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Who Shall Reign in Spain?

  |  July 9, 2003   |  Comments

Four national newspapers, four online business models.

BARCELONA, Spain -- Spain is a focus nowadays of commercial experiments in paid online content. Its national newspapers are battling each other from opposite corners of the paid-versus-free debate. Representatives from many of Europe's largest online publishers met in this beautiful Mediterranean city last week to compare results from their paid content initiatives. Not all the results are good.

Four Sites, Four Models

Spain's largest print newspaper is El Pais. For years, this 434,000-circulation newspaper offered its content online for free and attempted to generate profits primarily through banner-advertising revenues. But the site bled red ink doing so, despite half a million unique monthly users. So, Mario Tascón, general director of content for Prisacom SA, the chain that publishes El Pais (and himself an online publishing veteran), ordered the site to switch to a totally paid-access business model last December.

Visitors can read El Pais' home page, but unless they pay either €80 ($91) annually or €50 ($56) every six months for memberships in El Pais' online El Club de los Mejor Informados (Club of the Better Informed), they can't read any of the stories. Online subscribers have full access to El Pais' electronic archives and PDF versions of the paper dating back to 1998.

El Pais' Web site had half a million unique users when it was free. Since switching to a totally paid-access model, it's lost most of those users but signed up 25,000 paying online subscribers. If that doesn't sound like many, El Pais executives are nonetheless pleased.

"We never had good revenues from banner advertising. But now we are making real money by charging readers," Marilo Ruiz, director of El Pais Digital, told me. "We think it is better that we make real money by subscription revenues than to be dependent upon banner advertising. This also is closer to our print business model."

Disputing those conclusions is Gumersindo Lafuente, Internet Director of El Pais' archrival, El Mundo. Although El Mundo has a lower print circulation (312,000), its Web site has always generated more unique users than El Pais' did when the latter was free. Lafuente is committed to keeping El Mundo's site primarily free, attracting former users of El Pais' site who don't want to pay for access and triumphing over its rival in banner advertising revenues. El Mundo charges only for archive access.

"I believe that the advertising-supported business model is still superior to charging consumers for access. All that El Pais' conversion did has been to send their former users to our site. That just makes our site even more attractive for advertisers," he told me. "I believe that they made a huge mistake in converting to paid access."

El Pais and El Mundo are both based in Madrid, and their online business rivalry has an incestuous nature: Lafuente is a former executive of El Pais; Tascón is a former El Mundo executive.

Spain's third national newspaper (289,000 circulation), ABC of Madrid, continues to operate its Web site the old-fashioned way: a completely free access model, including access to archives and PDF editions.

Here in Barcelona, La Vanguardia (198,000 circulation), which functions somewhat as a fourth national newspaper, now requires user registration at its site but thereafter continues to offer its content for free, including archives and PDF edition.

So all four national Spanish newspapers are battling each other from opposite corners in the paid-versus-free access debate. Which will be the conquistador? Only time and online use will tell.

Others Weigh In

NetMedia 2003 was held in Barcelona last week. This online publishing conference had always been in London, but there wasn't enough support there to hold it at all last year. This year, the city of Barcelona, the Catalonian Association of Journalists, the Spanish Digital Journalists Group, and other Barcelonan media organizations provided support their British brethren didn't, undocking the conference from the Thames and moving it to here on the Mediterranean. The official title of this year's conference was, aptly, "The Reckoning: Making Online Digital Media Pay its Way."

Besides Ruiz and Lafuente, plus Eduard Ramos of La Vanguardia, NetMedia speakers from European publications outlined the successes (or failures in the eyes of some) they've had converting their sites from free to paid access.

Mary Mangan, the former COO of Ireland.com noted her conversion of that site from free to paid was "wrenching but necessary," due to lack of sufficient banner advertising revenues. Nonetheless, paid subscribership has grown to only 11,000 after nearly two years of charging (€7 weekly, €14 monthly, or €79 annually) for access. Ireland.com once had 1.2 million unique monthly users as a free site.

Unlike Ireland.com's conversion to totally paid access, The Financial Times of London chose to keep much of its top-level news free but charge for analysis, detailed information, and company information. Tracy Corrigan, editor of FT.com, said this hybrid business model has allowed the business newspaper to generate 55,000 paying subscribers during the past 18 months.

NetMedia's audience this year was a mix of newspaper and magazine publishing executives. Many magazine executives said they were still watching results of newspapers' forays into charging before they themselves make free-or-fee access decisions for their magazines.

Based on the results of four Spanish national newspapers, plus Ireland.com, FT.com, and others reporting at NetMedia, I find the hybrid model best. El Pais is brave to choose a totally paid-access business model, but results of that model at Ireland.com haven't been pretty. Lafuente's remark about consumers voting with their feet sounds all too true.

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Vin Crosbie

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."

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