertheless, I look forward to seeing what The Daily continues to offer. I will gladly plunk down 99 cents each week to read it.  No, scratch that.  I will gladly pay the weekly price to experience The Daily.

Advertisements

Ongo: a good start for paid social news but far from perfect

January 26, 2011

As one who has devoted a significant amount of time researching new business models and news platforms, I  was pleased to see the debut of Ongo.  According to this PaidContent.Org post, Ongo is a social news site that combines aggregation and paywalls.  Ongo has significant backing from some major newspaper companies, including the New York Times Co, Washington Post and Gannett.  This is the first effort I’m aware of that harnesses socialization, but also adds a payment component.

This is an excellent start, but in my opinion this model/product still misses the mark in many ways.  First, this is a destination site.  The product appears to be an aggregator of social news much like Flipboard.  Aggregation in many ways is an old notion because it is predicated on the idea that people are seeking the news, rather than news finding the reader as often occurs on the Social Web environment.

The second problem with Ongo is subscription.  Seeking to charge for online content is good.  A subscription model, however, is just a tired retread of a print business model.  Social news consumption comes from multiple sources.  The ability to pay for a single piece of content is needed.  Micropayments were in high demand just two years ago, but there seems to be a sudden hesistancy on newspaper publishers’ part to experiment with micropayments.  Newspapers have not given micropayments a fair chance in earnest despite the widespread success of micropayments for other types of media content, such as music files and mobile ringtones.

I firmly believe that micropayments can succeed for newspapers.  The Graybeal & Hayes’ “Modified News Micropayment Model” outlines four drivers- socialization, microearning, hyperlocal focus and a centralized banking system- that would allow micropayments to work for newspapers.

I wonder what incentive would-be users of Ongo have to subscribe.  In the Graybeal & Hayes model we suggest using foreign currencies or points rather than real dollars and cents because it helps to remove the anxiety involved in the consumer purchasing decision.  We also suggest that the ability to microearn is a vital factor.  None of that is in the Ongo model that I’m aware of.  I’m basing my evaluation on the press materials because I do not have an Ongo account yet.  (Update: According to this Gigaom post , Ongo will provide credits to users who recommend the service to would-be new users.  Credits for article referral, however, would be much more beneficial.  In essence, micropayment and microearning is still missing and sorely needed. Also, thanks to Rachel Stults for giving me trial access to the site. I’m looking forward to trying it out.)

In some ways, placing content on a new platform may actually hurt the major newspaper companies investing in it.  In a recent study I did with Amy Sindik* published in the current issue of the Journal of Media Business Studies we found that brand loyalty increases user likelihood to adopt micropayments for online newspapers.  Brands matter.  Brand names like The New York Times or Washington Post carry far more weight than Ongo. The Times fared quite nicely, in fact.  Survey participants indicated a greater willingness to pay for Times content online than any other newspaper.

Ongo has tremendous potential, especially for establishing a mindset for paid social news.  I, for one, will be watching closely its development throughout the year.

Sources:

*Sindik, A., & Graybeal, G. (2011).  Newspaper micropayments and Millennial Generation acceptance: A brand loyalty perspective.  Journal of Media Business Studies, 8(1), 10-20

*An article about the Graybeal & Hayes “Modified News Micropayment Model” is currently in press in the International Journal on Media Management.