Publishing flips out
One of the biggest changes to shake up online media consumption has been Rupert Murdoch’s recent announcement that News Corp will charge for access to all its websites from 2010. The current free-for-all model will expire at the end of this financial year and take on a Wall Street Journal style fee-for-access model.
This follows a very aggressive move by Associated Press to take legal action against websites and blogs that use Associated Press articles without legal permission. While these moves seem more focused at trying to slow the dependence on Google News and blogs, they appears similar to the music labels heavy-handed approach to piracy.
The issue around critical mass is key to any successful online platform and if Google News already offers 4,500 news sites to consumers why change? Part of the issue has been claims that Google News cannibalises potential advertising revenue and then further impinges on publishers through placement of ads next to their headlines and article snippets.
The recent move towards paid content models by large media groups has accelerated, with Journalism Online reportedly signing 176 daily newspapers as potential clients for its service (still far less than the alleged 500 expressions of interest). The Journalism Online business model is fairly profitable as it revolves around a commission of 20% paid on any subscription fees paid.
The twist to this happy ending is why would News Corporation move away from dependence on Google News to become dependent on Journalism Online? News Corp has the option of pushing towards the formation of its own content consortium because of its global operations and established regional nameplates. News Corp appears to have stayed away from US centric technologies such as Amazon Kindle, so what is planned next?
The issue here is not around if journalists should be paid for great content but should consumers pay for online access to that content? The problem is a mixed bag of complaints about revenue, from placement advertising not reflecting the quality of the content to maintaining total control of content. Some media groups such as Tribune Interactive have been very aggressive in trying to draw as much traffic from sources such as Google, while others seem to be giving up.
The only true media platform that has had the ability to attract large numbers of people willing to pay for music has been iTunes. Much of the success is around the simple ‘one-click’ micro-payment system they offer consumers demonstrating that such a micro-payment solution has potential but needs to be centralised.
A recent request from the Newspapers Association of America for proposals of how to best charge for content online received 11 submissions, including submissions from Google & Journalism Online. The interesting point is although Google will likely expand their checkout payment system to cover micro-payments, it still does not see this as the key driver of revenue.
The reason why Google doesn’t see micro-payments as a major source of revenue is because they have an established Adsense/DoubleClick platform that will likely continue to be the key driver of revenue sharing with the content providers.
The recent launch of a new Google Labs product, FastFlip, has re-ignited interest in how Google can deliver a better media product for consumers and keep media providers happy. The initial tests show the new product has only limited sharing options: a FriendFeed, a ‘Like’ rating button and a disappointing lack of customisation of news feeds.
FastFlip has already showed it is more suited to magazine and book publishers as the screenshots allow articles to be partially read, but the real issue is that the screenshots don’t allow the content provider’s client ads to be displayed. This method, used to present the articles, seems to ‘re-break’ the advertising model and place content providers back at square one.
The new format also shows the limitations of contextual placement of advertising, as those shown do not appear to be relevant to the article and only partially relevant to the category. The ability of Google to generate revenue for FastFlip at the cost of the publisher’s ads will likely require more generous revenue sharing agreements. The screenshot format will likely become a larger issue, as it may exceed the fair use claim used in the past to allow Google News to display snippets and article titles.
All this experimentation is healthy for the media industry as it seems to be moving toward a consolidated approach that combines display ad revenue and micro-payments as a long-term solution.