business model

Rita McGrath at Harvard Business Review has written a blog post on why she hates micropayments.  Micropayments are financial transactions involving very small sums of money (see Wikipedia). For online publishing, a small fee would allow you to view the content for a certain period of time or for a certain number of articles.

Personally, I'm not sold on the concept of micropayments for content which is probably why I was lured to Ms. McGrath's article in the first place.

The idea has been around a long time — at least since the mid-to-late 90s — with both supporters and detractors weighing in. Millions have been lost by companies seeking to capitalize on streams of micropayments, almost all of which eventually crashed and burned. Myself, when confronted with a request to chip in 99 cents for a one-time glimpse at an article or $2.99 for a week's worth (as some of my local newspapers are doing) — well, I close that window and go away.

The author of the article discusses further the importance for any payment system adopted to consider "how the payment link of customers' consumption chains fits into their total experience". Micropayment systems have a tall order in that they need to be seamless, transparent, and achieve inevitability. Even grimmer for publishers, it's not only the micropayment experience that needs to be improved but also the non-micropayment systems too.

For the past few years, I've paid a yearly subscription to the Wall Street Journal for the print publication and the online subscription. With my yearly renewal coming up very soon, I've decided to discontinue my online subscription to the WSJ. Why would I do that? There are some very basic reasons to why I'm dropping WSJ.com. I rarely find myself reading the online content of the WSJ. I either already read the stories in the print version of the WSJ or I have found myself already familiar with the news story because I read a similar story posted elsewhere online. Stopping by the WSJ.com, unlike CNN or FoxNews, never became a daily ritual for me.

This is one of those rare posts where I post an article about a change in the executive ranks of a CMS company. However, thanks to Jon Marks and his CMS gurus on Twitter list I've been a Twitter follower of this person.  Cheryl McKinnon is moving from Open Text to Nuexo as their Chief Marketing Officer. Nuxeo is one of the leading provider of open source Enterprise Content Management (ECM) software and services.

"Cheryl has a broad spectrum of ECM experience and is a superb marketer, strategist, trend spotter and evangelist, which makes her the perfect match for Nuxeo at this point in our growth," said CEO Eric Barroca. "Nuxeo's open source technology has a deep feature set and rich functionality that rivals far costlier, cumbersome and complex proprietary ECM systems. With 350+ customers, tens of thousand of downloads, nearly 65 percent of sales outside of France, and a strong demand from the North American market, Cheryl will be instrumental in helping Nuxeo evolve into a global force." [Source]

What's interesting to me is that one of the reasons Cheryl made the move to Nuxeo is because Nuxeo is an open source company. On her blog she writes:

So why Nuxeo, why now? The Open Source angle fascinated me. Could something really be Free? And Good? And have a nice UI? Maybe I really have drunk the Kool-Aid on the concepts of transparency, openness, flatness, simplification. Over the last 18 months I've been living and breathing the world of Enterprise 2.0 and what it means to be 'Social' inside business and strive for collaboration with customers and partners. It just all makes more sense now.

There has been a lot of articles written lately on Rupert Murdoch's latest comments regarding the need to charge online readers for the content they access to the business model The Wall Street Journal utilizes. Murdoch recently announced that additional News Corp's newspapers would be charging users access to their online content.

Speaking on a conference call as News Corporation announced a 47 percent slide in quarterly profits to $755 million, Murdoch said the current free access business model favored by most content providers was flawed.

"We are now in the midst of an epochal debate over the value of content and it is clear to many newspapers that the current model is malfunctioning," the News Corp. Chairman and CEO said.

"We have been at the forefront of that debate and you can confidently presume that we are leading the way in finding a model that maximizes revenues in return for our shareholders... The current days of the Internet will soon be over."

That pay for content business model that Murdoch wishes to spread to the the rest of the News Corp holdings has worked pretty well for the WSJ. Yearly subscription to WSJ.com is around $100 and the business news site recently introduced a cheaper micro-payment system. Deane Barker recently pointed out this story on his Gadgetopia blog. Barker points out that this business model could possibly work for additional online news sources, but Murdoch needs "another big player on the bandwagon, and he might kick the snowball off the hill. Gannet? New York Times Company?". Barker's point is that for News Corp's subscription model to work, access to news content needs to be limited at other places online too. In my opinion, a fight against free online content is a war that has already been lost.

As a subscriber to the WSJ in both print and online content, I do see paid online subscriptions working for niche news sites. I however have serious doubts that the model can work for general news. People are willing to pay and only pay for content they can get nowhere else online. The news articles found in the WSJ is unique content and since its also content of value, I'm willing to pay for it. However, reporting general news is a much different game. Even if the majority of newspapers started charging access to their content it only takes one newspaper willing to offer that same story for free to break the pay for access model.

The Pew Project for Excellence in Journalism does a fantastic job reporting annually on the state of the American news media.  The Pew Project's sixth edition for 2009 is no exception and provides lessons for all businesses on the importance of agility, adaptability, and competitiveness.  The following paragraph from the report's introduction says it all.

Journalism, deluded by its profitability and fearful of technology, let others outside the industry steal chance after chance online. By 2008, the industry had finally begun to get serious. Now the global recession has made that harder.

This is the sixth edition of our annual report on the State of the News Media in the United States.

It is also the bleakest.

I have friends in the businesses of radio, television, and newspaper.  I take no pleasure with seeing people's careers in jeopardy due to all the rapid changes taking place in their profession.  What is truly sad to me is that the owners and managers of traditional media seemed to deny for too long what was happening.  The event is even sadder because it seemed obvious to many of us that look at industries from an information technology perspective where things would be headed.