Newspapers look for ways to profit in Internet age

July 3, 2010 by Michelle Fitzpatrick
A man reads the online version of thes Times newspaper in London. Rupert Murdoch's Times and Sunday Times finally went ahead from Friday with their long-promised plan to start charging readers for online access to their journalism, the first non-specialist papers to do so

Newspapers worldwide are being forced to reinvent themselves for the Internet age -- and will be watching closely the success of two experiments launched in London, analysts say.

Suffering a long-term fall in sales and a collapse in advertising revenue as the world goes online for its news, the press has for years been scrambling to decide how to respond.

In Britain, Rupert Murdoch's Times and Sunday Times finally went ahead from Friday with their long-promised plan to start charging readers for online access to their journalism, the first non-specialist papers to do so here.

The move comes after the less expected news last week that London's city-wide daily, the Evening Standard, hopes to break even after turning itself into a freesheet for commuters, ditching its 50 pence cover price.

That decision cut the paper's distribution costs from 30 to four pence per copy, and sent readership soaring from just over half a million to 1.3 million, its new Russian owners said last week.

"The industry is still at a very early stage of this rapid evolution forced on it by digital technology," Karin von Abrams, a senior analyst at eMarketer, told AFP.

"The game clearly has changed for most old , but we don't yet know what the successful new ones are going to be."

For newspapers, one model to study is that of the freesheets.

The Metro, a free morning paper available at train stations and on public transport in 16 British cities, is read by more than 3.5 million people every weekday, according to the National Readership Survey (NRS).

Owned by the Daily Mail and General Trust, it relies entirely on .

Over the past seven years it has consistently performed well, even making an operating profit through the worst of the economic crisis, to the envy of the traditional dailies.

More recently, the Evening Standard was a well-established but loss-making London evening paper until its new owner, Russian tycoon Alexander Lebedev, bought the paper in 2009 and turned it into a freesheet.

Access to commuters seems to be a key to the success of the free model.

The Metro, the Standard and the City AM, another successful but smaller London freesheet aimed at business people, are all handed out near tube and train stations.

This saves on costs. And with the demise of two free evening rivals last year, the morning and evening papers have something of a captive market. This, of course, appeals to advertisers.

"Giving away print works if the free circulation is relatively high and there is a good advertising base for the printed version.

"It is easier to gain advertising in print than online and the prices are higher," Professor Robert G. Picard, a media economics expert from Sweden's Jonkoping International Business School, told AFP.

"The Evening Standard model has shown that the freesheet model is well worth exploring," adds George Brock, professor and head of journalism at City University London.

"But it's not right to assume all newspapers can perform the same trick," he told AFP.

He points out that freesheets don't have high editorial costs: they don't invest in lifestyle features, foreign correspondents or business experts. "That wouldn't keep a general newspaper competing," he told AFP.

So if free print is not the answer, should websites follow Murdoch's lead and retreat behind a paywall?

"News Corp has no more idea than the rest of us if this is going to work," says Brock, who believes it will take months to gauge the reactions of readers and journalists to the paywalls.

Eventually though, analysts agree most newspapers will have to find a way of making money from their websites.

Business paper The Financial Times makes readers pay for online content, while the Wall Street Journal -- also part of Murdoch's media empire -- is currently the only major US paper charging readers for full access online.

The New York Times announced in January that it would start charging for online content in early 2011.

"It does seem that many serious news sites will follow Murdoch's lead and charge for their content, or at least establish some kind of content menu, allowing readers to choose from a range of one-time charges, subscription periods and so on," predicts Abrams.

"This is not very expensive to institute, and so can be tried experimentally."

Brock, too, is in favour of a pick and choose model. His advice to the embattled newspapers industry is to "get into a charging experiment" to discover what works and what doesn't.

"Newspapers need to experiment aggressively, they need a way of getting people to pay for the value they're getting," he says."

For Picard, this means offering the readers something unique.

"Paywalls will only work if the news and information behind the wall is not available elsewhere for free -- such as television, radio, free papers, or the -- or if it is of such high quality or adds services not available in print versions," he concludes.

Explore further: UK Murdoch newspapers unveil pay-for websites

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not rated yet Jul 03, 2010
If sites like Mashable and TechCrunch and other blogs can profit without charging for access why can't news sites do the same? I think they should be taking a leaf out of their books instead of turning to these drastic measures.
3 / 5 (2) Jul 03, 2010
It's too late to start charging for online content, especially for services which have been previously free or can be sourced from many other free outlets. Compounding the problem is the now entrenched expectation that anything on the net should be free, especially among younger consumers. I doubt this 'experiment' will work, otherwise so much of the traditional press would not already be so decimated. It sounds like a last ditch effort to hang on to the traditional business model.
not rated yet Jul 04, 2010
Traditional business model for news agency is advertisement subsidies contents, producing and printing papers cost more than its selling price.

News gathering is expensive. Free sites are ripping contents off traditional news site, and enjoying the low cost of production; thus the problem is not with business model but rather copyright. In fact free site is using the same model.

If traditional news site built up a paywall, are those free site going to set-up their own news department and start gathering news, or will they perish?

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