How much is paid access to content?

Original author: Frédéric Filloux
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Almost every newspaper, magazine or website thinks about how to organize paid access to their content, and carefully monitors what others are doing in this area. And almost everywhere, executives glumly look at forecasts of advertising revenue, finding discouraging numbers in them. Those who are already published in numbers can not escape the disappointing forecasts for the coming year: the poor economic situation only exacerbates the pressure on the price of advertising in the already growing host of sites and mobile pages. At best, volumes and prices will remain the same. With regard to sales of print runs, Western newspapers are likely to witness the ongoing erosion of the readership, which will decline by a few percent.

But there are interesting points.The strongest players not only bow to the inevitable, they accelerate their transition to digital. This week, I discovered that two leaders took the same step. The New York Times and the Financial Times announced a serious increase in the price of their retail newspapers (25% and 13.6%, respectively).
  • The New York Times raised prices from $ 2.00 (€ 1.57) to $ 2.50 (€ 1.96) for Monday-Saturday issues, Sunday remained at the same price of $ 5 (€ 3.92) in New York and $ 6 (€ 4.72) beyond.
  • The Financial Times raised prices from £ 2.20 ($ 3.39 or € 2.66) to £ 2.50 ($ 3.85 or € 3.03) for weekly issues, and weekend issues rose from £ 2.80 ($ 4.32 or € 3.39) to £ 3 ($ 4.62 or € 3.63).

These numbers make sense. A ten-percent increase in prices each year can be justified by adjustments to inflation, however, a very greedy adjustment, since inflation in these countries ranges from 2.5% -3.5%. Therefore, increasing the price by 25% is a strategic decision aimed at accelerating the transition to digital. (The paper version of the Financial Times is now 25% more expensive than last October).

It is quite interesting to note for readers of the New York Times that reading a newspaper online with a minimum subscription ($ 15 per month) is now 40% -50% cheaper than writing it to your home, and 70% cheaper than buying it every day at a stall.

Both publications are struggling to transfer readers to a paid digital model. The Financial Times is striving to figure out in full steam, studying up and down its four millionth subscriber base to turn them into a paying audience (according to the most recent estimates, there are 250,000 people). The tactics of the newspaper are simple. Readers are constantly being encouraged to pay for access by reducing the volume of free content. In 2007, the user was given 30 articles a month for free, now - 8. Another important step was compulsory registration, even if the user wants to read only one article.

The New York Times showed a less clear strategy last year - regulated paid access. And it looks like it worked. The newspaper managed to collect 324,000 paid subscribers in 9 months. Considering that she has four times less non-paying registered users than the Financial Times (and correspondingly less potential for conversion), this is not bad.

The Times builds its paid strategy on three key factors:
  1. The uniqueness of the content. Let's put it this way: as for the brilliant journalism work, the New York Times has no equal in the whole world. This content attracted 34 million unique visitors to the domestic market and another 47 million worldwide. No other newspaper in the world has such a loyal audience. If the New York Times manages to convert at least 5% of its global audience (say, 2.4 million readers) and achieve $ 150 of annual ARPU (including subscription and advertising), it will bring her 360 million euros, which will certainly cover the cost of the contents of the obviously most expensive edition in the world ($ 200 million per year).
  2. Adjustable porosity.One of the key factors in building a paid access system was to keep as many readers as possible. There are two reasons for this. A large audience is critical to selling ads. In addition, you need to shine on every corner, this ensures brand awareness. Thus, a system appeared, aimed primarily at the most "gluttonous" users. But even they could easily fool the system. Without much effort, using several browsers and devices, I never once came across an offer to pay. Similarly, pricing was arranged. Prices for the same content ranged from $ 15 to $ 35. This approach is typical when working with an audience that is able to pay within different limits. It has long been known that rich people tend to buy the most expensive package possible
  3. Flirting with Apple. From the earliest days of the iPad, the New York Times has worked closely with Apple on applications, subscriptions, and Newsstand. I repeat: thanks to its brand and earned trust, the newspaper has no problems collecting user data that is not available by default to other applications. The Times received its bonuses through Apple's huge advertising budgets. The Apple ecosystem is highly effective in building an audience. But she makes you pay for this most important - relations with the audience, plus a huge fee of 30%, which should be no more than 10%. That's why the Financial Times decided to break this collar . Last week, she went even further. She bought Assanka, famed for its web application that made the newspaper independent of Apple. This acquisition alone demonstrates the commitment of the Financial Times to mobile products - HTML5 development remains very complex, and the newspaper considered it critical to integrate Assanka development tools.

Of these three factors, the uniqueness of the content is critical.The inflation generated by aggregators, and the habits of social reading, the natural reproduction of information have become a flood. In such circumstances, the production of special content and its protection become a key condition of value. As for pricing, there is no magic formula. Usually, the simpler the better. (This was demonstrated to us by Apple.) Especially for a business starting from scratch. But when different segments of the audience already exist, for example, corporate and private subscribers, pricing of products becomes difficult. Keep in mind that diversified prices can prevent cannibalization. As for the choice between Apple and self-distribution, I personally think that contacting Apple is beneficial only in the short term, this is an easier strategy.

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