Uncertainty and apprehension about the future are the underlying emotions at the morning sessions at the SIIA Industry Summit. In her opening keynote, Marjorie Scardino, CEO of Pearson (NYSE: PSO), which publishes FT, talked about traditional media companies having to look beyond content creation as their reason for existing. As for how to support that content, Gordon Crovitz, the former publisher of the Wall Street Journal, noted during the audience Q&A the FT’s price hike and its decision to offer more free web content while retaining a subscription wall. He asked Scardino whether media will be increasingly funded by subscription revs or advertising.
– The Ralph Lauren model: Scardino essentially said, if you charge enough for it, they will pay, and, “even with my failed newspaper in Savannah, we knew you had to balance subscriptions and ads. The Economist (which Pearson, through the FT, owns a 50 percent share) has that 50/50 balance. It’s easier for a magazine, especially a business one. But with newspapers, we’ve been able to price it too low for too long. I mean, a newspaper costs less than the price of a latte. We’ve pushed the price up at the FT and we found that our readership went up. It’s the Ralph Lauren affect — If you charge higher for it, people will think it’s really good.” She went on to say that she refined that view earlier in her career as an attorney. But when clients discovered that she wasn’t worth the high rates she was charging them, she had to find another line of work.
I interviewed Scardino after her presentation and have more details after the jump.
– Refining Ralph Lauren for media: I asked Scardino about the notion of applying high-end apparel maker Ralph Lauren’s retail concepts to media. She conceded that charging more can’t work for everyone. Business pubs like FT can more easily hide online content behind a subscription wall because its audience is small and more homogeneous than general newspaper website readers. “Don’t tell Ralph Lauren I said that,” she laughed. “I realized the minute I uttered that line… [she winced]. Anyway, my point is, even in this economy, yes, the Ralph Lauren model works. People will pay for something if they perceive value. Of course, readers won’t pay for something they don’t value. That’s the trick.”
– Content is generic, analysis is unique: When daily news is available everywhere for free at basically the same moment, how do you sell it? Basically, you can’t, Scardino said. But if you can present it in a compelling way, that gives you a chance to make money off of it. Scardino: “Content is mostly generic, particularly in education. There are only a few ways you can describe photosynthesis. There’s nothing unique about that or history lessons. It’s only the way you impart that information that’s different. We figured that out years ago and decided that the only way we could add value to our content is technology. So we try to figure out how the content and student or reader are interacting. Only embedded technology can do that. Our reporters do wonderful analyses. And that’s why we’re more about analysis than fresh reporting. FT does breaking news, don’t get me wrong, but it’s the analysis that sets them apart. Also, we have a fairly small audience, they’re people who have a lot in common and we don’t try to be big.”
– Pay walls vs. free: On the issue of online subscriptions or offering completely free content, Scardino reiterated that not every publisher can get away with asking readers to pay. “Subscriptions lend themselves more to publications like ours, business pubs, and not general interest news. They have to have a lot of money, deliver a lot of papers and large web presence to appeal to advertisers because of that. We don’t want to be in that position.”