One of the most storied news dailies, The New York Times, has been
talking about a pay wall for well over a year. Like most newspapers,
times are tough, and to survive and thrive, new sources of revenue must
be found. For obvious reasons, subscriptions are one of the most appealing potential revenue sources.
Yesterday, The New York Times finally pulled the trigger and announced that it
will be launching a paid subscription model later this month.
Some publishers believe that Apple may hold the key to a profitable
future. Thanks to the success of the company's iPad, for instance,
there's a lot of excitement amongst traditional publishers who have seen
their revenue from 'old' channels like print plummet. Some publishing
moguls, such as Rupert Murdoch, are so excited that they're investing
tens of millions of dollars in iPad publishing.
But previously, there was a huge barrier: a lack of an
Apple-sanctioned solution for selling subscriptions from within Apps.
That solution came yesterday, and it offers some things publishers will probably love, but a few things publishers will likely hate too.
Yesterday, News Corp. made what many publishing executives hope will be
one of the most important announcements in the annals of digital
publishing: the launch of the much-anticipated iPad publication, The
But while subscribing to The Daily is probably accurately described as 'affordable' at 99 cents a week, or $39.99/year, producing the publication isn't. News Corp. has confirmed that its investment to date is already a whopping $30m, and that The Daily will have a weekly overhead of $500,000.
Media executives around the world are holding their breath. Rupert Murdoch's bold and risky bet on the iPad is on the way. The ultimate hope: it will prove that the iPad is a viable platform for profitable content distribution. A big part of the 'profitable' part: paid content.
But media executives might not want to hold their breath for too long.
According to research firm Knowledge Networks, consumer expectations on
the iPad look a lot like consumer expectations on the internet.
Ask many consumers why they've stopped purchasing dead tree publications like newspapers, and chances are you'll hear comments like "the cost is too high."
Ask those same consumers what they expect when it comes to the digital/tablet versions of their newspapers of choice, and you'll probably learn that they expect the cost to be lower. And for good reason: there's no paper and ink to buy; the marginal cost of selling an issue of a newspaper on an iPad is pretty close to $0.
The Financial Times is one of the few major print publishers that has
succeeded in a big way with paid content. And while other print
publishers who hoped that the iPad would help them revitalize their
businesses struggle with the iPad, the FT looks like it has extended its
existing success to the platform.
According to The Guardian, the FT's iPad app has now produced more than
£1m in ad revenue since it was released to the public in May. What's
more: of the 400,000 people who have downloaded the app, a decent number
are subscribing; the iPad app now delivers 10% of the FT's new digital
Prior to the launch of the iPad, many magazine publishers hoped that the
iPad might do for them what the iPod and iTunes did for digital music:
provided a viable marketplace for them to sell their wares. Operative
Getting consumers to pay for content has, of course, proven challenging
for many magazine publishers. And despite the warm reception the iPad
has received from consumers, it hasn't exactly meant overnight success
for publishers that have rushed to develop iPad versions of their
Despite the fact that many publishers have struggled to transform
ad-supported content into profit, many publishers have opted to keep
the ad-supported content, and forgo a paywall.
And there's a good reason why: it's entirely unclear to many publishers
whether a paywall will be profitable or not, and once a paywall goes
up, a publisher's audience will almost certainly drop. For many
publishers, ad-supported content and a large audience is still more
attractive than paid content and a smaller audience.
Is paid content the online future of the newspaper business? While there's plenty of discussion and debate on the subject, if you listen to enough newspaper executives, you might come away with the impression that they think it has to be.
But while many newspapers contemplate paid content and talk up their plans, The Financial Times has actually been executing a paid content strategy.
When the New York Times tried to have Apple pull the plug on the hit
iPad news reader, Pulse, I noted that as newspapers like the New York
Times attempt to 'save' their businesses, it would be wise of them to
figure out how they can work with creative third parties. After all, individuals outside of these organizations may be able to
do more for them in some areas than they can currently do for
But if emails between an online publisher who wanted to license content
from Dow Jones is any indication, news organizations may be better at
talking about getting paid for their content than they are at actually
accepting money from businesses that are ready to pay them.