If your main business is TV, radio, or print, should you charge online users for content, give them the content for free while generating revenue by selling ad space, or choose some hybrid of those two business models?
Last year, I wrote about how Spain's major daily newspapers had chosen different answers to that question. El Pais, Spain's largest newspaper (434,000 daily print circulation) chose to force its online users to register and pay for content access. El Mundo and ABC, the next two largest general-interest dailies (312,000 and 289,000 circulation, respectively), took the opposite path by not requiring any registration or payment for content access. And La Vanguardia, the fourth largest (198,000 daily), required user registration but offered its content for free.
El Pais, El Mundo, and ABC are based in the nation's capital, Madrid. Head-to-head competitors, they're considered Spanish national newspapers, available daily at newsstands across the country. La Vanguardia, based in the Catalan capital of Barcelona, has a market position somewhat like that of the Los Angeles Times in the U.S; it's a very large regional daily that its readers and editors might consider to be a national daily.
Let's see where they stand.
When Prisacom SA's El Pais began charging €80 ($99) for 12 months or €50 ($62) for six months of access beyond its site's home page, general director of content Mario Tascón, who ordered the switch from free to fee, bravely predicted the site would lose 90 percent of its nearly half million unique monthly users.
Instead, the site lost only 40 percent of those users. Prisacom executives say by keeping the site's home page; service features such as search, editorial comments, cartoons, and reader comments; and participation areas free, it prevented some of the predicted losses.
El Pais sacrificed a great amount of subscription revenue for that. Though published reports say the site now has online subscription revenue over €2 million (nearly $2.5 million) per year, it could be much higher. Problem is, most site users just visit the free areas, a problem Tascón talked about at length at a new-media conference last month in Spain. The problem isn't limited to just Spain.
However, keeping 60 percent of its previous users did allow El Pais to earn better online advertising revenue than had it lost 90 percent. I have no reports about that ad revenue, nor whether El Pais now generates a profit after expenses.
El Mundo's online director, Gumersindo Lafuente, believes charging for access hurt El Pais' Web site and helped his competing one. According to the Oficina de Justificación de la Difusíon, which audits Spanish media, El Mundo was the market leader for online usership, with more than 4.4 million unique users last month.
El Mundo's free site generated €304,000 ($377,000) in advertising revenue last year. Lafuente predicts €600,000 ($744,000) in net income this year. Ad revenue constitutes 70 percent of the site's overall revenue. Sales of other types of electronic information compose another 20 percent, and e-commerce commissions and information services to mobile phones make up the remaining 10 percent.
"I believe that this data illustrates the situation quite well," Lafuente told me. "We are still betting on free quality information, with permanent actualization and thematic diversification." He believes over time his free site's comparatively greater user base will lead to greater overall revenue than that of his competitors.
I regret I have no report about how ABC has done with its similar model over the past year.
La Vanguardia continues to offer free content in exchange for user registration, but it added a twist. Registered users now must receive two commercial email messages per week. According to Eduard Ramos, general manager of online business for La Vanguardia, their business model is based on gathering real data about its audience through user registration. "The value of that format is the publisher knows the user and justifies to our advertisers that we insist upon not giving away contents of our publication in the manner [of] the traditional kiosk model," Ramos told me.
Some 180,000 of La Vanguardia's 240,000 registered online users have opted in to receive access in exchange for receiving the advertising email. Subscribers to both the on- and offline editions can cancel the ad mailings.
In the U.S., the Chicago Tribune and The Dallas Morning News chose this business model back in 2002. Both papers now "routinely" sell that email advertising space for $150 to $300 CPMs, according to presentations they've made at American new-media conferences. Belo Interactive, operator of the Dallas Morning News site, says it earned $1 million from that advertising in 2002 and $2 million in 2003. It projects $4 million this year.
Spain still has no clear winner among these different online business models. Though outcomes aren't clear yet, some trends are developing.
El Pais' switch to mostly paid content has probably given it the greatest overall revenue, adding its new online subscriptions to its probably marginally declined online advertising revenue. Meanwhile, the free El Mundo site has steadily increased its market share, probably at the expense of El Pais but probably without as much immediate revenue.
Is fatter paid revenue from a narrower audience better than thinner ad revenue from a broader free audience? That's the competition between these two newspaper sites.
Meanwhile, La Vanguardia chose a middle road, offering free but registered access, while using email advertising to increase revenue.
More time will tell which business model is best for this market.
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As managing partner of Digital Deliverance LLC and publisher of the "Digital Deliverance" newsletter, Vin Crosbie advises news media worldwide about new media strategies and tactics. As adjunct professor of visual and interactive communications and senior consultant for executive education in new media at Syracuse University's S.I. Newhouse School of Public Communications, he teaches that wisdom to graduate students and media company executives. "Folio" magazine called him "the Practical Futurist." "Editor & Publisher" magazine devoted the overview chapter of its executive research report "Digital Delivery of News: A How-to Guide for Publishers" to his work. And his speech about new media to the National Association of Broadcasters annual conference was one of 24 orations (including some by President George W. Bush, Condoleezza Rice, Hilary Clinton, and Barack Obama) selected by a team of speech professors for publication in the reference book, ">Representative American Speeches 2004-2005."
March 19, 2014