Sorrell backs online charges

06 October 2009

LONDON: Charging consumers to access online material will be a vital future strategy for media owners, but newspapers and free-to-air television will have to face up to "continual degradation", Sir Martin Sorrell, ceo of WPP Group, has said.

A recent forecast from Ad Age predicted that the Media 100 – comprised of the biggest companies in this sector in the US – will post a decline in revenues for the first time this year since the trade title began tracking figures in 1981, having recorded growth of just 0.8% in 2008.

When excluding cable and satellite television, which are displaying the most robust performance at present, this group saw its total revenues tumble by 8.3% in the first half of this year.

TNS, the research firm owned by WPP, also recently reported that advertising expenditure in America, the world's biggest ad market, fell by 14.3% over this period.

Speaking at an event in Athens, Sorrell stated he was in favour of Rupert Murdoch's proposal to charge web users to view content produced by News Corporation's various news titles.
"Murdoch is absolutely correct to try and get people paying for content – it is critical for traditional media businesses as there is not enough advertising to support these models anymore," said Sorrell. 

"Getting consumers to pay for content they value is key. We have to find those areas,” he added.

However, while this strategy may partially offset falling income levels, the chief executive of the globe's biggest advertising holding group suggested it would not save some ailing mediums.
"There will be the continual degradation of traditional media like newspapers and free to air television," he warned.

One result of this trend will be the "massive consolidation in media companies. Traditional media cannot survive in its current structure," predicted Sorrell.

Looking forward, he suggested "new media, new markets and consumer insight" would be among the key drivers of long-term growth.
In response, "we need to look at processes and the way we organise our structures. There is a natural tendency to focus on cost in a downturn – but we need to focus on long term strategy changes," he concluded.

One company seemingly following this advice is Time Inc, which is currently thought to be developing a digital "store" for magazine content, as it seeks to replicate the success of services like iTunes in aggregating material from a variety of different sources.

Time is said to be in talks with other magazine and newspaper publishers regarding the venture, which would be jointly owned by the contributing partners, in a fashion similar to Hulu, the video-sharing website operated by Disney, NBC and News Corp.

Data sourced from Daily Telegraph/AdAge; additional content by WARC staff