It’s been a big few weeks for the publishing sector with Fairfax and News Ltd announcing organisational restructures to focus on digital. Whilst digital is not new to these major publishers, monetising digital content has yet to become the primary focus of their businesses until now. Faced with declining print revenue’s, publishers across Australia are redefining business models and structures to survive in the digital age. Like the retail sector has been slow to adopt digital, it seems the publishing industry hasn’t evolved quickly enough either and is the latest to succumb to the digital grim reaper.
The Paywall – Saviour or One Foot In The Grave?
For the Australian dailies, paywalls represent the silver bullet to monetise content or do they? In 2011 The Australian was the 1st publication to announce a paywall experiment with other News Ltd publications following suit. Now Fairfax has indicated part of its 3 year strategic plan is to charge for digital content. But with much of premium advertising bought on an impression basis, are the majors biting the hand that feeds them?
The New York Times Paves the Way
The New York Times has proved that paywalls don’t necessarily spell the start of the end. It’s seemingly successful execution of a paywall 12 months ago suggests there is a way to maintain healthy online readership (impressions) whilst also charging for content through a subscriptions model. In fact The Times has reported online subscriptions have grown from 0 to 390,000 without compromising audience figures. This has been achieved through allowing infrequent readers of content to continue to view articles for free whilst frequent users (accessing The Times over 20 times a month) pay to subscribe.
The New York Times has also reported that circulation figures of print editions have also risen for the first time in 5 years through packaging print and digital subscriptions. On the back of The Times success, at least 150 newspapers in the US are adopting an online subscription model. Now The Times has its sights firmly set on the global market to support its aggressive targets to treble online subscriptions.
But Will It Work Down Under?
Australia is a very different media market to the US. The newspaper industry here, like the supermarket business, is an oligopoly so it should be a breeze. Well not quite – getting the model right is a delicate balance. If major publishers shut down access to too much content, this could strengthen the position of independent publishers (like Private Media) or allow TV channel sites like the ABC to become a primary source to access the latest news. It may also give rise to new entrants that are able to provide free content and monetise solely through display and partnerships as they can maintain leaner operating structures.
But the biggest risks newspapers face is whether they can attract a sizable enough subscriber base to compensate for declining print revenues? Since erecting its paywall the Australian boasts 40,000 subscribers which is a good start but a far cry from where they need to be. And it seems that unlike The Times, The Australian has been unable to maintain its audience. According to CIO, between January and May 2011 (before the paywall was erected), The Australian served 240,340,895 page impressions. In the corresponding months in 2012, those numbers fell to 156,869,838 — a 35 per cent decline.
The average daily UBs showed similar trends with the first five months of 2011 recording 190,117, however this fell to 143,418 over the same period in 2012 — a 25 per cent decline.
Does this all point to Australians being less likely to pay for content they have been accessing free online for over a decade? Only time will tell, however one thing is clear – the digital grim reaper is here to stay – so like many organisations and industries that have fallen before them in Australia – choose to ignore it at your peril.