Here is a hard cold fact of the Internet age. Any content creator
whose sole business is selling their content al a carte will have a
hard time surviving. In a world of unlimited digital choice, the cost
of creating and marketing content that generates a profit is expensive
and difficult. Which is exactly why the successful sites have been
aggregators.
It’s also exactly why newspapers are having a hard time making it.
They sell papers 1 at a time. They sell home subscriptions one at a
time. When they charge for monthly subscriptions online, they sell them
one at a time. That’s a tough business.
It’s not that the newspaper content is not worth it. The problem is
that it requires prospective buyers to first value the content, then
decide whether they want to go through the hassle of going to a
news stand, calling the home delivery department of the paper, or putting
in their credit card information to buy online. This may be beyond a
solvable problem when much of the same content is available online for
free.
So what to do?
This past week several outlets wrote that online video sites are
discussing a new approach that would require anyone who wanted to watch
their favorite TV show online to first be a cable or satellite TV
subscriber. While the “internet should be free” folks will hate this
for obvious reasons, it makes perfect sense. Subscriber fees from
cable and satellite to content creators pay the bills. Period end of
story. It makes every bit of common sense to provide cable and
satellite subscribers, the people who really pay the bills, with
unlimited access, on any platform to the content they are already
paying for. Right ? Of course right.
Given that there are about 100mm cable and satellite subscribers,
its not like this is going to affect a great number of people. In fact,
it will probably only impact those who are trying to drop their
subscriptions to use the net exclusively. While this is a small number,
requiring viewers to be video subscribers will keep this number small
and create a win win for content creators and cable and satellite video
subscribers.
So what does this have to do with newspapers ? They should be
knocking on the doors of cable and satellite providers offering their
subscribers exclusive access to the online versions of their
newspapers.
That’s right, the New York Times should be going to
CableVision, Time Warner, Comcast, Charter, Directv, Verizon, ATT,
Echostar et al, and offer to each that for 25c per month for those
subscribers in the New York area, and for 5 c per month for those
outside the immediate NYCity area, their subscribers will get exclusive
access to the NY Times Online. Non subscribers will get what Wall
Street Journal non subscribers get today, access to some content, but
not the most timely or valuable content.
If the Times can convince these operators that their subscribers
will find value in exclusive access to the content, particularly if
they can become part of their basic or near basic service, then all of
a sudden, the NY Times and any other newspaper finds themselves with a
recurring source of revenue that can turn into real money, while at the
same time offering differentiated value for the video distributors.
On a macro basis, I don’t think its inconceivable that within a few
years more than a material percentage of subscribers would support an
additional $2 per month for unlimited access on all platforms, to all
newspapers across the country. If its 50pct at $2, that’s $100mm per
month in new revenue for the industry. That’s a billion dollars that
matters. Plus advertising.
Of course, in addition to video distributors there will be ISPs that
don’t provide video services that want to offer the content as a value
add to their subscribers as well. That’s more subscribers for the
content.
Trying to sell content al a carte is a difficult, if not impossible
business venture. Offering digital content, in this case newspapers (or
magazines), to content aggregators that specialize in selling digital
content to subscribers (digital and cable video providers) not only
makes sense, it could be a matter of survival.
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