@ SIIA: Looking For The Right Media Business Model? More Ralph Lauren Than NYT
This story was written by David Kaplan.
Uncertainty and apprehension about the future are the underlying emotions at the morning sessions at the SIIA Industry Summit.In her opening keynote, Marjorie Scardino, CEO of Pearson (NYSE: PSO), which publishes The Economist and FT, talked about traditional media companies having to look beyond content creation as their reason for existing. As for how to support that content, Gordon Crovitz, the former publisher of the Wall Street Journal, noted during the audience Q&A the FT's price hike and its decision to offer more free web content while retaining a subscription wall. He asked Scardino whether media will be increasingly funded by subscription revs or advertising.
The Ralph Lauren model: Scardini responded, saying essentially, if you charge enough for it, they will pay. Scardino: "Even with my failed newspaper in Savannah, we knew you had to balance subscriptions and ads. The Economist has that 50/50 balance. It's easier for a magazine, especially a business one. But with newspapers, we've been able to price it too low for too long. I mean, a newspaper costs less than the price of a latte. We've pushed the price up at the FT and we found that our readership went up. It's the Ralph Lauren affectIf you charge for higher for it, people will think it's really good." She went on to say that she refined that view earlier in her career as an attorney. But when clients discovered that she wasn't worth the high rates she was charging them, she had to find another line of work.
The second morning panel continued to explore the right path for old media.
General print is dead: Michael Wolff, Vanity Fair columnist and founder of Newser, grabbed the question "what is the best model for print media companies?" and ran with it, offering an extended riff on the woes of the New York Times and print in general. "What's the best model? It's certainly not the NYT. Traditional media organizations, general interest print organizations are finished. They're done. If this takes another week or a year or 18 months, this is inevitable. We are living in historic times. The question should be, How far do you have to move? You have to move all the way. Google (NSDQ: GOOG) has established a new model. They don't create or pay for content. The thing we've built our businesses around, they don't do. They have monopolized the primary revenue stream, which is advertising. The question is how can we pay lessor really, nothing at allfor content? Newser has no content costs. It's mind-boggling that you can create a high caliber business with other people's content. It's all based on the fundamental notion that we are all connected to each other, we all link to each other."
Vivek Shah, group digital president, new business unit of Time Inc: "You need a great product, a quality product and a way to make money. There are way too many people knocking on marketers' doors asking them to fund product creation. News-gathering as a way to drive economic value is going away. On the internet, the advantage of having the news first doesn't matter. Once the news hits, everyone has it. As you go from PC-based web to mobile, the advertising format shrinks."
By David Kaplan