Paid Content, E-commerce and Turning the Knobs Down on Ads

Posted on 11. Sep, 2009 by in Paid Content

New plans for paid content platforms, from players as varied as I.B.M., Google and NewsCorp, earned plenty of attention earlier this week. Some have boiled the story down to a potential battle for publisher-clients between Google and Journalism Online, the start up from Steven Brill, Gordon Crovitz and Leo Hindery which has been at the center of the paid content story all summer.

In that potential dust-up, it’s notable that the Journalism Online plan calls for taking a 20% commission on subscription revenues (plus a 3% commission on credit card transactions), while Google says it would charge 30% for clients using its revamped Checkout platform. Newspaper Association of America graphicThe plans were a response to a request for proposals from the Newspaper Association of America that published them in a report to its members this week.

Here are a two items that have been largely overlooked in the coverage so far:

First, the Journalism Online e-commerce model (available at the Nieman Lab) will let publishers change variables like the price of subscriptions or micropayments to fit their own markets. Publishers will also be able to turn the knob on advertising, apparently, changing settings so that “paid subscribers see fewer, different or no advertisements.”

Could this finally lead to the ad-free news that some consumers have sought for so long? The Journalism Online model does not aim to replace advertising revenue with subscriptions. Instead, the model says advertising revenue lost to the pay wall (and subsequent decline of unique visitors) by commanding a 30% cpm premium on the subscriber base that remains. Clearly, a no-ad product would come at a premium, but how much would publishers have to charge subscribers who want to turn that knob all the way down?

Second, Brill et al. say their platform will let publishers sell products against content. The 15th and last item on a list of product capabilities is the “ability to sell related goods via participating retailers (such as books within book reviews).” As we noted earlier, the UK’s Telegraph has developed an e-commerce platform that now accounts for roughly 30% of all revenues. They sell everything from home gardening products to panama hats. And, instead of erecting paywalls around general news content, they have subscriptions and micropayments for secondary products like fantasy soccer and puzzles.

Sadly, the Journalism Online plan does not provide an estimate of how much money news sites could make by selling products through a contextual e-commerce platform. But, if the Telegraph’s experience is any guide, what seems to be an afterthought here could become a significant revenue stream for the group that can pull it off.

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2 Responses to “Paid Content, E-commerce and Turning the Knobs Down on Ads”

  1. Mike Hartley

    17. Sep, 2009

    Seems to me the danger here is swopping ad supported content for product placement supported content. In my experience, sites that have gone down the product placement route (contextual e-commerce platform) have even less editorial integrity than those that are ad supported.

    Isn’t the problem that ads are being sold for too little online. It’s a selling problem. Online publishers are not describing the value of their online inventory. Surely it’s better than their print inventory (trackable, changeable, multimedia, interactive, real time feedback). Why such a lower CPM? Is that because print publishers trashed online so roundly that they actually have shot themselves in the foot.

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  1. Future of Journalism Consulting Project Part 2 « Emh579’s Blog - September 22, 2009

    [...] finds a balance between generating revenue from consumers and advertisers. Matthew Sollars in his Paid Content, E-Commerce and Turning the Knobs Down on Ads blog post talks about the Journalism Online e-commerce model. Basically, there are different tiers [...]

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