Is Subscription the Next Thing?

Adam Pennenberg does a fine job of beating up the Times in this Wired News piece. He points out that folks go to Google (and others) to find things, and that, for the most part, you can't find the Times in Google. He then critiques the Times' current business model,…

newsboxAdam Pennenberg does a fine job of beating up the Times in this Wired News piece. He points out that folks go to Google (and others) to find things, and that, for the most part, you can’t find the Times in Google. He then critiques the Times’ current business model, but offers no viable alternative, suggesting only that the Times figure it out.

Well, I agree. But how about we suggest some alternatives?

Adam points out: The Times attracts 9 million unique visitors a month, while only about 1 million read the daily paper. But the dot-com makes a scant $11 per user, while the printed paper earns the Times a whopping $900 per reader (in subscription fees and advertising).

Why is this? Why, because of print advertising, of course, as well as print subscription fees. That’s where the money is. Value always trails usage. Martin’s digital unit has been growing every single year, and is making tens of millions of dollars in profit. But the true chasm crossing moment is still to come. To win online, they will have to abandon print and its business model, and make it their archive available free. Right?

Maybe not. I am quite sure that the major engines, Google and Yahoo in particular, have been and will be again in pretty deep conversations with “traditional” publishers to figure out a model whereby their content can pass through search portals in a manner that allows value to be fairly apportioned. How might this happen? Danny Hillis has some ideas about that, which will appear in an upcoming column of mine, but it has to do with subscription models and aggregation.

A summary of his thinking with my spin goes like this. What revenue stream accounts for the lion’s share of search’s margin? Advertising. That’s a one legged stool ready to tip over. As the search giants become more and more media companies, they must develop subscription services, and because users won’t want to pay for something they already believe is free (searching) search engines will have to figure out a way to become middlemen to paid content. After all, they own distribution, so they should become…distributors. Were they to execute this service in a scaled and elegant fashion, it might be viewed as a benefit – in many cases, subscribers will get more content for less than they were paying in the past (that’s the benefit of volume).

Many internet users have one or two paid relationships with content providers already, a smaller but richer percentage have far more than that. Imagine a service where you can subscribe to one simple paid channel, a channel that has all your favorite paid content, including, say, the Times archive. You pay one sub fee, and use it as you wish. The content providers to the paid channel get paid by the search engine based on usage patterns over time (neat how the search engine can track your usage, eh?).

The only companies with the gravitas to pull off such a system are the search portals (or Microsoft through IE and MSN). And such a system would only work if folks like the Times and the WSJ give it their blessing. But once it starts rolling, it could really, really scale. I’d guess, and it’s just that, a wild guess, that such a system is already in development at both Yahoo and Google. Can I imagine giving Google $40 a month to get the WSJ, Times archives, BBC archives, all my favorite blog archives, and whatever other universe of paid content I might want to add elegantly served up in a Googlish interface? Yup. No brainer. Sign me up.

9 thoughts on “Is Subscription the Next Thing?”

  1. Do you think there’s some conflict of interest between the paper publishers and Google/Yahoo? Essentially the newspaper publishers are in the business of selling ads, and so are the search engines. They do it differently, but it’s possible that they are fighting for the same customer.

    I believe there was a story not so long ago on ZDNet about the computer magazine publishers losing ad placements to Google. The AdWords model and Overture listings attract hardware and software sellers, who can target a very niche market, since most of the computer guys out there are on the Internet anyway. With paper ads you have measurement problem and cost issue (i.e. PC Magazine probably wont talk to you on your $50 budget).

    At some point, I think, The Times will view Google as the competitor, when, for example, their major ad buyers cut their Times budgets in favor of AdWords/Overture.

  2. This is AOL’s current model and has been for about 10 years… aggregate content from around the web and distribute it to its 20+ million subscribers…with AOL’s advertising pasted around the content. Brilliant, eh?

  3. Forward thinking as usual JB.
    However, you probably cut yourself out of 50k in consulting fees for that pen stroke. When they adopt this plan you will never get the credit.


  4. John – you’ve uncovered the model publishers have been struggling with since Google introduced advertising and became a competitor. Well stated. By running ads against a publisher’s content, Google has taken advantage of the free nature of online media at the expense of the publisher. They are encouraging media companies to embrace registration and in some cases even blocking Google’s access to content. But I’m sure publishers will gladly pay bounties to Google or any other search engine that drives subscriptions or registrations. It’s probably too much to ask to get Google to share ad revenue back to the publishers too 😉

  5. I’ve mentioned several times that many libraries in the US, Canada, Australia, and elsewhere OFFER FREE remote access (no need to visit the library) to thousands of publications. All you need is a library card.

    As an example, the Marin County Public Library in California offers a database called ProQuest Newsstand. It offers FREE full text access to 600 newspapers. All searchable from home. They also offer MANY other excellent and expensive resources for free.

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