58 Percent Of Newspapers Surveyed Considering Fees
BY: MICHAEL LIEDTKE, AP Business Writer
SAN FRANCISCO -- With their advertising revenue drying up, newspaper publishers spent much of the spring and summer debating whether to cut off free online access to some of the material they run in their shrinking print editions.
It looks like the talk will turn to action this fall, when some large newspapers are expected to put up Internet toll booths.
They'll be testing readers' willingness to pay for information and entertainment that mostly has been given away online for the past 15 years. That happened largely because most publishers could afford to subsidize their Web sites with profits from their print franchises. But now those profits have crumbled, just as the prices for online ads are tumbling, too.
A recent study by the American Press Institute found 58 percent of the responding newspapers are considering online fees. Of that group, 22 percent expect to introduce the fee before the end of the year. The findings drew upon 118 interviews of newspaper executives in the U.S. and Canada.
The free-to-fee transition likely will occur in tentative steps rather than bold leaps that would lock all online content behind a pay gate. Publishers are taking this cautious approach because they are still trying to devise online payment plans that will generate more revenue without alienating too many of their readers.
For instance, the Pittsburgh Post-Gazette, a newspaper with a weekday circulation of about 206,500, recently launched a Web site that includes coverage and commentary on sports, politics and entertainment that isn't in its printed product or free online edition. The service costs $36 annually or $3.99 per month.
Other newspapers that have talked up subscription plans remain reticent. Newsday of Long Island, N.Y., still hasn't rolled out fees for its Web site, even though the newspaper's owner, Cablevision Systems Corp., said it was going to do so this summer. Newsday spokesman Paul Fleishman declined to comment.
The conundrum facing publishers: It's hard to figure out how much, if anything, readers will be willing to pay. Internet search engines and digital communication tools such as Twitter and Facebook ensure people still will be able to find and share plenty of free content.
But running totally free sites hasn't been paying off for most newspapers. Even before the online market began to slump this year, Web ads were generating only a small fraction of the revenue that print ads do. The disparity has made publishers realize they need more ways to make money on the Internet, but few of them have been able to figure out how.
"This is like a four-dimensional chess game. It's really complex," said former newspaper editor Alan Mutter, who is now an industry consultant when he isn't writing "Reflections of a Newsosaur," a free blog.
The Associated Press also has been part of the online fee movement. The not-for-profit cooperative, which is owned by newspapers, is setting up a system that will track the usage of its stories. It's a crucial piece of a plan that could improve the AP's ability to run ads next to news stories and perhaps even lead the AP to charge readers to see major scoops or other "premium" content.
"The value of content has to rise," said Tom Curley, the AP's chief executive. "We are all looking how to make that happen."
Even as newspapers mull just how much to commit to charging readers, a competition is already brewing to provide the technology to enable it.
Four of the world's largest technology companies -- Google Inc., Microsoft Corp., IBM Corp. and Oracle Corp. -- have expressed an interest in developing an online payment system for publishers. Mutter also has been promoting his own approach to Internet fees, a concept he calls ViewPass.
Separately, more than 1,000 newspapers and magazines have signed nonbinding letters of intent to join an Internet fee system being assembled by Journalism Online LLC. It intends to begin collecting money on behalf of publishers before winter.
Backed by former leaders from Court TV and The Wall Street Journal, Journalism Online wants to run the cash register for a digital news smorgasbord. Readers will be able to buy stories from a wide range of participating publishers without having to repeatedly provide their credit card numbers and other personal information at each Web site. The content would be distributed on the Web and electronic reading devices, with each publisher dictating its own terms. As a commission, Journalism Online plans to keep 20 percent of the revenue collected through its system.
Although he isn't jumping on board with Journalism Online, News Corp. Chairman Rupert Murdoch is sold on online fees.
News Corp. already owns the newspaper industry's most successful Internet subscription model in The Wall Street Journal, with more than 1 million customers who pay for online access. The annual rates vary from $103 for an online-only subscription to $140 for a package that includes delivery of the print edition too. Now, Murdoch hopes to make online fees pay off for his other publications, which include the New York Post and The Times of London. Murdoch hasn't provided a timeline or specifics about his plans, however.
The New York Times is considering charging online readers a membership fee, with more details promised in the fall. It's a road the newspaper has been down before, only to reverse course after management concluded that the online subscription it required to read the Times' top columnists was crimping its Internet ad sales. The subscription service, which cost $50 per year, was scrapped in 2007 after a two-year run. It had 221,000 customers when the Times tore down the toll booth.
These days, the printed versions of newspapers are suffering so much that publishers appear determined to find a way to get readers on the Internet and mobile devices to pay something, even if it's just a few bucks per month. The question is mainly which publisher will jump off the sidelines first.
"There's still a lot of 'wait-and-see' attitudes out there," said Randy Bennett, senior vice president of business development for the Newspaper Association of America. "I think a lot of publishers would like to see some empirical evidence of what happens to other publishers who dip their toes into the water."
In a worst-case scenario, imposing online fees would drive away so much of a newspaper's Web audience that publishers would lose more in Internet ad sales than they would gain in new revenue.
In a best-case scenario, newspapers charging their online readers would still retain enough of the audience for their Web sites to remain attractive marketing channels. What may be even more important, the fees might make readers more willing to pay for the print editions if the same content isn't on the Web for free, especially if print subscriptions include free or discounted Web access.
Preserving the value of their print franchises is one of the main reasons for publishers to charge for Web access. That's because newspapers still get most of their money from print ads, which accounted for $35 billion of the industry's revenue last year. Newspaper print ads are on pace to fall below $30 billion this year.
Online ads, in contrast, contributed just $3.1 billion in revenue last year. And while that category had been growing until this year, it wasn't fast enough to offset the erosion in print ads. From 2005 through 2008, the industry's annual revenue from print ads dropped by $12.7 billion. Meanwhile, newspapers' annual revenue from online ads increased by just $1 billion.
Journalism Online's co-founder, Steven Brill, believes newspapers can still hold on to most of their online readership by charging for only their best work -- information, images and audio unlikely to be found anywhere else on the Web. This presumes publishers will be able to prevent the content from being copied and pasted or even just summarized at other sites, a potentially daunting task.
Some publishers still have no intention to charge for online access because they have concluded online fees are bound to backfire on the newspaper Web sites that adopt them, Mutter said. The American Press Institute study found 44 percent of the respondents don't think Internet fees will provide a significant lift to newspapers' future revenue.
"The guys who hold off (on Internet fees)," Mutter said, "could get a have a huge windfall in new traffic."
September 22, 2009
September 21, 2009
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Estimated daily clicks are 9000 with a $281,000 daily cost.
Estimates based on targeting United States only. Actual traffic may vary.
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September 20, 2009
Put Your Money Where Your Mouse Is
There has been much talk about an online advertising recovery going all the way back to Google’s (GOOG) last quarterly report where we first saw what appeared to be at least a “leveling off” in pricing trends. Now that most analysts covering this space appear to be expecting a recovery in online advertising spending in the months ahead, should investors consider investing where they spend their time online searching and shopping? It time for investors to put their money where their mouse is?
Such a discussion has to start with Google, the largest player in the online advertising space and the company which is expected to reap the greatest benefit from a rebound in online advertiser spending. Google’s stock traded below $400 in the days leading up to its second quarter earnings report in July where the company reported revenues grew at the slowest pace in the company’s history. Google’s performance in Q2 was widely understood to be hampered by a pullback in online ad spending. Google CEO Eric Schmidt’s commentary in the post report conference call suggested that online ad spending had likely stabilized, but the lower revenue growth and year over year average cost-per-click declines left few ready to call a recovery.
Fast forward two months and we have Google’s stock hitting new 52 week highs almost daily and quickly approaching the $500 level again as analysts almost universally are now expecting Google’s Q3 report to portend a recovery in online advertising. Some of this goodwill and expectation that a recovery in online advertising will lead the economic cycle has started to flow to Yahoo (YHOO) as well, which has just been upgraded by several analysts.
Since Google’s stock is now up substantially from the lows leading up to its Q2 report and Yahoo is up about 20% off its lows from the summer, have investors who failed to jump on the bandwagon missed the parade entirely? While we would never bet against rocket scientists who work and play at the Googleplex, the large increase in Google’s stock price in such a short time makes us wonder if much of this recovery is already priced in and whether investors might do well to look a little farther down the food chain to see what other companies might get a boost from an ad spend recovery. Given our belief that any turnaround in online ad spending will be experienced first and best within the Google ecosystem, we decided to take a look at the publicly traded companies who most benefit when Google’s advertisers begin to spend more on advertising.
These companies are part of the Google “Search Partners” network and they have guaranteed minimum revenue share payments based on their achieving defined performance terms, such as number of search queries or advertisements displayed. Thus, a rising tide in ad spending at Google should raise all of the Google “Search Partner” ships who have a significant part of their revenues/earnings tied to the Google network.
The largest Google Network partners include Time Warner’s (TWX) AOL and Interactive’s (IACI) Ask.com. One could surmise that each company’s stock will perform well over the next few months as we should expect to see gains in revenue for each as a result of advertisers choosing to spend more with Google. The difficulty with such a conclusion is the same with both companies though - both AOL and Ask.com are just subsidiaries of much larger companies that have exposure to many different revenue streams that are impacted by a wide variety of factors. Until TWX completes the spin off of AOL to its shareholders and when/if IACI decides to do the same with Ask.com, any stock price increase from an uptick in spending on the Google network may be muted due to happenings with one or more of the many other movable parts.
We think investors might do well to take a look at some of the smaller Google Network partners, given that their results are so heavily driven by Google Search Network revenue.
InfoSpace (INSP) derives the majority of its revenue from the Google Search Network and a full 95% of their Q2 2009 revenue was derived from a combination of Google and Yahoo search network payments. With no debt and $200 million in cash on the books, INSP’s is currently trading only 12% higher than it was when Google reported in July, thus its returns are somewhat less than the +20% gains we have seen for Google, Yahoo and even Interactive.
Answers.com (ANSW) is another small cap company that should see a benefit from an uptick in advertiser’s spending through Google. Answers derives nearly all its revenue from Google including 91% of the company’s total revenue during the most recently reported quarter. Like InfoSpace, Answers has no debt, a significant (relative to its $60 million market cap) cash hoard ($20 million) and its Wikianswers.com site appears to be growing rapidly. Additionally, Answers.com stock is actually trading about 10% below where it was trading when Google last reported quarterly results, so there could be some nice upside of the company experiences strong growth in its Google driven revenues.
The smallest of the Google Search Network companies that should benefit is a microcap company called Vertro (VTRO) that offers the ALOT.com home page, toolbar and desktop search products. Like the other small cap names mentioned, VTRO has no debt and a nice cash position ($8 million) relative to its market cap ($18 million). VTRO could be among the biggest beneficiaries of an uptick in Google advertiser rates because it is so small, the company derives more than 95% of its revenue from Google and it has been experiencing significant internal growth in the number of searches across its network.
VTRO actually outpaces Answers.com in terms of Google Search Network revenue earned with trailing twelve month revenue in excess of $30 million. Even more importantly, VTRO management recently reported that their ALOT.com home page service has experienced a 60% increase in unique users since the end of June, they now have over 5 million active toolbar users and that searches across their entire network increased from 58 million in June to 72.4 million for the month ended August 31. The combination of a significant increase in the number of users of Vertro’s search services combined with improving cost-per-click rates within the Google provided paid search results could make Vertro the biggest “bang for your buck” among stocks that will get a boost from increased advertising spend across the Google Search Partner Network, if you can stomach the volatility that goes with microcap investments.
In summary, we believe it is quite likely that we are on the verge of a secular trend towards higher online advertising spend. As such, investors would be well served to “put their money where their mouse is” and feel that Google and its search partners will likely be the biggest beneficiaries.
Such a discussion has to start with Google, the largest player in the online advertising space and the company which is expected to reap the greatest benefit from a rebound in online advertiser spending. Google’s stock traded below $400 in the days leading up to its second quarter earnings report in July where the company reported revenues grew at the slowest pace in the company’s history. Google’s performance in Q2 was widely understood to be hampered by a pullback in online ad spending. Google CEO Eric Schmidt’s commentary in the post report conference call suggested that online ad spending had likely stabilized, but the lower revenue growth and year over year average cost-per-click declines left few ready to call a recovery.
Fast forward two months and we have Google’s stock hitting new 52 week highs almost daily and quickly approaching the $500 level again as analysts almost universally are now expecting Google’s Q3 report to portend a recovery in online advertising. Some of this goodwill and expectation that a recovery in online advertising will lead the economic cycle has started to flow to Yahoo (YHOO) as well, which has just been upgraded by several analysts.
Since Google’s stock is now up substantially from the lows leading up to its Q2 report and Yahoo is up about 20% off its lows from the summer, have investors who failed to jump on the bandwagon missed the parade entirely? While we would never bet against rocket scientists who work and play at the Googleplex, the large increase in Google’s stock price in such a short time makes us wonder if much of this recovery is already priced in and whether investors might do well to look a little farther down the food chain to see what other companies might get a boost from an ad spend recovery. Given our belief that any turnaround in online ad spending will be experienced first and best within the Google ecosystem, we decided to take a look at the publicly traded companies who most benefit when Google’s advertisers begin to spend more on advertising.
These companies are part of the Google “Search Partners” network and they have guaranteed minimum revenue share payments based on their achieving defined performance terms, such as number of search queries or advertisements displayed. Thus, a rising tide in ad spending at Google should raise all of the Google “Search Partner” ships who have a significant part of their revenues/earnings tied to the Google network.
The largest Google Network partners include Time Warner’s (TWX) AOL and Interactive’s (IACI) Ask.com. One could surmise that each company’s stock will perform well over the next few months as we should expect to see gains in revenue for each as a result of advertisers choosing to spend more with Google. The difficulty with such a conclusion is the same with both companies though - both AOL and Ask.com are just subsidiaries of much larger companies that have exposure to many different revenue streams that are impacted by a wide variety of factors. Until TWX completes the spin off of AOL to its shareholders and when/if IACI decides to do the same with Ask.com, any stock price increase from an uptick in spending on the Google network may be muted due to happenings with one or more of the many other movable parts.
We think investors might do well to take a look at some of the smaller Google Network partners, given that their results are so heavily driven by Google Search Network revenue.
InfoSpace (INSP) derives the majority of its revenue from the Google Search Network and a full 95% of their Q2 2009 revenue was derived from a combination of Google and Yahoo search network payments. With no debt and $200 million in cash on the books, INSP’s is currently trading only 12% higher than it was when Google reported in July, thus its returns are somewhat less than the +20% gains we have seen for Google, Yahoo and even Interactive.
Answers.com (ANSW) is another small cap company that should see a benefit from an uptick in advertiser’s spending through Google. Answers derives nearly all its revenue from Google including 91% of the company’s total revenue during the most recently reported quarter. Like InfoSpace, Answers has no debt, a significant (relative to its $60 million market cap) cash hoard ($20 million) and its Wikianswers.com site appears to be growing rapidly. Additionally, Answers.com stock is actually trading about 10% below where it was trading when Google last reported quarterly results, so there could be some nice upside of the company experiences strong growth in its Google driven revenues.
The smallest of the Google Search Network companies that should benefit is a microcap company called Vertro (VTRO) that offers the ALOT.com home page, toolbar and desktop search products. Like the other small cap names mentioned, VTRO has no debt and a nice cash position ($8 million) relative to its market cap ($18 million). VTRO could be among the biggest beneficiaries of an uptick in Google advertiser rates because it is so small, the company derives more than 95% of its revenue from Google and it has been experiencing significant internal growth in the number of searches across its network.
VTRO actually outpaces Answers.com in terms of Google Search Network revenue earned with trailing twelve month revenue in excess of $30 million. Even more importantly, VTRO management recently reported that their ALOT.com home page service has experienced a 60% increase in unique users since the end of June, they now have over 5 million active toolbar users and that searches across their entire network increased from 58 million in June to 72.4 million for the month ended August 31. The combination of a significant increase in the number of users of Vertro’s search services combined with improving cost-per-click rates within the Google provided paid search results could make Vertro the biggest “bang for your buck” among stocks that will get a boost from increased advertising spend across the Google Search Partner Network, if you can stomach the volatility that goes with microcap investments.
In summary, we believe it is quite likely that we are on the verge of a secular trend towards higher online advertising spend. As such, investors would be well served to “put their money where their mouse is” and feel that Google and its search partners will likely be the biggest beneficiaries.
October 23, 2008
Engaged Online Viewers Receptive to Advertising
According to a new study "Watching The Web: How Online Video Engages Audiences" conducted by Forrester Consulting for Veoh Networks, , not all online video viewers are equal when it comes to advertising. While some online video viewers still only "snack" on short clips, there exists a large audience of young, influential, engaged viewers who watch a great deal of long-form online video and pay attention to the brand messages delivered to them in online video environments.
The study found that Engaged Viewers (viewers who watch more than an hour of online video a week) make up nearly 40% of all online video viewers and watch nearly 75% of all online video. Of these Engaged Viewers, those who spend the most time consuming and sharing long-form content:
- Are more likely to watch videos all the way through
- Pay more attention to online video more than they do TV
- Interact with and rate the videos they watch more frequently
- Are twice as likely to recall in-video ads and post-rolls than non-Engaged Viewers
- Agree more readily that advertising is fair and helps pay for their free experience
- Consider banner ads and ads that come in between videos (mid-rolls) most effective
Steve Mitgang, CEO of Veoh Networks, opines "...online video viewing... will create many new opportunities for content providers and advertisers... advertisers (should) re-think their approaches to marketing... to captivate these valuable viewers as they drive online video into a mainstream entertainment medium."
The study found that online video viewing For Engaged Viewers is not a fad but rather a growing consumer habit:
- 61% of Engaged Viewers expect to spend significantly more time watching online video
- 13- to 24-year-olds make up only 15% of the online population, but represent more than
- 35% of Engaged online video viewers
- Engaged Viewers watch an average of 6 kinds of video content, from animation to TV shows to movie trailers, during the course of a month
The study further segmented Engaged Viewers into three sub-groups based on time spent watching video, types of videos watched, comfort level managing the video viewing experience, propensity to share videos, and amount of attention paid to online video compared to TV:
- Watchers, those who spend just over an hour watching video each week and don't engage the experience deeply by controlling playback or sharing videos
- Controllers, those younger viewers take an active role in controlling their video experiences and feel that online video is important to their lives
- Connectors, though just 7% of online viewers, consume 20% of all online video and do 42% of all online video sharing
The most desirable viewers - Connectors and Controllers - watch long-form video more often than Watchers do, so sites that offer a great deal of long-form video are the ideal places to reach them. Long-form video sites not only attract these viewers, but they also foster an environment that secures more viewer attention and engagement with advertising. Connectors are significantly more likely to notice brands and feel ads are useful when presented with products they are interested in.
As online video viewing matures, advertisers can take advantage of the unique opportunity to reach valuable Engaged Viewers by considering these findings, concludes the report:
- Engaged video viewers are more open to enjoying the advertising they watch giving marketers an opportunity to create ads that are as entertaining as the video clips they are paired with.
- Engaged video viewers are more involved in every aspect of the viewing experience, including the advertising.
- Engaged viewers respond to ad formats that don't intrude unfairly. Their preference for banner ads supports this. But banner ads can be supported by a comprehensive ad experience
- As more viewers spend more than an hour a week viewing online video, advertisers can match ads to viewers with long-form content, where the choice of programming defines the viewer
August 05, 2008
Who Has Time For All This Video Content?
WHEN YOUTUBE LAUNCHED, THE TOOLS enabled everyone to become a producer of video content. Until recently, the production quality of most video online has been entertaining at best but not something a brand wants to regularly sponsor. Now, it seems that every day the phone rings with yet another content producer with stellar broadcast production credentials asking for an opportunity to pitch. It's almost as if all of Hollywood has become unemployed and is looking to peddle their ideas for a video series. If it's not the producers calling me, the indie video sites jump in to fill the time void. There's another Funny Or Die, YuMe or strike.tv eager to partner with brands to bring great, original, and not-for-the-faint-of-marketer-heart content to the world. Since I have a day job that encompasses all of digital media, the majority of online video producer and upstart Web site calls go unanswered or do not receive their just due.
Imagine if the TV world had this issue. Clearly, they do not, because (1) lots of money is spent annually on integrations and (2) there are a finite number of shows being produced, most of which are continuations of known programming. Furthermore, agencies and marketers have become experts in reviewing and selecting scripts where a brand's insertion will most often appear to be natural or organic, hopefully not detracting from the show's entertainment value. Typically, there is a resident expert who takes on this arduous task. In most, if not all, cases agencies have yet to bring these experts into the online video world, where we typically lack content guidelines, adequate projections on delivery performance (which impacts pricing), a content ratings system to know if the content is suitable for marketers, and little opportunity for retribution should the program not achieve moderate success.
As a first step, however, we need to define success. The challenge resides in measurement options being limited and lacking visibility. There are three measures that are easy to capture without incurring incremental cost -- total streams, average viewing duration, and click-through data from clickable placement in or around the content -- assuming the program is set up to track this data. Notably missing are brand metrics, buzz/sentiment metrics and demographic/behavioral audience composition, which are more common currency for digital measurement these days and often come with added expense. There are likely to be others, but these are top of mind. It is safe to assume that success will be achieved if the show hits a "feel good" number of streams/views.
How then does an industry with unlimited content address this unprecedented issue? One option is to hire a few of the most talented content creators. Being a part of a media agency, that would be somewhat novel but not entirely unheard of. Would the agency then offer a production studio solution for branded or unbranded content that needs to find a home via Web syndication? Or should another video Web site be created, launched and wholly owned by the agency? If holding companies can own ad networks and other technologies, then why not own a video Web site or two (or 100)? Another option is to stick to business as usual, with reps and vendors calling on anyone who will pick up the phone or email them back. That, however, seems like a lot of time invested with low return on that investment. The fall-back option is to create a gateway to funnel this information through a resident online video content expert, adding to the agency's wide berth of specialized services.
No matter which road is taken, something needs to be done to ensure indie video content online is properly considered alongside other online video options. Otherwise, it will be the same network Web sites that will continue to command share of wallet. The result will be their ability to maintain high prices relative to other quality online video options due to lack of real competition and supply constraints
Imagine if the TV world had this issue. Clearly, they do not, because (1) lots of money is spent annually on integrations and (2) there are a finite number of shows being produced, most of which are continuations of known programming. Furthermore, agencies and marketers have become experts in reviewing and selecting scripts where a brand's insertion will most often appear to be natural or organic, hopefully not detracting from the show's entertainment value. Typically, there is a resident expert who takes on this arduous task. In most, if not all, cases agencies have yet to bring these experts into the online video world, where we typically lack content guidelines, adequate projections on delivery performance (which impacts pricing), a content ratings system to know if the content is suitable for marketers, and little opportunity for retribution should the program not achieve moderate success.
As a first step, however, we need to define success. The challenge resides in measurement options being limited and lacking visibility. There are three measures that are easy to capture without incurring incremental cost -- total streams, average viewing duration, and click-through data from clickable placement in or around the content -- assuming the program is set up to track this data. Notably missing are brand metrics, buzz/sentiment metrics and demographic/behavioral audience composition, which are more common currency for digital measurement these days and often come with added expense. There are likely to be others, but these are top of mind. It is safe to assume that success will be achieved if the show hits a "feel good" number of streams/views.
How then does an industry with unlimited content address this unprecedented issue? One option is to hire a few of the most talented content creators. Being a part of a media agency, that would be somewhat novel but not entirely unheard of. Would the agency then offer a production studio solution for branded or unbranded content that needs to find a home via Web syndication? Or should another video Web site be created, launched and wholly owned by the agency? If holding companies can own ad networks and other technologies, then why not own a video Web site or two (or 100)? Another option is to stick to business as usual, with reps and vendors calling on anyone who will pick up the phone or email them back. That, however, seems like a lot of time invested with low return on that investment. The fall-back option is to create a gateway to funnel this information through a resident online video content expert, adding to the agency's wide berth of specialized services.
No matter which road is taken, something needs to be done to ensure indie video content online is properly considered alongside other online video options. Otherwise, it will be the same network Web sites that will continue to command share of wallet. The result will be their ability to maintain high prices relative to other quality online video options due to lack of real competition and supply constraints
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