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 7 years experience leveraging search and social media to help brands meet their business goals online. By day, he provides SEO and social content strategy to both SMBs and enterprise level companies in the tech, entertainment and travel industries, including Acquisio, Microsoft Canada, and Luxury Retreats. CT is also an accomplished blogger, podcaster, and conference speaker who educates groups and companies about how they can effectively leverage different online channels.

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