Is there an online subscription model that could work for newspapers?

The WSJ has a successful online subscription model. It works for the WSJ because it is an extremely premium and differentiated product with a great brand (they charge $150 a year for its print edition and have a lot of subscribers). Since it is a business newspaper, its users are likely to be more affluent than average, and many people are willing to spend money for something they perceive as helping advance their careers. And last but not the least, many users probably have their companies paying for their subscriptions. The WSJ model can work for the WSJ and a few other very premium publishers, but not for everyone.

Another option is Micropayments, which on the face of it, seems like a great idea. Users won’t feel the pinch when they pay a few cents for an online article they like. Aggregated over millions of users, this could add up to a lot of money.

Or not. Micropayments has not taken off. One major reason is that even if it is a very small amount, users don’t want to be bothered to have to make a buying decision every few minutes. (“Is this news article worth X cents? Will I like it? Couldn’t I just get it for free elsewhere?”). A prepaid model – a combination of micropayments & subscription –  is also a possibility (you pay $20 upfront and then X cents are spent every time you choose to view an article) but it involves the same user decision every few minutes. Plus you have to convince the user to pay the $ 20 upfront.

A multi-publisher subscription model might work instead. Charge me $ 10 or $ 20 or $50 a year and let me read online content from an almost infinite range of quality sources. The subscription could vary by the number and type of categories (sports, news, entertainment, travel) or the number of devices (web, mobile devices, e-readers).

Of course someone would have to build the platform and get publishers to make available their content. But once this is done, users can easily buy subscriptions for a small fixed amount and get a lot of content for this amount. No purchase decisions to be made every few minutes.

However, the problem is that online content is a commodity, unless you’re the WSJ. There is plenty of excellent content available for free on the web. So why would users choose to pay even a small amount when they can simply get it for free? And no, it is very hard to think of online news content that would be so premium and so much better than the other free stuff on the net that users would scramble to pay for it.

This subscription model would hinge on publishers creating premium content or moving more of their content to the ‘premium’ domain and making less content available for free. Given the competition for users and page views, even publishers who have every intention of having a lot of ‘premium’ content might succumb to the temptation to increase page views by showing content for free. Besides, there is an inherent conflict between the online subscription model and the online ad model. Making more premium content available means fewer page views (even if those page views are paid for), and that means fewer page views on which to show ads.

Bottomline: I am skeptical of newspaper vendors making money for their content through subscriptions, for the main reason that content online is a commodity. Tinkering with payment models does not alter this fact. The folks who will make money from online newspaper content are platform or device vendors (such as Amazon’s Kindle) and they will make money not because of the content per se, but for the whole package/ experience they offer.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: