Independent Malaysian News Site, Malaysiakini.com, Shores Up its Pay Wall with Innovation By Premesh Chandran – Newspaper Paywall Case

Posted on November 16, 2011

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Independent Malaysian News Site Shores Up its Pay Wall with Innovation By Premesh Chandran

Free startups and social media undercut a break-even subscription site in Malaysia.
But Malaysiakini.com is pursuing four strategies aimed at winning financial security for the independent news it provides.

The question of who will pay for journalism continues to haunt media companies as they watch the erosion of advertising revenues in tandem with print circulations. With every new technology gadget and digital channel, the Darwinian pressure to evolve gets stronger, ever surely accompanied by the thesis that only the fittest will survive.
If only the path forward was better lit and the fog of change settled. Instead, the industry wades through murky discussions, fluctuating between the promise of growth in online advertising and the ultimatum of asking readers to pay for content. It is hardly a choice for a proud industry that has checked the powerful, walked with the weak and given society the pulse of the nation, all while being reasonably rewarding for shareholders.
As the fork in the road grows closer, some signposts and signals would be helpful to media owners, journalists and the audience. Maps of pioneers are a precious guide, defining dead ends and pointing to possible options ahead.
Malaysiakini’s Journey
Malaysiakini.com is one of those pioneers. Launched in 1999, the daily news site had the benefit of being a completely online effort, undistracted by a legacy print or broadcast operation. The Internet was then very much in its 1.0 incarnation. Absent were terms such as User-generated content, blogging and social media.
Malaysiakini also had a domestic advantage. Strict government regulations meant that traditional media was generally owned or aligned to the government, and hence toed the ruling party’s line on most issues.
However, the government saw the Internet as a vehicle of growth and agreed with foreign investors that the Internet would be free of censorship and controls. This provided a window of opportunity for Malaysiakini to establish itself as the country’s first free and independent media, albeit online.
In the wake of the controlled print media, Malaysiakini grew exponentially, reaching 100,000 unique visitors within eight months of its launch. Malaysiakini quickly became the site to go to for political news, and was termed “probably Malaysia’s most important political journal”. The then prime minister Dr Mahathir Mohammad would label Malaysiakini “a pain in the neck”.
Despite becoming one of the most visited sites in Malaysia, advertising revenue did not grow for several reasons. Advertising did not migrate quickly online, and much of the digital ad market was dominated, in the early days, by companies linked to the government – hardly ideal sponsors for the site. Malaysiakini’s political reporting did not help, as businesses stayed away from any appearance of supporting the radically independent site.
With little advertising revenue in sight, Malaysiakini was forced to consider alternatives, including subscriptions. The closest business analogy was the co-existence of free to air and paid (cable or satellite) TV. Examining the model, it was clear that the audience would pay for some content, if it was compelling and part of their daily diet of information or entertainment, even if something similar was on offer for free.
Malaysiakini believed that its unique content would attract a subscription base. We hoped that 10 percent of our 100,000 daily unique visitors would subscribe.
We also believed that if and when more news sites decided to adopt a paid model, there would be a market for aggregated access, closer to the paid-TV model whereby a user gets multiple “channels” for a single fee.
Preparations for a Pay Wall
In order to prepare for launch, Malaysiakini faced three major challenges. The first barrier was internal, to convince our staff that this was the right approach. Close to the entire staff dismissed the idea, arguing that Malaysiakini would lose most of its audience.
The management argued that there was little other option to generate revenue. Without advertising, the only other channel was to rely on donation. If we were to rely on donors, donor fatigue would eventually set in. Also, donor drives are extremely uncertain, hence Malaysiakini could hardly plan and strategise based on donor contributions. It was clear that Malaysiakini would have to develop a revenue base or fold.
The second major challenge was to build a reliable and secure subscription management engine. Most such systems on the market then were priced at above a million dollars, built for major companies. Malaysiakini started to build its own system, now called Manage4me.com. Apart from subscription management and online payment, the system also supports aggregation of subscription content across channels.
The third challenge was developing anonymous payment methods. As Malaysiakini was a politically sensitive site, our subscribers demanded a system that would not require their identity to be revealed, even via a payment such as credit cards. Malaysiakini developed its own pre-paid card and managed to get support for a convenience store chain to retail it.
Launch
After nearly a year of preparations, Malaysiakini launched its subscription service in early 2002 at the rate of RM 100 ($30) per year.
Subscribers trickled in at a much slower rate than anticipated. An early mistake we made was giving away too much of the content for free. We allowed non-subscribers to read up to five paragraphs of a story. Subscriptions improved once we reduced the free content, but we only managed to attract 1000 subscribers in our first year.
As expected, the subscribers were generally from the higher income category, with a penchant for news and politics. Demographically, over 70 percent were from within Malaysia, from the 30-45 age group. Surprisingly, there were a high number of retirees. Although this group had great trouble using the Internet and making payments, perhaps the extra time of their hands gave them more incentive to subscribe.
In the early years, readership and subscription was tied to political events in Malaysia. The 2004 general elections saw the number of subscribers jump close to 3000. 2004 was also the first year that Malaysiakini broke even, with subscription contributing over 70 percent of income, the balance coming from grants.
The subsequent election in 2008 witnessed a doubling of subscribers as the political opposition won in five states, signaling the first major breakthrough toward a two-party system since independence. In discussing the political tsunami, prime minister Abdullah Badawi said that his biggest mistake was “underestimating the Internet”.
Since 2008, subscription numbers have plateaued. It was obvious that the Internet had become a major influencer and as a result many more online media sites were launched, providing so-called independent news. With major investors, these sites were able to offer content for free. What used to be a ‘blue ocean’ was now a bloody red ocean. Nevertheless, given their lack of revenues, it may be a matter of time before investors’ funds run dry, and some will close.
Twitter’s ability to spread breaking news fast was also a major blow to Malaysiakini’s positioning. Twitter provided newsmakers, especially politicians with a direct route to the audience, reducing their reliance on news media.
As a subscription site, Malaysiakini has also been cut off from social media. Users are more likely to share links on Facebook and Twitter that their non-subscriber friends can read. Malaysiakini’s stories continued to get shared in private over email, but integrating with social media has become a key challenge.
Saving the Subscription Model
The challenge going forward is to preserve and increase the number of subscribers. Malaysiakini has a few strategies in mind.
Firstly, Malaysiakini is developing a technology that allows users to share stories with friends. A unique link will allow users to click on links and access the full story without being blocked by the pay wall. The number of friends visiting will be limited, but the subscriber can pay more to be allowed to share with a larger number of friends. In a sense, a subscription now includes limited sharing rights. This strategy will allow Malaysiakini to grow its presences within social media as well as attract new subscribers.
Secondly, Malaysiakini is keen to trade access with other subscription sites. We believe a simple technology can be created to allow Malaysiakini subscribers occasional access to other sites along a micropayments model. We believe in the mantra that everybody will pay something but would like to access other interesting sites occasionally. Sites can trade “views” just as mobile phone companies trade “minutes” under roaming agreements.
Thirdly, the move towards multiple platforms such as smart phones and tablets will also generate new revenue opportunities for news sites. Platforms that integrate payment for specific applications, such as the iPad, provide new opportunities for revenue.
Since the Web is also accessible via these devices, however, it’s difficult to protect content offered through a paid app without also charging a fee on the Web.
Fourthly, it is clear that new media economics do not support large scale traditional media organizations. The new media organisation has to be lean, flat and innovative in its structure and revenue streams. Media organization 2.0 is an organization that has a distinctive editorial strategy and is geared to continuous adaption to new technologies. It is looking ahead at technologies 3.0, just as it builds its current distribution and content strategies. An adaptive media organisation is amphibian by nature, prepared to thrive in the murky waters ahead.

Premesh Chandran is the co-founder and CEO of Malaysiakini.com, the leading online media in Malaysia, reaching over 300,000 readers per day in four languages (English, Malay, Chinese, Tamil). He is also the founder and program advisor to Malaysiakini’s nonprofit training organisation, the Southeast Asian Centre for E-media.

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