Where does the future of media lie: printed or electronic?

Ralf Schlozer
Aug 2, 2010

Media tycoon Robert Murdoch announced last year that he wants to charge for online content of his publications. The Times in the U.K. made the move to charge for site content a few weeks ago. Experian, a company tracking web hits recorded a decline of 66% after introducing the paywall, as measured by the Times’ share of web hits of all media companies. Hits have seen further slight decline but started to stabilise. Competitor UK newspaper The Guardian took the analysis a step further and found that all non-registered surfers were forwarded to a sign-in page and that only 25.6% signed up there and proceeded to the originally targeted Times page. Taking into account free pre-registration of subscribers of the printed issue The Guardian concludes that the Times online lost overall 90% of its traffic. Actually this is pretty much in the range of what was predicted by the Sunday Times’ editor. It could even be worse in the future. Currently The Times is running a low cost trial subscription of just £1.00 for 30 days, instead of £2.00 per week as planned. On top there is a hefty reduction in on-line advertising revenues, as these are calculated by the actual views made by consumers. It does not help that Murdoch’s newspaper titles did pull out of the voluntary page view auditing for news sites – somebody stopping in reporting numbers is usually not a good sign.

We already know thanks to many surveys that consumers aren’t exactly rushing to pay for on-line content. This is confirmed by a recent study of the Annenberg School’s on online social networking, which shows the most extreme reaction so far, that in fact none of the respondents were willing to pay for using Twitter. This is despite the fact that 49% of the internet users among the 1,981 survey respondents said they did use social networking sites like Twitter. It is seldom that consumers’ views are that decisive and it underscores the difficulty of getting Internet users to pay for anything that they already receive for free.
Even if users are willing to pay, it can sometimes be a bumpy ride. The German newspaper taz pulled their offerings from iBook store for the iPad. The taz admitted having a good start, climbing to the number 1 spot in the book charts within 4 days, but then problems and limitations started to pour in. Originally the download should be available from 10pm onwards, but Apple’s internal approval and release processes for new iStore content meant that issues could be delayed by up to several days – not an option for a newspaper. The taz resorted to a loophole by simply updating content of issues they already sold, which is not affected by the approval process. The obvious problem with this strategy is that the Apple store does not allow charging for the update, as the original issue has been sold already. Apparently Apple was not helpful in solving these issues, so the taz opted to drop supporting the iPad (while still offering e-papers for open formats).

While much of the hopes and expectations of e-publishing are driven by reading device hardware providers (e.g. Amazon and Apple), an interesting development is driven by the Indian government. It wants to bring a $25 tablet computer to the market, primarily for 25,000 Indian colleges and linked to plans to get them all connected to broadband. The bill for hardware going into the proposed tablet PC stands at $47 unfortunately, which does not even include labour, supply chain costs or any profit. Mass production could bring the costs down further, but it would not even get close to the $25 planned price point, despite being not as sleek as an iPad. It remains a chicken and egg problem — how to sell enough tablets to bring the price down so that it is attractive enough to prospective buyers. In the end it will not only come down to a low price level, but also to the content available on a tablet PC. Considering the device being target at the budget segment it would mean having the content sufficiently low priced, if not for free. But if consumers remain as unwilling to pay for on-line content as they are right now, it might be a challenge for publishers to get enough return.
The future of e-media and printed media is not as clear cut as it sometimes seems. We tried to shed some light on the dynamics in a report we published this year titled: ‘Consumer Media Preferences: the Future of Publishing Applications’. As the market unfolds it is definitely worth keeping an eye on the developments and how they might shape the future. Time to remind us of an old proverb: In the short term we tend to overestimate developments, in the long term we underestimate the impact.

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