Putting value in content

24 Feb 2011

With the rise of tablets and social media, many companies are looking at new business models for digital media. LAURA O’BRIEN takes a look at the current challenges for old and new media.

Rupert Murdoch has put his faith and his money in distributing digital media on tablet computers. Investing a reported $30m into his new iPad-only newspaper The Daily, and hiring 100 journalists to write for it, the News Corp CEO seems determined to turn things around for the troubled media industry.

“With The Daily, we aim to make the business of news gathering and editing viable again,” said Murdoch at the launch. “We are entering a valuable age, a digital renaissance.”

While The Daily is the first iPad-only newspaper, it’s not the first publication to hit tablet computers. Wired, The New York Post, Vanity Fair and Time have apps for the device, with the RTÉ Guide coming to the iPad next month.

It’s not just tablets that are seeing a boost in media interest. Web news distribution is still growing, with AOL acquiring many professional blogs, most notably The Huffington Post, for $315m in early February.

Menno van Doorn, research director of new technologies at Sogeti, and publisher of Me the Media, doesn’t find the growing digital media world surprising.

“When you look at what has happened to the music industry, the digital revolution in other industries hardly comes as a surprise,” said van Doorn.

“Maybe book, magazine or newspaper companies think they are different, but they are not. Consumers demand digital products and now they are moving,” he said.

Distributing news online isn’t exactly a new thing, but it is becoming much bigger than before, said Muirne Laffan, executive director of RTÉ Publishing.

“Certainly the impact now is more significant, but media companies have all been involved in either acquisitions or developing services since as far back as the mid-Nineties,” said Laffan.

“It is becoming potentially more mainstream, in that a lot of the services have reached critical mass.”

The rise of social networking sites such as Twitter and Facebook has had a huge impact on how news is shared, with new mobile technologies being released to allow users catch up on news anywhere.

Traditional media’s future

If digital media is having such a huge impact, what is the future of traditional forms of media, such as physical newspapers and publications?

A recent report from the Audit Bureau of Circulations showed that circulation figures for newspapers were down in general, not to mention the appointment of a receiver to the Sunday Tribune. Tuesday saw the paper announce that 43 jobs are to go because a new buyer has not been found for the Sunday Tribune.

However, van Doorn doubts the rise in digital media will spell the end for older forms of media. That said, he believes they need to reinvent themselves in order to remain competitive.

“If there is still room for movie theatres, there is room for newspapers and physical books,” he said. “Movie theatres needed to reinvent themselves. In the old days, people went to the theatre to see the news. When television came, the role of movie theatres changed in direction of high quality content and experience. Now they are moving towards 3D.”

Laffan agrees there is still room for traditional and digital media, but believes media companies today need to be both. Although moving to new media isn’t easy.

“I think making the leap to new media is challenging in terms of work practices and commercial models. What it really requires is organisational planning, training and tools, because people have to think differently,” she said.

Regardless of the medium, Laffan believes content is still king.

“What’s really important is the content, whether you’re a TV company, newspaper, magazine publisher or a news organisation. It’s really about how you deliver the content best for the audience you’re trying to engage.”

New media business model

One of the biggest challenges to the media industry now is maintaining a viable business model. The web is full of free news content, from media companies to bloggers, and this has enabled the revolution of how people consume, engage with and share media.

Murdoch has looked into methods of monetising news content, be it through paywalls on The Times‘ website through the subscription model of The Daily. Indeed, much of the business model for mobile apps has involved getting consumers to pay for information or services.

But after years of free information online, should these price barriers be placed in front of news content now? And will people be receptive to this?

“The first signs are that people do pay for content but it is too early to say how sustainable the new closed model of apps is,” said van Doorn.

“What is free? Browsing for hours to find the content you need? Subscriptions are acceptable as long as you bring value for money.

“The iPad and the Kindle are much closer to the user experience of reading than the computer. You hold it in your hand and you can touch and feel it. It comes closer and closer.

“The future of media is for companies that can think beyond the old products. The tricky question is whether apps will survive or whether we all turn to HTML5 or another technology. But you still need to invest in the new platforms to build experience,” he said.

Spotlight on subscription model

The subscription model has become a huge focus recently, with Apple releasing the terms of its new service. For every subscription bought within the iTunes Store, 30pc of the charge will go to Apple. Many content creators felt that this was too much and were unhappy with some of the restriction placed on it.

Google revealed its own subscription service, One Pass, in response, stating it would only take 10pc of sales. Both services have only been recently announced, so it will be interesting to see how much or how little this will change for media distributors implementing digital subscriptions later on.

Advertising spending is also a challenge for the media. With the reach of global news sites, they can offer advertising to an Irish audience. In the online world, the borders are broken and everyone is a competitor.

However, in spite of these issues, Laffan believes new media is a positive thing, as opposed to a threat.

“It’s an opportunity and I think people need to get onboard. Change is hard, but I do think it is an opportunity,” she said. “But it does require imagination and it requires a different mindset and I’m sure some people may be afraid of change.

“In order to survive and to succeed, we need to adopt the new opportunities and I honestly believe that, if people do that, they will be happier and hopefully more assured of success in the future,” said Laffan.

For the past two years, Silicon Republic has run a campaign to highlight the imperative of creating the digital infrastructure and services upon which the success of our economy depends.

The website for Digital 21 provides a forum for all those interested in accelerating the development of Ireland’s Digital Economy.