Online news moving from Free to Fee
Why would somebody pay for something they can get for free? It was the barrier marketers overcame with Cable TV and it’s the same question Canada.com had to face when it decided to charge for online content.
After years of financial losses, news sites are putting an end to the era of free access to online news. The largest newspaper firm in the country — CanWest — has started to charge subscription fees for the use of online news. A major TV Network and online news site have also joined the fee for service bandwagon.
This March, the Vancouver Sun started charging users for news from its re-designed website. CTV.ca and Canoe.ca plan to do the same before summer.
The long term question is will this move help Canadian news outlets turn a new medium into a profit centre — as audiences for traditional media are declining.
In the short term, Canadian newspapers and TV stations are mired in a thorny debate about just how to implement a user pay model that works.
Montreal newspaper La Presse was Canada’s pioneer in this area. In March 2002, La Presse pulled the plug on its free news site and launched an electronic edition available to paid subscribers alongside a scaled-down free web presence.
Soon after, Canada.com, which is owned by CanWest Global, started requiring visitors to register for select content from the National Post and the Ottawa Citizen. Registration was compulsory for reading the electronic editions of those papers, which are exact online replicas of print versions emailed to subscribers every day.
“Registration is a vital step in building a marketing platform that allows managers to profile users,” says online media specialist Kevin Kawamoto. “The idea is to know your visitors very well, so you can then sell them content and services and attract more advertising.”
Canadian outlets aren’t forthcoming about their results, but that’s exactly what happened after the Washington Post introduced user registration last February. “Without question, registration has been an important contributor to the success of online advertising at washingtonpost.com,” says Washington Post Newsweek Interactive (WPNI) CEO and publisher Caroline Little. She says the company’s revenues from local and national advertising has grown, but declined to reveal figures.
Currently, most Canadian outlets require user registration to see selected content. Under this structure, some content is kept open, with no sign-on requirement. If visitors don’t stray beyond the confines of the free information, they aren’t asked to register.
But increasingly, Canada.com users are being asked to do more than register. The Vancouver Sun is one of the latest papers to start charging a subscription fee for its electronic newspaper. The strategy, says editorial director of CanWest Interactive (the company that owns Canada.com), Tom Doyle, has proven to be successful. He says they are not only getting more ads, but the number of visitors has increased exponentially.
News sites also plan to roll out new services and content that will require users to pay. They are considering charges for exclusive news and financial analysis, text messaging headline news to cell phone users and other services like online personals.
Experts such as Julian Sher, founder of JournalismNet.org, foresee an increase in the number of paid services in the next few months. They warn, though, that users don’t like paying for general online news.
Mark Sikstrom, executive producer of CTV Newsnet/CTV.ca, shares this idea. He believes there are too many free news alternatives Canadians can access to make a harsh subscription model work at this time. He believes in a combination of free and paid content. That is why CTV plans to offer a live video stream of CTV Newsnet this year on a subscription only basis.
The key, say experts, is to charge for specific information, such as financial advice or exclusive content. “The more specialized the content on the site, the more likely the subscription model will succeed,” says Sher.
A good example is the Globe and Mail website. GlobeandMail.com allows visitors to access general content for free, but they need to pay for specific financial information, provided exclusively by globeinvestorGOLD.com.
Angus Frame, editor of GlobeandMail.com, says globeinvestorGOLD.com is a special site designed to meet the needs of high-end investors. It costs $9.95 per month to subscribe and has been available for more than two years. The site features some high-end analytical tools that allow people to manage their portfolios and make investment decisions. Subscribers also have exclusive access to investment advice columns by industry professionals.
The Globe is one of the exceptions. So far, profits have been elusive for most online publishers, says John V. Pavlik, senior research associate of the Institute for Learning Technologies at Columbia University. “With the exception of adult-oriented sites, the majority of the Web sites operate at a loss,” he says.
Even without the costs of distribution, Pavlik says online versions of magazines (“e-zines”), newspapers and broadcasters have struggled to find the road to profitability. “This situation is beginning to change, but it doesn’t mean news websites have found the right formula to be financially sustainable.”
Their challenge, says Pavlik, is to build a strategy that expands the online business without any adverse effects on the print version of the same publication, or its radio or TV stations’ ratings, if they are part of the same organization.
In the meantime, users will have to get used to shelling out personal information or even money to access news online. “But if they don’t find an extra value in what they are getting, the situation won’t last long.”
* This article was originally published on The Thunderbird