Paying for premium news in SA
Following in the wake of the recent paywall implementations on major news websites abroad, Elan Lohmann, general manager of Avusa Media Live, has taken a critical look at the sustainability of the current online publishing business model.
Lohmann argues the necessity of premium content for the survival of online publishers in South Africa at the latest DMMA debate held today.
Speaking at the Cape Town leg of the debate, Lohmann, who oversees Avusa’s online news stable and platforms, believes that the future of online news publishing is a challenging one.
“The current online business model, reliant on high-value advertising and adopted from print, has a number of serious flaws that do not translate well into the online world and which are forcing online publishers to take bold steps into shaky territory,” he says.
“The original business model for the news industry, which worked so well for print, is built on the presumption that the revenue generated by advertisers will pay for journalism and that consumers will pick up the cost of circulation. Currently the revenue generated by online advertising is not enough to sustain the online news business and online publishers are being forced to turn to other tactics, such as paywalls, to keep their businesses afloat.”
Paywalls fall into the subscription category, one of the three successful online business models including advertising and transaction as used by sites such as Amazon and EBay.
“Consumers who are not used to paying for content may find this a hard pill to swallow and paywalls, while they are one solution to the problem, pose their own threats. Publishers asking users to pay for content need to ensure that the paid-for content is exclusive, of a high quality and, most importantly, that there is a high demand for it. Otherwise they risk users simply migrating to other, free sites as seen recently when Rupert Murdoch of Newscorp implemented paywalls on The Times and The Sunday Times news sites in the UK.”
“While official statistics are not yet available the speculation is that high percentages of users are opting out. This can only benefit rival free online publications in the market such as the Telegraph and The Guardian.”
Online publishers can use paywalls in three ways: by walling off all, or sections of the site; offering a premium subscription package providing exclusive content to subscribers only and by making use of a micropayment system where users can pay per content item they wish to consume.
“News sites wishing to make use of the subscription model need to carefully evaluate their offering before deciding how best to implement paywalls.”
“A crucial knock-on effect that publishers need to consider is that when content is restricted it cannot be easily shared, thus reducing content dissemination – a primary virtue of the web. In addition, a diminished audience severely limits interactivity and debate, creating less incentive for important brands and thought leaders to talk to a publication. These are just a few of the issues that shutting down content can bring with it.”
“Currently, Avusa are in the process of implementing a full paywall model in its Eastern Cape properties. This is a deliberate decision as being the dominant source of news record in the area has afforded us the opportunity to offer exclusive online content on The Herald and Daily Dispatch news sites.”
“With little competition in this regional market we are optimistic that we have a chance at encouraging users to pay for content. The market also includes a large community of ex-patriots hungry to keep up-to-date with happenings in their hometowns.”
“While users would need to adjust to the idea of paying for content, we would be asking them to support the policy to ensure the continued availability of independent journalism covering the Eastern Cape region online.”
“This approach would not be taken with a brand such as Times LIVE which will continue to offer a free daily breaking news service. We aim to attract users to the site with the breaking news offering and could potentially consider asking readers to pay to view other areas of the site such as the Sunday Times publication.”
“Knowing your audience and striking the right balance with your customers can assure online publishers continued annuity income, which, when coupled with commercials, makes sense.”
“For the paywall to break even in the Eastern Cape, each site needs a minimum total of 2 000 subscriptions, just three percent of the current unique users and we are confident this is achievable. We are excited to see what happens and understand the risks. If we are unsuccessful we will have to return to the drawing board but we need to be brave.”
“Paywall or not, local online publishers need to tighten up – quality journalism should never be compromised, no matter the medium. While the majority of products offered by South African online publishers used to be world class, the gap is widening and we need to be ready to move with the global changes and accelerated growth of the online community,” concludes Lohmann.
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