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As a leader in innovation and commitment to its readers, as
evidenced by its leading move to using a digital paywall - the
Financial Times and its ownership company are in a pretty good
place by now. In a review of its financials for 2011, Pearson has
provided an interesting look at what keeps media companies going in
the digital age.
To summarise briefly, the numbers while showing some strong
advancements in the move to digital newspaper subscription,
there is still a lot of work to be done in the realm of the
corresponding digital revenue model.
Consider these facts and figures:
Good news. Bad news. The perfect storm really. The good news is
that consumers are wiling to pay for and subscribe to online news
content. The good news is that the Financial Times is seeing
excellent gains in the United States. The good news is that the
model is working. The bad news is that advertising revenues are
This all speaks to the inherent problem for most major media
companies: consumers will pay for digital content but the loss in
advertising revenues from the digital medium is a point of
concern. The innovation that allowed newspaper publishers such as
FT Group to push the boundaries with its digital product and online
subscription model must be translated to the advertising and
But, will this be enough? Online advertisements need to go
beyond the typical flashing banner or landing page - most readers
ignore these ads or don't even bother to click on the banner.
This makes it challenging for media companies to demand the
high rates for these advertisements. Unlike in a traditional
newspaper or magazine where readers will linger over advertisements
and might even follow through with some consumer research, this
simply isn't happening online.
The companies that are having success with online advertisements
are pushing the boundaries and thinking of their consumer. We know
that people are willing to pay for digital newspapers - and this
took some savvy marketing, pricing, and packaging to get the early
adopters to digital newspaper subscription on-board. This same
creativity and forward-thinking is required to help boost
But, this is likely a short-term panacea - as consumers get more
savvy, it will be easy to skip and ignore these advertisements. So
really better time and energy should be spent on increasing the
viability and appeal of the digital package and making it easy for
readers to pay for the content they want. The Financial Times has
done this by giving readers access to free content, collecting
reader data and packaging their online newspaper as one that
appeals to more than business men and economists. With realizing
that its readership are really interested in: business, life, food
and drink, leisure, and entertainment - the FT.com website now
appeals to a range of readers who likely would never purchase a
print issue of the Financial Times.
Getting back to the revenue numbers again, here are some more
And now consider that the Financial Times and The Economist
Group, in which Pearson holds a 50 per cent interest, are
"weak advertising markets but strong growth in digital
To sum up, it is worth really reading what chief executive
Marjorie Scardino said:
"The external environment provides a testing backdrop for these
results, and all our industries face some degree of turbulence.
"But our strategy and long-term planning for
change have helped us to another good year to add to our record of
"We believe those qualities, combined with the
commitment and innovation of our people, will continue to serve our
customers and our shareholders well."
Did you catch the key words here: innovation,
commitment, and long-term planning.
Time to think about how this type of thinking
can be translated to continued online success and revenues - for
every media and entertainment company out there.
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