The cost of online content; an overview of paid news subscriptions

With the cost of print media beginning to exceed revenue received, traditional outlets are slowly making their way onto an online platform to explore new ways of generating revenue and in some cases, curb the losses that they’re experiencing.

Last month, The Guardian announced that they would become a digital first service, placing more focus on newer mediums with their print media containing more considered articles such as comment and features. This came after their publishers, Guardian News and Media, revealed that they were making a loss of £33m a year with their digital-first approach resulting in job losses. Other media outlets have experienced mixed fortunes over their transitions, trying to find the perfect model to generate revenue online while keeping their readership.

Today, The Financial Times (FT) announced that it has increased its adjusted operating profit went up by 3% to £31m. In a half-year report by the FT’s parent company, Pearson PLC, sales at the FT group increased from £192m in the first half of 2010 to £203m in the same period in 2011.

Digital subscriptions to FT.com rose by 34% to almost 230,000 registered users while registered users went up 49% to 3.7 million. Mobile devices now account for 22% of traffic for FT.com and more than 15% of new subscriptions for the site. Across print and online, the FT’s total paid circulation was more than 585,000 up 4% on 2010, reaching an average daily audience of 2.1 million. The premium subscription for the FT costs €38.99 per month or €389 for an annual subscription, which amounts to around €7 per week.

In a statement published on their website, Pearson stated that “the changes we have made to the business model and mix mean we are well placed to grow even in tough markets for print circulation and advertising. We expect digital subscriptions, now the engine of the FT Group’s growth, to continue to build steadily.” They reported that they had experienced “modest” advertising growing with strong performances in luxury and online areas but warned that advertising demand still remained “volatile”. The volatile playing field they mention is the very problem all print media outlets are facing and how best to tackle the problem is still unknown.

News Corp and the subscription paywall

The bigger experiments for traditional print media outlets to recoup losses are still underway; paying for online content is still at an experimental stage and has met resistance due to the majority of news outlets allowing readers to access for free. So far, a number of subscription services have been pioneered by News Corporation whose publications include The Times (UK), The New York Times and The Daily, an iPad exclusive newspaper with the results at best being mixed.

News Corp have yet to reveal subscription figures for The Daily but their number of subscribers are reported to be somewhere in the hundreds of thousands. The publication costs 99 cents to download it for a week, or $39.99 if you want a yearly subscription.

Reports say that the iPad newspaper has had around 800,000 downloads through iTunes in its first three months but it made a loss of $10m during this period also. News Corp defended this saying that the service is still a work in progress, suggesting that it’ll take time before any profits are seen.

The New York Times has started relying more on digital properties for advertising as it now accounts for more than a quarter of the media outlet’s total advertising revenue. It started charging non-print subscribers for access to most of its online content back in March. So far around 224,000 subscribers have signed up for the service alone.

However when the company combines other subscription that allow online access, mainly home delivery subscribers, those who subscribe through e-reader and digital readers who have free promotional access through a deal with Ford Motor Co., The New York Times has more than one million digital users.

Non-print subscribers pay between $15 and $35 a month for unlimited access to the paper’s online content. Through the first half of 2011, digital advertising accounted for 28% of its total advertising revenue, rising 3.5% from the first half of 2010 to $168.2 million

However The New York Times still reported a $119.7 million second quarter loss, with overall advertising revenue falling by 4% although they say that the digital subscription model is a long-term strategy and that it will provide a new place to earn revenue during the second half of the year.

Earlier this month, The Times (UK) was reported to have over 100,000 people signed up to its online services which includes its website, iPad and kindle products. This was a 28% increase from figures in February where their subscribers amounted to 79,000. The Times and Sunday Times charges £1 per day or £2 a week to view its online content.

Outside News Corp, one such paper considering the pros and cons of adapting a paid model is The Washington Post. The paper is currently free to access online but the company are considering the feasibility of implementing a pay subscription model to curb losses. Back in February, they announced that 43% of their revenue in 2010 was generated online yet that was in line with falling revenue usually generated from print sales.

In the first quarter of 2011, print advertising revenue had fallen by 8% to $63.2m while online publishing revenue rose by 8% to $25.7m. Dispite online revenue rising,  the losses received from print adverts and the gains made from online will match each other sometime in the future.

While it’s not encouraging news for those making the transition from print to online, some sites have experienced success without external help. BBC.com had announced two weeks ago that they made a profit as a standalone business, two years ahead of what they had originally forecast. Many sites will want to recreate that success but how they generate a profit for themselvse while pleasing their readership is anyone’s guess.