Welcome to Market Revolution's blog
Thank you for visiting Market Revolution's blog.
We live and work in exciting times - revolutionary times. Technology continues to recast the media industry.
The extraordinary advance of affordable personal digital technology and the stellar rise of social networks are both distrupting and transforming the media market making this a unique moment to be involved in the convergence sectors we focus on.
This is also our place to ruminate and comment on the world as we see it, we hope you enjoy and please join in.
Wednesday, 31 October 2007
Thursday, 25 October 2007
Sweet taste of early success
Published: October 24 2007 in the FT
A teenage Scottish entrepreneur is on his way to becoming a millionaire after he landed a contract to supply15,000 jars a month of his “home-made” jam.
Fraser Doherty, 18, started making jam four years ago as a schoolboy in his Edinburgh home, using his grandmother’s recipe and selling the jars door to door.
Back then it was his parents who helped fill and label the jars. The jam is based on a recipe handed down through generations of the Doherty family.
Having now set up his own company, SuperJam, he is developing new flavours predominantly using so-called super fruits such as blueberries and cranberries in the hope of exciting a market that has changed little for hundreds of years.
Part of Mr Doherty’s success lies in his unusual approach to making jam. Instead of adding large amounts of refined sugar to his recipes – the traditional method – he uses natural fruit juices as a sweetener.
SuperJam has no other employees, hiring a factory in the north of England for a few days a month to make 40,000 jars a month. But Mr Doherty, whose new contract to supply Tesco follows a deal with Waitrose, said he was now considering taking on staff.Thanks to FT
On 24 October we blogged on Metro's 3rd quarter results were the worst in its 12 year history (source: WARC).
We now understand that this isnt in fact the case. In fact "there have been a number of quarters more recent showing losses in this size [sic]".
We apologise for the inaccuracy.
We do, however, feel obliged to comment that whilst Q3 2007 may not the biggest loss in Metro history its not a great performance however you look at it is it? And it doesnt improve any because its not the biggest does it?
ps our view on the business hasnt changed in light of this information we still think the Metro business is strong and full of unrecognized potential
Seems we are listening in large and increasing numbers on digital radio, listening on the internet, listening on digital tv and even listening via mobile phones as well, of course, as listening on the trannie. In fact 15% of total listening is done via digital channels and its growing.
Radio is a robust and healthy medium with 153 million hours spent listening in the 3 months ending september - overall, the number of adults (aged 15+) tuning in has decreased slightly, down 760,000 quarter on quarter from 45.6 million in Quarter 2, 2007.
Another example of how personal digital technology is changing the way we entertain ourselves.
source: Quarter 3 2007 RAJAR
Microsoft will invest $240 million in Facebook and expand its existing advertising relationship to international markets, according to the WSJ.
The $240 million is a minority stake that values Facebook at $15 billion.
Google would have been a better fit but it would have been too expensive to buy out Microsoft from the advertising arrangement so best (cheaper) to stay with who you know.
Wednesday, 24 October 2007
Coventry City Football Club, former top division stalwarts and FA Cup winners, have spent the last 5 seasons out of the money generating Premiership, languishing in mid table obscurity in the Championship. For those among us with an unhealthy obsession with all things sky-blue, this has been a bad thing to happen.
Only it's got worse. Much, much worse. And now, there's a great example of a brand treating its customers with complete disdain. The Board of Directors over the past 8 years seem to have taken an interesting and innovative approach to business management, reminiscent of Icarus, but without any obvious warmth being apparent from flying close to the Sun.
With £34m debts, having sold one stadium and lost any control over the new one, minimal revenue streams, and a monthly cash burn that would make boo.com hide behind the sofa, things are looking very very grim at the Ricoh Arena. It appears that money was gambled on the playing field, on the assumption that a takeover would magically appear if the players failed to reached the promised land of a season in the Premiership. However, it's not happened, bills have not been paid, the Inland Revenue is owed money, the FA have placed a transfer embargo on the club for failing to pay agreed transfer fees, the Acting Chairman has returned to his consituency, and the MD has fallen on his sword. As Oliver Hardy would have said "That's another fine mess you've got us into".
So, why is this of any interest? From a media perspective, this is exactly the situation where a local paper, in a 1 club city, can provide a focus, whip up support and generally shout loudly about finding out the truth, "where has the money gone", "who authorised that decision" "who forgot the basic rules of financial management" - the difficult questions that someone needs to ask and get the answers. The Coventry (Evening as was) Telegraph has the opportunity to stand tall, excel at investigative journalism, and unite the emotional supporters back with their brand, and sell more newspapers at the same time.
I wonder why they haven't to date? Sports sells papers, local football sells even more. Carpe Diem Mr Editor, before administration, liquidation, and away trips to Keswick Town are on the schedule.
Football post over, back to the less emotional world of business and media tomorrow.
As said below we think the fundementals are good but radical surgery is undoubtedly required. Competition has increased distribution costs and reduced advertising yields - not good when your revenue model is sole source!
Real value is in delivering a known and global youthful audience across multiple platforms for advertisers AND nurturing a direct relationship with the 20m readers.
Staying with Free market for one more second. One imagines that Metro is not alone in feeling pain . The drives of the free market are the same for everyone in it. Therefore we should expect to see more poor news from the sector. Time for consolidation?
Tuesday, 23 October 2007
The Daily Telegraph has started a petition to keep airlines mobile free citing passenger sanity and security reasons..... so far 3,500 outraged readers have signed up!
Time to ask Periscopers what they think of full mobile use.
In the meantime please participate in our poll which can be found above and on the left of the blog
Thursday, 18 October 2007
It's a business proposition we've found fascinating for a number of years now, particularly the difficult balancing act of product quality, distribution effectiveness and advertising yields. Get it right and build a monopoly or duopoly market and you can create a good revenue stream. Get sucked into a 3 or 4 player market, and watch the cash burn at a rapid rate.
Leaving the bloodbath of free London afternoon newspapers to one side for now, here's an observation on men's mags. Last year saw Sport successfully launch in London, with a high quality product targeted at a specific gender and demographic. 13 months on, it's in good shape, which is to be applauded.
ShortList is a recent entry into the same space, distributed on Thursdays, with the tagline: "Free for men! Movies, news, sport, TV, Cars, Style". Issue 5 is out today, with lads favourite Jeremy "He's got opinions and he's not afraid to use them" Clarkson looming large on the cover (not that JC ever looms "small" anywhere, his paunch on a 42" widescreen TV is quite alarming).
There's rarely much warmth and congratulations flying around the London media world, but Shortlist should be in line for some. Obviously pulled together by people who understand their target audience well, with good quality content, it's an exciting and welcome addition to the media landscape. They've got the product right almost from the off. Now it's down to effective distribution and a good advertising yield to cement its position.
The free London magazine market is well served if you are a bloke, but will anyone take the plunge and take one of the declining national paid for womens' magazine brands, and spin off a free weekly women's mag? Will be interesting to see if anyone is willing to take the plunge, innovate, and grow a whole new market.
Free is here to stay, and it's only going to get bigger.
Wednesday, 17 October 2007
Metro International recently issued a third-quarter trading update/profits warning. It warned of deeper than expected operating losses of £6.5m (versus £4.5m loss last time).
Whilst disappointing these results aren't all together surprising:
1. Freesheet newspapers are an expensive business
2. Freesheet newspapers is an uber competitive business (i.e there are lots of them)
2. Freesheet are (completely) dependent on single revenue stream - advertising
3. Advertising revenues are under intense pressure from freesheet competitors and digital channels which has led to lower ad rates and reduced margins particularly in mature/maturing markets (Sweden etc)
4. Being FREE isn't enough (consumers have lots of free alternative media/ents channels).
5. International businesses are challenging to manage. They require good people, strong organisation and investment.
That said Metro is underlyingly a good business.
Our strategic advice would be to immediately stop being a collector of countries/markets 'presence' business and transition the business into an integrated aggregator of a young global audience. The value is in audience relationship and (multi-channel) delivery and its potentially enormous. Metro has some 20 million readers.
But it's rapid growth and its low(est) cost model has left it painfully under resourced and weak. Therefore, more than anything Metro needs (a lot of) love and attention. It needs to build capacity. It needs to invest in talent.
Top management team (as we have written here before) is capable. Per Mikael Jensen (CEO) is a strong manager and a talented media man. Denis Malamatinas (Chairman) is charismatic and experienced. They are backed by the Board and the investors.
The good news is that Metro has in fact done the difficult bit (built a brand, established an audience etc) and now its time to consolidate and leverage.
We think they have a great chance.
Tuesday, 16 October 2007
Monday, 15 October 2007
Gordon's honeymoon is well and truly over, managing to alienate the bedrock of the UK commercial community by increasing Capital Gains Tax to discourage entrepreneurial activity and success. More on this, from the coal face, on a separate post.
David Cameron's performance at the Conference was well received,and the polls spooked Gordon sufficiently to perform a neat U-turn on an early election. This weekend saw some of the Blairite big beasts briefing against Gordon, a sign of early panic and distrust in the new direction?
And tonight, Sir Menzies Campbell steps down, apparently feeling he had taken the party as far as he could since Charles Kennedy called last orders on his time in power. A timely resignation for the Lib Dems, clearing the decks to give a new incumbent a likely 18 months lead time before the next election. Will Lembit Opik have a run for the top, leading to the possibility of a cheeky girl being installed in Number 10? Can you imagine the scene if Hillary Clinton was elected, and brought Bill over to a high powered summit at Number 10, to meet with Lembit and his Transylvanian Cheeky Girl. I'd pay to watch that.
Has Gordon rescued defeat from the jaws of victory? He's bought himself some time, but with discontent in his own party, Cameron ahead in the polls, and the Lib Dems stirring into an 18 month period of activity, there looks like there's a lot of blood in the water, and the sharks are circling closer and closer. In the Labour lifeboat, the discussions on who to throw out first must be starting.
According to the latest Nielsen//NetRatings figures for August 2007, The Guardian remains the most popular national UK newspaper website, as it has been for each of the last 12 months, with 2.7m unique visitors, equal to one in every twelve Britons active online.
The figures also show the Daily Mail and the Telegraph are the fastest growing amongst the "Top 10" national newspapers.
The Daily Mail has more than doubled its audience from 0.7m in Dec 2006 to 1.4m in Aug 2007, a 117 percent growth.
The Telegraph is the only other of the "Top 10" to at least double its audience; growing by 106% from 1m to 2.1m.
For the first time in 2007, The Sun (2m unique users) lost second spot; and is now third behind the Telegraph in terms of popularity.
Thursday, 11 October 2007
as of 09/10/2007 380,00 people had signed up in support of the Monks' protest
when we last posted on 30/09/2007 the protest support group had 214,000 members
Let this be a (another) lesson in the dangers of e-mail getting into the wrong hands.
This deal is interesting in that it is based on so called 360 deals where all aspects of the artists career including touring, merchandising etc are managed in return for cash and stock.
In other news the Eagles, is selling its new album directly to Wal-Mart Stores.
Wednesday, 10 October 2007
MOUNTAIN VIEW, California: Google's rampant success in the world of web search and the increasing migration of advertisers online have propelled the company's share price through the $600 (€427; £295) barrier.
Investors have high hopes for the online titan's third-quarter earnings, due to be announced next week, and this latest surge places Google's market value at around $187 billion.
The company is now worth more than more than Wal-Mart, Coca-Cola, Hewlett-Packard and IBM. It was floated just over three ago at $85 per share.
bang, bang - is that the sound of nails going into record industry coffin? or the sound of gunfire in music biz boardrooms?
My take is Skype revenues are bigger than Facebooks' and Facebook is valued at $13bn so Skype is real value.
Two further thoughts:
Does the eBay write down have any financial or tax benefits?
Or is it more about not wanting to pay last tranche of cash to founders?
Tuesday, 9 October 2007
Mr Sarin claimed it was unclear what a Google phone would offer consumers, and that mobile phones could already access google, negating the need for a google specific phone.
Two things spring to mind.
Firstly, Mr Sarin seems to be in the dark about why google would want to launch a phone. A wiser man than me once said, "if you look around and see only darkness, look up to make sure you are not just alone in a deep hole". For me, Mr Sarin is in denial - he's protecting Vodafone live services, accessible through his network, which Vodafone have bet a large amount of money on successfully generating a valuable revenue stream from to replace the increasingly commoditised text and voice revenues. Googlephone would bring the internet streaming onto the mobile, portalled and coralled by google to replace "Operator own label" services.
Secondly, advertising. Google loves advertising, and with shares at over $600 a pop, it needs to continue its reach and growth. Mobile provides a new audience touchpoint, and this must also be making Mr Sarin reach for the Nurofen and find himself a dark room to lie down in.
It will be interesting to see whether the O2 and Apple iPhone deal is replicated with the Googlephone and one of the other operators. Watch to see if Mr Sarin goes on to perform an about-turn worthy of an Australian scrum in Paris.
Monday, 8 October 2007
Not much is new or evidenced based in the piece but it's fascinating stuff and well worth a read.
What seems clear is that the Gphone is well on its way and that Google's aim will be on extending it's hold on digital advertising to include mobiles. Google already know lots about us when we are at out desktops but absloutely nothing about us when we are on the move. They now want to add location/on the move information to the data they hold on each of us. Imagine how powerful the full set of personal data is for advertising and how valuable!
What is, also,pretty clear is that the Google play is a software play i.e the operating system rather than the handset itself (if there is one) will will be made by someone else.
It's not going to easy and the networks won't encourage Google crashing the party as they are fearful of being disaggregated but as the New York Times piece says 'if Google-powered phones prove to be a hit with consumers, carriers (networks) may feel pressure to follow suit'.
Also if Apple can do it with a cool box but poor operating system why can't Google with a cool operating system and someone else's Google branded box?
Who would bet against Google in the mobile space - they have brand, brains and bundles of cash but there is no doubt that they will need plenty of all three.
Bigger issue is do we as consumer want Google to know where we have been and what we have been doing?
Friday, 5 October 2007
TOKYO: Japan's leading newspapers have been prompted into a unique online alliance as they attempt to rekindle readers' interest in the face of a serious internet challenge.
The Yomiuri Shimbun, the Asahi Shimbun and the Nikkei dailies, which between them currently boast more than 21 million readers, are planning a joint website and further cooperation in distribution -possibly by combining delivery operations in rural areas to cut costs.
What am I doing wrong?
Okay, I'm tired of beating around the bush. I'm a beautiful(spectacularly beautiful) 25 year old girl. I'm articulate and classy.I'm not from New York. I'm looking to get married to a guy who makes atleast half a million a year. I know how that sounds, but keep in mind that a million a year is middle class in New York City, so I don't think
I'm overreaching at all.
Are there any guys who make 500K or more on this board? Any wives? Could you send me some tips? I dated a business man who makes average around 200 - 250. But that's where I seem to hit a roadblock. 250,000 won't get me to central park west. I know a woman in my yoga class who was married to an investment banker and lives in Tribeca, and she's not as pretty as I am, nor is she a great genius. So what is she doing right? How do I get to her level?
Here are my questions specifically:
- Where do you single rich men hang out? Give me specifics- bars, restaurants, gyms
-What are you looking for in a mate? Be honest guys, you won't hurt my feelings
-Is there an age range I should be targeting (I'm 25)?
- Why are some of the women living lavish lifestyles on the upper east side so plain? I've seen really 'plain jane' boring types who have nothing to offer married to incredibly wealthy guys. I've seen drop dead gorgeous girls in singles bars in the east village. What's the story there?
- Jobs I should look out for? Everyone knows - lawyer, investment banker, doctor. How much do those guys really make? And where do they hang out? Where do the hedge fund guys hang out?
- How you decide marriage vs. just a girlfriend? I am looking for MARRIAGE ONLY
Please hold your insults - I'm putting myself out there in an honest way. Most beautiful women are superficial; at least I'm being up front about it. I wouldn't be searching for these kind of guys if I wasn't able to match them - in looks, culture, sophistication, and keeping a nice home and hearth.
it's NOT ok to contact this poster with services or other commercial interests
I read your posting with great interest and have thought meaningfully about your dilemma. I offer the following analysis of your predicament. Firstly, I'm not wasting your time, I qualify as a guy who fits your bill; that is I make more than $500K per year. That said here's how I see it.
Your offer, from the prospective of a guy like me, is plain and simple a crappy business deal. Here's why. Cutting through all the B.S., what you suggest is a simple trade: you bring your looks to the party and I bring my money. Fine, simple. But here's the rub, your looks will fade and my money will likely continue into perpetuity...in fact, it is very likely that my income increases but it is an absolute certainty that you won't be getting any more beautiful!
So, in economic terms you are a depreciating asset and I am an earning asset. Not only are you a depreciating asset, your depreciation accelerates! Let me explain, you're 25 now and will likely stay pretty hot for the next 5 years, but less so each year. Then the fade begins in earnest. By 35 stick a fork in you!
So in Wall Street terms, we would call you a trading position, not a buy and hold...hence the rub...marriage. It doesn't make good business sense to "buy you" (which is what you're asking) so I'd rather lease. In case you think I'm being cruel, I would say the following. If my money were to go away, so would you, so when your beauty fades I need an out. It's as simple as that. So a deal that makes sense is dating, not marriage.
Separately, I was taught early in my career about efficient markets. So, I wonder why a girl as "articulate, classy and spectacularly beautiful" as you has been unable to find your sugar daddy. I find it hard to believe that if you are as gorgeous as you say you are that the $500K hasn't found you, if not only for a tryout.
By the way, you could always find a way to make your own money and then we wouldn't need to have this difficult conversation.
With all that said, I must say you're going about it the right way. Classic "pump and dump." I hope this is helpful, and if you want to enter into some sort of
lease, let me know.
Thursday, 4 October 2007
Greenslade on MediaGuardian, a commentator who is right more times than wrong, makes a vaguely amusing point on his blog today. Commenting on the obituary of Ronnie Hazlehurst, he raises the issue that Wikipedia has the potential for user-generated merriment and deception. I read the obit in The Times yesterday and raised a quizzical eyebrow at the reference to RH co-writing a big hit for S Club 7, that popular beat combo from the early noughties.
Apparently this nugget was lifted directly from Wikipedia, and was a mischievous piece of nonsense, since removed. A good demonstration of the perils of relying on user generated content exclusively.
The internet is good for many things, but not cutting and pasting content for publication directly into quality publications. What's next, the front page copied directly from netvibes?
Wednesday, 3 October 2007
To recap, BSkyB spent £940million buying ITV shares at 135p a share in November 2006.
The Competition Commission has found that the 17.9% holding owned by BSkyB was "against the public interest", as it gave Sky "a material influence over ITV", namely the ability to block shareholder resolutions requiring 75% approval, in effect, putting a potential handbrake on Michael Grade's freedom to move ITV forward in any direction he required.
Interestingly, the decision wasn't made on the grounds that the situation was anti-competitive in terms of TV advertising markets, sports rights bidding or plurality in television news - in effect then finding against Sky on the grounds of what it could potentially do, rather than what it actually has done.
Guilty until proven innocent? Is this fair?
Looks like Sky will be forced to reduce its position to around the 10% to 15% mark - which at todays share price of around 105p a share, will crystallise a £100m+ loss.
So, in effect, being "indirectly fined" for buying a position in a competitive business with only mere potential for causing trouble at some point.
Fair or not? Any views?
Tuesday, 2 October 2007
Much has been written over the past few weeks about Northern Rock and the supervision of the banking system.Many people now know-if they have bothered to read or listen to even a fraction of what has been written –infinitely more than they knew before about the way the markets work.Greater minds than mine have analysed the cause and consequences so all I want to do is make some observations.
1.When is a guarantee not a use of public funds.
I heard a minister being interviewed-he was asked why the government had intervened on Northern Rock but would not put more money into the bankrupt pension schemes.The minister pointed out that there should be not misunderstanding the government had not put any public money into Northern Rock.I ask myself the question-does the £8billion that the Bank of England had advanced not count?.Would his attitude change if the guarantee was called-but maybe he wasn’t worried as the vast proportion of the deposit guarantee scheme would come from the banking sector only.I am left confused-who is guaranteeing what to whom?One commentator recently pointed out that Northern Rock has around £25 billion of deposits.Even if only half was in amounts of less than £35,000 then the providers of this guarantee would need to find £12.5 billion –where was this going to come from.
2 The Bank of England was right
We read that the £10billion Bank of England lifeline was shunned. The rest of the banking community did not need the liquidity-the only one they didn’t want to lend to was Northern Rock.So what we have is a sneeze in the banking system,with the major banks and other funding institutions taking stock of their risk and Northern Rock the riskiest player in town catching a serious cold.The only question now is whether the cold is going to turn into something more serious because having been a heavy smoker a cold can always go to the chest.
3 Shit happens
The events in the money markets were described as being 10 standard deviations away from the norm.In plain english this means that the financial engineers who created the business model convinced themselves and everybody involved that it was so unlikely to happen it could be ignored.How often do we hear about 100 year events-usually in the context of the weather or some other natural phenomenon.And guess what-how often do 100 year events seem to happen close to each other.Standard deviations are a traditional analysis that relies on normal distributions and based on statistical analysis.We all know about Lies ,damned lies and statistics-maybe we should ask a few more questions about who helped create the Northern Rock business model and who got paid to continuously roll out these mortgage backed securities and given the billions involved I cannot believe that there isn’t a city bonus or two that has relied on this gravy train.
4 Consumers were right to run for their money
I spoke with a number of city contacts and friends.Without exception they said they would have withdrawn money-each subject to a threshhold determined by their own wealth and the level of deposit guarantee.No one would have left more than £40,000.(why that level I do not know) .I suspect that each of these financially sophistcated individuals would be materially richer than the average depositor at Northern Rock.The authorities have therefore had a sharp lesson in consumer behaviour and need to take note.Furthermore I dispute that runs on banks are reserved for banana republics-it is only because we have a sophisticated financial system that we could create the situation in the first place and then manage it.If shit happens that sophisticated people conclude is so remote that they could create £100billion of financial instruments then your ordinary consumer is perfectly entitled to conclude that it can happen again and take his business elsewhere.Shareholders take the equity risk and expect an appropriate return-depositors get low returns and take low risk.Risk is ckearly more about perception than it is about statistical analysis.
5 The lesson everyone has forgotten to mention
The on line banking model failed-the capacity was inadequate and the depositors had no right of branch access.I am sure that this failure added to the loss in consumer confidence.No one has yet sat down and started talking about the levels of resilience and service required to maintain an on line banking service.If we live in a 24 hour on line digital world it is amazing how fast everyone demanded the right to deal through a branch.
I am sure this will rumble on but I believe at the moment the true culprits are still free to commit the crime again-assume away the risk and anything is possible until shit happens.
The consumer was right –the consumer must also be aware of on-line limitations.
Thank you to our guest blogger - he who knows from the inside!
Fast forward to October 2007, and EBay writes down the value of Skype by $900 million, admitting it overvalued the group in 2005, and paying a one off and final bonus to the Skype founders of "only" $530m, rather than the maximum $1.7bn earn-out that could have been achieved.
The key issue here - EBay overpaid based on an unrealistic multiple calculated on projections of monetising the audience into paying for Skype calls to landlines and mobiles, something which has proved difficult to achieve at the levels needed to justify the sale price - Q2 revenues of $90m at a relatively sluggish growth rate year on year aren't that impressive.
"Peer to peer connection" - the intersection between digital and traditional comms, is a fascinating place at the moment. EBay gambled that people would pay to sit at PC or laptop, and Skype mobiles and landlines to communicate, but my view is that people have way more digital choice now - instant messaging, facebook posting, SMS over internet - do I really need to actually talk to someone when I can poke, prod, prevaricate and post. And if I do need to talk, then my mobile has more free minutes and texts than I need.
EBay know they need to focus on what to do with Skype, it's an interesting strategic question for them, to prevent another write-down in value in 2008. Some serious consumer insight is needed right now.
Monday, 1 October 2007
30/09/2007 214,000 members
29/09/2007 160,000 Members (100,000 in 1 day! That's over 1 a second!)
28/09/2007 60,000 Members
27/09/2007 30,000 Members
26/09/2007 12,000 Members
25/09/2007 6000 Members
24/09/2007 3,500 Members
Social media (with a heart and a cause) - its what the internet was invented for.
Here is one of the biggest and most popular bands in the world choosing to go it alone. Choosing to exclude the music industry and the music retailers.
Radiohead have long wanted to go direct but were stopped by their record company. Now with no record company they are free to connect with their loyal global fan base over digital channels.
They are confident that the fans will click to buy. They are confident that the fans will pay to get the box set namely the 'extra' tracks, the 'extra' artwork, and the merchandise etc. If fans dont choose these 'extras' then they can download the music regardless on a 'pay whatever you choose' basis. This in itself is pretty radical and extremely exciting.
Is this the 'tipping point' that the music industry has so dreaded?
The moment when the talent recognises it doesnt need the industry or their distribution anymore and goes direct.
Reading between the lines, it looks like the subscriber growth needed a kick-start, and a 2 stage process of subscriber acquisition through different access to content worked successfully abroad.
This comes 2 weeks after the NY Times dropped its subscription charges and moved to an advertising revenue model.
Will the FT abandon subscription in the future? They clearly state not - "(our) strategic belief is that our content is worth paying for, whatever the channel" "We are very confident that people are prepared to pay a reasonable price for FT journalism".
But with the Wall Street Journal in Rupert's hands, is this a pre-emptive reaction from FT.com before they wake up with tanks parked on the lawn? I'd suggest so - identify your premium audience by name right now, before the WSJ is properly woken up.