FT.com boss on making the paywall pay and the impact of the iPad

The FT has successfully operated a paid-for content model for years

As the Sunday Times and Times move behind the paywall with their new look web sites and the Daily Mail explores ways to charge for online content, the managing director of the Financial Times (FT), which has operated a paid-for model since its web site launched in 2001, talked exclusively to Computing.

Rob Grimshaw, managing director of FT.com, told Computing how the site has managed to successfully grow behind the paywall while most of its competition has been giving content away for free.

He explained that one of the reasons the free model became so prevalent among news providers was because it was so simple to implement.

“You just need a DNS and an ad server and away you go,” he said. “If you get into access management authentication, the set-up becomes a lot more complicated from a technical point of view because you’ve got a lot more moving parts.”

He added that, in the early days of providing content on the web, there weren’t many templates or models to work from. The figures for the potential growth of online advertising made publishers believe that they didn’t need to charge for content to be profitable.

Grimshaw explained that paid-for web sites vary in complexity. Content created by providers for academic institutions, for example, are able to use IP-based authentication to allow everyone at the institution access to content.

However, authenticating individual users is a lot more complicated. FT.com has full subscribers, registered members who do not pay and can access up to 10 articles per month, and non-registered users who have very limited access to FT.com content.

“Every time a reader tries to access the site, there’s a call coming back to central, asking does the individual have rights” he said.

“What can we show them and what barriers are in place for this specific user? We have millions of users accessing the site and we have to deal with transactions, renewals on subscriptions, and feed all that data to a central system.

“Then there are the analytical tools – we have a marketing database and have to link up all the subscription data to ad serving in order to exploit our knowledge of our audience so that we can target relevant ads to them. There are a lot of moving parts; you don’t have that with free web sites.”

Limitations of free content model

Grimshaw urged publishers to take the paid-for approach seriously as there are major challenges to maintaining a purely ad-supported model.

Advertisers spend just a small proportion of their budgets on media web sites. The niche is highly competitive as it is not just newspapers vying for their business, but also magazine web sites, radio and TV web sites, as well as social networking sites.

Facebook, with its volumes of page views in the billions, is an incredibly aggressive competitor in this space, noted Grimshaw. And with trends in advertising spend being cyclical, media web sites are not guaranteed a consistent income, so another source of revenue is imperative.

Grimshaw also advised that, when operating a paid-for model, the nature of content must drive people to pay for it.

“We’ve seen at the FT.com that quality pays off. If people are going to pay, they want something unique that they can’t find anywhere else. Just reproducing wire copy is not going to drive subscriptions. People have to think there’s something behind the barriers that is worth paying for.”

Impact of the iPad

Grimshaw also stated that the iPad could well live up to its hype of being the device to replace newspapers. He admitted that, like many others, he too was sceptical of the impact that the iPad would have but has since changed his view.

FT.com launched its iPad application in the US in mid-May, and Grimshaw said it has had more than 100,000 downloads in the first two weeks. Although the app is available to download for free during its initial launch period, the figure still represents quite a significant number of users, considering that the newspaper sells 400,000 copies daily and the web site has 135,000 subscribers.

“If you’d asked me about it a couple of weeks ago, I’d have been quite cautious - we had no real expectations then. But for us to have 100,000 downloads, just in the US, in two weeks, on a completely new platform, it’s quite extraordinary.”

To access the content after the launch period, users will have to pay to subscribe, but Grimshaw is optimistic, claiming that a lot of the iPad users are becoming active users.

“It feels to us that there is a definite shift in the market going on there and this might be a special category of device. It’s a great reading experience, very slick, comfortable and very appealing and I could see it substituting for a lot of print use.

“I find myself reading more FT content on the iPad app than I do either using the newspaper or on the web site,” he said. “To me, I think it’s got some unique qualities to it.”