Juan Señor says that news publishers are sinful. Well, not sinful in any moral way. But they did commit a big mistake years ago — an original sin, as he described it — when the internet was just becoming a force to be reckoned with, and they continue to pay for that sin today.
Señor says news organizations said to themselves, “Free today will pay off tomorrow.” The idea was that huge traffic volume by casual visitors and/or readers, without asking them to pay for content, would eventually pay for itself through some form of advertising. He says this is the biggest blunder since by publishers the invention of the printing press.
Señor is the president of Innovation Media Consulting Group, a leading research and consulting company on digital strategies for news organizations worldwide. He spoke on the first day of Publish Asia 2019 – the annual news publishers conference put on by WAN-IFRA in Singapore. He presented his firm’s latest research on the best, proven business models news publishers can adopt in today’s environment.
Reader Revenue or Retire
To start, though, Señor had two stark admonitions for the attendees of the session.
PHOTO: BILL POORMAN
One, if you are not currently charging for digital content, you should not be in publishing, let alone journalism.
And two, regarding the ways of charging consumers, if you are not asking readers for their data or their dollars, it’s game over.
PHOTO: BILL POORMAN
He put these messages together to point to the first of his suggested new business models: the need to move away from an ad-based strategy to one based on reader revenue. Senor says, “ News media built and dependant on a display ad model are in serious trouble and vulnerable” – display ads, in this case, being banner and pre-roll ads. He listed several high-profile digital players based on this model that are now struggling, including Mashable, Buzzfeed, and the Huffington Post.
He says publishers need to recapture a fundamental principle: Everything that generates value should generate revenue. “This is so basic,” Señor says. “It’s a basic of business. If you have something of value, you can get people to pay for it.” Quality content, quality journalism, should be worth paying for. He says it’s clear people are now willing to pay for compelling content in many media spaces.
For example, in TV, people subscribe to streaming services like Netflix and Hulu. Also, research from Deloitte that says, by the end of 2020, adults will be willing to pay for up to four content subscriptions on their mobile devices (though these are likely to include that video and maybe a music subscription, as well).
He says a good benchmark for publishers is to work to get 40% of their revenues directly from readers and subscribers. He says at least 50 news outlets are already doing this in Europe and 25 in the United States.
To get there, Señor says, the trick is for new organizations to reverse their thinking. Don’t think about whether to charge for your content — you should — but do you have content worth paying for? Do you have content worthy of a subscription? If you don’t, then you have much bigger problems.
It’s highly unlikely, Señor says, that raw, breaking news coverage will be that content. Maybe newswires can survive this way, but fortunately or unfortunately, today breaking news is a commodity. News organizations have to provide some of it, of course. But once the new information is out there, it quickly pulses around the internet, devaluing it. What truly generates reader value and engagement is the context and analysis that follows breaking news.
Putting it in classic journalistic terms, Señor says, the questions of who, what, when, and where won’t ever generate a desire by someone to subscribe and give up their personal information or part with cash to get behind a paywall. However, the question of how, why, and what’s next will provide that motivation.
Señor says publishers must get out of the mindset of many millions of unengaged readers is better than fewer fully engaged readers. “The volume play is over,” he says. There is already so much advertising inventory on the internet, and so much is controlled by the big tech companies, that the only effective way forward is by engaging with your readers more completely, even if that’s fewer users. Even the measurement scheme is changing. He says CPM, clicks per million impressions, is out, since it only serves as a measure of a disconnected audience. Instead, CPH, clicks per hour is in. This is a measure of how long people stay engaged with the content on the site — for example, do they read to the bottom of the article.
“Very successful brands are tribal,” he says. “It’s about fishing in the coves, not the open sea.” The more dedicated and passionate your audience, Señor says – and the more you know about them, their habits, and interests – then you can command more from advertisers and sponsors, bolstering the traditional media funding model through reader engagement. You can also sell them additional information products that are a natural extension of your journalism that they’ll be interested in.
Regarding the structure of the paywalls that would generate reader revenue, Señor says that has evolved, as well. Hard paywalls, metered paywalls, and freemium paywalls are no longer effective. These are too inflexible. Instead, dynamic paywalls offer better returns. With dynamic paywalls, which articles appear for free is adjusted on the fly, depending on the readers interests that are recorded in cookies and databases and processed by algorithms. These data and interests can also be used to more effectively target readers with the best possible ask for a subscription. This becomes a personalized paywall, tailored to the reader, that maximizes revenue and doesn’t create artificial or inflexible limits that could drive away a customer.
Now, Señor warns, all of the above and the strategies to be mentioned below fall apart if the publisher is stuck in a platform/distributed content way of thinking – in other words, Facebook, Google, Twitter, etc. Señor says the ironclad rule is the money is made where the article is viewed. It does no good for publishers, he says, to have readers engage with their content on other companies’ platforms, especially if you’re looking to generate revenue from your readers. “They’ll never give you the data. They’ll never give you the subscriber. They might give you some money, but they’ll control the relationship.” And that relationship is key. In fact, Señor says, the tech companies privately wonder to him why publishers haven’t taken control of this facet of their business already.
More business models
While Señor emphasized generating reader revenue, he also listed several other business models that are seeing some success worldwide. Some are extensions of the reader revenue idea and the traditional advertising model. A few are truly unique and different.
The publisher as bitcoin-blockchain broker: Some publishers have experimented with teaming up with bitcoin issuers to create linkages between their content and the new currencies. Heart Media in Singapore is one example through its Aditus platform.
The publisher as data broker: If publishers focus on truly understanding how people interact with their content in a granular way, they can then monetize that with advertisers. An example is the Instagram feed Beautiful Destinations. It carefully tracked exactly what kinds of travel photos received the best response (don’t show faces, show men instead of women, etc.) and used those data better position themselves.
The publisher as a club: Publishers should look to expand their relationship with readers beyond just subscriptions into more facets of their lives. One way is to offer exclusive member discounts to subscribers. The Guardian in the UK and La Nacion in Argentina have done a lot of work in this area.
The publisher as retailer: In this model, publishers look for opportunities to directly help sell items or to flat out sell things themselves. Dennis Publishing began selling cars. T3 would take the product reviews that it did in the normal course of its journalistic business, then ask retailers to give them a fee if a buyer came to a product seller through its site.
The publisher as event organizer: While these sorts of events have been around for a while, they are quite an effort to put on and don’t ordinarily have great margins. So now publishers are staging multi-day “festivals” that give them more opportunities to engage with attendees.
The publisher as philanthropist: Some publishers are setting up foundations to support a particular part of their journalistic mission. For example, Mother Jones magazine in the U.S. has established a fund for some of its public service mission work. The journalism that gets funded this way should indeed be for the public good – for example, literacy. Politics and international affairs don’t necessarily lend themselves to this model.
The publisher as an agency: Many, many publishers are jumping into this business. Basically, a division of the news outlet acts as a media production house or an ad agency, helping an advertising client using the journalistic production and story-telling skills learned in the core business. Projections are that the vast majority of ad dollars are expected to migrate to this form in the coming years. However, the returns to the news organization can vary widely. There’s a lot of competition in this space from traditional production houses and agencies, and the hand-holding required for some clients can be costly in terms of time and money.
The publisher as an advertiser: Under this model, the organization accepts commission from advertisers to generate content using the same information design skills that make good journalistic products. For example, an advertiser might want to have a newspaper known for its infographics design some materials for their next campaign.
The publisher as brand licenser: Some media companies simply sell their name to third parties, who then use it to brand their independently produced products. Forbes is an example. Publishers should be cautious since this approach comes with risks to the brand.
The publisher as IT provider: News organization manage huge amounts of data of many types – text, video, photos, audio, etc. If they’ve developed expert ways of doing so, they might be able to sell their solutions on to others as content management systems. The Arc Publishing division of the Washington Post, for example, now contributes enormously to the bottom line of the news paper.
The publisher as investor: Some publishers have started co-working or media startup spaces that they use to help incubate new ideas and perhaps generate investment opportunities. Thomson Reuters Labs is an example.
The publisher as emotional advertiser: This is a variation on the traditional advertising approach. Traditionally ads have been sold based on a combination of user patterns and demographic information. Now, publishers are moving away from demographics to so-called psychographics. Publishers are beginning to use careful analysis of reader reactions to figure out what emotions certain kinds of article will generate. They will then charge advertisers premium to be placed next to an article that generates a particular emotion. ESPN pioneered this a few years back, and it is now spreading widely.
The publisher as educator: Perhaps this is the most natural extension of the core journalistic mission. News organizations are now offering course programs – sometimes taught by educators, sometimes by staff – that are pitched to the general populace. For example, La Monde – which is widely regarded to set the standard for written French – is partnering with a company to teach the language.
PHOTO: BILL POORMAN
For a more complete treatment of these models, Señor and his co-editor, John Wilpers, have published an annual report, which also covers many other aspects of innovation in journalism.
About the author: Bill Poorman is a freelance journalist, writer, podcast producer, and video producer, living in Singapore.