WILLIAMSTOWN, Mass., Oct. 23, 2001 — Newspapers seeking long-term profit from the Web should focus on registering and controlling the online accounts of their users, rather than ceding those relationships to new-media competitors, according to a just-completed online readership study. They should work with vendors that enable one-click, single sign-on purchasing at a networked alliance of websites, the study adds.”Newspapers, as they adopt a subscription or registration model, have the opportunity not only to capture that all-important subscriber/billing relationship, but also to achieve the industry’s elusive goal of creating a nationwide databank of customers,” concludes a report by Borrell & Associates Inc. released last week.
The report suggests that an alliance of newspaper sites, using single sign-on, one-account, one-registration technology known as an “e-wallet”, could help newspapers to (a) control their own billing and end-user relationships, (b) build a uniform transaction standard for millions of local consumers and (c) create the industry’s elusive goal of a nationwide service for customers who have control of their own “persona.”
The 70-page report is based upon extensive interviews with news industry online executives, analysis of news and non-news websites which charge for content and responses from 1,895 recipients of a Belden Associates Inc. survey – a 13.3-percent response rate of 14,300 panelists queried. The respondents, surveyed Sept. 23-29, answered questions about their information-viewing habits, and about their willingness to register at websites and pay for information.
The study said a simultaneous poll of 120 newspaper publishers and groups by Borrell found 24% expressed high interest in the topic of erecting registration tollgates on their websites, a dozen have done so, and 350 more are thinking about doing the same thing.
Because the survey results showed 75% of consumers are willing to enter personal information for access to a free website, the Borrell report recommends that newspapers adopt an approach similar to The New York Times of requiring all users to register for access to most services. The report also recommends that newspaper websites (a) not charge for generic web access and (b) consider charging for premium “niche” content instead. The report finds a monthly membership fee of between $1 and $3 to access premium content may be acceptable to consumers.
The full report, “The Free vs. Paid Debate: Newspapers must decide between short-term ROI and long-term goals; status, challenges and directions for 2001-2005,” is available for $595.00 from Borrell at: http://www.borrellassociates.com/research.htm.
“When newspapers rushed to secure their place on the Web in the mid-1990s they lost a core strength: the billing relationship with their readers,” says the Borrell study. “While newspapers provided the content, the major ISP’s wound up ‘owning’ the readers and redirecting eyeballs … It is no wonder that the top-two news websites are owned by AOL/Time Warner (CNN.com) and Microsoft (MSNBC.com) … the bill-paying relationship is no small matter.”
The report recalls the 1995 effort by 10 major U.S. newspaper chains, the New Century Network, to create a “Travel Pass.” Under the e-wallet concept, the report says, users register account and demographic information and choose an ID that rests in a home-base databank. Whenever the user visits a site that participates in the e-wallet program, the user merely needs to enter their name and password to “enter” or “buy.”
The report cites two vendors — including Clickshare Service Corp. and QPass Inc. — as having pursued and gained some traction in the newspaper industry with such shared-authentication networks. It says the big difference is price and that QPass has focused on the largest newspapers, while Clickshare’s “rapidly-growing client list includes a diverse group.”
Qpass’ three-party model requires users to register their information in a central databank controlled by QPass, analogous to American Express or Discover cards. Clickshare’s four-party model vests registration in multiple databases among the multiple independent service providers, analogous to Visa or MasterCard, with their association of thousands of bankcard issuers.
Other recommendations of the report:
— Choose an outside vendor that provides scalability and registration portability because building an in-house registration system will likely not scale in the long term.
— Don’t charge for access to the basic website yet. There is no evidence that free content on websites cannibalizes print subscribership. Borrell found that 76% of site users are already print subscribers or are outside the market and can’t buy the print product. There is also strong data to suggest that websites actually sell newspapers.
— Find a local community’s content niches (sports, arts, tourism, history, recreation, etc.) and mine them because the average newspaper website gets one-third of its audience from outside the newspaper’s circulation area.
— Be patient and plan for the long term. Slightly more than half of U.S. households are online and broadband will not reach one-third household penetration for as long as another four years.
About Borrell & Associates
Clickshare allows a consumer to have one account at a most-trusted “infomediary”, and to purchase information from across the web without having to repeatedly enter credit card information, register repeatedly or surrender personal information. The result is one account, one ID, one-bill simplicity.
Clickshare’s investors include Sawgrass Seacoast Investors LLC, the University of Massachusetts and private individuals, including founding executives of PeopleSoft Inc., and the former publisher of the Philadelphia Inquirer and Chicago Sun-Times. Its executives, board and advisors include veterans of the publishing and credit-card industries.
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