How can we ask some people to pay for printed news whilst giving the same content away for free to others?

This is an extended extract from News UK chief executive Mike Darcey's address to The Times CEO Summit in London on Monday, 2 July 2013

Since I joined News UK we have thought a lot about our purpose. Following recent criticism of the newspaper industry, we have spent time reminding ourselves about what our papers are for.

Some politicians might prefer it if we weren’t here at all, but without a vibrant news industry our democracy and society would be immeasurably weaker.

I believe that our mission is to inform and entertain our readers, yes, but in doing so we also look to stand up to powerful and vested interests, challenge orthodoxy and equip our readers to reach more informed views and make better choices in their lives.

We want to be part of the national conversation, to have a voice in the debate.

Of course we don’t have a monopoly on the truth, and other publishers will take a different stance, express different views, and this is right and important in a plural society.

But without newspapers and other professional journalists playing this role, as they have done for hundreds of years, I fear the news agenda of the day would come to be set by the press offices of the Government and other political parties, supplemented by anonymous, amateur commentary on Twitter.

If that were the case then I think the world would be a much poorer and less well informed place.

So while the past two years have not been an easy time in the newspaper business, focusing primarily on things that people in the media shouldn’t be doing, they have also helped to remind us of the unique contribution newspapers still make to life in Britain.

And being clear about this purpose will help to guide us going forwards, as we debate our regulatory future, and also the future of our business model.

Internet disruption

The second area that seems to be a constant thread in many business conversations is the challenge of responding to change, especially technology change and the consequential changes in consumer behaviour.

And the dominant flavour of this conversation is how to respond to the ways in which the Internet is disrupting and reshaping markets.

The internet has an amazing transformational power. It can, overnight, make millionaires of 17-year-olds – as it did this year to a lad at my son’s school – and at the same time close high street retailers that have existed for almost a century.

Most in this room are grappling with the opportunities and challenges for their business posed by the Internet. My company, indeed my industry, is certainly no exception.

I won’t try to summarise the machinations of the last 5 or 10 years, but after a number of false starts and short-term fixes, many in the newspaper industry are waking up to the reality there are real problems with giving your product away for free over the Internet.

The Times and Sunday Times were among the first in the world to successfully establish a subscriber model based on a wholly paid-for proposition – and The Sun is soon to follow, as are several other papers in the UK and overseas.

Many people still argue that charging for newspapers online will never work. I say three things.

First, it is working. Second, that should be no great surprise as charging for news is not a new idea. And third, if still in doubt, there is already a good model for how this works in pay TV.

Taking each of those in turn, first, as I say, it is working. The Times and Sunday Times moved to become paid-for across all formats in 2010. Initially thought of as a crazy move, it has been successful and is now flattered by widespread imitation.

Looking at the Times, we already have 140,000 paying subscribers, mainly on the tablet, and it’s growing.

Just as important, these tablet subscribers spend on average 40 minutes with the tablet edition, very similar to the amount of time spent reading the paper copy.

So this is a fully engaged experience, not the flitting around associated with free news websites: good news for subscriber retention, and also for our advertisers.

But the key insight comes from looking at total paid sales: the sum of casual print, plus print subscribers, plus digital subscribers. And on this basis the Times is ahead of 2010, and there are very few titles that can boast that record in recent years.

Second, charging for news is hardly a revolutionary concept. When people talk about the Times going behind the pay-wall, I remind them that the Times has been behind the pay-wall since 1785, it has been a paid for proposition all that time, and there have been free news alternatives all that time also.

Those free alternatives have certainly evolved, from the town crier – free at the point of consumption – to free newssheets, to radio, to television, to 24 hour television news. Competition from free is not a new idea.

And throughout that time, the paid-for news industry has had to make sure its offering is distinctive, differentiated from those free options, offering added value and articulating why it is worth paying for. And that remains the game today.

If there is anything that is odd, it is quite how long the idea persisted in some quarters that it was possible to ask one set of people to keep paying – for printed news – while at the same time giving precisely the same content away for free to others, in the hope that the first group wouldn’t notice, or at least wouldn’t react.

Seems pretty silly when put like that, and many publishers are moving away from that sort of idea. To those who are holding out, I wish them the best of luck.

Learning the lessons of pay TV

My third point is that there is already a good model for how this can work in the pay-TV business, here in the UK and in many other territories.

Before joining News UK I worked at Sky for 15 years and in the early days some scoffed at the idea that someone could charge for television when there was a free alternative readily available on terrestrial channels.

But Sky and others have shown that if you build a strong relationship with your customers, provide distinctive quality content they can’t get for free elsewhere, if you surround it with a great customer experience as regards technology and service, then it is perfectly possible to build a large and loyal subscriber base.

I believe that is also true for strong news brands.

So I’ve spoken about purpose and about responding to change as two separate issues – but perhaps they are really just one, or at least need to be thought of together.

That has certainly been the case at News UK: as we navigate the winds of change and we make key choices about direction, we refer back to our agreed purpose to help make those choices.

Sacrificing online 'reach' to maintain profitability

Some people have argued that the problem with a paywall 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 five to 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.

Much better to focus on an engaged audience, who spend time with us, who know they are reading the Times or the Sun, and who we know.

So at News UK, the choices we have made in responding to change generally, and the internet in particular, are rooted in our view of our deeper purpose – it’s an approach I recommend.

It has certainly helped to link the two when explaining to colleagues the strategic choices we are making, and when seeking their support and buy-in.

One more thing

Then, one final observation before I close: in responding to the internet, many of the lessons are typically directed at the risk of not responding quickly enough, or radically enough.

But I bring a slightly heretical message from the news industry: it is also possible to over-react, to be too radical and end up throwing the baby out with the bathwater.

That’s probably bad news, because the general message is that the world is a complex place and simple rules don’t always work. Sorry about that.

So to close, News UK is at an important and exciting moment, the beginning of a new chapter for our business. Together with a new leadership team, of which I am a part, and as part of a new global publishing company in News Corp, we are playing our part in building a brighter future for news.

We’re clear about our business model. And we’re clear about our purpose.