Broadband News

Just as the infamous Dragons return to their Den for a new BBC series of grilling budding entrepreneurs, it seems fitting that Rob Grimshaw. Managing Director of FT.com, should remind web publishers of the ‘turnover is vanity, profit is sanity’ line so often uttered to disappointed inventors.

Grimshaw is adamant that the measurability of online publishing is both a great boon as well as a curse. While detailed analytics can allow a site to find out more about how its content is consumed than a paper could have dreamt of in the past, the trouble is, it can be misleading if you look at the wrong figures.

“A lot of the country’s national newspapers are getting very excited about how many unique users they’re getting each month but it’s the wrong figure to be looking at,” he says.

“They’re looking at 17m uniques that can mean a site like the Guardian is bigger than The Sun and think they’re doing really well, which they are, but I can tell you one thing for sure; we make more money out of our 110,000 subscribers than our several million unique viewers.”

Economic reality

For Grimshaw it is a simple case of economics. It does not matter how many people come to your site, it is how you monetise them that counts. This is where online publishing is a victim of its own success. The huge amount of traffic national newspapers and social networks receive means the advertising market is flooded with millions upon millions of daily pages views which brands can advertise on. As in any market, this over supply has led to cost per thousand (CPM) impressions falling through the floor.

As Grimshaw maintain, this was always a problem but the recession, which has seen a further cut back in advertising budgets, has simply exacerbated it.

“The ad-funded model was in danger even before the recession,” he says.

“It relied on constant growth in advertising but now if you were trying to have a site making $50m per year, with CPM rates as low as $1 or $5, you would need to sell between 4 billion or 800m paid impressions per month. It’s no mean feat to sell that much space and there are only a handful of sites who can.”

Finding niches

Hence Grimshaw’s prediction is that many publishers will start to charge for content. This is unlikely to be for general news which can be obtained from a wide array of free sites but rather for specialist information, perhaps from world-renowned columnists which readers would not be able to get anywhere else. The FT’s own model is to provide free access to three articles per month boosted to ten stories for those who register. Above that level, and to get access to the Lex column, a subscription is required.

By this time next year, Grimshaw reveals to SamKnows, there will be an additional payment option for more casual browsers. Instead of paying for a month or a yearly subscription articles and research will be available for a small fee per story. The mechanics and fees have yet to be decided upon but the strategy is to earn money from people who have a short term need and are unlikely to be regular readers.

“We’ve obviously got the advantage that we’ve always worked on a subscription model and we have a very niche audience,” he says.

“The people we’re hoping to monetise with a micropayment service are those who have arrived on the site through research. They might not read us for their everyday life but they need some articles and maybe some company reports or market data for a particular project. We’ll be able to allow them to buy these articles and so appeal to a new audience that will dip in and out as they need to.”

Grimshaw predicts that in a bid to survive declining advertising rates many more media sites will need to alter their strategy and follow suit.

“It’s going to be tougher for more general newspapers but they’re going to have think about what extra they can offer and charge for, what they do that people can’t get elsewhere and what audience niche they have,” he says.

“It’s going to be tough and require a lot of creativity but it shouldn’t be impossible.”