Charging for Digital Content in the Land of Free RidesPublished: October 15, 2010 in Knowledge@Emory
Digital media, often blamed for cannibalizing the newspaper industry’s bread-and-butter business, is finally being put to work for the broadsheet.
Reeling from plummeting advertising revenue and circulation losses, newspapers are capitalizing on media convergence and learning to leverage social media, mobile devices and location-based services, says Doug Franklin, executive vice president of Cox Media Group.
Speaking at a recent “Business for Breakfast” meeting sponsored by The Goizueta Partners Society, an alumni group of Emory University’s Goizueta Business School, Franklin argues that traditional journalists must position themselves as a value-added, lending a credible, analytical voice to cut through the digital noise.
“The mobile side of the business and the social media side of the business are still the Wild, Wild West, much like the dotcom boom of the nineties,” he asserts.
To engage readers and remain relevant, Cox newspapers have embraced Twitter, recognizing it as the news source for the under-25 set, Franklin continues.
Earlier this year, when an embittered software consultant launched a suicide attack on an Austin building that housed federal offices, theAustin-American Statesman, a Cox publication, issued a tweet confirming the plane crash within five minutes of the event. Within an hour, another Statesman newsfeed included detailed information about the pilot.
“It was a story that would have normally taken two days,” notes Franklin. “We had it in two hours.”
To fully exploit social media’s potential, Cox, the third-largest cable entertainment and broadband services provider in the country, must move all parts of its media business to “one streamlined content management system,” Franklin says. The next step is to encourage experimentation, “from hard-hitting investigative journalism to tweets about a Seattle meteorologist’s fashion sense.”
However, a round-the-clock news cycle cannot subsist on advertising revenue alone. In a weak economy, a glut in online content means fewer advertising dollars to go around. That leaves newspapers grappling with how to restrict access while preserving their digital readership.
Erecting a pay wall for content previously provided for free emerged as one of the most divisive issues at a recent meeting of top newspaper publishers, says Franklin. TheNew York Times has announced that it will begin charging for unlimited access to its website starting in January.
Unlike radio and television, which have a “common enemy” in the Federal Communications Commission, “the newspaper industry has shown no ability to come together on this issue,” he says. “It’s a very fluid area right now.”
Meanwhile, theAtlanta Journal-Constitution, Cox’s flagship publication with four million online page reads daily, is launching an improved application for Apple’s iPad that will likely be a paid service. Like other major metropolitan newspapers, the AJC is weighing a move to a single subscription strategy, bundling print and online content for a flat fee.
Newspaper executives have long complained that news aggregators, such as Google News, encourage readers to skim the headlines rather than clicking on a newspaper’s website to view the full article. In 2007 the Associated Press newswire threatened to sue Google for unauthorized use of its content. Recently, both parties reached a content-sharing agreement.
Now traditional media is trying to get in on the action by considering other ways to aggregate content online. One option is to allow readers to subscribe to multiple newspapers on one website, Franklin says.
That strategy is not expected to win any points with Baby Boomers, who remain loyal print subscribers. Accordingly, retail giants spend a chunk of their annual marketing budgets on Sunday newspaper inserts, Franklin says, but they are always looking for the next Groupon or Amazon to widen their reach. Google and Yahoo, for instance, are working hard to infiltrate local markets to attract local advertising dollars, which was once the domain of traditional media.
“When big advertisers on Sunday preprint-inserts walk away from newspapers, it’s over,” Franklin warns. “That’s the last big profit pool for newspapers.”
Location-based mobile applications, such as FourSquare, Gowalla and Loopt, offer opportunities for targeted marketing—that is, once the consumer data becomes readily available. A fan of AJC fashion news wandering around midtown Atlanta may enjoy receiving a coupon for a nearby boutique, delivered to her cell phone. Then again, she may view it as a privacy invasion.
“There is no master plan on social media,” Franklin says, given the rapidly evolving technology.
Following a string of bankruptcies and mergers, newspapers are on stable ground for the time being, he says, but they continue to face short-term challenges. After reducing its newsroom staff by nearly one-third in a year, the AJC is hiring again, seeking well-rounded journalists who can not only write eloquently but also shoot video and take photographs. The front page has a harder edge, emphasizing comprehensive investigative reporting, even though there is less money to dispatch reporters on months-long projects abroad, Franklin notes.
“There was an arrogance about newspapers over the past decade, a way of talking down to the community that eroded the papers’ credibility,” he says. “We have to build that credibility back.”