Five things you need to know: Paid-for content

1. The problem Over the last several years, media consumption has migrated to digital platforms, reducing both circulation and advertising income for print publishers, particularly in developed markets. Publishers tried to create new revenue streams by distributing content for free through online and mobile channels and charging for advertising. The problem is that advertising revenues from digital have been nowhere near enough to replace the revenues lost from print – so the pie as a whole is getting smaller. The global recession has made this situation worse. Publishers need to find a way to persuade consumers to pay for digital content, or they risk going out of business.

2. Who will pay for content? Consumers have been getting content for free on the internet for years, and they don’t like the idea of suddenly having to pay for it. The general consensus is that people will only pay for content that has genuine value and cannot easily be replicated elsewhere. The most obvious example of this is financial news and analysis. But most news is general news, and very few people are going to be willing to pay for a story from one newspaper website when they can get exactly the same information for free from ten others. For the paid-content model to make sense, either content has to be unique, or everybody has to start charging.

3. How will they pay? Publishers are testing a variety of models, from single-story micropayments, to one-day access, to long-term subscriptions as per the traditional print approach. There is no clear consensus on which will work best. Apple’s new iPad has been proclaimed a savior of the publishing business because it creates a platform where the user experience will be so rich and convenient that people will be willing to pay for the content it distributes.

4. Who is taking action? Rupert Murdoch is leading the fight for publishers, and plans to put a pay-wall around all News Corporation owned content. Other famous media brands like the Financial Times, New York Times, as well as leading Asian titles like The Straits Times and South China Morning Post (SCMP), have already decided to charge for elements of their digital content. Most publishers are either experimenting with paid content, or watching closely to monitor the success of others.

5. What does it mean for advertisers? If paid-content takes off, it should offer opportunities for advertisers. First of all, registrations for subscription models will give advertisers more information about who they are reaching, allowing better targeting. Paid-content will also by definition be “valuable” content, which increases engagement levels. Finally, there will be implications for Search. Google has already created a 'First Click Free' programme allowing users to view a set number of pages before the pay-wall appears. We should watch closely as paid-content develops further momentum in 2010.