Journalism Online. Media Briefing, June 2009

Transcription

1 Journalism Online Media Briefing, June 2009

2 The Mission To enable publishers of quality journalism to realize the revenue they can command from readers and distributors for their content. To enable these news organizations to restore the optimal mix of circulation and advertising revenue necessary to finance original reporting and editing. For print publishers, to restore the value of the print medium by eliminating the fully free online alternative. 2

3 The Missionaries STEVEN BRILL has created new paradigms for old industries (The American Lawyer Magazine and its spinoff daily and weekly newspapers) has created, staffed and run start-up businesses, e.g., Court TV; and is a committed journalist. L. GORDON CROVITZ has built, staffed and overseen successful paid content models (oversaw The Wall Street Journal Online, founded Factiva and serves on the board of ProQuest) and is a committed journalist. LEO HINDERY, JR. has built, run, and expanded major content businesses (San Francisco Chronicle, TCI, AT&T Cable, YES Network) and has unparalleled expertise in media finance (InterMedia Partners). INDUSTRY-LEADING PUBLISHERS will help guide the development of Journalism Online and have equity stakes in its success. DAVID BOIES & THEODORE OLSON, two of the most accomplished U.S. lawyers, serve on the Journalism Online board of advisors. 3

4 Paid Model for Online News... The Time is Right It makes no sense, as you all know, to run a publishing business with no cost for the content. Jeffrey Bewkes, CEO of Time Warner, Sanford Bernstein's Strategic Decisions Conference, May 29, 2009 There are signs that traditional media are sensibly starting to put more emphasis on subscription-based models. That, more than simply scrapping over a limited pool of ad dollars, increasingly looks like the future. Heard on the Street, The Wall Street Journal, May 18, 2009 Newspapers will generate between $500 and $900 in revenue per subscriber per year. But a newspaper's Web site typically generates $5 to $10 per unique visitor per year. It may be that newspaper Web sites as an advertising medium, and free news, just can't generate the revenue to sustain a valued news operation. How to Sink a Newspaper, The Wall Street Journal, May 7, 2007 To me, an online subscription is just the commonsense thing to do. To just give it all away on a Web site is completely and blindly idiotic. Roger Plothow, Editor and Publisher of the Post Register in Idaho Falls, Idaho, Associated Press, May 25,

5 Many People Will Pay for Online News If Asked Only 6% of Americans pay to subscribe to news online but if asked to pay, 92% would on average, several hundred dollars a year Do you currently pay to subscribe to any online news content? 6% Yes No How much money are you willing to spend on online news per month? 21% 10% 8% 13% None Up to $5.00 Up to $ % 24% 24% Up to $25.00 Up to $50.00 On average, people would pay $25 per month ($300 per year) to access online news Source: Penn, Schoen & Berland Associates (All Things Digital Conference, May 2009) 5

6 Journalism Needs Multiple Revenue Streams Online Traffic to many news sites continues to grow, but key categories of advertising are declining. News sites rely chiefly on display advertising, which is a declining share of advertising spending, especially versus search advertising. The slowed growth and even decline in online advertising revenue suggests that advertising alone cannot support journalism online. "People who are looking for content are looking for content. People who are looking for shopping are looking for shopping. Sucharita Malpuru Forrester Research 6

7 Our Services for Publishers 1. A COMMON PLATFORM We will develop and manage an easy-to-use e-commerce payment system so that consumers can purchase annual or monthly subscriptions, day passes or single articles from multiple publishers using the same account and password. The payment system will be integrated into the websites of publishers, with each publisher having sole discretion over which access and content to charge for, how much to charge, and the manner of charge. The payment system will give publishers the ability to optimize revenues through full marketing options, such as tested sampling, priority access by time, free summaries, and sharing via social media. Publishers will use this payment system to market delivery via emerging digital platforms, including electronic readers (e.g., Kindle), mobile devices or their own devices while retaining full control over their customer relationships in all situations. 7

8 Our Services for Publishers 2. ALL-YOU-CAN-READ OPTIONS We will aggressively market subscriptions and micropayments for consumers to pay one fee to access Journalism Online-member publishers content or selected combinations of content, in topic areas of their interest. Revenues from this bundled shared content option will be shared among publishers. We will use data from consumer behavior to identify potential packages of access, helping to maximize revenues for member publishers. 8

9 Our Services for Publishers 3. REPORTS FROM THE FRONT LINES We will provide reports based on consumer data to member publishers on which strategies and tactics are achieving the best results in building circulation revenue while maintaining the traffic necessary to support advertising revenue. No one knows today which strategies annual subscriptions, sampling, micropayments, day passes, premium frequency updates will work best as the industry is rebuilt. We will gather and share information about consumer behavior to help each publisher optimize free and paid access. 9

10 Our Services for Publishers 4. RESTORING A BALANCE OF POWER We will negotiate wholesale licensing and royalty fees with intermediaries, such as electronic readers, search engines and other websites that base much of their business models on the original content of newspaper, magazine, and online news websites. Those who invest in and create original content should not be bystanders as it is monetized. Journalism Online will enable publishers to negotiate from a position of strength. 10

11 Two Myths of the Paid Online Model Myth One: It s an Either/Or Proposition Think 88/91 (keep 88% of page views, 91% of ad revenue). Think hybrid models, sampling and freemium strategies. Think premium CPMs and focusing on most engaged readers. Think optimization of high-margin revenues. Myth Two: It s Only About Online Revenue It s also about the value proposition of print. It s also about print subscriber acquisition and retention costs. It s also about keeping the direct relationship with readers. It s about making the internet an asset, not the enemy. Because it s ultimately about delivering information to your best customers however they want it, now and in the future. 11

12 Newspaper A BOTTOM-LINE BENEFIT $29.8 million in Year One $82.2 million in Year Two CURRENT CIRCULATION Print Circulation 1 million Home Subscribers 800,000 Online Unique Visitors 20 million ONLINE SUBSCRIPTION MODEL Annual Rate $75 Monthly Rate $7.50 Per Article Rate $0.25 (6 per subscriber per month) ANNUAL REVENUE MODEL Online Advertising $175 million Print Circulation $600 million Print Subscriber Retention/ Acquisition Cost $75 million 12

13 Magazine A BOTTOM-LINE BENEFIT $6.6 million in Year One $23.2 million in Year Two CURRENT CIRCULATION Average Weekly Print 900,000 Paid Home Delivery 836,000 Newsstand Purchases 36,000 Online Unique Visitors 6 million ONLINE SUBSCRIPTION MODEL Annual Rate $80 Monthly Rate $8 Per Article Rate $0.25 (6 per subscriber per month) ANNUAL REVENUE MODEL Online Advertising $36million Print Circulation $54million Print Subscriber Retention/ Acquisition Cost $30 million 13

14 Opportunities Not Reflected in Models FINANCIAL Revenue from all-you-can-read packages. Revenue from special packages and newsletters. Higher margin revenue stream associated with subscriptions. Recurring subscription revenue decreases riskiness of cash flows and improves working capital metrics. Higher valuations and lower cost of debt associated with higher margins and predictable revenues. Diversification of revenue streams. Mitigates cyclicality of advertising sales. STRATEGIC Negotiating power improves with intermediaries through the combination of multiple publishers. Information on pricing models that work best for publishers will be shared using aggregated data. Ability to enhance consumer value through bundled pricing options and one-stop-shop subscription website. Change consumer expectations that journalism is free on the web. Restore publisher ability to invest in journalism, protecting key asset. Develop a long-lasting and sustainable paid-content business model. 14