One of the truisms we are taught from an early age is that there is no such thing as a free lunch. With such simple sincerity, why do we instinctively feel that this does not apply to the internet? In our hyper-connected, always-on existence, we expect to access any content, at any time. Increasingly that is no longer the case.
The internet started as an open meadow, it is now being divided into managed fields and, increasingly, into walled gardens. The main protagonists in this change, raising barriers and firewalls, are the global media companies. Media across the US and Europe rushed to put content online, only to find that increased online readership did nothing to address falling print subscriptions. Internet users were happy to browse, but without commitment or any cost burden to them.
Newspapers like The Guardian in the UK embraced the ‘freemium’ model on the assumption that increased online traffic would trigger increase internet advertising revenue. Despite over ten years of committed online activity — at one time being one of the most read media sites in both the UK and the US — its advertising revenue in the last financial year was just US$23.7M. The UK’s MailOnline, part of the Daily Mail, is now the world’s leading site by visitor numbers, and yet it only receives US43M in advertising revenue.
For keen online media upstarts that sort of revenue would be impressive, but these sites are supporting legacy media organisations, with extensive and expensive operations worldwide. Other newspapers took early steps to put valuable content behind the firewall, most notably the Financial Times. They reached a milestone this July when their digital subscribers outnumbered the print subscriptions (300k vs. 299k). The FT now gets over half its revenue from digital sources.
So who is right on the subject of freemium vs. premium – the most viewed or the most valuable? The answer is not quite as simple as one might think. We are seeing the steady decline of generalism, of newspapers as mass media, and increasing specialism. The FT reaches a distinct business and political catchment. The Guardian is now likewise tailoring its content for particular networks and groupings.
The question remains whether specialism requires a firewall. This month saw the launch of an ambitious project from the Atlantic Monthly — Quartz Magazine, which is a bespoke business site, available freely online. By targeting a specific audience, in their case, global, tech-savvy businesspeople, they can be more particular in the advertising that they generate. The main challenge will be to create enough engaging content to test the loyalty that their target readers have to publications that are now sitting behind a firewall.
Other media companies are adopting a hybrid model, providing free content up to a defined level as an enticement — see The Economist and the New York Times. While more innovative media brands, such as Monocle, use the internet to trial entirely new formats and channels, in Monocle’s case its internet radio station, without damaging their print subscription numbers.
It is fascinating to witness such profound change in such a short period of time. The days of both the mass media and the internet open meadow are over. Where does this leave the media in developing countries, where print media has been holding steady? It probably leaves them on the precipice. The changes that we have seen in the media across the US and Europe will occur elsewhere — and at an accelerated rate.
Loyalty counts for very little in the internet age. Content, brand and relevance will be the key determinants of successful online media. The brands that innovate in content and format, while keeping a keen eye on their target audience, will thrive and grow. Media that maintain a generalist approach will turn fallow in the internet meadow, and disappear.
John Mandeville is head of reputation, Hong Kong, at Weber Shandwick