Two weeks ago The Independent launched its app for the iPhone. And it is likely to prove highly popular.

As long ago as the turn of the year Comscore estimated that nearly 80% of all UK iPhone owners used their browsers to access news and other information, a percentage four times higher than for all mobile phone users.

Worldwide, there are now over 1,500 news apps for the iPhone, with the number having increased by a staggering 253.6% in a mere 12 weeks.

For the moment many of these, such as the offering from The Independent, are free. But one respected media commentator, Frédéric Filloux, thinks apps could finally provide the means for news organisations to start charging for content.

And that could cause Rupert Murdoch to pay attention. The Australian born Chairman and CEO of News Corporation, the owner of innumerable newspapers and broadcast outlets around the world, was recently quoted as saying: “We intend to charge for all our news websites."

"Quality journalism is not cheap," he went on to argue. "The digital revolution has opened many new and inexpensive distribution channels, but it has not made content free.”

Unfortunately for Murdoch, as a report from PricewaterhouseCoopers demonstrates, few would agree. Most people think of both breaking news and general interest news as commodities, accessible online without charge and from innumerable sources.

Indeed, as one commentator on a recent Guardian blog on this topic suggested, “What the producers of news websites are about to do is try to persuade us to pay twice for their product; once to our ISPs and again to those who create news websites.”

To his or her way of thinking, they had already paid their ISP for the privilege of accessing the entirety of the worldwide web, and if The Guardian wanted money they “should probably be picking up the phone to BT and Virgin and talking about this. Because otherwise we will all do the obvious thing and get our news from the BBC, which we've already paid for once.”

Seductive as this argument might be, it poses two logically irreconcilable problems.

Firstly our Guardian commentator chose to ignore the reality that when you buy a car, even though you have paid for the vehicle, you do not then expect the dealer to pay for any oil and petrol you subsequently consume.

Secondly, as Martin Langeveld of the Nieman Journalism Lab makes clear, in the United States only 1.2% of all time online is spent looking at newspaper sites. The situation on this side of the pond is unlikely to be dissimilar.

 

Consequently, unless ISPs are prepared to pay Murdoch and other publishers out of their own profits, and in which case they could reasonably be required to make payment to each of the other sites where the remaining 98.8% of time online is spent, they would have but two options.

They could either erect a pay wall, and only permit news site access to those paying an additional subscription or, alternatively, they could increase costs to all, and so penalise everybody for the benefit of the few.

Suffice to say, neither option is likely to prove acceptable. And, as many commentators on the Guardian blog vehemently stressed, were they to be asked for money, they would simply go elsewhere.

Given that the Guardian website can arguably boast the most engaged audience of any British newspaper, and that those regularly commenting on their blogs are probably more engaged than most, the chances of Murdoch being able to charge for any of his considerably inferior online offerings can at best be described as remote.

Murdoch therefore, in common with virtually every other newspaper publisher, has a problem.

However, before explaining why Filloux thinks apps could be the answer, at least where mobiles are concerned, it should be said that publishers have nobody to blame but themselves.

Newspapers originally chose to allow free access to their content in the expectation that by delivering exceptionally large audiences, and the Guardian website has been known to attract up to 30 million unique visitors in a single month, they would be able to charge premium rates to advertisers.

Since then there has been a global recession, coupled with the discovery that for reasons noted elsewhere on this blog, display advertising on the internet is largely ineffectual.

As a result the vast majority of newspaper websites haemorrhage money, at a time when their printed products are also facing financial meltdown.

In the last 12 months Guardian News & Media, the owner of The Observer, The Guardian and guardian.co.uk, made an operating loss both on and offline of £36.8 million before exceptional items.

Nor can newspaper websites be expected to significantly improve their financial performance at any time in the future.

Indeed, looking at research undertaken by Ryan Chittum of the Columbia Journalism Review, a compelling argument can be made that newspaper websites are already getting more than their fair share of advertising revenue.

Consequently, even if total advertising expenditure increases once the economy improves, newspaper websites are unlikely to increase their share.

Chittum takes The New York Times by way of illustration. He estimates that last year online advertising brought in $150 million, with print advertising generating almost $860 million, or a multiple of 5.7 to 1 in favour of print.

By comparison, the paper’s website attracted 17.4 million visitors, or 15.8 times as many people as bought the newspaper. So even if you allow for research that suggests each printed copy has 2.2 readers, the reach of the website is still 7 times greater than the paper.

In other words, on the basis that advertisers should pay the same cost per thousand to reach readers online as they do in print, then simple maths says the website should be generating $6 billion, or seven times the revenue derived from the paper.

However Chittum offers another and arguably more compelling metric, namely the average reader each day spends more than 30 minutes with the paper. By comparison, the average visitor to the paper’s website does so for less than 30 minutes each month.

That means, according to Chittum’s calculations, the ratio of reading time spent with the paper versus online is 6.3 to one. Now equate that to the advertising revenue ratio of 5.7 to one in favour of the paper. Were advertisers to value readers as much for their depth of engagement, namely the time spent reading, as they do simply for their numbers, then online is already overpriced!

Regardless of whether any credence should be given to this supposition, publishers have certainly concluded that advertising is never likely to provide sufficient revenue to support their online aspirations.

Equally, and not withstanding Rupert Murdoch’s intentions, except in rare and specialist cases such as the Financial Times, any attempt by individual publishers to charge readers for online content is also likely to fail.

Having opened the proverbial stable door, the horse has long since bolted.

That may be the case online but where mobile differs, Filloux feels, is that even if people will not willingly pay to read the news, they could be persuaded to purchase the app that enables them to do so. Persuasively he presents a proposal that requires users to upgrade their app every 6 months, spending in total around £17.50 each year in the process.

Were all those accessing the Guardian website to have a smartphone, and were less than 10% of them to be persuaded to pay for their apps then, even after paying a 30% commission to the app stores, that operating loss of £36.8 million would be completely eliminated.

But even if every Guardian reader were to acquire a smartphone, that will never happen.

And part of the explanation is to be found in the radically different length of time readers give to the online and offline offerings.

To begin with the Norwegian researcher, Anne Mangen, recently made an interesting observation in the Journal of Research in Reading. “The process of reading on a screen,” she said, “involves so much physical manipulation of the computer that it interferes with our ability to focus on and appreciate what we're reading.”

Distracted by video advertisements, sound, the need to scroll and other unwanted and irrelevant intrusions, it is not surprising we find it difficult to focus on what we are reading. Print makes it easier to concentrate.

The other factor is that while offline we tend to settle down with our newspaper of choice, online we are more inclined to “chase the story”. Because other sources are never more than one or two clicks away, the online medium encourages reader promiscuity. When we come across an item of interest, we are likely to switch between sites for a second or even a third opinion. As a result, our time online will be shared amongst several sites.

Consequently, subscribing to a single news website, whether online or on mobile, is unlikely to appeal. We still will want access to multiple sources. And cost and convenience would both be critical considerations.

Some sites we would want to visit regularly, others only occasionally. Even with those we might visit every day, we would spend longer with some than others.

In practical terms the only sensible option is for a single and relatively inexpensive subscription to provide access to all credible news sites. Feasibly, in the United Kingdom, this could be arranged under the auspices of a trade body such as the NPA.

However, for such a scheme to have any chance of success it would need, for the reasons the Guardian commentator quoted earlier noted, to include the BBC website. Unsurprisingly, those who have already paid their license fee might take exception.

Conversely, even if the problem of the BBC could be overcome, a single subscription at a cost low enough to ensure widespread public acceptance is unlikely, when shared amongst all participants, to generate sufficient revenue to satisfy anybody.

The reality is online news, regardless of whether it is read on a computer or on a mobile phone, needs to identify new sources of finance, separate from those that newspapers have traditionally relied upon.

The conclusion that advertising revenue alone will never suffice is inescapable. And trying to impose a workable subscription or ‘cover price’ model appears impossible.

For once, even an operator as determined and astute as Rupert Murdoch may be forced to accept defeat.

As for The Independent app none would argue that, at the price, it represents exceptionally good value.



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