"Any media business has two products to sell: its content (to readers and viewers); and its audience (to advertisers). The task for old media is first to protect its advertising revenues by amassing audiences online and, second, to offset their viewers' intolerance of mass-advertising by making them pay more for content - which they are increasingly willing to do. It will not be easy, but then saving the heroine never was."

There are two "truths" to these, the last phrases of the Economist leader. The transition to digital is certainly not going to be easy for big media companies whose set-in-stone business models are quickly being overturned by digital media. And "amassing audiences online" to protect advertising revenues, especially as online advertising skyrockets, is a must.

But offsetting "viewers' intolerance of mass-advertising by making them pay more for content" will not always work.

Firstly, let's look at the contradictory manner in which the Economist article's closing paragraph is structured. The second sentence figures that old media companies moving online will continue to rely on an advertising model to fund creation and distribution of their content while the third sentence essentially says that this "mass-advertising" model is dead because consumers are adverse to advertising and would rather pay for content.

This contradiction highlights exactly why the transition to digital "will not be easy" and why it is exploding the foundations of traditional media business models. Consumers are willing to pay for content online, but it depends on what content.

Television stations are becoming successful in selling their programming online (and on-demand for today's time-pressed consumer), be it for viewing on the computer screen or on video i-Pods. Keep in mind their programming was once free to the consumer (aside from paid cable or satellite packages) and based on advertising.

The on-demand download of movies is evolving quickly on the Internet and will only be facilitated as broadband connections become faster. Movie producers are even starting to distribute their product in cinemas, on video/DVD and television at the same time. It will only be a matter of time before simultaneous release includes Internet distribution. Consumers pay to see these movies (however indirectly in the case of television through cable or satellite packages), but the price differs from platform to platform, the Internet presumably being cheapest for both for the distributor and the consumer.

Newspapers are having trouble with online revenues. Online advertising, although growing rapidly, has not come close to reaching the level of revenues newspapers are used to and several analysts see very little growth in print advertising this year. Furthermore, newspapers have had problems when charging for online content, apart from several notable sites.

Broadcast news stations do not charge for the majority of their online content. Some have launched online video subscription services but it has even been predicted that these will eventually be free of charge to the consumer.   

So why doesn't the Economist's conclusion that the public wants to pay for advertising-free content prove entirely true?

Consumers will pay for television programs and movies online not just to avoid advertising, but because the content is original. After having paid once, they will also "own" that original content to watch at their leisure, theoretically forever.

News content, on the other hand, is not original in the same sense of the world. Once it breaks, it is picked up by news agencies, newspapers, broadcast and radio news around the world. Consumers are more reluctant to pay because whereas once newspapers had a monopoly on news in their regions which forced people looking to stay informed to subscribe, now the entire world of news is found with a few clicks of a mouse. And come tomorrow, it's already yesterday's news that won't be looked at again like a favorite book, TV program or movie.

On the other hand, newspapers do provide original content that can feasibly be monetized online. Newspapers claim many renowned columnists, influential opinion makers and specialized lifestyle sections that the public wants to read and for which it is willing to pay. And of course there's always local coverage, the importance of which is emphasized by Jeff Jarvis.

The problem newspapers see with a paid strategy now is that paid content will diminish website traffic and thusly advertiser satisfaction.

However, well-publicized promotions will generate new readers that will want to come back to the paper after the promotion is over. The Wall Street Journal opens up its website once a year to introduce it to new readers and the New York Times claims a 90% retention rate on readers who apply for its 14-day trial of TimesSelect.

Still, the Internet jeopardizes traditional newspaper subscription models in that people are less willing to pay for the whole package. But it also opens up new opportunities for newspapers. Newspapers need to experiment, charging only for sections, various columnists, or even per article. Readers will thank them for being able to pay for only the content they really want.

ps. Other highlights in the same edition of the Economist include a piece on DVD giveaways in the UK, a practice not looked upon highly, and an in-depth look at News Corp. Rupert Murdoch's recent purchases provide the perfect example of how traditional media can "amass audiences online." 

Source: The Economist, Buzzmachine