The Times Pay wall: Rupert Murdoch is right from a B2B perspective, but wrong about Google
There's been a lot of talk recently about the new pay wall approach taken by The Times newspaper. In a bold move, Rupert Murdoch has decided to make readers pay to access The Times Online - £1 per day or £2 per week, going against the generally accepted practice of providing online news for free and thus attracting a huge audience that can be monetised in other ways than via subscription.
Commentators have been divided in their response. Ok, many if not most have come out with a resounding 'it won't work', but quite a few are watching and waiting. Personally, I'm concerned about the site's ability to reach critical mass and make enough money, but rather than speculating I wanted to look at the approach from a B2B point of view.
How do online newspapers make money today? In the main from selling advertising, and some of them, notably the Daily Mail Online with over 2.3 million unique visitors per day and over 40 million per month (according to April ABC's) are actually making a profit. The Times was not making money from this business model, which, according to Mr Murdoch, does not work, and that was his main argument for the pay wall.
Selling advertising is of course a B2B business, and it's basically about quality of data. With the extremely low click-through rates typical to online advertising today, the key is to know that you are getting in front of the right audience, and in-depth profiling has to be a challenge with free to read papers, a fact reflected in the extremely low CPMs for advertising in the nationals. It's a relatively safe bet that the Daily Mail's success can be put down to the sheer volume of advertising sold, although let's be honest, if you look at some of the typically 'outraged' comments, a certain level of profiling is self evident!
With a subscription approach, data immediately attains a new level of quality. For every reader, The Times Online is able to create a detailed profile: what they read, when they read it and how often, and all linked to who they are and where they come from. These readers will also over time increase further in value as their 'relationship' with the publication develops. This makes that data far more valuable, and gives them the opportunity to sell advertising at a completely different price point. In addition, they have the opportunity to build an enviable mailing list, one that grows in value with every additional visit. From a B2B point of view, all of these points give The Times a huge advantage over their competitors when selling to advertisers - quality data that can only get better over time. The only challenge is this: will there be enough data?
And this is where I disagree with Murdoch. In order for his new approach to work and be profitable (let alone to pay for the whole cost of revamping the site, etc), he needs to achieve a certain volume of subscribers. Due to the higher prices he can charge for his data, he certainly doesn't need to compete with the online circulation of the Daily Mail or Guardian Online, but how much more will he be able to charge? Twice as much, maybe three times?
A third of 40 million is still a huge amount of subscribers, and I just don't see how he can do it without Google. You see, Rupert Murdoch has a problem with Google, and has on several occasions basically accused them of 'stealing' his content, and tapping into a 'river of gold'. This objection to search engines is so strong that the new Times Online actually blocks search engines from crawling the majority of its pages, and this, I believe, is a huge mistake for a site that needs as many visitors as possible.
If a site's pages can't be crawled, they can't be indexed, and if they're not indexed, they can't be found. A recent study from Paidcontent.org revealed that 53% of traffic to UK Newspaper sites comes from search, with 45.5% coming from Google, and I can confirm this average myself from working on search for major national publications in the UK and in France. By blocking Google et al, The Times is removing the opportunity to advertise its content to the millions of people searching on the very topics it covers every day, some of whom could well become subscribers. It's basically cutting off a whole sales channel at a time when volume must be a key factor in its success.
What I find even stranger is that this is being done because Mr Murdoch doesn't want to make his content available to be grabbed and distributed once indexed, but that he has taken an all or nothing approach instead of the far more sensible one taken by other subscription models. It is in fact perfectly possible to make all pages of a site behind a pay wall partly crawlable so that they can be indexed but not 'stolen'. In this way, each part page acts as a teaser, found on search engines, and visited, but with the necessity of paying the subscription to read the whole article. The site is opened up to the huge potential audience delivered by search, and the precious content is protected.
I signed up for the free trial of The Times. I loved the new design and layout, and found it easy to use, but was not sold enough on the content to take up a paid subscription. It is, however, potentially a great product and a B2B money-maker, but only if enough people do sign up. By taking the decision to block Google, I believe that Rupert Murdoch has seriously jeopardised his chances of reaching this critical mass.