Summary:

He probably doesn’t worry about falling house prices or the evils of multiculturalism, but does North Korea’s “Dear Leader” Kim Jong-il sati…

He probably doesn’t worry about falling house prices or the evils of multiculturalism, but does North Korea’s “Dear Leader” Kim Jong-il satisfy a secret hunger for celebrity news by reading MailOnline? The Daily Mail’s rapidly expanding website has two unidentified users there, Mail sources say.

Intriguingly, recent postings by one North Korean mystery reader betray a curious obsession with Lady Gaga, one of the many showbiz stars MailOnline writes about regularly.

That the Daily Mail (LSE: DMGT) can now be read in Pyongyang illustrates a simple truth; the paper has made its own Great Leap Forward online. In 2007 it didn’t have a website worthy of the name. Last month, it had 17.8m monthly unique users in the UK, according to Comscore (NSDQ: SCOR), far more than any other newspaper.

Around 1.8 million people visit MailOnline 10 times a month or more, and the same 2 million people consume 68% of its pages, according to a senior Mail source. He adds its readers return more often to consume a greater amount of content than users of thetimes.co.uk – despite the fact the Times is now focusing on attracting a smaller group of more loyal, paying customers. MailOnline’s readership is engaged as well as sizeable, and it is still growing.

How did an internet-averse paper become the world’s second largest English-language newspaper website (after the New York Times) so quickly? And does its success suggest the free model has more commercial potential than the paywall alternative implemented at Rupert Murdoch’s UK titles? MailOnline’s digital revenues are believed to be small: industry estimates vary from £10m to £50m a year, but senior Mail executives are adamant giving away content will ultimately prove more lucrative than asking users to pay, provided the audience is large enough. “You either go free and big or pay and go niche,” says one. “We think the sums add up better to go free and big.”

Growing places

MailOnline has chased traffic aggressively and now captures 35% of all UK newspaper online traffic, recording 446% audience growth in three years without spending anything on marketing. “It is the success story of recent times in terms of growth and traffic,” says Douglas McCabe, a media analyst at Enders Analysis. The most common charge laid at the Mail’s door is that celebrity content has driven much of that growth. MailOnline is littered with pictures of scantily-clad starlets, many of which would never be published in the paper. For McCabe, however, “that underrates the power of the Mail brand in its various manifestations. It’s about being really aware of audience needs and audience behaviours in different environments. There is a subtlety to what they are doing.”

Mail executives point out that just under 25% of its traffic is generated by showbiz content, but admit they have a far wider canvas on which to paint. “One advantage of being a middle-market title is we can stretch our legs either way,” the senior executive says.

News stories can sit alongside pictures of Kim Kardashian in a way they may not in print. Executives insist the site and the paper have the same brand values, however, and that the products are distinct but complementary. Six out of 10 of the 1.2 million UK users who visit MailOnline each day don’t buy the paper and over half of them arrive at the site directly.

Crucially, the success of one does not come at the expense of the other, which may also provide a valuable lesson for rivals. The Daily Mail’s circulation is one of the most steady on Fleet Street: 2.1m in October’s ABC (NYSE: DIS) figures – despite MailOnline’s growth, suggesting industry fears that online page views cannibalise print sales are misplaced.

“Daily Mail readers who use the website buy twice as many papers,” the Mail executive says. “If you have a strong website and a strong paper people will consume both.”

The Mail is also benefiting from a general trend, says Robin Goad, research director at Experian Hitwise. “As the web has become more mainstream, the online market share is starting to reflect the offline market share.” So, as the internet becomes ubiquitous, reading habits formed in the old print world take root in the new media universe. The Sun is now the fifth largest UK news site, for example.

Breaking with tradition

So far, so promising. But there’s a hitch. Internet competition is fierce, and most people do not get their online news from traditional providers. British newspapers account for just 0.8% of UK internet traffic, yet the news industry as a whole accounts for an average of 6.5% of visits.

The BBC is the country’s most popular news website but Yahoo (NSDQ: YHOO) is second (ahead of MailOnline) and MSN news is larger than the Daily Mirror’s site. A growing number of consumers get their news and information from social media sites such as Facebook, which now accounts for one in every six page visits in the UK, according to Experian Hitwise. When Facebook went down for two hours recently, MailOnline’s traffic increased by 25%.

In short, British newspapers, including MailOnline, face a battle. Digital revenues may never be large enough to fund the Mail newsroom, of course, but that is a challenge the rest of the industry faces. In the meantime, Mail executives are planning a range of new products that will come with a price. An iPad app is “very close” and over 65,000 people have signed up for a free 60-day trial of MailOnline’s iPhone app. Access to the “tethered internet” will continue to be free, but new products – including some editorial innovations that will be funded through micropayments – are in the pipeline.

Martin Clarke, the mercurial executive who runs MailOnline – and today chairs a session called How to Win Online and in Print at the Society of Editors conference in Glasgow – briefed his team recently on the site’s success, telling them: “This shows that, firstly, I am a fucking genius, and secondly, that you are all doing really well.”

According to McCabe, that analysis is accurate. “They’re just getting it right. That’s what it all boils down to.” The site’s expansion, he adds, may only be constrained when online penetration reaches its limit. “They may not have reached the ceiling yet,” he says. Kim Jong-Il will be delighted.

This article originally appeared in MediaGuardian.

By James Robinson, MediaGuardian

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