The change to charge: giving value to online content

To begin, I’d like to bring you back to 2001 to give you a snapshot of the situation ireland.com was in at that time. This marked a turning point in our development as it was in then that we realized we would need to change our approach to revenue generation in order to survive.

At that time, ireland.com was the most successful Web site in Ireland, by traditional media metrics standards, with 25 million audited page impressions per month and 2.5 million unique users. These figures were impressive relative to both the size of the print edition and the fairly small Irish market. We had excellent brand awareness, both of The Irish Times and of ireland.com, thanks to the quality of the respective products and the huge Irish-interest market abroad.

However, we were generating low levels of revenue relative to our cost base. Our costs were not exceptionally high – The Irish Times had been expansive, but prudent in its Internet investment – but nonetheless, the revenues were simply not enough to sustain the business. It was clear we could not depend on advertising for all, or even most of our revenues, so we started to look for new business models.

This marked the beginning of our return on investment phase. The Irish Times had been investing in the Internet since late in 1994, when it was the first newspaper in Britain or Ireland to go online. Our business was over six years old, and it was time to start seeing some rewards from that investment. Thus began our exploration of the pay model.

In this phase we were asking people to stop being ‘users’ and become our ‘customers’ instead. On the plus side, we found ourselves back on familiar ground in the context of publishing; creating relationships based on the provision of a high-quality service in exchange for cash. In addition, this was an approach that would operate by predictable business rules. Also to our advantage was the fact that we were an established brand in the marketplace. This was our starting point.

Much of the debate about subscriptions has been involved and complex, as businesses try to reduce risks to a minimum, while maximizing their piece of the pie. Once we had decided to charge, there were three fairly simple questions we needed to answer.

1. What will customers pay for? This was at the center of the debate. We needed to know as much as possible about what our readers would go out of their way to attain, without alienating them or rendering the remainder of the content on offer unattractive. We researched extensively in our attempt to answer this question.
2. How can we satisfy the need to give customers something tangible? This was probably most difficult question and arose from the nature of the Internet itself, and people’s perception of it. This relates to a customer’s ‘offline world’ need to be given something of substance in exchange for money and to break down the concept of the Internet as an intrinsically ‘free’ service.
3. How much will they pay? This was also problematic, in that we had no industry standards as such, and it was difficult to assess what the customer would bear.

In order to answer these questions as best we could, we undertook several different pieces of research to maximize our range and knowledge. We felt our own experience and knowledge should feed into the process, and to that end we solicited the views of those within the company who had most experience of the medium.

Our audience falls into two geographical categories: the Irish audience based in Ireland and the Irish-interest audience abroad, including the Diaspora. These audiences offered views in focus groups in Ireland and the United States. In addition, our users took part in a comprehensive survey. As a measure of the interest in this, over 6,000 people spent at least 20 minutes filling out our optional online questionnaire.

Finally, we tried to speak to as many of our peers as possible, in similar publications and Web sites.

In June of 2002, we introduced our premium content subscription product. We decided to simplify both the content package and pricing as much as possible. Our research had shown that users wanted to be clear about what content they were getting and wanted to get to that content as quickly and easily as possible. The yearly subscription is priced at EUR79, while monthly and weekly options, priced at EUR14 and EUR 7 respectively, are also available.

Limited news from both the newspaper and breaking news is free daily and free stories are always to be found in the same place. For example, the front page stories are always free. In addition, the classified advertising sites, such as property, jobs and motors are freely accessible. Also outside the payment model are special interest sites and one-off news sites dedicated to coverage of a particular news event. This is to ensure people are not deprived of coverage of an important issue, and to create new reasons for people to visit the site for the first time.

What were the most important factors in our minds when we began to charge? Our chief aim was to make the experience simple for the user. For example, we selected the same stories to be free every day, according to their placement in the print edition or in breaking news.

We are also trying to achieve a balance between providing interesting free content and good value premium content; to give a compelling proposition to the subscriber, but not to leave the ‘free’ browser alienated.

We couldn’t rely on the offline brand to sell this product for us, so we needed to limit our use of the print edition as a crutch.

In addition, it was very important we got the basics right; the technology, the payment mechanism. A U.S. study in 2000 found that more than one-third of all attempts to buy products online failed. We simply couldn’t afford to have people walk away because they found it difficult to make the payment.

Finally, we needed to convince our parent company and our own staff that this was the way to go and enlist their support. There were many good reasons to do this, not least the emphasis on customer service that comes with a pay model.

Here’s a small selection of the initial reaction to the news that ireland.com was going to charge. Obviously, quite a bit of it was negative. It was striking to see the sense of ownership among the site users.

Paying for news is absurd! The idea of a free press is gone and buried with this idea! In any case, who does the IT group think it is . . . there will be winners and losers and if the IT continues with this plan it will lose . . . adieu IT!"

"When I read the other day that ireland.com was going to start charging, I cursed them to the high heaven."

"I noted with equanimity that you will introduce soon a charge for access to 'premium' content on your Web site. As one who uses the site regularly I appreciate its value and am more than happy to pay for this."

Now let’s look at where our business is in 2003. When we first began to charge for our e-mail account product, we converted 7% of users of the free e-mail account service. This number exceeded our targets. In the second year, the renewal rate was 80%.

Introduced just one year ago, premium content subscriptions have seen a gradual and steady growth. Corporate sales are strong, while the renewal numbers are encouraging. This has already created a significant revenue stream for us.

The SMS and WAP news and sports services we offer through both major mobile operators have proven extremely successful. We now have 20,000 mobile subscribers, collectively receiving around 1.2 million messages per month, each of which gives us a revenue share.

In addition, our page impressions have not collapsed. The site now attracts 18 million page impressions per month – a 25% reduction on its peak in 2001.

All of this has been achieved alongside a significant reduction in our cost base, resulting mainly from reduced staffing. We’re now heading towards a break-even situation. In addition, the omens are good. We’re getting positive feedback from subscribers, and there is a consistent stream of people signing up for the service.

Lest people believe that we have fundamentally changed our ethos, it’s worth reviewing our mission statement. That is: ‘Producing and marketing via multiple formats, content relevant to the Irish, and Irish-interest markets, at home and abroad.’ This is the same mission statement that we used in 1994, and it is just as relevant today.

Let’s look now to the future, and the commercial opportunities we intend to develop over the next couple of years.

Sponsorship is short-term and event-driven, but it can be lucrative. It’s also attractive as a test of the reaction to Internet promotions by online skeptics

We’ve already seen remarkable growth in the area of mobile services revenue and this looks set to continue. There are also enormous advantages of providing services through partnerships with mobile operators – they make huge investments, they cultivate markets for goods and services and they also have a ready-made business relationship with customers.

In the area of premium content, we’ll continue to look at new models for subscription, trying to create the best fit for the customer. This will be an area of development over the coming years, as the marketplace thins out.

Our e-mail service will continue to grow. One of the best decisions we made was to outsource the technical development and maintenance. By retaining the customer service element, we kept a handle on any QA issues that might arise. We’ll continue to offer periodic enhancements of the service, to keep customers happy.

I mentioned market thinning earlier. It’s not difficult to imagine this consolidation will create further opportunities for us, in the area of content syndication, for example.

Finally, our sole e-commerce product, Irish Ancestors, does well. We will continue to look at opportunities to develop products in this area.

I’ve talked about positive signs we’ve seen from our own experience. Let’s look at the latest industry indicators.

In the newsroom

We’ve made several significant changes to our business over the last couple of years. I’d like to make a couple of observations on how the change to a subscription model involves and affects the editorial department of our operation.

Finally, I’d like to leave you with a couple of thoughts that I hope reflect the development of publishing on the Internet since 2000.

2000

Time Warner CEO Gerald Levin has grasped what many casual observers, especially older and wealthier ones, just can’t yet believe: For the Old Media, now, it’s go digital or die.

The Wall Street Journal, January 2000.

2001/2

For the Old Media, now, it’s drop digital or die

Perceived Wisdom, 2001/2.

2003

Publishers who didn’t panic and drop their online operations or cut back to a token presence will show that online publishing can be turned into a sustainable (and profitable) business.