Making money out of news online

News International’s decision to start charging for their online newspapers has led to a lot of debate: will this save The Times, and the rest of the Murdoch stable, from financial disaster, or consign them to oblivion by driving away human eyeballs and search-engine spiders?

We can only wait and see: and every newspaper in the world will surely be watching closely. Free online news is causing most news publishers to haemorrhage money at an alarming rate. The best ones are picking up huge new global markets (80% of reader of Times Online are in North America, while the Guardian, Telegraph and Mail online all have over 30 million unique readers a month, dwarfing their print sales), but the conundrum remains of who, exactly, is paying for it all.

The conundrum was thrown into stark relief – on the same day as Murdoch’s announcement - by the sale of the Independent (the paper which launched, famously, in 1986 with the slogan ‘Is it. Are you?’) to Alexander Lebedev for £1 – though even at that price it took a £9 million sweetener to bring him to the table. Lebedev had recently bought the London Evening Standard for the same price, and instantly converted it to a give-away paper.

And the very same day Carolyn McCall, the CEO of Guardian Media Group, moved to easyJet, leaving behind a balance sheet almost £90 million in the red. Disastrous advertising revenues in 2008-09 can only be partly to blame, and they are not going to improve dramatically any time soon.

No one disputes that quality reporting – more than regurgitating the newswires and agency reports, which is all that most freesheets manage – costs money. There are no easy answers.

What makes people buy newspapers?

The key question is, what do people people really want when they buy a newspaper? And is there another way of monetizing that aspect of the business, while still maintaining the instant access timely information and sifted news that is the essence of a news publisher?

What is the unique selling proposition of the entity we still tend to call a newspaper? Its news or its other stuff? Most people would probably say they buy a newspaper for the news; but it’s not really the news that gives a newspaper its USP. In some circumstances, an old-fashioned scoop  – the Telegraph’s reports on MPs’ expenses in 2009, for example – can cause sales to rocket temporarily. But most scoops are a matter of industry pride rather than customer awareness. You can’t build a business case on always being the first to bring news to market.

So the uniqueness must come from the other stuff. Murdoch is going to make people pay for the Sun online but no-one really chooses the Sun for its news coverage, they buy it for something else. (That’s true for The Times too, although Times readers probably want something different from Sun readers…). But what exactly is this ‘other stuff'? It’s the experience of sitting down, opening and looking at that paper, its presentation, style, editorial priorities, image selection, the whole ‘mix’ that gives a paper its identity – plus analysis from named and trusted writers. That experience isn’t easy to replicate online – especially as some of it is social: a paper often acts as a kind of tribal flag telling others what sort of person you are.

The value we attach to a paper’s distinctive blend of comment and analysis means that some have suggested that the solution is to keep the news free, but to ask readers to pay for the comment, and other valued but genuinely unique content such as crosswords. But even that tactic has its problems – opinions are already ten-a-penny across the Net; and even if a paper manages to sell access to today’s top columnists, how is it going to nurture the next generation of stars whose wisdom and style can lure customers over the paywall?

So the paradox can clearly stated thus: what people value most (access to the news) is free but expensive to maintain and hardly unique, while the unique stuff is relatively cheap to produce but unlikely to sustain the business.

Getting people to pay

Valorizing the news means shifting it from being ‘nice to have’ information, into a genuinely must-have content that gives consumers a clear and defined benefit. And that means, not just pumping the news out in the old way, but looking more closely at what consumers really need, and using all the resources, data and reputation at your disposal to create  ‘must have’ products.

And that means content directly linked to people’s ability to operate successfully, to perform their work or get the most out of their leisure time. Must-have content is not just something to consume and enjoy, but something that prompts an action of some description. And while that is almost certainly timely, it’s probably not just ‘news’. So, a report of the Budget is nice-to-have news; but a report of the budget linked to analysis of what it means for your own business or family that helps you plan your finances better is a must-have.

 ‘Must have’ content might not even be written content at all, in the normal sense of the word, but could be an piece of functionality or personalisation, or a template that is difficult to find elsewhere, or something which helps your audience to anticipate and respond to change.

This will always have old-fashioned reporting at its heart (though in future we may find that more of the old, expensive, general news-gathering operations are replaced by lower-cost, very niche suppliers, whose work is vetted and aggregated by the branded publishers). But it won’t be enough any longer. If, though, the publisher can supply context, in the form of expert opinion or unique supplementary data, or premium access, or truly valuable conversation, then the reader will derive far more value than anyone ever got from turning the pages of a broadsheet, and will be prepared to pay.

And once you have got people wanting to pay, or even just to sign up for, content that they know can change their behaviour - whether in their professional lives or in specialist leisure interests - then all the other sales opportunities open up and you'll be well on your way to making that news pay.