Media’s Future: Retail

(This is a copy of my weekly newspaper column, distributed by Loose Wire Service)

By Jeremy Wagstaff

As you no doubt know, Rupert Murdoch has decided to put up a front door on the The Times’ website, demanding a modest toll for reading the online content.

Needless to say this has prompted laughter among those who think that content should be free. This is silly: Someone needs to pay for this stuff at some point. And no one else has any better ideas right now, so good luck to them, I say.

Though I would counsel them to be smarter about the way they make folk pay. Demanding a credit card in the age of PayPal, as well as lots of other personal data is old wave. If you want to make light of the pay wall, make scaling it easy and simple.

(Disclosure: I worked, and occasionally work, for another Murdoch company, The Wall Street Journal.)

But what disappoints me elsewhere is the limited range of options being discussed. For most the question is: how do I charge for what we do? This is not the right question—or at least not the only question.

Think about it. We’re in the midst of some of the most exciting viral experiments in the history of the world. Twitter, Facebook, Ning, flickr are all evidence of the extraordinary effects  of high viral coefficients—in other words, the ability to expand users exponentially.

Now we know all about this, especially those loyal readers of this humble column.

But news organizations seem to ignore it.

They have readers. Lots of them. But the only thing that they can think of using that network for is to give them ads, or make ‘em pay.

A better question, then, is to ask: How can we make use of this network?

Well, one way to would be to sell them stuff.

Some news websites do this. The UK’s Guardian website offers books, CDs, gardening tools and holidays to its readers. Not that you’d necessarily know this to look at the website. The “readers offers” link is buried way down on the right hand side of the home page.

In fact, I was surprised to find that the Guardian has a dozen self-contained mini websites, called verticals, that try to sell their readers stuff. From mortgages to hand trowels.

But I’m guessing this isn’t making a huge dent in the losses the company has been suffering. I couldn’t find anything in their annual report mentioning any of these websites or their contribution to the bottom line. (My apologies if I missed it.)

To me this is an opportunity lost.

Not least because the Guardian, as many English-language newspapers, are developing huge markets overseas. Of the main British newspapers, for example, more than half their traffic comes from overseas, according to Alexa data. For the Guardian, Telegraph, Times and Independent, a whopping two thirds of their readers are outside the UK.

The Guardian website has a quarter its readers from the U.S. For the Times it’s more than 30%. Even the Daily Mail, not known for its global view, has more than a third of its readers in the U.S.

These foreign-based readers are huge opportunities missed. Not for advertising, but for selling them stuff. After all, if people go there to read stuff, wouldn’t they also be interested in buying stuff?

There are signs that this is the case. The Guardian Bookshop, for example, delivers all over the world, and has more traffic from outside the UK (55%) than from within it, with the United States accounting for 17% of visitors.

But the actual volume of traffic is still tiny for these verticals, suggesting that they’re not really part of the Guardian vision of its future. Still, at least it’s trying. I couldn’t much except wine for sale on the Times’ homepage, and nothing on the Daily Mail’s.

To me it’s obvious that if you’ve got an audience you try to sell them stuff. Especially if you’re not charging them for what they are there to see. And ads aren’t filling the coffers. So somehow you’ve got to sell them something else. And if your audience is overseas then that’s a clue about what they might not be able to get where they’re accessing your site from.

Books is an obvious one. Food is another. More than 10% of Brits live overseas, so it’s fair to assume that a fair few of them miss their PG Tips and bangers. Indeed, there are dozens of websites catering to just that.

But of course it’s expensive. At one website I visited $20 worth of chutney will cost you $60 to ship to Singapore, for example. And many won’t ship to far-flung places that aren’t the U.S.

Which is where we come back to the network thing. Newspapers still don’t really understand that they have a readymade community in front of them—defined by what they want to read. So while I may not be willing to pay twice again to ship the chutney, I might be willing to split the shipping cost with others living nearby.

But whereas I may not be willing to take that risk with people I’ve met on eBay or a porn site, I might be more inclined to do so if they’re the kind of people who read the same paper as I. So it’s both common sense and good business sense for The Guardian, say, to leverage its existing network of readers and to use the data it has to make it easy for that community to make those kinds of connections.

The readers get their chutney at a reasonable cost, the paper gets a cut of the sale.

In short, a newspaper needs to think of itself as a shop. You may go in for one thing, but you may come out having bought something else. Indeed, online shops have already figured this out.

Take Net-a-porter for example. It’s a fashion clothing e-tailer, run by a woman who was a journalist and who wanted to be a magazine editor. Instead Natalie Massenet set up an online shop, but which is also a magazine.

A recent article (in The Guardian, ironically) quotes her as saying: “I hadn’t walked away from being editor-in-chief of a magazine – I’d just created a magazine for the 21st century instead, a hybrid between a store and a magazine that was delivered digitally.”

In other words, Net-a-porter goes at it the other way round: It’s a retailer that also informs. Newspapers could be informers who also retail. Of course fashion is relatively easy, and the road is littered with possible conflicts of interest. But probably fewer than the sponsored editorials we’re starting to see even among serious broadsheets.

There’s nothing wrong with trying to sell your readers something, if you feel that something reflects your brand and your commitment to quality. Indeed, your readers may thank you for it. The power of the network, after all, isn’t just about size: It’s about trust.