30 Nov 09

MediaCom's Paterson says Johnston Press' trial inevitable

Rory Paterson gives his view on Johnston Press paywall trail

Read this article on thedrum.co.uk

Rory Paterson, digital business director at MediaCom Edinburgh has said that he believes the trial online payment system being implemented by Johnston Press on six of its local newspaper title’s website was ‘inevitable’ as a strategy within the newspaper publication industry and that he believes the industry will be watching closely to see if it is a success.

Says Paterson: “It was inevitable that publishers would, at some point, re-consider their monetisation strategy as a result of the continued development in technology and subsequent ease of content proliferation. Mr Murdoch opened the can on the “free” newspaper industry debate back in May with his comments in this area, no coincidence then that paywall tests are starting to become a reality. Johnstone Press has reportedly chosen St Andrews day to roll out a small-scale trial on six of its publications, charging a fee of £5 for a three-month subscription to access online content.”

Paterson continued by highlighting that this is a ‘trial’ and that as the company owns 286 titles, it is only being run on ‘small-scale’ and that this was not new territory for Johnston Press which already uses a charging structure on Scotsman.com for premium content.

“I completely understand why they are doing this, there has been a flurry of research studies undertaken in the UK and across the pond but the reality is that publishers are only going to learn if it's a viable model or not by giving it a whirl. Fact is they need to know if it'll work because the market has changed exponentially: breaking news doesn't hit the doormat anymore, classifieds have moved online in droves, free papers are everywhere in major cities and advertisers now rightly expect a more in-depth level of accountability from their advertising spend. Combine this with the fact that the online display market has moved on so that the number of unique users or page impressions a newspaper site achieves (ala old fashioned circulation figure model) are becoming less relevant.

“Digital advertising revenue hasn't turned in to the silver bullet the newspaper industry thought it would,” he adds.

“Of course this inventory makes money and in some cases a great deal of money for certain publishers, however the online display market has quickly become commoditised, a great deal of remnant inventory exists and in turn prices have dropped. More importantly though, technology has made it possible to trade online inventory based on user habits and that doesn't just mean behaviour such as the type of content they viewed over the past few days/weeks, it also means trading on a "shared risk" basis such as cost per engagement. Publishers who really understand their audience’s online appetite and habits will be able to compete more efficiently in this space.”

Paterson continues to say that some in the newspaper business believe that fewer paying readers are better than a million non-paying ones and agrees with that from a business perspective. He adds that the ability to obtain more accurate profiling data on paying readers is an attractive by-product. Despite this he believes that the question over whether consumers will pay for content they can find elsewhere for free still remains.

“It only takes one active Blogger, Tweeter or RSS Feeder to pay for a subscription before repurposing the story and broadcasting it out to the masses..... Doesn’t it? I'm sure there will be some interesting legal battles to follow if this type of activity does start to threaten the paywall model, but in the mean time I look forward to seeing the results of this test and any differentiated media opportunities advertisers are offered based on truly profiled online newspaper readers.”