To pay or not to pay…

We have entered a troubling age for journalism. With the financial crisis ever present, companies are forced to slash budgets in order to save money. This means cash spent on advertising, a major source of income for newspapers, is dramatically reduced, with the result that many media titles, no longer subsidised by this revenue, begin to hemorrhage money and make losses. Thus, when we speak of the “financial crisis” that began in 2007, we can also talk of a consequent “media crisis”.

Titles are forced to cut back on staff and expenses, or worse. The Observer, for example, the world’s oldest Sunday newspaper, was considered for closure by its owners, Guardian Media Group (GMG), just this summer. Titles must now fight even harder to build up and sustain readerships in order to make money and survive, which in a sense is positive; they must become more innovative and dynamic, potentially resulting in a better, or at least more original, distinctive media, as opposed to a group of competing titles rehashing the same content in subtly different ways. Just as important, however, as a strong brand and readership, is learning to make money from these things. The media must somehow become profitable in order to survive.

So far, we have seen two innovative (there’s that word again) and highly ambitious proposals. This August, media tycoon Rupert Murdoch, on seeing his media organisation News Corporation suffer a financial beating at the hands of the recession, pledged to start charging for content on all of his title websites (including the News of the World, the Sun and the Times) by summer 2010. Murdoch hopes to make online news profitable by relying on the allure of the titles themselves (the Sun, for example, which sells better than any of its national rivals, is a formidable brand name) and the strength of originality; granting access to celebrity exclusives, reporters’ scoops and popular columnists could persuade readers to pay extra for “premium content” not provided by other sources.

The other approach, announced at the end of last week, is as far removed from Murdoch’s strategy as he, or anyone else, could imagine. The London Evening Standard, owned by another business mogul of a different mould, Russian Alexander Lebedev, will soon ditch its 50p cover price altogether, distributing the newspaper for free, but with an increased circulation, thus potentially a greater readership and increased appeal for advertisers. With two opposing strategies at hand, is there a clear way to revive the media’s fortunes?

Unfortunately, though both are somewhat radical, they are also both gambles. Lebedev’s method is promising; from 12th October, his well-established London newspaper will not only be completely free for all, but also have a bolstered circulation, from roughly 250, 000 to 600, 000. It is probable-and presumably Lebedev’s ultimate aim-that the “Standard” will see a large increase in readers, and advertisers will respond accordingly, investing much precious revenue into the title once it has a bigger audience, and thus more influence on consumers.

Yet there are also pitfalls here. The newspaper no longer has paying customers, and thus the £15m it used to gain from these each year will instantly vanish. Furthermore, its reputation may suffer once it switches to “freesheet” status, being these are often associated with low quality journalism by the public. This could repel some of its traditional readership and even lose readers. What makes Lebedev’s move such a gamble, however, is that advertising is still in a slump, offering slim pickings; a bolstered readership may look attractive to advertisers, but whether they want to, or can afford to, invest more is uncertain. The newspaper is losing one source of revenue, may not definitely attract more readers, and advertising revenue as a form of funding may be something of the past.

Murdoch and News Corporation also have an uphill struggle on their hands; merely perusing comments on newspaper websites leaves the impression that a large proportion of consumers balk at the idea of paying for online news, and it may be the case that, rather than paying for exclusive content at say, the Sun, readers will simply seek their news, gossip, or comment elsewhere.Yet if Murdoch did persuade readers to pay online, and other media outfits followed suit in charging for content, a valuable new form of revenue would be established.

These two experiments may or may not succeed. More importantly, they will give an insight into whether paying readers or non-paying consumers (of advertising) are more valuable, and how to draw them in. We may find that Advertising vs. Payment is too narrow an argument; a variety of methods, used simultaneously, could be more effective.