The two sites are shining examples of ‘good’ and ‘bad’ online content providers. FT.com has a unique product, targeted at people who can afford to pay for it, and one of the world’s strongest brands. B2C directory firm Scoot, on the other hand, has none of these. As a direct result, FT.com is set to be a financial success and Scoot is likely to go to the wall.
FT.com will start charging for content, and Scoot has reported an operating loss of GBP28 million.
The Financial Times’ website, FT.com, will start charging for premium content this month. For $110 a year, people will be able to read the paper’s most important commentary. $300 a year will add access to a 500-publication archive, and 18,000 company profiles.
FT.com is one of the most popular business information sites, with 2.7 million users. It cost almost $300 million to build, and parent company Pearson is under pressure from the advertising slump, making the move to build revenues no surprise.
End-users are demonstrably prepared to pay for online business information, if the offering is right. The FT’s archrival, the Wall Street Journal, makes around $25 million a year from online subscriptions, and vertical trade-specific sites also bring in subscription revenues. And keeping the majority of the news content free should maintain user numbers and therefore advertising revenue.
UK directory Scoot, however, does not. It has reported a 2001 operating loss of $41 million, before write-offs. The B2C-focused dotcom now has $6.4 million in the bank, which it will have spent by August.
FT.com and Scoot highlight the gulf between online content providers. FT.com has the advantage of an extremely recognizable brand, a unique product offering, and a customer base that places a cash value on its services.
Scoot has none of these advantages. It is targeted at domestic consumers (whose information budget tends to be low), making it reliant on companies paying to be listed. All Scoot’s content is available for free elsewhere, and despite heavy ad spending during the dotcom boom, it doesn’t even have a particularly strong brand. There is no compelling reason to pick it over its larger, profitable rival, Yell.
Online content providers that have an established brand name, unique content and customers who can afford to pay, like the FT and the WSJ, will make money. Those that don’t are set to go to the wall; betting on Scoot’s survival might not be wise.
Related research: Datamonitor, 2002: United Kingdom – Online Advertising