I have often made the observation that for the business of media to work well commercially, there has to be a link between popular success and commercial reward.
One of the great frustrations of the internet has been that this is, largely, no longer true: even staggeringly popular sites like MailOnline (117m monthly unique users) earn pitiful revenues (£20m for the half year to March 2013).
This is partly to do with the internet, the changed rules of the game which produce perverse outcomes all too often, and about which I have written much.
But it’s also to do with the tactics many of the media players have adopted in the game.
Despite years of failure, despite other winners clearly emerging, despite years of data and obvious simple logic which show it can’t ever work, the strategy of many media brands has been to treat popularity as an proxy for commercial success, whatever it costs. Earning money, if it puts consumption figures at risk, is deemed too risky to try.
Even in the old world, though, there were trade-offs. It was still possible to undermine your business by being too cheap, screwing up the balance between reach and commercial return. Popularity was important, but not at any price. The bottom line mattered more.
So, for example, while free media products existed and still exist, many of the most successful sacrificed some of the reach they would have obtained from being free for the greater commercial strength of being paid by their users.
In other words, even in the past popularity was a central goal but not the only one. Common sense, intelligence, flair and a hard nose were always needed to get it right.
All of which have been notably lacking in many erstwhile rational players’ approach to the internet.
So it’s refreshing and to see one of the masters of the media game saying some controversially common-sensical things in public.
Mike Darcey, new CEO of my former employers News UK (née News International) made a speech last night and said some things which, despite their seeming… well, almost banality, are so counter-cultural that they are still capable of being controversial in some quarters.
For example, Mike says:
there are real problems with giving your product away for free over the Internet
A little later he tackles one of the reasons some people find this comment so controversial:
Some people have argued that the problem with a pay-wall strategy is that you lose reach, while others who maintain a free web presence continue to enjoy large numbers of Unique Users and Page Views.
To which I say: to what purpose? – this reach doesn’t generate any meaningful revenue, and the pursuit of it undermines the piece of the business that does make money.
So if your purpose contemplates still being here in 5-10 years time, then the choice seems clear: it is better to sacrifice reach and preserve sustainable profitability.
Moreover, when we sacrifice this so-called reach, what have we really lost? A long tail of passing trade, many from overseas, many popping in for only one article, referred by Google or a social media link, not even aware they are on a Times or a Sun website, wholly anonymous.
That passing trade was good for the ego, if Unique User stats do that for you, but they don’t really add to our purpose at all.
It’s only a short speech, but it contains within it a large amount of good sense, which other media executives would do well to think hard about, resisting their natural instinct to dismiss their rivals.
Hopefully the whole thing will end up online soon, in the meantime here are some links to coverage which includes other quotes.
UPDATED: News UK have now put a video of the speech on their website here