One of the favorite sports of most media conferences these days involves trotting out Wired editor Chris Anderson’s “freemium” idea — which is predicated on balancing free online and paid premium content — and kicking it to the ground. The topic served as a introduction to discussing the problems associated with paywalls and display advertising for major media brands at one of the afternoon sessions at the Media Summit 2010 conference at the McGraw Hill Building. While the panelists certainly didn’t say they were ready to put paywalls around everything, they are clear in deciding that consumers need to be re-trained a little to appreciate more direct payments for the content they expect for free.
Liberty Carras, SVP of sales for CNNMoney.com, summed up the feeling about the “free meme,” which the media execs has become taken for granted. “Unless the price of creating content becomes free, I don’t see how it can be made free [to consumers]. Whether it’s an event or a TV show or a product that delivers content, there’s value there and people will pay for it. There is a place for content to be free. But it’s not about the medium, it’s about the brand.”
Although it’s an obvious point, the panel’s moderator, Edward Moran, director of Product Innovation, Deloitte Services, noted that that to most people, “free” is really a colloquial way to say “ad-supported.” Of course, while many media companies worry about how erecting paywalls will affect the advertising, the panelists argued that it depends on what the content is and who it’s aimed at.
In response to an audience question about Newsday’s paywall strategy — and how the Cablevision-owned daily saw only 35 paid subscribers sign up for access seemed to suggest failure for the idea. Julie Michalowski, Vice President, Business Development, Conde Nast Consumer Marketing, shot back that the panelists aren’t focusing on paywells, but on “what the brand experience and value is.”
But Alisa Bowen, SVP, Head of Consumer Publishing for Thomson Reuters (NYSE: TRI), quickly interjected to defend the use of paywalls. “Paywalls aren’t right for some. Let’s be clear about that. We’ve experimented with putting up barriers on parts of our website. In one case [she didn't specify], traffic dropped 70 percent after instituting a paywall. In another case, using the same barrier level, mind you, happened to lead to a traffic rise of 300 percent. The value extraction is very specific to different audiences.”
Bowen also alluded to the Newsday’s claim that the paywall model wasn’t intended to drive online subscriptions, but rather to create more value for Cablevision (NYSE: CVC) customers by offering access to the paper’s website.
– Digital dimes into dollars: After much happy talk about the rosy future of digital media, one audience member challenged the panelists about their sanguine views after so many layoffs and magazine closures. Michalowski was specifically asked about the shuttering of Gourmet and Domino, and she responded by saying that those titles couldn’t sustain themselves, the audience is still there and Conde Nast has been trying to guide them to other online properties. The publisher is also looking for ways to keep those mag brands alive in other ways across other platforms and through commerce.
“In making the match between digital dimes and traditional media’s dollars, we’re in the process of a learning curve,” CNN’s Carras said. “There’s no easy way to do this. We’re making tough choices.”