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Dr. Joe and Bo Sacks Talk about Getting Customers to Pay for Digital Content

Published on February 10, 2012

Bo Sacks of Precision Media and WhatTheyThink's Dr. Joe Webb have an in-depth discussion about the progression of pay wall business.

Dr. Joe Webb:  Hi, this I Dr. Joe Webb with the What They Think Economics and Research Center and I'm here with Bob Sacks, affectionately known as Bo Sacks in the publishing industry and head of Precision Media.  

Bob Sacks:  Good morning.

Dr. Joe Webb:  Bob, it has been very interesting to see how pay walls have played out in the publishing business.  You have some businesses like the Wall Street Journal, which were never free, which have some free content, but they were never free, but it goes to a rather exclusive audience who is not afraid to pay for the things that they receive online and then you have something like the New York Times, probably the most famous newspaper in the world, if not the top two or three who are still having a lot of difficulty figuring out how to create a pay wall where people are willing to pay for the content that they are receiving and still have the same amount of influence that they would have as a general publication.

Bob Sacks:  I think they are going to continue to have this problem.  The New York Times has branded itself well over a hundred plus years.  They have quality writers expressing quality thinking, but it’s mostly general news and general news is not niche enough to require in this stage of the game a pay wall.  I believe that the New York Times will in fact get a devoted few to pay the $20 a month to do that.  I might even do it myself, but I don’t think that there is quantity enough of people who will make it lucrative enough for the New York Times to continue that policy.  I think what we’re going to find is that news is everywhere, intelligent, thoughtful news and news written by less than intelligent, thoughtful people, but there is so much out there that I think it’s unnecessary to pay for news.  Now financial information is a niche enough period where the Wall Street Journal can and does get away with it and that’s the secret to pay walls, getting your niche down to a particular point where there are that devoted following who are willing to pay any amount of money.  Football is a great example.  Fantasy football sites, they are all over the place.  There are pay walls and idiots like myself are willing to pay two or three sites to get that valuable information that you must have.  It’s an addiction.  If you can give out the information that people are addicted to they will pay for it.

Dr. Joe Webb:  One of the best examples of cross media or multichannel publishing is probably ESPN who is involved in a lot of those businesses, but on the general side as opposed to that kind of very specific business you have Rupert Murdoch working with Apple to create The Daily.  What is your sense with how that business is going?

Bob Sacks:  I applaud Murdoch’s entrepreneurial spirit.  He has been in the publishing business for his entire life and he is quite successful.  I think that his particular business can afford to make mistakes.  I have said it in print.  I have said it in my newsletter.  I think The Daily is a mistake.  I don’t think that it’s niche enough to gather traction with a wide enough audience to make it worthwhile and in an earlier conversation Joe and I were discussing that he can afford to make a few mistakes and if in fact The Daily is a mistake they will learn it and repurpose what they have learned to a better use.

Dr. Joe Webb:  Over this next year there has been some forecast that there will be as many as 55 million tablet PCs sold worldwide.

Bob Sacks:  I heard 75.

Dr. Joe Webb:  Which is an astounding number considering that Apple will be selling somewhere between one and two or possibly three million a month of these devices.  How do you see that fitting in with things like ebooks?  We always know—hear here about the Kindle of course, but what about ebooks and iPads and tablets and those things?

Bob Sacks:  Several things have to happen.  You’re talking about 75 million affluent homes.  That is not across the entire social network.  There is going to be a moment when ebooks are about $50 apiece.  That is the magic number and when we reach that point I think there is going to be a new huge(er), than there is today, reading explosion and I'm glad you brought that up in that there is a difference between the Kindle and the iPad.  One is transmissive [ph] and one is reflective.  This year products will be coming out that are beautiful color video refresh rates and are reflective.  That is the next barrier.  We have to get away from the glare problem on these devices.  So you get the glare problem solved, easier to read, greater ability to reproduce fonts as they are supposed to be reproduced and at a lower price point and then the question is why would I want to read that on paper.

Dr. Joe Webb:  Right and a lot of the content that publishers create is content that is used for a particular period of time like textbooks and there are some startups in that area that are going to basically licensing textbooks.  You’re not going to be buying a textbook unless you pay an extra fee on top of a license fee.  Does that have legs do you think?  Is that the way publishers are finally going to kill the used book market?

Bob Sacks:  The educational publishers are going, leaping into the digital market and I think they have found several economic paths that are going to make sense.  If they don’t make sense today again they are experimenting enough where they are going to be very successful at it.  The devices are really good.  They are only going to get better.  Writing in the margins and the notes as every college kids like to do can be done today, but it’s not as easy as it will be.  Being able to the grab paragraphs and shoot them off to your professor or your friends can be done, but will only get better.  So the educational publishers are doing the right thing.  They are headed in the right market.  It is going to be very lucrative and I'm supportive of their efforts, yeah.

Dr. Joe Webb:  Well Bob, thank you very much.

Bob Sacks:  Thank you Joe.

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