Washington Post Managing Editor Explains Why Focusing On Direct Revenue From Consumers Is Short-Sighted

from the free-is-expensive,-but-it-can-pay-off dept

From the title of this article in Forbes, by Raju Narisetti, the managing editor of the Washington Post, you might think it was going to be another rant against "free" online and talk up the wonders of paywalls. After all, the article is called "Why Free is Very Expensive." But, the article actually is much more nuanced, and effectively explains why folks at The Washington Post think that a paywall doesn't really make much sense:
Here is why revenue from readers is unlikely to be our salvation.

-- A metered model makes your business susceptible to the will of a few readers--those who consume the most articles/pages. Often, less than 5% of these kinds of visitors account for nearly 50% of your page views. And they have very little barriers to exit.

-- Aggregators, like Huffington Post, will still find ways to deliver your content for free and often with more engaging technologies since they don't have to invest much in content creation.

-- The infrastructure for payment systems, data security, customer service, reader acquisition and retention for digital subscriptions costs a bundle to build and run, yet your consumer price points need to be low, making the return on investment a clear challenge.

-- Our Web sites were to be trusted safe havens protecting, informing and entertaining you amid a deluge of digital content. And when you came to us, we would make money off you. But that was before your friends became your trusted sources. There are 600 million of you on Facebook and we know we need to be there too with our content. We haven't even begun to fathom that monetization challenge. So, we could up end an expensive drawbridge around Web sites that are already losing their value?

-- Scrolling on Web sites has always been a poor experience for consuming news. Now, just as new devices and digital experiences--none invented by major news brands--create richer engagement outside our sites, we are talking about charging readers for sub-optimal Web site consumption.
He does point out, as everyone agrees, that it is costly to run a major modern news operation, and that the digital business models for large publications like the one he works for haven't kept pace. But, thankfully, unlike some of his competitors, he wants to look forward and not backwards. He's looking at the ways large successful internet companies are making more and more money by increasing convenience and building more value for users:
I, for one, think that the golden age of targeted digital advertising is yet to come. Do we really want to trade that larger opportunity for the much smaller and unreliable pursuit of consumer dollars? I also wonder if we aren't better off redeploying our newsroom resources to create new revenue streams and more engaging digital platforms than trying to make the traditional Web experience better and charge for it....

Free is indeed very expensive. But, what the prolonged and knee-jerk debate about free vs. paid inside our news organizations shows is that we still have what led us here in the first place: An imagination deficit. Rather than apply an Ďall or nothing' approach focused, perhaps wrongly, on just our Web sites, we should be willing to make creative bets on our business model. We continue to make what is being consumed--in large quantities. It is time we figured out how to make it easier, more engaging and useful. Despite their soaring valuations, Facebook, LinkedIn and Twitter don't create much, if anything at all, by way of original content. And, for that matter, neither do Google or YouTube. They simply make it easy, useful and engaging to their audiences. These are incredibly disruptive times and one thing is clear to me: There isn't time or room for incrementalism at major news organizations.
It's nice to finally see someone at a major publication recognize this point that many of us have been making for a while. For all the talk of paywalls, there's been very little done to actually increase the value of the online experience for users at these newspaper sites. There's been very little effort to build and support community. It's nice to see that at least one major paper is hopefully moving in that direction.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Anonymous Coward, Jun 14th, 2011 @ 5:08am

    I, for one, think that the golden age of targeted digital advertising is yet to come.

    An age when ads aren't stupid, annoying, and potentially loaded with malware? An age when ad blockers have become obsolete because people want to see ads?
    I can't see it ever happening. Maybe I'm wrong, though.

     

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  2.  
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    AJBarnes, Jun 14th, 2011 @ 5:09am

    Golden Age?

    "The golden age of targeted digital advertising is yet to come"...

    I understand that ads pay for these content creation websites. But MORE AND MORE ads destroy websites and will destroy the ad based model unless the content providers use some self control and constrain the number of ads to a REASONABLE number.

    I am visually handicapped and it is difficult for me to focus on the content I'm trying to read when there are a bazillion flashing, moving, dancing, obnoxious ads competing for the attention of my eyes vs the plain and often hidden content I was after in the first place.

    But, my guess is that the overdone ads are not just a hinderance and annoyance to only me... hence the popularity of the ad blocking add-ons available in most browsers today. I mean, really, does anyone enjoy the USATOday experience given all the full page diversion ads they force on you? Or the clutter they create on their pages?

    So, without tastefully presented ads used in moderation, more and more will opt out of these over zealous ad placements and enjoy an internet devoid of ALL advertising push. Once the many outnumber the few, ads will generate fewer clicks (can't click 'em if you can't see 'em!) and advertisers will be forced to find other ways to get their message to the consumer. Then, there will be NO ad supported sites.

    So, as providers contemplate how to pay for their content, please keep in mind that they will lose their customer base who look at your ads unless they moderate and use common sense (yeah, I know... highly unlikely, now, isn't it?).

     

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  3.  
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    Bengie, Jun 14th, 2011 @ 5:24am

    Re:

    You don't need adds to work all the time, just some of the time.

    Look at spam. In my network security class, the teacher said spam has something like a 0.0001% success rate, but a single spammer can make $400k/month off of that.

    Statistics + large numbers = constant income

    Well targeted ads with a large viewer base will get you decent bank.

     

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  4.  
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    Svante Jorgensen (profile), Jun 14th, 2011 @ 5:27am

    Ads that we like

    Just from what I see in my daily surfing, there is a lot of potential for better targeted adds. There are plenty of things I'm interested in buying, but I rarely see ads for them - and if I do, the click-through never gives me the information that I want. Just "we are teh' best" said in a hundred different ways - never a true reason to buy.

    I would even be glad to give up personal information on exactly what I want to see ads for - just so it would be less annoying.

     

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  5.  
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    tom, Jun 14th, 2011 @ 6:44am

    the ads are going to have to get clever

    i wont pay for news, but they could get the ads right.
    I found out too late that Bon Iver were coming to Edinburgh. Originally tickets were £20. I had to pay £160 for my pair.
    There is money to be made there - by everyone. Its going to be difficult because i delete cookies at my daily shutdown - maybe i shouldn't - maybe thats what i have to give for free (on one browser anyway).

     

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  6.  
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    Jason, Jun 14th, 2011 @ 7:01am

    Re:

    All the pieces are there just screaming for someone to execute it well.

    Hulu...could be amazing in this regard. Instead, they waste 30 secs every show telling me that 80% of people who watched what I'm watching watch this other show that bores me to tears. I mark "Not interested," and the very next episode...same damn thing.

    Pandora...another one that really, if they leveraged their knowledge base with some real analytics, ought to be able to produce significantly better value to both advertizers and far less annoyance to users when it comes to ads.

    Both of them have a huge edge over television and other media when it comes to their capacity for targeting, but they don't seem to get it.

     

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  7.  
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    DannyB (profile), Jun 14th, 2011 @ 7:05am

    Re:

    I don't know if I can ever see it happening. But I would point out this.

    Ads had become the scourge of the web. Google figured out how to make ads less or not annoying. Even relevant. Sometimes interesting. All without gigantic flashing, shaking, seizure inducing graphics. Without gimmicks like "punch the monkey" or "win $XXX if you can click on the moving ball", or "your computer may be infected with Windows".

    Now, when I'm looking for something, especially something I intend to buy, Google seems to just know that I intend to buy something, and shows me ads that are spooky relevant.

     

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  8.  
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    DannyB (profile), Jun 14th, 2011 @ 7:08am

    Re: Golden Age?

    +Insightful.

    There are plenty of web sites that I have just quit visiting because the ads got simply out of control.

    At one such site, it became necessary to use an ad blocker. Then it became an arms race to block, show, block, show the ads. In the end, I used the nuclear option -- leave.

     

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  9.  
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    DannyB (profile), Jun 14th, 2011 @ 7:10am

    Re: Ads that we like

    The thing is, a lot of people are not willing to give up even anonymized personal information in exchange for useful results.

     

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  10.  
    identicon
    Anonymous Coward, Jun 14th, 2011 @ 7:19am

    Re: Golden Age?

    The implication of "the golden age of TARGETED advertising" is that there can be fewer ads that perform much better with less annoyance. Note that I said "can" ergo the phrase in the above article "yet to come."

     

    reply to this | link to this | view in thread ]

  11.  
    identicon
    Jason, Jun 14th, 2011 @ 7:20am

    Re: Re: Golden Age?

    Accidentally AC'd--claimin' it.

     

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  12.  
    identicon
    hank, Jun 14th, 2011 @ 7:54am

    "Scrolling on Web sites has always been a poor experience for consuming news"

    hmmm, I guess that's why all these world wide web sites are dying off and the there is a bubble in the printed newspaper sector.

     

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  13.  
    identicon
    AJBarnes, Jun 14th, 2011 @ 8:11am

    Re: the ads are going to have to get clever

    Anyone seen the ad going around by Dirt Devil? I have watched it about three times because it is clever, entertaining and just makes me laugh. Bravo to them for putting some creativity into their ad. If all ads would be so good, then I'd quit blocking them!

     

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  14.  
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    David Muir (profile), Jun 14th, 2011 @ 8:44am

    Sub-Optimal Experiences

    I am frankly surprised to see such insight from a member of the "traditional" media sector (even if he is the WaPo's guy for bringing them into the digital age).

    He hits the nail on the head about how so much more can be done to target ads effectively (thus the golden age is yet to come). This would make them less annoying and answer many of the concerns from those above who think that it will mean more of the same display advertising.

    He is also right on by saying that scrolling is a poor way to consume news. Despite the sarcastic response from Hank, he's not comparing web to print... he's comparing the average scrolling website to targeted, consumable, app-driven, contextual digital news. Read some @xarkin on Twitter and you'll learn what semantic technologies are coming down the tube that will make "scrolling" and even traditional "browsing" a thing of the past.

     

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  15.  
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    Atkray (profile), Jun 14th, 2011 @ 8:46am

    Re: Golden Age?

    Had to google USA Today. :/

     

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  16.  
    identicon
    Adam, Jun 14th, 2011 @ 9:00am

    Raju Narisetti inserted two gems in this observation:
    Free is indeed very expensive. But, what the prolonged and knee-jerk debate about free vs. paid inside our news organizations shows is that we still have what led us here in the first place: An imagination deficit. Rather than apply an Ďall or nothing' approach focused, perhaps wrongly, on just our Web sites, we should be willing to make creative bets on our business model. We continue to make what is being consumed--in large quantities. It is time we figured out how to make it easier, more engaging and useful.

    His recognition that the newspapers are suffering an imagination deficit, and that trying to rescue a now obsolete business model is not going to get them anywhere.

    What does the Washington Post do; i.e. what is their business? The scarcity is not their ability to print and deliver a newspaper with ads in it; it's their ability to gather news, compose it into coherent stories, write editorials about it -- the functions of their newsroom personnel. What they have to monetize is only that function -- their unique point of view.

    Their readers all have targets in the printed newspaper -- they don't read the whole thing nor do they even see all of the ads (at least if they're like me). It might be of more value to me if I could pay a lot less than a blanket subscription to see only the parts I was interested in. I'd pay to gain admission to a personalized version of the coverage.

     

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  17.  
    identicon
    Anonymous Coward, Jun 14th, 2011 @ 9:31am

    "it's their ability to gather news, compose it into coherent stories, write editorials about it -- the functions of their newsroom personnel. What they have to monetize is only that function -- their unique point of view."

    And how exactly does one do it? Isn't that exactly the crux of the problem newspapers are facing today? No one wants to pay for that "unique point of view," so how's a newspaper to survive? T-shirts?

     

    reply to this | link to this | view in thread ]

  18.  
    identicon
    PRMan, Jun 14th, 2011 @ 12:22pm

    Re: Re:

    Saying Pandora doesn't get targeting is crazy. I listed to a lot of Christian rock, and before subscribing to Pandora One, I would get ads for so-and-so Christian speaker holding a conference in my local county. How much more targeted does it get than that?

    I actually rarely minded the ads on Pandora, except for the ones that played nationally (because other people at work were also complaining about them).

     

    reply to this | link to this | view in thread ]

  19.  
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    Nom du Clavier (profile), Jun 15th, 2011 @ 9:18am

    Re: Re: Ads that we like

    Count me in that group. Even if an advert is relevant to what I want, I still won't click through. If and when I want something, I do my own research.

    Adverts are a broken version of word of mouth in that they're inherently biased. Additionally I'm of the mindset that if something needs to be advertised to begin with, something must be wrong with it, beyond getting initial exposure so the internets are aware of its existence. Good search results have made adverts irrelevant, to me at least.

    It's not entirely as black and white as that, but on the whole I find adverts to be worse than useless. This goes for commercials on television too, by the way.

    Marketers may think that annoyance will wear off and the brand sticks around, and that's what matters, but I know I'm not the only one who has a long memory when it comes to annoyances. I'll just buy something else, annoy me enough and I'll even take the effort to figure out all the brands you make and add them to the shitlist. ;)

     

    reply to this | link to this | view in thread ]

  20.  
    icon
    David Muir (profile), Jun 17th, 2011 @ 5:49am

    Re: Sub-Optimal Experiences

    Correction: that would be @xarker not @xarkin. My bad.

     

    reply to this | link to this | view in thread ]


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