Who will win the battle for paid content?

According to RICHARD MULLINS, director at Acceleration, the debate about how, when and whether publishers should charge for the content that they provide is reaching fever pitch. Facing some hard economic realities, an increasing number of publishers are looking to monetise their properties by putting walls around some or all of their content and charging for it.

The debate about how, when and whether publishers should charge for the content that they provide is reaching fever pitch. Facing some hard economic realities, an increasing number of publishers are looking to monetise their properties by putting walls around some or all of their content and charging for it.

Meanwhile, media mogul Rupert Murdoch has taken aim at aggregators who leverage off other publications’ content, calling them freeloaders. It’s clear that the business models for publishing on the Web have yet to be settled and that the question of who exactly will pay for the production of professional content will be with us for some time to come.

The Internet has radically changed the way that people consume content, leaving publishers uncertain about how they should approach the future. Their traditional revenues – cover pricing, subscriptions and advertising fees for print publications – have been eroded by the rise of the Web.

At the heart of this debate is a cold reality: it costs money to produce professional content and distribute it to the reader. Someone needs to pay for it – be it advertisers, readers or a combination of the two.

‘Paid’ versus ‘free content’

Publishers exist to serve the needs of readers and advertisers – and the way they have always done so is by providing content in a paid content or free content business model. The choice is not a new one. Trade magazines have for years distributed their content for free, using a controlled and qualified readership as a hook to lure advertisers.

By contrast, premium publications aimed at consumers or the high-end business market charged for content to fund better stories (better writers with more resources at their disposal) and thus attract more readers to attract more advertisers. This paid-for business model started to collapse when publications began to offer their content online for free.

As yet, however, online advertising revenues do not yet make up for the loss of subscription fees and print ad revenues that many publications have suffered in the transition online. At this stage, publishers need to monetise their content or they will have to compromise on its quality.

Implications for advertisers

So what does this all mean for advertisers? Advertisers want choice, value and innovation from publishers. At the moment, it’s hard to know where these can be found or what the implications of the paid-for-content vs. non-paid-for-content route will have.

There can be little doubt that Websites that put some or all of their most valuable content behind a pay wall will lose readers. This could mean that display advertising costs on paid-for-content sites may increase as the audience will be far more refined and targeted.

On the flipside, some readers might pay not to be bothered by advertisers, which could restrict advertiser choice in time to come. Or it could hurt the publisher by shrinking its reader base, especially readers that have arrived via searches or news aggregators.

If publishers end up taking such a hard line against aggregators and search engines that they can no longer index content, search engines will most likely break away from traditional content and rely only on blogs, and other sources of information, for their news.

The result of this is that advertisers will find it more difficult to do brand advertising across multiple publishers. Ad networks will do well as a result because advertisers will need to spend more with them to get to their audiences. It will also mean that advertisers will need to do more display ads on remote publishers to reach certain audiences.

My feeling is that only publishers that offer exceptionally valuable content will get away with charging for content in such a fragmented landscape, where there’s so much competition from user-generated and amateur content. But that will mean that publishers that have large and valuable audiences to offer will be looking to boost advertising revenues to monetise their content.

Closing words

Between the posturing from media types like Murdoch and the defenses offered by the likes of Google, it’s hard to tell how the battle for paid content will play out in the end. But whoever wins the battle for paid-content, there will be profound implications for advertisers.