How will Alibaba’s removal of SCMP’s paywall help it generate revenue?

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Alibaba has removed the digital paywall on Hong Kong’s 113-year-old South China Morning Post after completing its acquisition of the media group this week.

The Chinese ecommerce giant is hoping that free access to the English-language SCMP site will increase the newspaper’s readership, widen its global footprint, and over the long-term, help it to foster new revenue streams as part of Alibaba’s “ecommerce media ecosystem.”

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Jack Ma, executive chairman, Alibaba Group, said the SCMP should not be focusing on finding the right media business model. Rather its priority should be on what changes need to take place to allow it to better adapt to the reading habits of its readers.

“Many people think being free is how the Internet should work, but this is not always a simple solution,” said Ma.

“Our winning edge is to provide better services. Free services do not mean cheap services. Rather, offering free but quality services is how we can succeed and sustain our growth,” he told the SCMP.

Alibaba’s ecommerce media ecosystem

Over the past two years, Alibaba has been connecting its ecommerce platforms (Taobao and Tmall) with popular digital media outlets across Mainland China through a series of investments and partnerships.

These include a stake in microblogging site Weibo, the acquisition of a leading Chinese mobile browser provider UCWeb, and the purchase of video-streaming site Youku Tudou.

Data

With each new media acquisition, people are encouraged to log in with the same user ID they use when accessing other Alibaba sites.

This is enhancing the quality of the data Alibaba has on its individual consumers. For merchants on Alibaba marketplaces, access to this data gives them the ability to run more targeted and multichannel advertising and marketing campaigns or to target individual users with product recommendations to drive sales.

“We hope to be able to recognize our customers across all ecommerce sites and media, enabling merchants to learn about and operate for their target customers,” said Daniel Zhang, Alibaba Group chief executive officer, during an Alibaba vendor conference in March.

“Branding and marketing is [becoming] not only about sales, but about having consumers interact with brands, and about building relationships between brands and customers,” he said.

What better way to help brands do that than through its affiliate media assets.

SCMP

By including Hong Kong’s renowned English-language newspaper to its media mix, Alibaba aims to bring the world closer to China. In addition to showcasing the opportunities in China, Alibaba can assist international clients with their marketing and ecommerce strategies for the Chinese market.

“It is our firm belief that as China plays an increasingly critical role in world politics and the economy, a global community of China stakeholders will demand insightful and trusted news and commentaries from a within-the-region perspective,” says Tammy Tan, Editor-in-Chief, South China Morning Post.

The SCMP’s news that the paywall was being dropped has remained the lead story throughout the day on the publication’s website:

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It has simultaneously introduced a new SCMP mobile app, developed based on user feedback. New features include search, personalization, faster loading times, deep linking from social media and easy navigation.

Most importantly, the app is free. The more users who download the app, and who view content through the app, the more data and insights Alibaba gleans from its SCMP readers.

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User reviews on the app’s Apple store are positive so far, with people praising the user experience, the non-intrusive placement of ads and loading speeds. There are mixed reviews on the Android store however, with many users reporting a network error.

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Alibaba has become a dominant force in China in the innovative ways it integrates ecommerce with media channels. This has given marketers in China access to better data for more customized interaction with consumers, as well as new media channels for brand building.

The company’s purchase of the South China Morning Post in Hong Kong, its decision to immediately close the paywall and the introduction of a revamped mobile app, are strong building blocks towards Alibaba’s international expansion.

Do you agree with Alibaba’s decision to close the South China Morning Post’s paywall? Feel free to leave your comments below.

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