The Daily Telegraph is considering going behind a paywall, just months after The Times began charging readers £1 a day for online access. Steve Elsham, head of media at business analytics company SAS looks at how newspapers can make the paywall pay.
Hot on the heels of the The Times, there are rumours that The Telegraph may be the next national title to introduce an online subscription model, or paywall. Just months after The Times newspaper made the decision, subscriber numbers have dropped dramatically. Unique visitors fell from 2.8 million in May to 1.6 million in July, while average minutes per visitor went down from 7.6 to four, according to data from ComScore.
Many industry watchers are baffled as to why such an important decision was made, especially following the warning in May from The Sunday Times editor, John Witherow, that the paper could lose up to 90% of readers.
There is no doubt that the media landscape is changing and that newspapers need to innovate to stay profitable. However introducing major changes like this without conducting a proper analysis of all the influencing factors means newspapers are embarking on a grand trial and error experiment without truly knowing how it will end up.
While The Times conducted a series of online customer surveys, the results were not backed up by enough serious statistics to paint a definitive picture of how the decision would impact future revenues. Revenue modelling using advanced statistical software would have brought together all the information held on subscribers, customers and prospects as well as external factors such as shifting consumption patterns and economic conditions, and point to where the paper could introduce paywalls successfully. Likewise it would show how profitable these decisions would be, what price to offer content at, and what customers value now and in the future.
Interestingly, according to Beehive City, a website run by Dan Sabbagh, the former media editor of The Times, 12,500 people have already paid to download The Times Apple iPad application at a cost of £9.99 for 30 days, more expensive than access to the website. It shows that The Times readers are willing to pay for extras that add value and enhance their experience. Where it becomes more difficult is asking audiences to pay for something they once had access to for free, or can visit a competing site to get similar content at no cost.
There is no doubt that the prevalence of online news and rapid rise of social networking sites is changing the way the public consumes and interacts with media outlets. As the Daily Telegraph considers going behind a paywall, we are reminded that traditional revenue models are being severely threatened.
To continue to attract advertising, media companies need to innovate if they want to keep audiences engaged. Simply counting the number of unique visitors to a site, or daily newspaper sales is not enough to persuade and give confidence to advertisers that their messages are reaching the right people. Media companies need to dig deeper by leveraging the information they hold on subscribers and use it to shape investment models to determine the best way to adapt in a rapidly evolving market. Only through accurate customer insight can broadcasters and publishers make the right decisions about what to focus their efforts on, be it online, print or video, or working with content creators and providers, to reach customers in a relevant way and continue to grow.
By Steve Elsham
Head of media
SAS
www.sas.com/uk
