News Corp. Being Buried Under Crumbling Paywall

Often times, when the mogul behind an business empire dies, the empire either gets hacked up or falls to pieces. But in the case of News Corp., it seems that the company’s only chance of survival will be when Rupert Murdoch moves on to that big board meeting in the sky.

In case you haven’t heard the news, Rupert Murdoch’s paywall has been a disappointing success. What do I mean by that? Well, it’s doing what walls do best: keeping people out. And when you’re in the business of selling audience and eyeballs to advertisers, keeping readers away isn’t what you might call “strategy”.

So just how exactly is the paywall failing News Corp? Well, GigaOM had a pretty good breakdown just the other day, a few highlights:

  • News Corp. British newspaper sites, the Times and the Sunday Times, have watched their online audience drop from about 3 million unique visitors to about 200,000 paying subscribers.
  • The subscribes counted includes new paid users (105,000) and print subscribers (about 100,000) who have activated their free digital accounts.
  • Of the new subscribers, about half were regular subscribers through the site, iPad App, and Kindle editions, while the rest are pay-as-you-go users.
  • According to Reuters, “the site’s overall traffic has collapsed by almost 90 percent.”
  • According to Guardian.co.uk even an optimistic estimate of paywall revenue (including its iPad app) “comes to about $8 million (and that’s before Apple’s cut for the iPad app)”.

Given that a number of advertisers “have said they are less interested in working with the Times and Sunday Times” because of the paywalls, advertising revenues seem unlikely to rebound.

News Corp.’s Problems: Past & Present

Prior to the paywall, News Corp.’s problem was falling revenues (falling circulation eroded both subscription and advertising revenues). Their problem after the paywall is falling audiences.

You see, advertising revenues should be the bread and butter of most publications. The subscription fees are only supposed to cover physical circulation (i.e. the paper boy). What keeps the paper in the black should be its advertisers.

What News Corp. (and most news outlets) has experienced is a fundamental shift in content distribution. We don’t need physical paper to distribute print content anymore, it’s increasingly cumbersome vis-à-vis digital distribution, so publishers need to find ways to grow, retain, and monetize their digital readerships.

Subscription Revenue Models are Obsolete

Rather, news publishers need to leverage social media APIs to learn more about their readers and grow their audience, and then diversify their ad revenues accordingly.

What News Corp. has done instead with the Times and the Sunday Times is overlooked the data originally available to them, and then reduced their readership. That’s a suicidal publishing model in this day and age.

Of course, execs at the helms of these publications have gone on record to say that they see it the other way around. As Times editor, James Harding, told the BBC about their pre-paywall days:

“We’d engaged in a quite suicidal form of economics – which was giving our journalism away for free. We knew that if we continued to do that we couldn’t invest in reporting.”

But given how a newspaper’s business model is based on growing an audience so that you can sell it to advertisers, and that these papers have lost 87 percent of their online audience, you have to wonder whether Harding is a deluded fool or just a liar whose towing the company line. The fact of the matter is that content distribution technology has evolved, to rely on revenue models from the days of print is suicidal.

That doesn’t, however, mean that there aren’t alternatives. Digital traffic can be successfully monetized. It just requires a diversified revenue model and the right technology (which is already available). Granted, trying to explain this to board members who can barely bridge the generational technology gap and are too lazy or stubborn to learn the new tricks of the trade has gotta be a tough sell for any Editor in Chief.

About CT Moore

A former Staff Editor here at Revenews.com, CT Moore is a recovering agency hack with over 8 years experience leveraging search and social media to help brands meet their business goals online. He currently provides digital strategy consulting to both SMBs and enterprise level companies through his consultancy Socialed. CT has worked with both start-ups and multinational brands alike, including Acquisio, Microsoft Canada, and Luxury Retreats. He is also an accomplished blogger and speaker who educates groups and companies on how they can better leverage different online channels.

Twitter: gypsybandito
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A former Staff Editor here at Revenews.com, CT Moore is a recovering agency hack with over 8 years experience leveraging search and social media to help brands meet their business goals online. He currently provides digital strategy consulting to both SMBs and enterprise level companies through his consultancy Socialed. CT has worked with both start-ups and multinational brands alike, including Acquisio, Microsoft Canada, and Luxury Retreats. He is also an accomplished blogger and speaker who educates groups and companies on how they can better leverage different online channels.

6 Responses to News Corp. Being Buried Under Crumbling Paywall

  1. Shane says:

    Well said. If they'd just hire an affiliate marketer, they'd have a better shot at surviving. Charging readers works in very few niches…major media isn't one of them…not anymore at least. Why should readers pay to read a topic that is being covered elsewhere that can be read for free?

    Here's the thing….what is the unique value proposition? Is it their "high quality" authors? Is their use of nouns, verbs, and grammar actually worth "more" than someone else who reports the same stories?

    What value are they providing? If people want "news" there are plenty of places to get it. I'm actually curious how many of those 200,000 subscribers are the moms, grandmothers, and close relatives of the employees of News Corp that are proud of what their "babies" have accomplished.

    Murdoch is trying to impose old school revenue models into modern media and clearly doesn't get it. I actually spoke with members of one of their competitors and asked if they had ever considered affiliate advertising or doing performance based advertising. All I got was a deer in the headlights look and a response about how they just have flat rate advertising. No CPM, CPC, and nothing performance based. Just old school revenue.

    Here's the thing. There are TONS of content and information websites that are making LOTS of money because they are providing unique value propositions and generating revenue using clever strategies that the big boys are too afraid (or too old) to bother with.

    News Corp (and anyone else following their model) need to move forward or move aside.

    It's pretty simple….either fix the content or fix the revenue stream. And yeah, it may mean a reduction in fancy offices and bloated salaries, but all I hear from them up to this point is they're trying everything they can to keep from cutting any of that.

    If anything, it pains me to think of the employees and people actually doing the work that are going to be negatively affected by the suits that are in the boardroom pulling the strings.

    Maybe those employees can jump on board of some of the new media companies that "get it" and that have leaders with fresher vision and a willingness to put ideas to action.

    • CT Moore says:

      I love how you put that: "Here's the thing….what is the unique value proposition? Is it their "high quality" authors? Is their use of nouns, verbs, and grammar actually worth "more" than someone else who reports the same stories? "

      And personally, I think that they have to fix the content AND the revenue stream.

  2. Marianne Filion says:

    I realize in this day an age, charging for content is suicide. But I can't help but wonder what the price of free content will be for society. I mean, let's face it, ad supported journalism will never have the editorial or financial freedom to completely fulfill its role as democracy's watchdog. To that extent, I don't know who to be more upset with: an apathetic population, or the newspaper publishers who consistently fail to find new sources of revenue.

    • CT Moore says:

      I agree with you that democracy is in danger of losing something important. I'm wondering just how well citizen journalists will be able to pick up the slack. I mean, after all, part of being mediated by a large organization is understanding your editorial biases, etc…

  3. [...] at paywalls as their only means of survival when other options were possible. In November, CT Moore pointed out that News Corp.’s British newspaper, The Times, took a big revenue hit when it implemented a [...]

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