UK Publishers Abandon Paid Content Models for Online Ads

Across the pond, it’s all about the ads, too. A new study released by the UK Association of Publishers (AOP) finds display advertising accounts for an average of 41 percent of online revenue, the biggest chunk of online income for the group’s members. Sponsorships make up nine percent. In fact according to the “AOP Census 2006,” for the first time in the four year history of the survey, the number of publishers charging for online content has dropped from 37 percent this year to 63 percent last year.

The survey “confirms a sort of gentle shift in emphasis that has been going on for at least a year, maybe two years,” in which time traditional media owners have had to accept that the content they create won’t always command subscription revenue, concludes Bill Murray, chairman of UK AOP and managing director of group business information strategy for Haymarket Publishing Group. Murray adds the online ad market is so strong, publishers are finding they can easily compensate for lost subscription revenue when switching paid content to ad-supported content.

Another signal the paid content model may be getting less viable for some publishers: the number of survey participants who don’t plan on charging for content has risen to 43 percent, from 30 percent last year, and 18 percent in 2004.

That’s not to say the paid content model has bitten the dust. To be sure, the census also finds revenues derived from paid content were the second largest portion of AOP member monies, making up 18 percent of online income. Seventy-eight percent of that portion came from subscriptions, 22 percent from one-off payments (typically for republishing rights).

More B2B media members offer paid content than their B-to-C brethren. According to the report, 44 percent of B-to-B members charge for online content compared to 34 percent of consumer-facing media outlets.

All in all, both paid and free content offerings seem to be getting more strategic. Murray explains content is being created to drive specific types of people towards specific types of content to enable highly-targeted contextual advertising. When it comes to paid content, publishers are charging for niche or highly valued media such as breaking news, financial data or crosswords.

If not subscription-based, more content will require registration. Notes Murray, “In B2C where we start to see really strong second generation Web activity, content surrounded by high value functionality…then I definitely think we’ll start to see that sitting behind quite detailed registration barriers.” Registration data on user location and age, of course, often aids publishers in targeting advertising to site visitors.

The survey also shows 37 percent of publishers that charge for content garnered more than £1 million ($1.75 million) in revenue in 2005, and 26 percent earned over £5 million ($8.78 million). In addition, 75 percent of those surveyed said some of their online revenue comes from overseas operations, and 10 percent said more than half their online revenue comes from those divisions.

Alluding to the fact that the UK online media industry has traditionally fallen behind that of the U.S. in terms of growth, Murray observed, “I think they’re coming closer together….I think that the time lag is closing all the time.”

The AOP Census 2006 study was conducted by research consultancy Fox Insight via an online survey between January 16 and February 4. All 26 full AOP members and most of the group’s 100 associate members participated. AOP members include print publishers, broadcasters and other media outlets that publish content on the Web such as BBC, CNET Networks, Conde Nast Interactive and Reuters.