The economics of online news

Business Insider have put together an interesting tweetdeck entitled More Than You Ever Wanted To Know About The Economics Of The Online News Business — A TWEETIFESTO

Some interesting facts are that CPM rates (cost-per-1000-page impressions for advertising on a website) are $3-6 for a general news website and $10-20 for a business or premium website.

NewsCorp are to charge for online access to their news websites. That will eventually include both The Times which had almost 20 million unique visitors in December & The Sun which had 21 million. From these figures it might reasonable to guestimate their potential online revenue from advertising as somewhere between $1.2m per month (assumes each visitor visits 10 pages per month on average, and the lowest CPM rate $3 applies) and $81m per month (assumes each visitor read 100 articles per month on average and the highest CPM rate $20 applies).

I think their decision to introduce a pay wall and cut off their online content from open view is bizarre. In comparison to purely online news sites like Business Insider they actually have a distinct advantage. They can already easily segment their users into those who want to pay to read and own the whole paper, and those who would rather browse a few articles with adverts for free. Their real world newspaper division does this for them. Hiding Timesonline behind a paywall won’t have any major affect on the numbers migrating from purchasing physical newspapers to free online sources. The online, free-to-use news market will still exist & continue to grow – without them! They will have given up their place in it.

A Business Insider article, with the same title as the Tweetdeck, highlights some of the differences in structuring news for the web versus print journalism. Perhaps the best solution for dual medium news agencies is produce two different products – a traditional print newspaper & an online service – perhaps with shorter, snappier articles (blogs?), more interaction, that provides more up-to-date news?

  • I am amazed by the 21m hits/month claimed for the Sun. Instant thought: boredom-at-work and sloppy firewalls. I simply cannot credit that the average Joe will cough for that, when there’s so much sordid trash for free. It might be the best educator on net-navigation yet.

    Equally, the Times site. I happen, already, to be a Times/Guardian/Irish Times subscriber. Which means I plough through good, old-fashioned newsprint on a daily basis. From time to time I need to cite references when I post here and elsewhere. From the near future, News International has lost a small but free daily puff. Anyway, I have a very effective scanner here: Adobe Acrobat Pro would mince raw text into electons sharpish. If the spirit moves me, bang goes any pay-wall.

    The net is an anarchy. Not much goes unreported, unlinked, unripped. The truth is out there. if you know where to look. Murdoch is dependent on laziness and incapability. It cannot last.

  • Mick Fealty

    Malc, it’s at all not wide of the ball park. Picture so semi clad ladies will get you a chunk of that. Most of the Opinion pieces I have tried to look for are almost impossible to find even if you look on the day.

    Mack,

    Splitting the product offering makes sense. There are certain kinds of product that you just cannot charge for access: most typical blog posts, tweets, and other short form material.

    I don’t see why you cannot charge for other longer form material online as well as in print.

    Murdoch’s move I think is intended to be more strategic than that. He sees where the monopoly lies (Google increasingly own the online platform), and wants to go after ringfencing the higher end material.

    Tying the value of the product mor closely to your readers’ profile rather than letting advertising carry the bulk of the value makes sense when the ad model everywhere seems to be destroying value.

    Others will be watching him like a hawk.

  • [quote][i]Perhaps the best solution for dual medium news agencies is produce two different products – a traditional print newspaper & an online service – perhaps with shorter, snappier articles (blogs?), more interaction, that provides more up-to-date news? [/i]…. Mack @ 09:46 PM [/quote]

    Mack,

    What you discover whenever [i]more interaction, that provides more up-to-date news[/i] is enabled, is that should the interaction contain mutually beneficial peaceful views [and therefore not be popularly subject to any legitimate or rightful moral universal condemnation and dismissal], which would also be able to provide the necesssary ways and means to achieve those views,……. and which are easily able to lead in a direction contrary to the view/wishes of the site/paper owner or the national/international/Internetional interest of the jurisdiction and executive administration which would be favouring and supporting and using/abusing a media mogul with newspapers [and media] to lead/subliminally program readers and viewers, …… is that failing to be able to counter those views reasonably with valid argument will either result in those novel interactive views from contributors being denied publication for global viewing [which is the audience available for anything which is virtual/online] or if that is not practically possible, then is the site denied Internet hosting or the site owners decide to ensure that an introduced increasingly critical moderation will decide on which contributions to “print” …..ie Censorship will Increase dramatically and nowadays, because of the ubiquitous and instant nature of Global Virtual Telecommunications Delivery Systems, does the Host Nation descend into a Fermenting and Fomenting State of Indignant Anarchy and Fascist Authoritarian Control, which isn’t Control at all, but rather an Ignorant Abuse of Power.

    Does the following describe any united kingdom/states that you may know and recognise all too well ……[b]A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. – Alexander Fraser Tytler, 18th century Historian and Jurist [/b]

    And this, is a fact ……”[i]And here is some news which you may not know …… Whenever the Great Debate message board was on the BBC, news items freely and openly discussed by its members, and some of them were real smart, towards an acceptable consensus of constructive unbiased opinion, invariably ended up as an item of news and novel government policy a day or two later, pirated/plagiarised from the board. Sadly though, nowadays, after a number of drastic changes to curb the critical free speech against the rules and regulations of Puppets and Muppets in the madhouse of Westminster, the very few boards that remain are moderated to such a ridiculous extent in support of the BBC/government view, as to be a complete and utter waste of anyone’s time and Public money.[/i]” ………. which is irrefutable evidence in support of the fact.

    And with regards to [b]From that time on the majority always votes for the candidates promising the most benefits from the public treasury,…. [/b]which was written a long time ago and things have moved on considerably since then, it is NOT the majority which votes for the candidates promising the most benefits from the public treasury, it is a very small elite/cabal, for the present sorry state of Great Game play and Power Perception is [b]Public Apathy Enables Leaders To Ignore Voters. . .[/b] and that is something which Leads Perverse and Subversive Thinking for Political and Military Action, as is revealed in this most recent CIA Document [11 March 2010] …. http://file.wikileaks.org/file/cia-afghanistan.pdf.

    And who here on Slugger think that politicians and governments listen to voters?

    I bet you a pound to a penny more voters will say that their views are ignored and they just do what they want.

  • jtwo

    Times newspapers are losing £240k a day, the rate card for online ads is massively lower than those for display print ads, despite all the bollocks talked about technology reducing production costs that means nothing unless Murdoch shuts his print business overnight. So I’m not surprised he,s trying this.

  • Alias

    Good point, jtwo. His online newspaper carries its own productions costs but is heavily subsidised by the production costs of its offline counterpart, specifically its news-gathering department. Remove the printing and distribution costs, and the residual costs would approximate to the real cost of producing an online newspaper.

    But the problem he has is that if he tries it with one or more of his papers then he increases the production costs of his other titles since he loses benefits of scale.

    If he makes a bold decision that the future of news distribution is exclusively electronic then he gives market share of printed titles to his rivals. He may be giving them an exclusive share of a dying market but he may also be giving them economies of scale that allow them to dramatically increase their profitability and lower their production costs – and they can then get very rich while taking a long time to die (with their death being little more than a cash-rich rebirth as online media with a wider readership following them).

    He might consider propriety delivery hardware that he used with satellite broadcasting, and giving this free or at a subsidised price to readers of his titles, thereby allowing them access to a wide range of his titles (exclusively).

    At any rate, I’m glad it’s his problem and not mine.

  • Alias

    propriety delivery hardware = handheld readers

  • Mick Fealty

    amanfrommars,

    I don’t mean this as a plug, but that is the thing we are starting with on our Open Workshop on Tuesday: what does being a ‘representative’ mean?

  • Mack

    Mick

    Murdoch’s move I think is intended to be more strategic than that. He sees where the monopoly lies (Google increasingly own the online platform), and wants to go after ringfencing the higher end material.

    The problem is Google don’t make as much money from people searching for news articles to read as they do from people researching purchases. That’s why advertisers pay more for Google search ads than they do for display ads. They know if they pay for their ad to be associated with “personal injury claims Dublin” or “mortgage broker London” – they’re more likely to get people who actually looking to hire a lawyer or a mortgage broker. Putting the material behind a paywall isn’t going to change that one iota.

    (Incidentally if the higher end material is that valuable today, Google as an intermedary shouldn’t enter the equation at all. Readers should be going directly to the Times for that purpose).

    I don’t see why you cannot charge for other longer form material online as well as in print.

    Well, you’ll cannabilise your own sales for a start. Having paid £2 for a weeks reading of the Times will I pay for The Times when I hope on the train on a Saturday? Will I feck. It’ll be the Indo, Irish Times, Guardian, Telegraph etc. instead.

    If they want to charge online, it should be for another service that is different and in addition to a specifically geared advertising supported online news service & their real world print paper.

    The issue here is you have a disruptive technology (the web), that makes distribution of information effectively free. The print business model of charging premium rates for access and untrackable advertising will not work online at scale.

  • Mack

    Incidentally, I would have thought that all Murdoch’s assets leveraged together online – Sky, Fox, Global newspapers, even MySpace could be a compelling proposition. You could certainly charge for TV shows, movies etc on demand (& upsell, cross sell from their satellite offerings), and probably early access to news.

    The Sunday Business Post option of putting the paper online only in the evening isn’t a bad one.

  • [quote][i]I don’t mean this as a plug, but that is the thing we are starting with on our Open Workshop on Tuesday: what does being a ‘representative’ mean?[/i] …. Posted by Mick Fealty on Mar 28, 2010 @ 08:30 PM[/quote]

    Is there more information available online on the Open Workshop, Mick?

    “what does being a ‘representative’ mean?” ….. Err, that question comes right out of the blue, and it can be many things with some of them polar opposites such as a system champion and/or driver at one end of a scale or a program tout and/or pimp at the other, and in intelligent fields of endeavour will the smarter being always explore and deliver news and views as the former prime source with information rather than latter subprime drain on resources.

    And what makes Slugger tower head and shoulders above any more “normal traditional media” is that there appears to be free uncensored multi-level interaction, extremely well peer review self controlled with contributing members mentoring and monitoring each others progress/mental health. It is the sort of thing which sadly all too rarely in the past, appears out of the blue to create a standard by which all others are judged and which selflessly deserves a recognition of rich reward in just desserts. And that is also due in no small part to the calibre of contribution in comment, with everyone playing their particular part, no matter how great or small.

    And as someone into HyperRadioProActive UKGBNIRobotIQs and C42 Quantum Control Systems [Creative CyberSpace Command and Control of Computers and Communications] may note, that is a Real SMART Virtual AIR&dDevelopment; too. Bravo, Mick. And crikey, you never know, but that is just the sort of thing which could spark a supporting interest from a Crazy Smart Belfast Telegraphing Russian with a Spooky CV.

    Thick Micks and Dumb Russians? Don’t you believe it, for there aint no such animals, today. 🙂

  • PS …. your clock needs adjusting.