MY ACCOUNTPRESS+ NEWS

Game strategy for selling online news

By Irene Tham

28 November 2010
The Straits Times

Publishing veteran is sold on 'freemium' revenue model to draw and keep readers

First, hook them. Then, charge them.

This philosophy, which powers the online video games business, could well be the panacea for newspaper publishers' current ills, which stem from waning print subscriptions and insufficient online advertising.

At least, this is what Press+ co-founder Gordon Crovitz believes.

If this is true, then sorry, readers, your online staple of news may no longer be completely free in the near future.

The concept Mr. Crovitz is promoting for American newspapers is simple. Make the basic digital product free to get traffic. When readers are convinced that a news site has something unique to offer, make them pay for premium items.

In Singapore, newspapers like The Straits Times have used this online model for some years now.

The players of popular online role-playing games like MapleStory and Granado Espada don't have to pay to play. They pay only when they want to buy digital assets such as swords, rifles or costumes to enhance their virtual characters in the game.

As opposed to a walled garden where users pay for everything, this business model—known as freemium—keeps casual readers coming, said Mr. Crovitz, whose company supplies e-commerce technology and services to news publishers.

'You create online revenue while still keeping journalism out there and part of people's conversations,' he added.

Press+ has 15 customers, including the MediaNews Group, whose flagship newspaper is The Denver Post; non-profit newsroom ProPublica, funded by The Sandler Foundation; and LancasterOnline.com.

Casual surfers cannot be ignored, he said. Research has shown that they make up 90 per cent of news sites' Web traffic. Only 10 per cent of visitors pay for unlimited access.

These casual visitors may pay for individual stories that interest them, or contribute to page views to bring in online advertising revenue. 'Over time, they may be converted to unlimited subscribers,' he said.

Mr. Crovitz was the publisher of The Wall Street Journal before Mr. Rupert Murdoch's News Corp took over the paper's parent company Dow Jones in 2007.

He was speaking to The Sunday Times on the sidelines of the Digital Media Asia 2010 conference, organised by the World Association of Newspapers and News Publishers (WAN-IFRA) and held at the Singapore Press Holdings News Centre auditorium from Wednesday to Friday.

The freemium idea is catching on among newspaper publishers worldwide, including customers of Press+ and big-name news organisations like The Financial Times, Nikkei and The Wall Street Journal.

'Online advertising is not providing publishers with the same certainty that traditional print advertising has,' said Mr. Crovitz.

'With waning print subscription putting a permanent pressure on advertising, where do publishers look for new revenue streams?'

Just as there is money to be made in online games—global spending on virtual goods is estimated to hit US$6 billion (S$7.8 billion) this year, with Asia leading the trend—Mr. Crovitz believes that there is money in paid content in Asia.

His claim may not be far from the truth. Said Mr. Crovitz, who has lived in Asia for much of the 1990s, during which he was publisher of Dow Jones' Far Eastern Economic Review in Hong Kong, and later the marketing director for Dow Jones' Telerate subsidiary in the Asia-Pacific: 'The deep engagement so many readers have with publishers in Asia is a key reason for optimism that readers will be willing to pay a fair price for digital access, just as they have been willing to pay for print access.'

Also, the idea of paid content may not be as abhorrent to readers as publishers had thought—and as forerunner The Financial Times has proven.

The Pearson media group, which owns The Financial Times, posted a profit last year despite a global slump in advertising. It attributed its good fortune to a 43 per cent rise in FT.com online subscription revenue.

FT chief executive officer John Ridding had reportedly said that advertising alone was unable to sustain the scale of newsrooms.

'If you have an audience that is paying for your journalism, they are engaged and that is an important message for advertisers,' he had said.

Already, publishers round the world are looking to replicate FT.com's success. Among them is Nikkei.com, the first paid subscription website in Japan. The Japanese financial news organisation's website was previously an aggregation of only articles from news wires.

Since its relaunch in March this year, the websg to replicate FT.com's success. Among them is Nikkei.com, the first paid subscription website in Japan. The Japanese financial news organisation's website was previously an aggregation of only articles from news wires.

Since its relaunch in March this year, the website is now also packed with exclusive reports by Nikkei reporters. Since March, Nikkei.com has signed up more than 80,000 paid subscribers and 600,000 non-paying registered users.

It charges only for premium content, while breaking news is free. Current print subscribers are given a 75 per cent discount for online access. Nikkei is considering charging overseas visitors a higher access fee.

Here's where Press+ hopes to come in.

Its in-house developed e-commerce technology, dubbed the Reader Revenue Platform, helps publishers 'geo-target' its readers.

Geo-targeting is the method of determining the physical location of a website visitor and delivering different content to—and levying different charges on—that visitor based on his location.

The system, launched in the middle of this year, also helps publishers manage 'metered' article access—where users view a number of articles for free for a period, after which a fee kicks in—on PCs or mobile devices.

Press+ is in discussions with a number of undisclosed large global publishers about becoming their outsourced solution provider.

'The technology to run modern, flexible e-commerce services is very different from the technology that publishers do on their own to build and maintain their websites, mobile apps and journalistic requirements,' Mr. Crovitz said.

With Press+ handling the e-commerce element, publishers can focus their efforts on what will differentiate their offerings from rivals'.

Mr. Crovitz is a Phi Beta Kappa graduate of the University of Chicago. He graduated from the Yale Law School and received another law degree from Wadham College, Oxford University, where he was a Rhodes Scholar.

His father, Dr Herbert Crovitz, is a research psychologist and his mother, Dr Elaine Crovitz, a medical psychologist.

Reading human minds may not be Mr. Crovitz's expertise—unlike his parents. But reading into the future, he believes that applying the freemium model to Web publishing is the only way forward.

'The fast pace of technological change means the 'long term' is now happening much more quickly than expected. The fast-adapting publishers will survive and even thrive.'