Category Archives: Business Models

OPA's Continuous Spin on Paid Content Figures

The Online Publishers Association has released its latest hope-filled and hype-filled update of its questionable figures about the growth of paid online content in the US. We write the monthly Publishing: Free to Fee columns for JupiterMedia’s ClickZ.com, so we think we have a modicum of knowledge about online paid content. So, last year when the ONA began releasing its ‘paid content’ growth report, we lambasted their methodology. We still stand by that.

Although the OPA’s membership consists of About.com/PRIMEDIA, BankRate.com, Belo Interactive, CBS MarketWatch, CNET Networks, CondéNet, Cox Enterprises, Edmunds.com, ESPN.com, Forbes.com, Internet Broadcasting Systems, Knight Ridder Digital, Le Monde Interactif, Meredith Corporation, MSNBC.com, New York Times Digital, Scripps Networks, Slate, SportingNews.com, Tribune Interactive, USATODAY.com, Wall Street Journal Online, Washingtonpost.Newsweek Interactive.com, and Weather.com — in other words, mostly traditional media companies — the OPA defines online consumer ‘paid content’ this way:

    “We restrict our definition of ‘paid content’ to digital intellectual property purchased through a Web browser by an individual.”

Although that definition might sound reasonable, it actually lets the OPA include lots of things that aren’t actually parts of their membership’s lines of business. Things such as:

  • Business-to-business reports, such as Internet industry reports purchased from eMarketer.com or professional wiring reports purchased from the Institute of Electrical and Electronics Engineers’ site. The ONA counts these B2B sales as purchases by consumers.
  • Paid subscription directories, such as Ancestry.com and Classmates.com.
  • Consumer credit help lines, such as ConsumerInfo.com and CreditExpert.
  • Personal growth services, such as eDiets and WeightWatchers.com.
  • Online greeting cards services, such AmericanGreeting.com, Blue Mountain Arts, and Hallmark.com.
  • All paid downloads of streaming media. Not just from radio and TV stations, but from all paid streaming music downlaods from Real.com, Pressplay, etc.
  • Playable online game, such as Alien Adoption Agency, Case’s Ladder, and The Well Dressed SIM).
  • Online dating or matchmaking services, such as Match.com, Singles.com, and kiss.com.
  • Even downloadable pinups and pictures from Playboy.com.

When we criticized the OPA for overstretching a definition of online paid content to the point that it wasn’t even wildly applicable to its membership, OPA defenders responded that the categories included could someday be part of the membership’s lines of business. Well, we’re still awaiting launches of New York Times Digital’s Bop William Safire online game, the Wall Street Journal Online’s Brokers to Love dating service, or ESPN.com’s online greeting cards.

Meanwhile, we think the OPA wants to create REMARKABLY BIG FIGURES by overinflating a definition of consumer paid online content. Because these overinflated figures include online dating, B2B sales, and other extraneous categories, the OPA claims to show a rapidly growing pace for consumer paid online content. Why? Because most OPA members are executives working for onlien subsidiaries of traditional media companies. Those executives are working on their own companies’ online paid content initiatives. The actual growth of consumer paid content online revenue for most of the OPA member companies has hardly been stellar. But what better way to show their superiors the potential promise of their endeavors than to overinflate market demand figures.

However, maybe a little air escaped the balloon this time around. The latest OPA survey:

    “determined that consumer spending for online content in the U.S. grew to $748 million in the first half of 2003, an increase of 23 percent over the same period last year.”

Not quite as good as the meteoric 131 percent rise this OPA survey reported last year.

We’re not the only ones skeptical about the OPA’s latest survey nor to call attention to the hopeful conjectures in the survey’s executive summary:

    “While slowing growth is indicative of a maturing market, we may also be in the midst of a quiet period during which content providers are readying new premium paid services for an increasingly receptiove public.

    “In many quarters there is a sense of anticipation that the next wave of consumer paid content spending is about to be unleashed.”

So, the reason growth has slowed is that online publishers might have let it slow? We don’t think so. (However, someone in the OPA could have a great future at a public relations agency.) The OPA’s own figures are inadvertently a form of an online game and, if the OPA charged for the report, it could count it among its own figures. If a publishers organization does want to track the pace of consumer spending for their content, it should do so accurately.

WayBack Machine Adds Keyword Search

Here is something that is bound to upset publishers who are now charging for archival access to their Web pages: The WayBack Machine search engine at Brewster Kahle‘s Internet Archives project has added keyword search capabilities. This makes it much more articulate in searching the terabytes of Web page content that it’s cached during the past half decade.

For examples, How about finding Speigel Online’s September 13, 2001 story about September 11, 2001 terrorist Mohammaed Atta? Or the home page of NYTimes.com on September 12, 2001? Easy.

Some publishers who now charge for archival content were careful back then to put search robot exclusion tags onto their story Web pages. But not many did.

On 10th Anniversary Online, Polish Paper Begins Charging for Archives

Celebrating its tenth anniversary of publishing on the Web but without profiting from banner advertising during that period, the Polish daily newspaper Rzeczpospolita on its online anniversary began charging for access to its online news archives. To access its archives, a customer uses a mobile phone to send an SMS message to a number listed on the newspaper’s Web site and in return gets a password — a micro-transaction method that’s becoming popular among European online newspapers. The Warsaw Business Journal reports that online advertising in Poland last year totaled only 33 million zlotych (US$8.8 million) and how little of that went to online newspapers. Gazeta Wyborcza had the largest share, with 2 million zlotych (US$534,000). Rzeczpospolita was the first Polish daily newspaper online, launching Rzeczpospolita Online in 1993.

A Million Dollar Question for the Albuquerque Journal

At the World Association of Newspaper Annual Congress in Dublin this week, the Albuquerque Journal was presented as an example of a successful paid-access newspaper Web site. Its editor Donn Friedman said that during the past two years the site has grown to 3,800 paid subscribers and its subscriber retention rate ranges between 56% and 65%. Because the site charges $8 per month, I calculate that it’s grossing about $364,800 per year, $204,288 to $237,120 of which is stable year-to-year. Does that sound good?

Not to me. Borrell Associates‘ April 2003 report, What Newspaper Web Sites Earn, found that, among newspapers with 100,000 to 200,000 daily print circulation, the average free-access newspaper site annually generated $12.76 in revenues per print circulation. Because the Albuquerque Journal‘s daily print circulation is around 110,000, this mean it should earn around $1.4 million annually if it were a free-access site. That’s a million dollar improvement. Even if the Albuquerque Journal could earned half that much as a free-access site, it would be doing better than it is now as a paid-access site.

[Update, 6 November 2003: According to an article written by Donn Friedman in Online Journalism Review, the paid subscribership figure is “almost 2,000” and the subscription revenues are “more than $100,000 annually”. See our new commentary about this article.]

ABC News Switches Around-the-Clock Portals

ABC News has removed its live feed from Yahoo Platinum and made RealNetworks the only Internet hub with its around-the-clock Webcast, according to The Wall Street Journal [a paid-subscription Web site] yesterday. Yahoo Platinum will continue to offer other streaming television programs from ABC News, not the live news feed. Yahoo Platinum and RealNetworks each charge consumers subscription fees to receive webcasts. The Journal reported that ABC will get more revenue from RealNetworks than from Yahoo, plus ABC will be able to stream its video to cellphone users via RealNetworks’ RealOne Mobile Guide, a free service to mobile users.

NY Times Archives To Be Opened to Blog Links?

Speaking of Dave Winer, his weblog says that the the news archives of The New York Times, which are currently kept behind a paid content firewall, will be opened to webloggers’ hyperlinks. NY Times Digital last year began syndicating its news feed in RSS format to people who use weblogging software from Winer’s company, Userland Software. Winer’s weblog yesterday noted that he and NY Times Digital executives “…found a good compromise, the archive will remain open to people who link from weblogs, but they will keep the toll booth up for others. We have to hammer out a final statement, which I expect to have in a few days.

A Determined but Adrift Industry

Is the newspaper industry determined to convince itself that charging for access to its online content is a good idea? To reach that conclusion, it seems determined to overlook all facts, data, and logic about the subject.

For example, here is the schedule for the panels on the paid content subject at the World Association of Newspapersannual forum, which will be held next week in Dublin:

Fifth Session: Content and Business Development on the Internet
Chairman: Andrew Nachison, Director, The Media Center, American Press Institute, USA
Charging for online news, selling news on mobile devices, making the most out of both static and dynamic content — these are some of the issues that will be discussed, through case studies, in this forward looking session
The Jerusalem Post: going for online subscriptions without going for broke
Alan Abbey, Vice President of Electronic Publishing, Jerusalem Post, Israel
FT.com: drawing the line between free content and subscription
Tracy Corrigan, Editor, FT.com, United Kingdom
It’s all about value
Donn Friedman, Assistant Managing Editor, Albuquerque Journal, USA

See anyone on that panel from a newspaper that hasn’t switched to paid access and whose career doesn’t have a vested interest in saying that charging for online content is a good idea? Shouldn’t a panel on this subject be objective or have at least one panelists who is against the issue?

Last thatI knew, the Jerusalem Post had only 1,000 paying subscribers. Published reports say that the Albuquerque Journal has less than 1,600 after years of charging online. JPost charges $9.95 per month and Albuquerque $5 per month for access. Thus those site are making a whopping $120K to $96K annually, which certainly doesn’t cover the costs of running those sites. As for FT.com, most of its reportedly 44,000 paying subscribers aren’t paying for the newspaper site’s general-interest news pages, which are free, but for access to company information (i.e., the FT, like the WSJ, isn’t a general-interest newspaper but a daily business journal).

Borrell Associates‘ research has detailed how none of the 15 U.S. dailies that have been charging for content have been able to generate online paid subscriber numbers equal to more than 2.6% of their print circulation or convert more than 1% of their sites’ unique users into paying subscribers. My own research involve El Pais, El Mundo, South China Morning Post, FT, Le Monde, and Ireland.com shows that none of those major newspaper sites have been able to convert more than 1% of their unique users.

In no case has a general-interest newspaper Web site’s conversion to paid access ever resulted in that revenue paying for the operation of the site.

If WSJ.com Founder Neil Budde were a panelist, he’d tell you that paid subscriptions account for only 60% of WSJ.com revenues and that WSJ.com has never been profitable, even with all its sources of revenue. In March, Neil told the JupiterMedia’s Content conference that it was a bad idea for a general-interest newspaper to switch from free to paid access. Paul Maidment, founding editor of FT.com and now executive editor of Forbes magazine and editor of Forbes.com, told that same conference that he was glad to leave FT.com before its “dumb’ switch to paid.

Whizzing About On The Subject of Paid Content

There’s an interesting article in American Journalism Review about whether or not newspapers should implement user registration and/or charge for online content. Registration makes sense (hello, did anyone remember why NYtimes.com announced in 1995 why it implementing registration?). But charging for all acesss is proving to be the latest online newspaper industry’s latest childish pursuit of bright shiny objects.

Few Japanese Online Publications Succeed at Paid Content

According to a story in the bulletin of the Nihon Shinbun Kyokai (The Japan Newspaper Publishers & Editors Association), few Japanese online publications are charging for content or have had success doing that.

For instance, Asahi Shimbum on March 3rd began charging for access to a subsection of its Web site but has gained only 2,000 subscriptions. That might seem like a lot to U.S. online publishers, but remember that Asahi Shimbum‘s daily print circulation is 12.5 million! Moreover, that subsection has 230,000 registered users. So, Asahi Shimbum‘s paid online access conversion rate for that subsection after two months is only 16/1000th of its print circulation and less than one percent of unique users. Despite Asahi Shimbum‘s premier brand name marketing muscle within its home market, its results at this are are no better than any other online newspaper in any other country.

Another Example of Media Disintermediation

David Astor, syndication columnist for Editor & Publisher Magazine, has written a column [which unfortunately might by now be hidden behind VNU’s paid archive wall] about how My Comics Page gained 10,000 new paid subscribers this spring. MCP now serves 25,000 paid subscribers. This is yet an example of (a) daily and Sunday newspapers unwittingly having their contents disintermediated and (b) how the contents of newspapers are worth more apart than when packaged together as a whole.