OPINION: Will Australians pay for content?

Danny Bass
By Danny Bass | 4 July 2013
GroupM's Danny Bass.

It’s one of the most popular digital news destinations in the world and has its sights set firmly on Australia. Last month The Guardian’s Australian website entered the top 10 Australian news sites for the first time.

The Guardian’s approach is to take the best of its content from around the world, create Australian-specific content written by a local news team and use the highly successful methods it has developed over the years to engage its audience in participating in the conversation.

Very few domestic publishers have been able to do the latter successfully. If The Guardian can replicate this success in Australia, it could be a real differentiator in what is already a very crowded space. Unless publishers deliberately play the click-bait game (Mail Online is a prime example), the ability to engage and understand their audience in a deeper way is critical to their future success.

The financial situation of The Guardian, including its ownership by a charitable trust, is well documented and allows it to focus on growing its readership internationally rather than monetising its digital presence. Without its unique funding model, it is doubtful it could have taken the anti-paywall stance it has. Australia’s two print giants have moved in a different direction.

Following last month’s move by News Australia, this week saw Fairfax launch its own paywall model. It’s a bold move and one that will determine the future of the company.

Fairfax has been extremely successful in migrating its print audience online but the challenge – and Fairfax is not along in facing this – is that the dollars haven’t followed at the same pace.

This issue is compounded by a collapse in print revenues, falling CPMs for digital inventory, a highly competitive media landscape and a move towards programmatic trading.

Both News and Fairfax (along with most media companies) have significantly cuts costs over the past few years and have taken an aggressive approach to under-performing business units, centralised editorial teams and injected millions into their digital assets.

Where both publishers agree is that in order to survive and continue to provide quality journalism, they need to convince Australians to pay for some if not all of their content. Both have gone down the metered model route, where consumers will either register or subscribe to gain access to varying levels of articles across some or all of their online properties.

Ultimately this means consumers can access a certain number of stories for free over the course of a month before they are asked to subscribe/pay.

Interestingly, there is a significant difference in the threshold each publisher puts on the monthly quota and the type of reader they are looking to attract. Fairfax is more generous – allowing up to 30 articles per month in contrast to News’ 15 articles. Fairfax will not count people coming in via social media and search engines towards its monthly quota, but News does. 

In a sign that shows how important video revenue is to Fairfax, it will not be putting any video content behind the paywall. Again, News has a different view on the video front.

Also interesting is the fact that News.com.au (now the number one news site in Australia) remains free from any paywall model and clearly plays a key role in News Australia’s digital strategy.

News Australia has the advantage of global learnings from the News Corp stable – and has a wealth of experience from the pay subscription TV model. However, Fairfax has arguably been more successful in monetising its digital assets.

All publishers and advertisers are now trying to capture each of their customers’ unique interests and speak to them as individuals instead of shouting the same message to everyone.

A greater understanding of the individual user will allow communication channels to get quieter – become less cluttered, display fewer ads and less junk – leaving highly relevant, hotly anticipated content (and ads) that people welcome.

Ultimately today’s digital landscape means readers have plenty of sources to choose from. Publishers considering paywalls have to weigh the costs of losing readers with the benefits of gaining subscription revenues and the potential to raise CPMs.

So will Australians pay for content? I believe they will. There are going to many different models tested over the coming years – some will work, others won’t. The New York Times is certainly making a success of it.

Ultimately it’s all down to the product; how it’s packaged and marketed. Who would have predicted 30 years ago that people would pay for bottled water at the volume they do today?

Danny Bass
Chief Trading Officer
GroupM

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