SA media ponders paid-for content

Local publishers are looking at how they can make online content pay for itself, and are keenly watching international decisions and debates.

In November, News Corp chief Rupert Murdoch put the debate on the table when he said the company may charge for online content. This followed concerns that people are getting free published online content, and then do not need to buy the publication, which eats into revenue.

Reuters quoted the media mogul as saying: “An industry that gives away its content is cannibalising its ability to do good reporting.”

The Wall Street Journal, owned by News Corp's Dow Jones unit, now offers some paid-for content and some free stories.

Murdoch also threatened to block search engines like Google from accessing the content his media subsidiaries produce. His argument is that the search engines are profiting from content that cost News Corp money to produce, and search engines also open up the possibility of copyright infringement.

Google responded by offering publishers a First Click Free programme to prompt online readers to register, or subscribe to a news provider's site after reading five free articles from that publisher in a day, reported Reuters.

Once readers are subscribed, they can log in and view the same premium content that has been published in the paper.

Deputy editor Yves Vanderhaeghen explains that the company wanted to generate revenue for its online team, and use that revenue to grow the team and its output.

In addition, he says, the print version of the publication was being cannibalised as the content was open to everyone on the Internet. So far, he says, the drive is meeting the paper's objective of generating revenue for the online unit.

However, Vanderhaeghen would not indicate which way readership levels online had moved, and whether the paid-for-content aspect was discouraging readers. He did say the amount of people who would subscribe is limited to those who would be interested in news about Pietermaritzburg.

“We've got a fairly modest objective,” says Vanderhaeghen. In a letter to readers on the site, he explains that the decision was taken because of the challenge to generate revenue to make the online medium viable, “since that is clearly where increasing numbers of readers prefer to hang out”.

But, he says, the success of the model will “hinge on our capacity to provide copy that is somehow valuable”.

JP Farinha, CEO of Naspers' Internet offerings, 24.com, says: “The paid-for-content debate that is currently taking place is one that Naspers is watching with interest.”

He explains that the debate is not cut and dried, as it seems to hinge on whether to go for paid-for content, or free content.

“This tends to be an over-simplification of the issues faced by publishers. Generally speaking, we believe that the higher the value, and the less substitutable the content is, the more likely consumers are to pay for it,” says Farinha.

However, he adds: “It does not follow that all low-value content should be open and high-value content should be paid-for. Each business case needs to be evaluated on its merits and we will probably see publishers move to hybrid models, which combine both approaches.”

Farinha did not indicate which way Naspers will move in the future. Naspers owns publications and online news sites such as News24.com.

Avusa is also pondering paid-for-content. The company is home to publications such as Sunday Times and Business Day. Lethiwe Motloung, group marketing executive, says Avusa is following a strategic digital evolution path by implementing a broader strategy on niche paid-for content.

“We are an integrated business that produces content beyond newspapers and as such, our online strategy extends beyond that,” she says.

At the moment, the company charges for content from Career Junction and INET Bridge, which Motloung cites as examples of viable paid-for content modes. “As an organisation, we have a multimedia strategy for the long-term.”

Anton Harber, Caxton professor of journalism and media studies and director of the journalism programme, at the University of the Witwatersrand, says publications are likely to move towards charging for content.

Harber says readers “are going to have to pay and pay more for good, well-edited journalism”.

However, while consumers will have to pay for what they read online, whether there will be content that is still free, and how publications will charge, has yet to be seen, he says.

Harber expects people to be willing to pay for information that is valuable, especially considering the plethora of data readily available on the Internet.

SA is seeing a revolution to a new form of new media, he notes, which must be embraced by traditional publications if they want to remain successful. He says publications that are credible add value to people's lives by providing trustworthy information on which decisions can be made, and can charge for doing so.

In addition, Harber expects the trend of charging for online content to gain momentum, and for more media houses to follow this route. How long this will take and whether people will have to subscribe, or pay per article, is an unknown at the moment.

However, Arthur Goldstuck, MD of World Wide Worx, says the model is not viable in the long run. He argues that the only time people will pay for online content is when it's absolutely vital, which is why The Wall Street Journal is so successful at charging.

But, Goldstuck says, Murdoch's plan to transfer this model to the rest of his empire could fail, because readers will simply look elsewhere for their news.

He explains that, by charging for premium content, publications are essentially shutting out an audience, and - in a few years - the amount of revenue generated by charging will be smaller than the advertising revenue that the site could have brought in if it was not gate-keeping.

Goldstuck says the nub of the dilemma facing publications that want to charge for online content is if readers “don't feel that the content is essential, they won't pay for it”.

In addition, the online reading public is small, although growing. Recent research by World Wide Worx shows SA has five million online readers, a figure that is expected to grow to six million by year-end.