Why the Financial Times can charge for metered content

by Jason Preston on September 22, 2008

I was recently prodded in the comments by Working Reporter to look at how the Financial Times is charging users for its content.

I think it’s brilliant.

As long-time readers already know, I am a fan of finding ways to provide consumers with a paid-for product.

I think that more people are willing to open their wallets than the prevailing wisdom allows, although in the past I’ve advocated charging for convenience and membership benefits rather than the content itself.

Meter content, don’t throttle it

As a blogger in the tech world, I heard a lot of people flat-out pan the New York Times‘ attempt at paid content that we all remember as Times Select.

I’ve heard conflicting accounts about why the NYT shut it down, but I do know that most of the blogosphere thought that putting high quality columnists behind a paid subscription wall stunted the conversation, and was generally against the open internet ethos.

To some degree, I think that’s a valid point. I love that anyone who can walk into a public library can read the news online from anywhere in the world.

But the Financial Times has shown us that you can accomplish that while still charging for your content. How do they do it? They’re taking advantage of the new metrics that the internet provides—thanks to IP tracking, cookies, and a number of other tools, it is now possible to determine how many times an individual visits your site.

What does that mean? It means that you can easily tell who is an active and frequent user of your site (an engaged customer) and who is just passing through. Knowing that lets you treat these customers differently, which is a classic Seth Godin strategy.

Those people who are just passing through and “joining the conversation” can be given free access, while those people who are your actual customers will be asked to pay for their content. By metering their content instead of simply throttling it like the New York Times did, FT is able to keep their content out from behind a wall while still charging for it.

That’s a neat trick.

Charging for digital benefits

Here’s the chart explaining how the Financial Times subscription model works, ganked directly from their site (click for larger image):

There are two things to note about this chart:

  1. You can access up to 30 articles per month without paying
  2. The premium membership benefits are digital tools and resources

For the Financial Times, they figure that someone who just follows a link on a blog isn’t likely to land on their site more than four times a month. And if they do, then FT would rather have them become a registered user.

Once someone is a registered user, they get access to 30 articles in a given month. Anyone who reads more than 30 articles per month, they figure, is using the Financial Times as a resource, and ought to be willing to pay.

Also, once you become a paying member, instead of getting print benefits like daily delivery, you start getting online benefits like e-mail delivery, and access to a mobile news reader, allowing you to easily browse FT content on a mobile device.

While I’m not sure that sticking the majority of your mobile readers with a crap interface is a good idea, the FT is charging for the right enhancements.

You can charge, too

Nothing the Financial Times is doing prevents other newspapers from following suit. In fact, the more newspapers that jump on board, the better it is for everyone. The trick is finding the right balance between the different levels of usership.

I think there’s a false dichotomy between newspaper audiences who will pay for content and newspaper audiences who won’t pay for content. Firstly, almost every print daily in business already has an audience who will pay for content (your print subscribers). Secondly, the Financial Times model isn’t actually about charging for content.

There’s no arbitrary division between what anyone can read and what anyone can’t read. Drawing that line was a big part of what killed Times Select. What you’re really doing is soliciting support from the people who use your site the most.

This just takes a little math. Poke through your server logs and see if there is any obvious stratification in your traffic.

Maybe you’ll find that a small but significant number of your users read almost everything on your website every week. Maybe the cut-off point for your paper is 50 articles per month. Maybe it’s 15. Do whatever makes sense with your traffic.

I think you’ll be pleasantly surprised with the results.

Sound like a good idea? Hear plenty more by subcribing to the RSS feed or joining the Eat Sleep Publish E-mail List.

{ 4 trackbacks }

What you absolutely must know about linking before you launch an aggregator — Eat Sleep Publish
09.29.08 at 3:04 pm
Do newspapers have a marketing problem? — Eat Sleep Publish
10.01.08 at 8:11 am
In defense of metered content — Eat Sleep Publish
12.15.08 at 11:42 am
NewsCorp: you want metered content — Eat Sleep Publish
05.08.09 at 12:05 pm

{ 10 comments }

1 Jim Buie 09.23.08 at 7:16 am

Thoughtful piece. I linked to it by name in my post, “Hope for Newspapers’ Financial Recovery in Subscriber-based Online Communities?” and added your RSS feed to my reader.

2 Rick 09.23.08 at 10:48 am

Interesting comment, but who’s actually winning the business model war, FT.com or NYTimes.com? Has Financial Times posted any numbers?

3 Jason Preston 09.23.08 at 11:07 am

Jim – Thanks! I hope you enjoy the blog.

Rick – I’m not aware of any numbers as of yet, but as far as I’m aware the WSJ is also experiencing success with paid subscription methods.

4 Working Reporter 09.27.08 at 11:10 am

Thanks for looking into this, Jason. I thought you had a sharp analysis and I’ve been sharing it around. I hope the FT is open about the success or failure of the enterprise.

One question: Do you happen to know what — if anything — they’re doing to deal with the problem of work being republished outside the paywall? Or if they even consider it a problem?

5 Jason Preston 09.29.08 at 2:59 pm

Working Reporter – You’re welcome, you were absolutely right that it warranted some looking into. I really think that metered content is a good model going forward because it solves the biggest problem with paid access content: that it can kill conversation and lower news awareness.

I don’t know offhand if they’re doing anything about work being republished outside the paywall. I’m guessing it’s largely a non-issue because the people who are likely to read scraped content are not part of the core brand enthusiasts (or maybe, 1,000 true fans) that they are relying on for subscription revenue—everyone else gets the content for “free” anyway.

6 Working Reporter 09.29.08 at 7:24 pm

You might consider looking into this a bit more — reuse is not a non-issue, it’s a growing issue. I spoke recently to a niche publisher of business analysis who said he maintains a team of people to make sure his subscribed content is not republished elsewhere; he considered it critical to his business model (which is currently doing pretty well).

Sites like attributor.com are beginning to make possible automated offsite content monitoring and control, and I expect to see more as forced consolidation occurs and the survivors start looking for ways to maximize content value.

7 Jason Preston 09.29.08 at 7:48 pm

You’re right that it’s worth a look (or at the very least a good long think), but my initial impression is that any reproduction that doesn’t interrupt my business model is, in fact, advertising.

So my assumption is that since the FT business model depends on them developing a loyal user base, and anyone can access any article at any time for free, then it’s probably not worth the effort to track down the people who are scraping their content.

That said, I’m not 100% sure I’m right.

8 Peter Nelson 08.04.09 at 11:09 am

. . . just a followup to my last comment about metered content.

To test my idea I went to the FT website and started clicking on articles until I got the message telling me I had to register to read more (I wasn’t counting but I think it was 5 or 6 articles) . So I did a “Clear Private Data” (which in my case clears almost everything) in my Firefox browser (one mouse click) and the FT forgot I had ever been there and just let me keep reading more articles!

So as I feared in my earlier comment, metered content seems easy to defeat because there’s no robust way to identify “you” as the “same” reader across sessions.

9 Jason Preston 08.05.09 at 3:48 pm

I’m betting that “no way” is a bit strong; if someone really wants to find out who you are, and they know what they’re doing, I bet it can be done.

But that’s beside the point. As with any Digital Rights Management scheme, which is kind of what metered content is, the idea is not to make something unhackable, but to make something sufficiently difficult as to deter most basic users from bothering. Or in other words, make it easier to play by the rules than not by the rules.

You’re right, you can get around paywalls and metered walls, and I think you’ll always be able to. It’s not about forcing</em. people to pay, it’s about convincing them to want to.

10 Peter Nelson 08.09.09 at 4:47 pm

“if someone really wants to find out who you are, and they know what they’re doing, I bet it can be done. ”

Well, I’m a software engineer and, offhand, I can’t think of any legal way that it can be done, especially if the client is on the other side of a firewall.

“but to make something sufficiently difficult as to deter most basic users from bothering.”

But what I described is trivially easy, even for a non-technical user.

I’ve seen studies suggesting that in certain demographics something like 90% of the music being listened-to is acquired through file-sharing – despite that fact that it’s illegal and it requires a lot more technical prowess than defeating metered-content schemes. I’m a music collector who’s spent over $20,000 acquiring music LEGALLY so obviously I think good stuff is worth paying-for, but I think that attitude is going out of style. Another example of this problem is public broadcasting where NPR and PBS have had to resort to increasingly strident methods to try to get people to pay.

Alternatively, consider Major League Baseball where many teams (including my local Boston Red Sox) are no longer broadcast on “free” TV – they’re only available for an expensive cable subscription, and they’re one of the richest teams in the league. So I think forcing people to pay works best, IF it can be done, but I don’t think the newspaper industry can pull it off. I hope I’m wrong because I love newspapers.

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