Monday, June 27, 2011

Distribution Strategies

The Business of Content – The Evolution of the Newspaper & Media Industry

Let’s rewind back 10 years. Commercial Distribution of news was relatively straightforward. News was collected, collated and printed overnight for viewing by the end user by either being picked up or delivered. It was a push model that relied on news corporations pushing the content out to users and picking up a subscription fee plus gaining revenues from advertising.  Let’s re-look at what has happened. Enter the world of online media, smartphones and tablets. Consumers are now using a pull strategy by extracting the latest news (available online) via their laptops or smartphones for free. What happened to print? 

It is no secret that online distribution of the newspaper industry has been a slow however disruptive force for the newspaper industry, a model that relied mostly on print advertisements.  With access to various sources of news online for free, there is a clear paradigm shift in the business model for newspapers.  Rupert Murdoch, Chairman of News Corporation is a man on a mission with this adverse shift in the news and media space. In the face of shrinking circulation figures and resultant drop in advertising revenues for print newspapers, Murdoch has taken on himself to change the new media model. He has already expressed his intention by raising a paywall around NewsCorp’s prized publications Times of London as well as the Wall Street Journal.  Unlike print, where the consumer actually pays for the service beforehand, it is not probable to control what people do the internet.  The Internet is a “giant copy machine” and the future lies in the hands of companies who can curate the information differently rather than just delivering a message. It’s curious how in the world of the Web, where information and content is considered king (and has lead to the dominance of megaliths such as Google, Microsoft , Amazon etc) that news is considered a de-valued commodity.
Murdoch views media as an industry which can work only when consumers are ready to pay for content and he has made his intentions clear by announcing only paid content access to NewsCorp. It makes sense, simply because what iTunes and Netflix have done to the music and video industry is what Murdoch attempts to do the news industry. Digital Distribution is the way forward and although Murdoch ‘s approach to business is not of a modern marketer, he does understand how to withstand medium term pain for long term benefit. By establishing his first move towards paid content (he closed a free post for iPad users recently), he has almost single handedly, not just made the paid model  the main topic of digital strategy in other traditional publishing companies but imbued it with nearly the forces of a fait accompli.

Attached is a BCG study that consumers are willing to pay for online news.


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