Time to pay? paywalls: mirage or oasis?

frederic filloux copenhagen, february 4th, 2010

why now ?

after all...

 ...we were all advocate of the free model

 it had its virtue:  universal access / visibilility

  readers participation

  incoming linking / Google-friendliness

(Alan Rusbridger, Guardian's editor)

"If you erect a universal pay wall around your content then it follows you are turning away from a world of openly shared content." ...

(Alan Rusbridger, Guardian's editor)

" (...) Editorially it is about the most fundamental statement anyone could make about how newspapers see themselves in relation to the newly-shaped world."

why now ?

a chain reaction

1. the adverstising

crash

the failure of the ad model

 CPM are lower then ever

  click-through rate never took off

  endless inventories are pushing prices further down with ad networks acting as bottom feeders

  Google is sucking up revenues

 design flaw: web publishers are caught in some inherent contradiction

the failure of the ad model

 CPM are lower then ever

  click-through rate never took off

  endless inventories pushes prices further down with ad networks acting as bottom feeders

 design flaw web publishers are caught in some inherent contradiction

the failure of the ad model

  CPM are lower then ever

  click-through rate never took off

  endless inventories pushes prices further down with ad networks acting as bottom feeders

  design flaw web publishers are caught in some inherent contradiction

three main causes 1.  a non credible audience mesurement

Nielsen, ComScore, Quantcast are just disasters

2.  a lack of creativity from the advertising community with very little innovation in ad packages

3.  an individualistic approach by publishers unable to cooperate left plenty of room for bad players. Among them...

...the classifieds pure players

(Francis Morel, CEO of Le Figaro)

"In the early nineties, the newspaper’s revenue from classifieds was about €150m per year. Now, it is €12m..."

the classifieds consumption (an example on the French market)

Le Monde : 16 mn per viewer

and 19 pageviews per month

(at the same time, facebook : > 4hrs 31mn and > 530 PV)

(source : NNR France Dec 09)

leboncoin.fr (free classifieds): 1hr 02mn per viewer

177 pageviews /mo

2. the Facebook/

Google sucking effect

going up:  Global time spent on social networks

in Dec. 09: +82%

  +200% on the US market alone

  Time spent on Google in the US:

+43%

  money is shifting: between Aug. 2008 and Aug. 2009:   amount invested online on the US

market : -2%   share invested on social networks:

+119% source: NNR

...going down:

 time spent on newspapers web sites :

 Nov. 2006: 42 min

per mo. and per visit

 Nov. 2009: 32 mn

3. consequence: the collapse of

the Arpu

a massive revenue depletion on print but also online

since 2005, US newspapers have lost 57% of

their print advertising revenue

online advertising, lost 26% since the peak of Q4

2007

over the last 4 years, each gain of

one dollar on digital translated into a loss of

55 dollars on print

(Clay Shirky, Professor NYU

"The old models are breaking faster than the new models can be put into place..."

revenue per reader

$612 per year per buyer $200 per year per reader

$10-12 per year per Unique visitor

revenue per reader

a web viewer brings 16-20 times less than a print reader

looking at others ARPUs

$7-10

3 $

$1.5

$0.85

$1.5 $15 (20-30 times less than a

mobile carrier)

(Chris Anderson, author of the bestseller "Free!)

"..Free is not enough. It also has to be matched with Paid..."

here we are!

time to squezze out of the user (someway)

two ideas: • no audiences are made equal • the necessity of an hybrid approach

fragmented audiences

the monetization

  young audiences: free is critical OK for invasive ads and giving up private data

 mature audiences: more reluctance to ads but more willingness to pay

the platform

  different device for:

  each type of audience

  each kind of news content: breaking news, features, services

  each type of use: home, office, commuting

the hybrid approach

choosing its audience

  [principle]: "... free for the audience I pick, paid-for for the ones who choose me..."

‣  geomarketing

‣ chronomarketing

‣  audience analysis

choosing its audience

new model will combine:

 free and paid-for

 print and electronic medias

 three legs:  advertising  subscription  pay-per-view (or metered system)

the paid-for option: 5 ways to reverse the free trend

  target the heaviest users

  focus on the type of uses not on the old "basic vs.premium" principle

  offer a better user experience

  find a "fricton free" payment system

 diversify the platforms

willingness to pay

how much and how many?   the notion of average is meaningless; for instance:

Italy

Norway

Australia

$4

$/mo 5 10 15

$11

$7 $16

$3 $9 49%

60%

62%

source : BCG

‘‘know your 20/80“

frederic.filloux@mondaynote.com

thanks!