COMMUNITY UPDATE

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Media organisations will have to find ways of commercialising online content to survive and be successful. Recent announcements that media giants News Corporation and The Economist will start charging for online content, and the release of new technology from Google to assist organisations in charging for online content are sure signs that the migration towards subscription-based models is well underway.   

How to implement a paid model is the challenge that content providers now face. What's the most effective model and how will it work in practice? Richard Brooke, Managing Director, SJIP Advisors offers this advice: "Monetising online content is something that all media organisations are agonising over. It's difficult to envisage a situation where consumers will ever be prepared to substitute free content with a paid subscription. There is also the cost element to consider as, in the short-term, it will take time to build a subscriber base and re-engage with advertisers. There's no easy answer, but my opinion is that companies are going to have to take a longer-term view if they want to successfully commercialise online content and recognise that this is a totally different business model from those they have previously exploited."

Clearly, larger publishers and content providers have a key role to play in the move to commercialise online content across the board. Organisations like the BBC and Future Publishing are likely to be instrumental in defining best practice subscription models but it is going to be tough. Peter Horrocks, Director, BBC World Service explains: "Innovative attempts by media and technology organisations to find ways of monetising content are to be welcomed. However any solutions will need to fit in with the overwhelming online model that is free. When users enjoy social networking, online video, adverts and product information all for nothing there is an enormous resistance to paying for content, especially news content. To be successful, monetised content may need to be so low cost that it is virtually no cost."

Similarly, Mark Wood, Non-executive Director, Future Publishing is positive about the trend towards commercialising content but recognises that various models will need to be tried before organisations find a working model. He says: "The Murdoch initiative is incredibly important and very timely. Publishers have to find ways to charge for access to online content in order to fund the costs of gathering and producing it. Internet advertising will clearly not be enough. I am sure we will see a variety of payment method trialled in the months ahead - from tiered subscriptions to per article micro-payments. For newspapers in particular, which can see their business models falling apart, success in this area is vital for their future survival."

There is also the issue of globalisation, which has increased the scale and scope of online content exponentially. In this environment, rights management will also become more critical to organisations looking to protect their online content and its value. Francesco Venturini, Global Broadcast and Entertainment Lead, Accenture explains: "The value of content is fundamentally determined by the rights associated with it and the revenue opportunities it provides. As many media companies are forced to diversify into growing their non-advertising revenue, rights are an increasingly important source of new revenue.

"Take the broadcast industry.  As we see it there are four different ways to generate revenue from rights assets including mainstream transmission rights, internet/new media rights, trade rights and commercial rights. Against this background, it is critical for content owners to rethink and redesign the way they work with rights management, by building an enterprise-wide capability that provides a unified and up-to-date view of the organisation’s assets,” Francesco continues.

Ultimately, media and content providers have to protect their online assets as well as appealing to advertisers in their new paid-for online environments. Tony Askew, MD Ventures, Reed Elsevier explains why the media model has to change: "The move by Google follows similar attempts by others such as Journalism Online to offer a paid model, and is throwing light on a troubled business model - broad, general CPM advertising. The real challenge for news content owners is delivering packages to attract advertisers that deliver measurable, actionable results. This shift in focus from traditional advertising to pay for performance marketing solutions is changing the way the media industry needs to operate."

For more information on media models and how they are evolving, please see the Write-up of a recent Criticaleye Discussion Group, Getting Media Business Models Right, held in June 2009. There are also Summary Notes available from this event. We also have other event Write-ups which might be of interest including Media Scene Breakfast - February 2009.

Please let me know if you have any comments about the issues raised in today's update.

I look forward to seeing you soon,

Matthew