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Can Online Publications Survive Without Charging?

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    Matt Mitchell discusses new business models for content creators.

  • Duration 6:31
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And -- -- and readers are used to getting contents for free -- more more providers are looking to charge for their services.

And one of the most recent announcement we got on that front was from media past.

Which announced this week that it will be partnering with where pressed to 1130 million bloggers to start charging subscriptions.

For their services we have Matt Mitchell CEO and founder of media pat here with us -- -- more about this growing trend.

Now Matt.

-- -- It's sort of should be expected that's sites like the New York Times -- our sister company the Wall Street Journal -- -- newspapers like that would be charging for their services but the Blogosphere is one of those places that.

It might -- most consumers assume would be free at least for much longer period of time so how well what triggered this deal on your part.

Well -- some may be free but I think if you if you're just consider in the New York Times and the Wall Street Journal and and -- really taking into consideration.

The whole point of a long tail market and that's that.

You know the a lot of these blogs out there they may have smaller readership but those readers that are going to their site.

Really like their voice like what they have to say they like what they're writing about it may be near term maybe it's it's not niche but -- -- Like -- voice better than you know other site that they can go to so well the Wall Street Journal.

Have more math so they'll have.

A greater subscriber base.

That doesn't necessarily mean that they would have a higher conversion rate -- in the percentage of for users that come to the site.

Vs the ones that actually end up paying because that they have a loyal audience -- it's it's just that it's dishonest smaller scale.

And that makes sense and now.

As I said this is kind of indicative of a growing trend -- we -- obviously on parent company news -- a lot of its own contents his subscription.

Services New York Times announced just last week that it was gonna have less free content on its -- we have -- publishing.

Moving AL a lot of its newspapers in 52 markets -- subscription services as well.

Why is it that there are so many -- publications that are now moving into this model vs trying to make money off of advertising.

Well it just makes.

And right now on the -- model just hasn't hasn't worked on line somebody was writing about something I -- called.

The 99% theory and that's where a for publications with a print.

An online presence on average.

They're they're getting ten times the eyeballs on their website vs -- for an addition.

But it only representing 10% of their ad revenue up -- literally 1%.

Of of of of the per unit ad dollars -- making on their online user so it just it just doesn't the math just doesn't add up and it it.

It really never well almost that at any scale so just to give you an example our readers so for those are not you know involved in the Internet business.

Advertisers -- pay these web sites based on what they call on RPM right and that's revenue per thousand visits to the site.

So on average a an advertiser who will pay anywhere between two and eight dollars per thousand page -- right that's not very much right.

So.

I even think you know in contrast our average publisher media pass on the pages that they have designated a subscription pages using our technology.

They're seeing an average of a 140 dollar RPM.

So those are numbers that actually can end up working out -- -- actually you know pay.

Pay some home with the lighting bills that these publications are trying to do to cover right now.

But we sort of we keep getting -- recurring question is you know people talk about these sites that have so many.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Why -- the advertising -- is paying such low CPM.

Yeah I'm wondering why these publications can't get that -- that advertising revenue up when they have was such a high readership.

Well I think it's.

I think it's indicative you know all over the last ten or fifteen years.

Our brains -- sort of evolves on the Internet to ignore these ads right and so.

That that's proven in the advertising the advertisers numbers right they're not they're not clicking through they don't engage with the ads.

And so you know as such they're not -- they're not gonna pay much for them.

And we don't pay much for them you can't really.

Would turn a profit almost at any scale I think.

You know there's there's a lot of example even the the Huffington Post.

Who who who has over 35 million unique visitors to their site every month there's completely and historically ad based.

I think they said last year that they may turn a profit this year is if you if you can't turn a profit.

Off of 35.

Million unique visitors to your website a month then you know what what chance does a local newspaper stand.

But now I want to sort of take this from two perspectives one in terms of the readers.

You people just have to change the way that they look at the web now with -- with this growing trend you know people sort of expect.

Things for -- they have to change the way that they the way that they approached the -- in that respect them.

I don't know they need to change the way they they -- the web actually.

A study ever I read firm Nielsen was saying that.

If 40% of users surveyed.

Said that if they were asked to pay for something on a website that they would see you seek the contents elsewhere.

And you know that was written someone that is an added as a negative but to -- -- that's actually a positive because this.

This this whole subscription model or having something some elements of your website.

Paid.

It actually works when only one or 2% of your users -- our our our paid the rest can still be free is I mean yeah if if 60% -- that mean that would be you know I don't know the word -- beyond a Grand Slam.

-- publisher.

But but yeah I -- -- the -- I don't think they need to change there there attitude either they choose to pay or they don't but it actually shocking.

How few how low of a percentage of users need to pay.

Before the publisher significantly out yielding any advertising they were doing before and by the way it.

It can we we don't.

We don't say that advertisers -- publisher should completely stop advertising we think it's about finding.

That optimal mix of free and paid contact and and you need to do that because if only you know.

One to 5% of -- Users are paying you also want to you know monetize a little bit off on the rest of them and I guess you just answer -- -- systemic.

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