Last week Facebook surpassed Google as the most visited website in the United States. This is of particular interest to providers of online news providers (as well as my team for this project who are focusing on publishing) as they need to know where to focus advertising efforts. However, as important as volume is loyalty and it appears that Facebook is also winning on this front. Another recent study showed that not only does Facebook have more users, but they tend to be more loyal than Google. The article noted that “[a]mong the top five print media web sites for the week ending March 6, 2010, 78 percent of Facebook users returned to that site to consume more news, versus only 67 percent of Google News users making return visits.”
A key theme for our project is the organizational relationship between the physical and digital world. All publishers, whether they are publishing books, news, magazines or textbooks, are struggling with developing new revenue models as content is becoming digital. Online news providers are hit especially hard as users are used to having this service provided for free. News sites are concerned that if they start charging, people will just shift to another site. It appears however that most people who use the internet for their news are not particularly promiscuous with their sources. A recent article in the New York Times reported that “only 35 percent of the people who go online for news have a favorite site, and just 21 percent are more or less “monogamous,” relying primarily on a single Internet news source…but 57 percent of that audience relies on just two to five sites.” However, “just 7 percent of people said they would be willing to pay for access to any news site. And even among the people who are most loyal to a single site, only 19 percent said they would pay, rather than seek free news somewhere else.”
Online news providers are in a classic prisoner’s dilemma in terms of charging for content. However there could be interesting new advertising opportunities for these providers if they are able to take advantage of the fact that 57% of readers are visiting less than 5 sites, coupled with the loyalty associated with Facebook users. Regardless, it’s clear that the battle between Facebook and Google is heating up even more as each tries to prove that clicks originating from their site will ultimately prove more valuable.
Nice article Julie. I would not advocate for a fee based service strategy by online news providers if we are speaking about online news and not research papers/articles:
ReplyDelete1. Only 7 percent (based on your article) are willing to pay to access a news site. However how will they pay, Will it be like when they click an article, it will take them to a secure server to provide their transaction details? Or will it be like a subscription based service? If it is a subscription based service, a user is forced to pay even if he does not read any article. It will be cumbersome.
2. When the rest 93% who are not willing to pay leave to another free site (zero switching cost), the news provider loses a huge subscriber base. Then why an advertiser will place an ad at this news site?
The question is, when the news readers (royal or monogamous or other) are the subsidy side, who is the revenue side? The advertisers of course.
In that case the key is to retain a larger user base and next provide more value to advertisers for the money they spend to place an ad.
In this regard Consumer Data analytics comes into picture. Will Facebook partner with news sites/marketers to share user data? Then we run into the debate of who owns the data!