It's been a busy week in the world of digital media. Over in the US, online advertising has overtaken print spend. On the new technology front, iPad 2 demand is still outstripping supply in New York, as global PC sales are showing signs of having passed their peak
Back in the UK, we have heard that Twitter are opening a London office, and that some prominent UK tech sites have dropped in Google's rankings as their latest search algorithm update (which we mentioned back in January) comes to the UK.
In the world of TV, 3D seems to be gathering momentum as we hear that Sky has appointed a new director of Sky 3D, that James Cameron expects all cinemas to be 3d-capable in 5 years, and 3D games are continuing their growth.
And a big wedding next week will be live on YouTube for those who want to watch it…
So, lots going on! But here are the biggest stories in the Digital Media world that have caught our eye;
MailOnline overtakes the Huffington Post to become the world's second largest 'newspaper' site — but New York Times remains number one.
According to ComScore, despite a 20% month-on-month growth in traffic at the Huffington Post taking it to 38,429,000 monthly unique visitors, MailOnline achieved a 27% rise in visitors, taking it to 39,635,000. This makes it the second largest of ComScore's "Newspaper" category of websites.
But the New York Times remains top of the table, and showed even larger growth with a 41% surge in traffic, taking it to 61,964,000 unique users from around the world.
As we mentioned last month, the New York Times has recently launched a paywall model, offering casual users access to a limited number of articles for free each month before being asked to become a "digital subscriber."
Whether the New York Times will be able to maintain this global domination is yet to be seen — particularly considering that the pricing model for subscribers is so closely tied to the physical, printed product. Of course, it may be that the NYT simply isn't geared up to properly monetise its' international audience through advertising, and may not see visitors from outside the US (who cannot easily buy print subscriptions, or be as easily targeted with advertising) as being valuable to its core business.
Whether MailOnline can manage to successfully monetise a free, global audience in the way that the New York Times seems to be struggling remains to be seen, but TheWall has an interesting analysis of how they have designed their site to target this kind of audience.
Disclosure: Associated Newspapers is a Starcom MediaVest Group client.
Google expected to overtake ITV as the UK's biggest advertising earner
Some interesting analysis from The Guardian;
Figures released by the search giant reveal that the UK generated $969m (£593m) of revenue in the first quarter of 2011. On present growth rates of around 25% per quarter – which it has sustained since September 2009 – Google will rack up between $5.2bn (£3.2bn) and $5.6bn (£3.4bn) in the UK. However to make the most accurate comparison of Google's and ITV's advertising revenues, it is necessary subtract the search engine's "traffic acquisition costs" (TAC), which Google pays to partners such as AOL or MySpace to acquire business. Those have run at 25% of revenue for the past five quarters. On that basis, Google's total UK advertising income in the year will be between £2.4bn and £2.55bn, depending on whether one assumes 20% or 25% growth this year – well beyond the £1.7bn ITV will manage if it achieves a 15% rebound during 2011.
Although internet advertising has grown to take a significant share in advertising spending in many countries, the UK is unique in that paid-for search advertising has a much greater share than most countries (57%, according to the most recent figures from the IAB.) In addition, Google's share of the search market is unusually large- estimated to be at least 85%.
As Google's recent change in CEO has led to an interesting change of focus, which could well lead to more growth in revenue outside of search (which accounts for the vast majority of Google's profits.) Is there anything that looks likely to slow them down?
Spotify changes its Free/Open product
As speculation continues to circulate about Spotify's anticipated US launch, Spotify has announced some new restrictions to its free, ad-supported service, limiting the total amount of music users can listen to, and the number of times they can listen to specific songs. On their blog, they explain what is happening;
Here’s how the changes will work:
- New Spotify users will be able to enjoy our unrivalled free service as it is today for the first 6 months.
- As of May 1st, any user who signed up to the free service on or before November 1st 2010 will be able to play each track for free up to a total of 5 times. Users who signed up after the beginning of November will see these changes applied 6 months after the time they set up their Spotify account.
- Additionally, total listening time for free users will be limited to 10 hours per month after the first 6 months. That’s equivalent to around 200 tracks or 20 albums.
It seems that this move is trying to push more of the heavier users away from the ad-supported model and towards the paid for model, as the free service becomes less of a standalone service in its own right, and more of a taster of what Spotify's subscription service has to offer.
On one hand, the free service might be a useful way for more passionate music fans to listen to a wider variety of music before they buy it, with the 5-listen cutoff prompting them that they have found a song worth owning. It seems that the more limited service is more likely to co-exist with the traditional music-buying model that record labels are familiar with.
On the other hand, once users have got used to a huge library of music that they can access from their computers, smartphones etc. with a fairly small subscription fee, presumably they would be less inclined to spend money on top of that on CDs and downloaded MP3s - making it tougher for them to cancel their subscriptions further down the line when their own music collections have fallen out of date.
In our Spotify: The Future of Music? piece last year, we questioned whether Spotify would be able to strike the right balance between the free and paid-for services for users, and this seems to mark the end of the "too good to be true", free and unlimited online music service. Of course, every track played costs Spotify money in royalties which advertising alone is unlikely to be able to cover, and as Spotify's founder Daniel Ek says, "to make [the free service] possible, we have to put some limits in place going forward."
But the change also raises the question that, if the heaviest and more habitual users are increasingly being pushed towards the paid-for version, who is the advertising in the free service going to be best at reaching? Is Spotify's view of the ad-supported model really something that can co-exist with a "premium" subscription service, with advertising providing an engaging and useful service to listeners — or just something for listeners to pay to avoid?
