South Africa’s Internet sites have raked in huge readerships over the past few years. IOL recently claimed to have broken through the landmark one million reader threshold, with News24 not too far behind.
But these impressive figures haven’t done much to bolster the bottom line. Since the dotcom crash, online publishers – those that survived the fallout – have struggled to attract advertising in significant volumes. Although there are recent and encouraging signs the online advertising market is improving, publishers are now looking at other revenue streams – one being the highly controversial ‘paid-content’ model.
It’s billed as the next big step in the evolution of online publishing and could see dramatic changes to South Africa’s webscape. The strategy is causing bloody boardroom battles and raising the ire of early Internet pioneers who believe the web should remain free.
Sceptics have dubbed the strategy the ‘one percent solution” – the approximate percentage of paying readers online publishers around the world have so far managed to sign up. This nasty little percentage point may be small, but it shows just how determined online publishers are to start making serious money.
For online publishers in the US, closing off websites and making users pay is big business, taking many online publishers into areas where few have been before: profit.
South Africa’s online publishers have yet to start charging in any major way, but already, some have recently begun closing their doors by making overseas users pay and insisting on free registration for parts of their sites.
M-Web, News24 and the Mail & Guardian Online‘s initial foray into the paid-content arena targets overseas South African readers, who make up a significant chunk of these publications’ readerships – at times, almost as high as 30 percent.
These sites and others have joined a single network, pioneered by M-Web and called KuduClub, which allows an overseas reader to pay once and get access to a combined group of sites. More websites are tipped to join the network further down the line.
The rationale for charging and therefore limiting access to overseas readers is relatively simple: they are a hard sell to local advertisers and a source of back-breaking bandwidth costs. Add to this the fact that South African news is a valuable commodity overseas (given the shortage of it), then look at the spending power of the dollar and pound— and it all starts to make sense.
Yet the paid-content model is not entirely new to South Africa. Financial Mail was one of the early pioneers of the strategy, closing off its website to paying subscribers, local and international, some time ago.
FM Editor Caroline Southey’s logic was: why should she give the same content away for free on the web that her print magazine charges for? Offering the content for free on the web, she says, potentially damages the print product’s subscriber base because ‘people wouldn’t bother to subscribe if they could get it for free”. Fair point.
Many print publishers find themselves in this quandary. During the dotcom hysteria it didn’t matter if print publications lost readers to their online cousins, because the theory dictated that the advertising revenue would follow readers to the internet.
But of course this didn’t happen. Up till now, the lion’s share of advertising has largely stayed with print, television and radio. Publishers found their readers were migrating to a content medium that did not yet have a sound business model.
Closing off websites to paying subscribers may just be the solution to such fears from the print sector and, together with an upswing in online advertising, could see the end to online revenue woes.
Matthew Buckland is editor of the Mail & Guardian Online @ www.mg.co.za