There is hope for the internet news business, according to The Online Journalism Review's Brian McDermott. Newspapers looking to charge for their online content simply need to follow the right business model: that of bottled water.
While probably not one's immediate comparison to be sure, McDermott makes a very comparable argument. The general public does not have a problem paying for bottled water, a product they consumed from the tap for free for ages.
What was once considered a free commodity was suddenly being paid for left and right without the bat of an eyelash. According to McDermott, this is because water bottle companies began marketing themselves as selling convenience, not water. Dr. Chiranjeev Kohli, professor of marketing at Cal State Fullerton, rationalizes it as "when they start pumping money into advertising, that's when the consumers buy into the conceptÂ- or, if that's your perspective, they get sucked into it. This is one of the most fascinating case studies in marketing. This is a product that used to be free."
The change and increase in marketing created a demand for a previously free commodity by creating a fresh viewpoint of it as the new necessity for a lifestyle on the go. Bottled water became the new thing to need because the public was told that it was better than what they had been getting for free- even though, as the article points out, most people fail to taste any difference between tap water and bottled water in taste tests.
This is where the internet comes in. Newspaper sites need to convince the public that they want to start paying for something they have been getting for free for years. There are many theories as to how this can be done: some suggest pay walls, some suggest charging for new add-on services, some suggest daily or monthly subscriptions. There is no clear answer, but there is a clear business model.
The transition from free to paid is not going to be easy but McDermott creates another interesting parallel in the article as an additional revenue creating idea: iTunes. As he points out, Apple sells millions of iPods each year, spurred on, at least in part, by the sale of music through iTunes. He cites the idea of using an electronic gadget to increase the sales of a digital medium- as music sales and iPod sales affect each other, so too could e-reader technology and digital newspaper subscription sales correspond.
With the impending release of the QUE by Plastic Logic, which is designed to resemble reading a paper newspaper, as well the introduction of more and more digital editions, such as the new GlobeReader from the Boston Globe and the new USA Today digital edition geared towards the college-aged, the world of digital newspapers is just beginning. Could the future revenue of digital newspapers rest in the sale of a company sponsored e-reader? Or in the increased distribution of a digital edition of the paper?
If the newspaper based e-readers catch on, it would correspond perfectly to the model of bottled water. Companies could sell the public a product they already get for free through the guise of ease of use and convenience.
Reading a newspaper digitally and drinking bottled water is the same concept because it is the same product, just packaged differently. But there is also potential to create a product that would not be possible were it in its original form: the ability to customize a digital newspaper and use added video and other extras, as some companies have discussed making a feature available to subscribers, is impossible to do on a traditional newspaper website, just as fortified or flavoured water is not available from the tap.
Whatever way each news organization eventually settles on as a way to charge for their online content, one thing is clear- consumers' concept of what they expect to be free is malleable. Just imagine telling someone in 1970 that he had to pay $5 for a liter of water...
Source: Online Journalism Review