Live Issue... Can publishers make the internet pay?

 Is 2009 the year the internet stopped being free? The answer is probably no, but the pressure on publishers to find a way to make money from the internet is growing, and charging consumers for access to websites appears to be back on the table.

The direst headlines are coming out of Europe and the US, where recession has forced publishers to rethink their strategies. The issue is that websites are not making anything like the amount of ad revenue required to shore up their falling print business. The dilemma is highlighted by the New York Times. Despite a highly trafficked website and rising internet advertising, it saw a 13 per cent drop in total ad income last year. As a result, analysts believe the print industry will begin investigating paid content models this year.

In Asia-Pacific, some of these conversations have been delayed because the downturn has not been as severe as in the West, but many in the industry believe publishers should at least be experimenting with a mixture of techniques now to maximise online revenue. “A lot of media will at least rethink their web content strategy but whether they will find the right solution for themselves is unknown,” says Hiroko Hoshino, regional online director of The Financial Times’ website FT.com. “As the media consumption habits change over time, and especially given the economic climate, advertising-supported free content models are not sustainable. Low advertising yield due to severe CPM competition is not helping media owners monetise their online businesses.”

However, others say that throwing up pay barriers will not work because customers do not share the same do-or-die mentality as publishers. According to Andrew Tu, digital director of OMD in Southeast Asia, the only way people will openly accept subscription models is if they cannot find the same information for free anywhere else. “I’m pretty sure publications as a whole are going to try a payment model soon because economics dictate that they try, but it will not fly with consumers,” he says. “The tipping point will come when Google News dies out as a free service because all the newspapers it is sourcing information from demand payments, or all the news sources across the world come together and say collectively they’ll only provide paid content. But this will take a long time.”

There have been some steps to limit the spread of their news for free. The Associated Press recently announced plans to crack down on websites that use its content without paying for it. AP chairman Dean Singleton declared at the time: “We are mad as hell, and we are not going to take it any more.”

Within the region, the most notable experiment into a paid-subscription model comes from the South China Morning Post, which charges US$51 for an annual subscription to SCMP.com. Among the SCMP’s paid-for content is local news, analysis and original video. According to Ross Settles, director of digital business for the SCMP, there is a market of readers willing to pay the price.

“The challenge is matching the investment in your content with the right target audience and the right delivery and payment mechanism. So, if you are a high-value newsletter in the oil and gas space, you may only have subscriptions,” Settles says. “If you are a mass-reach tabloid with lots of user-generated content - namely, low-cost content that depends on a very large audience to create - you may rely mostly on advertising.”

Jonathan Hardy, MD of media sales firm Energy Media Networks, suggests an alternative to a subscription plan is to adopt a micropayment model, or for publishers to put pressure on Google to share more of the revenue it makes through the listing of content made by others.

“A lot of this thinking applies to English-language pan-regional news media in Asia. For local-language Asian media, the story varies market by market. But the broad trends are global,” he says. “Everyone is learning a little from everyone else’s experience, yet the market is still too fluid for any one to call the definitive model. So the winners are likely to be those who can stay the course through experimentation and collaboration.”

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