Ed Efchak

1Monday 1 February 2010

Edward J. EfchakManaging Director and Senior Consultant

Belden InteractiveFebruary 2010


So What Do You Care What Other People Think?

Some Thoughts About The Current State of Paid Digital Content in North America


OVERVIEW


Publishers and consumers differ on the value of the digital product; hence paid

content has a different value connotation

1


There are few apparent success stories among case

studies

2


The disparate web audience offers no simple solution to

pricing

3


It may not be about paid content after all but rather

about e-commerce

4


The digital brand is not as meaningful as is the print

brand

5


There are worlds beyond the newspaper business model.

6


overview

• Publishers and consumers differ on the value of the digital product; hence paid content has a different value connotation

• There are few apparent success stories among case studies

• The disparate web audience offers no simple solution to pricing

• It may not about paid content after all but rather about e-commerce

• The digital brand is not as meaningful as is the print brand

• There are worlds beyond the newspaper business model.


Current State


➡90% currently do not charge for content

Current State


➡90% currently do not charge for content➡3% have a paid-only site

Current State


➡90% currently do not charge for content➡3% have a paid-only site➡60 % are considering moving to paid

Current State


➡90% currently do not charge for content➡3% have a paid-only site➡60 % are considering moving to paid➡25% expect to implement on/before end of Q1 2010

Current State


➡90% currently do not charge for content➡3% have a paid-only site➡60 % are considering moving to paid➡25% expect to implement on/before end of Q1 2010➡27% require users to register

Current State


➡90% currently do not charge for content➡3% have a paid-only site➡60 % are considering moving to paid➡25% expect to implement on/before end of Q1 2010➡27% require users to register➡23% monetize registration information

Current State


➡90% currently do not charge for content➡3% have a paid-only site➡60 % are considering moving to paid➡25% expect to implement on/before end of Q1 2010➡27% require users to register➡23% monetize registration information➡36% are considering a registration program

Current State


Enterprise Goals For North American Newspapers

In Moving To Paid Content

4




➡ Generating new revenue

4




➡ Generating new revenue➡ Protecting circulation

4




➡ Generating new revenue➡ Protecting circulation➡ Maintaining and growing audience, both online and

offline

4




➡ Generating new revenue➡ Protecting circulation➡ Maintaining and growing audience, both online and

offline➡ Preserving and growing advertising revenue and

relationships4


Considering Paid Content:Customers vs. Publishers


Provider vs. User Percep.ons

Very valuable

Somewhat valuable

Not very valuable

Not at all valuable

Don't know

0% 15% 30% 45% 60%

4%

4%

0%

46%

46%

6

60. How would YOUR USERS rate the news and informaCon posted at your main news and informaCon site?

Extremely valuable

Somewhat valuable

Not very valuable

Not at all valuable

Don't know/Not sure

0% 15% 30% 45% 60%

3%

1%

3%

54%

39%

Source: Belden InteracCve 2009 Local Market Survey (N =657)

N = 119

25. In general, how valuable do you think the news and informaCon posted at

LOCALSITE.com is to you?

Providers Visitors


Providers vs VisitorsVisitors value Print Content at Sites less

Very valuable

Somewhat valuable

Not very valuable

Not at all valuable

Don't know

0% 15% 30% 45% 60%

14%

1%

3%

41%

40%

7

61. How valuable is it for YOUR USERS to be able to access all of YOUR PRINT content online

at your main news and informaCon site?

Extremely valuable

Somewhat valuable

Not very valuable

Not at all valuable

Don't know

0% 15% 30% 45% 60%

2%

5%

13%

50%

30%

40. In general, how valuable is it to you to be able to access all of LOCAL DAILY NEWS print content

online at LOCALNEWS.com?

N = 119


Providers Visitors


Visitors see less difficulty in replacing local sites than do Providers

Very easy

Somewhat easy

Not very easy

Not at all easy

Don''t know/Not sure

0% 10% 20% 30% 40%

3%

33%

33%

24%

8%

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62. If your main site stopped posCng their news and informaCon to the Web, how easy do you think it

would be for YOUR USERS to find a replacement for that news and informaCon they are currently geZng

from your site?

Very easy

Somewhat easy

Not very easy

Not at all easy

Don''t know/Not sure

0% 10% 20% 30% 40%

11%

17%

30%

30%

13%


26. If LOCALSITE.com stopped posCng their news and informaCon to the Web, how easy do you think it would be to find a

replacement for that news and informaCon you are currently geZng from LOCALSITE.com?

N = 119

Providers Visitors


Provider Percep.ons Alterna.ve Media

Print edition of your newspaperOther local media sites

TelevisionRadio

Other regional or national Internet sitesOther local Internet sites

Print edition of any other daily newspaperOther

Don't know

0% 23% 45% 68% 90%

8%

4%

35%

42%

42%

46%

50%

50%

81%

9

63. What other media/sources do you think YOUR USERS would use if news and informaCon from your main news and informaCon site were no longer available? [Select all

that apply.]

N = 119

Providers


Resistance Is High!

I would stop visiting LOCALSITE.com altogether

I would read as much as I can for free

It would depend on the fee

I don't know

0% 13% 25% 38% 50%

3%

18%

37%

42%

33. If LOCALSITE.com began to charge a fee for access to some or all of its content including all its arCcles, blogs and mulCmedia, how would this affect your

LOCALSITE.com visi.ng behavior?

Resistance to Paid Access from ONE MARKET

10


➡67% offer an electronic edition of the printed paper➡59% offer it free to subscribers

➡Median price for an online-only subscription is $5.99/month

➡Median up-charge price is $4.99/month for those who offer it to subscribers

Pricing Is Low


Disparate web traffic offers no simple solution to pricing


Newspaper Web Site Audiences Come In Three Flavors

13

Incidental Visitors21%

Core25%

Fly-by54%

Chart TitleFly-‐by 1 Cme per month

Sourced from SearchWide variaCon in In-‐ vs. Out-‐of-‐

Market mixVaries between 25% & 80% of total people visiCng in a month.

Incidental Loyalists1-‐3 days per month, 1-‐2 Cmes on days visiCng.

Predominantly local.

Core Loyalists 20 days per month, 2-‐3 Cmes on days visiCng

Mostly to overwhelmingly local.

Typical Audience Profile for Local News Sites


14* Every month has special events: in May 2009, 16,400 “Fly-‐Bys” visited


Core18%

Fly-by47,00%

Chart Title

Incidental = 3 or fewer visits in month

Core = 4 or more visits per month

Projec.on For One SiteMay 2009

TOTAL Audience Visitors 34,900

Best Opp:Day PassesSingle Story

Best Opp:Day Passes

Single Stories

Fly-bys (One visit only): 47% 16,400

Incidentals (1-3 days): 35% 12,300

Core (18+days): 18% 6,200

Best Opps:SubscripConsDay Passes


14* Every month has special events: in May 2009, 16,400 “Fly-‐Bys” visited


Core18%

Fly-by47,00%

Chart Title

Incidental = 3 or fewer visits in month

Core = 4 or more visits per month

Projec.on For One SiteMay 2009

TOTAL Audience Visitors 34,900

Frequency and Loyalty will be the primary drivers of opportunity.

Best Opp:Day PassesSingle Story

Best Opp:Day Passes

Single Stories

Fly-bys (One visit only): 47% 16,400

Incidentals (1-3 days): 35% 12,300

Core (18+days): 18% 6,200

Best Opps:SubscripConsDay Passes


Some Case Studies


Newsday.com

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Daily Circula.on: 387,500

Monthly Pageviews: Not Available to us

Online Only Subscribers: Not Available to us

Monthly Subscrip.on Fee: $20.00

Uptake Rate: Not Available to us

Belden Index: Not Available to us

Gregg Siebert, EVP Cablevision

"We're taking as many steps as we can to protect our intellectual Property and try and assure that as the newspaper business recovers – or at minimum stabilizes – that Newsday is part of that recovery."


Substan.ally Blocked Site

LimaNews.com

17Jim Shine, Publisher


Monthly Pageviews: 1,500,000

Online Only Subscribers: 780


Uptake Rate: 2.6%

Belden Index: 49Daily : $.75

Monthly: $4.95Annual: $49.95


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Monthly Pageviews: 500,000



Uptake Rate: 2.9%

Belden Index: 22

The Blocked Site

PostRegister.com

Roger Plowthow, Publisher

1 month:3 months:6 months:12 months:

$6$18$36$27


http://www.postregister.com/




















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Online Only Subscribers: 2,500

Monthly Subscrip.on Fee: CDN$17.00

Uptake Rate: 9.4%

Belden Index: 87

Belden Index: 213

Par.ally Blocked Site

LeDevoir.com

Bernard Descoteaux, Publisher27Monday 1 February 2010

ArkansasOnline.com

20Conan Gallaty – Online GM





Uptake Rate: 1.9%

Belden Index: 32


E-‐Edi.on Focus Pioneer Newspapers

DailyRecordNews.com

21Maj Davison, Online GM





Uptake Rate: 2.1%

Belden Index: 77


ePaper Focus -‐ Sandusky Newspapers

TimesNews.net

22Keith Wilson, Publisher





Uptake Rate: 2.1%

Belden Index: 50

"We don't look at it as a defensive strategy but as an offensive strategy. The underlying business model is to gather readers and resell them to others who want exposure to that audience. If you combine all of our distribuTon on and offline we reach a broader audience than ever before." However, he also noted that as Publisher, he felt newspaper is a long way from being successful at truly mone.zing the online audience.


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Uptake Rate: 13%

Belden Index: 213

Par.ally Blocked Site

KeysNews.com

Paul Clarin, Publisher31Monday 1 February 2010

Brand Value

Advertiser Relationships

Overall Relevance

The Impact of Brand on Paid Content Applica.ons


“We have a powerful brand”

“We may not have a powerful brand”


Nega.ve Brand Connota.ons Towards Print Brands As Ar.culated by Consumers


Nega.ve Brand Connota.ons Towards Print Brands As Ar.culated by Consumers

➡“It’s not for me or my (target demographic)”➡“It used to be beker/it doesn’t cover (.me / geography)”➡“It is not of my poli.cal persuasion”➡“They don’t cover “local” well”➡“I’m not sure what or whom to “trust” (digital)”➡“The paper no longer has “credibility” (print)”➡“Takes too long”/”no fit”/”no .me”/”no interest”


3 Ques.ons To Brand and Digital Pricing

๏What is the strength of exis.ng print brand among market consumers?

๏What is the extent of perceived brand differen.a.on between print and digital offerings?

๏What is the strength of exis.ng digital brand among non-‐print duplicated product consumers?


Then… is It The Content Or Is It The Brand

That Drives Initial Pricing Direction?

3 Ques.ons To Brand and Digital Pricing


Can Doubts Be Changed Into Profits?


‣ Median price for content = $ 4.64 / month

‣ 47% would pay $ 0.00 USD

Can Doubts Be Changed Into Profits?


Is There A Pricing Model World Beyond Newspapers?


➡ Single or “few mul.ple” source(s) for content aggrega.on




➡ Have “back office” revenue collec.on—let someone else worry about collec.ng the money





➡ Focus on the future of digital distribu.on






➡ Embedded subscrip.on / “digital lockers”







➡ “e-‐commerce” not “paid content”







➡ “e-‐commerce” not “paid content”

➡ Focus on engagement not CPM



Poten.al Drivers To Paid Success


➡Strength of BRAND – akribu.on and brand equity




➡The context of the overall site experience– content and e-‐commerce





➡Differen.a.ng consumer needs – digital and print perform different “jobs”






➡“Slow .me” and “journalis.c quality” would appear to be mone.zable






➡“Slow .me” and “journalis.c quality” would appear to be mone.zable

➡“Fast .me” and “inferior quality” are not



But “Objections” To Paid Access, Can Be Addressed Only If They Are Known And Understood

‣ Internet should be free‣ Newspapers should be free on the Web‣ Newspapers provide no unique content‣ Price should reflect cost, not value‣ Subscribers should be free‣ The price of the Web should be lower because no print costs‣ Similar content of equal quality is available elsewhere for

free‣ Adver.sers should pay‣ Local coverage is poor—quality would have to improve to

jus.fy paid. 31

Key objec.ons to be addressed in any marke.ng in support of Paid Access.


Conclusions


?Time to Kill?

Time To Talk?

The Future is Now!|


[email protected]

802-‐282-‐6700

Ed Efchak


mailto:[email protected]

mailto:[email protected]

Ed Efchak

Business

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