Are Readers the Answer to Publishing’s Revenue Question?
Print’s a basket case. New online advertising dollars are under pressure from the duopoly. Bots and ad fraud are scaring agencies and brands away from spending what’s left of their budgets on digital display.
Not too long ago, video was the answer to any question about the future of publishing revenues. But while the pivot to moving pictures stumbles on, video income is looking as fragile as every other area of advertising.
What’s a cash-strapped publisher to do?
“You must migrate from ad revenue to reader revenue. Or else get out of journalism,” says Juan Senor, a partner at London-based Innovation Media Consulting Group.
Speaking at the UK Association of Online Publishers conference in London earlier this month, Senor explained how publishers that rely on advertising revenues alone face real jeopardy. He said they are sitting on a one-legged stool that’s in serious danger of toppling over.
And it does seem like the only good news stories from publishing at the moment rest on reader revenues.
- The New York Times will hit $579 million in digital revenue this year, much of the growth coming from its 2 million digital subscriptions.
- For the first time, The Guardian posted more revenue from readers than from advertising, with a significant number of the UK newspaper’s 800,000 paying readers in the US.
- A recent report from Digital Content Next (DCN) showed premium publishers building on their print legacies to grow digital subscription revenues to a quarter of their 2017 revenues.
More Than One Horse in the Race
The diktat to ‘Get Reader Revenue Or Get Out’ is a little prescriptive. Anyone who has worked in this business for more than 10 minutes knows there is no single solution to the revenue question. There is certainly no silver bullet.
But developing alternatives to advertising and sponsorship money makes absolute sense.
Back in 2012, Hearst’s David Carey told the Economist it takes 'five or six revenue streams' to make a publishing business successful. He’s more right now that he was five years ago and adding a robust reader revenue stream is looking more and more like a no brainer.
The challenge, as always, is figuring out how. As much as digital advertising is starting to look like a bust, securing recurring revenue from readers is not easy.
Digital publishing’s ‘Original Sin’ – abandoning reader revenues to deliver audiences at scale – hangs like an albatross around the neck of modern media. After years of getting content for free, what will audiences really pay for?
The Digital Subscription Model
Subscriptions are perhaps the most straight forward way to monetize an audience directly; but don’t confuse straight forward for stress free. It takes a brave publisher to throw up a paywall, uncertain of the damage that will do to their existing digital advertising business and whether anyone will ever actually pay for what they used to get free gratis.
Gratifyingly, print publications with a history in attracting and retaining subscribers have done a better job of getting consumers to pay for content online, according to that DCN report. Digital pureplays in particular are off the pace when it comes to subscription revenues, lacking investment in gated premium content and buy-in from senior management.
In all subscription sales, conversion is the name of the game and the hard-won scale that used to support digital display revenues can be turned to advantage. The Economist is working hard to convert its reach on social media to build and engage new audiences, delivering paid content trials as a starting point for conversion.
But subscription marketing is no longer just a numbers game. Data lets publishers identify the content that best engages audiences and gets them to pay, or at least register and facilitate future marketing efforts.
Common to many success stories is the reputation of the brand for producing quality content; this is where papers like The New York Times and the Guardian have seen real success. In just six years, The New York Times has secured a paid digital subscription base of over 2 million. The Guardian has grown its member base from 75,000 to 300,000 in just a year.
Recent growth may be partly attributed to an increased interest in news at a time of unprecedented political change. But for so many publications enjoying growth in subscriptions, the quality of content is the key to winning with subscribers.
Jed Hartman, the chief revenue officer of The Washington Post, recently told Campaign magazine that “investing in trusted, quality journalism, rather than cutting back as some other news publishers have done” was the secret to growth at The Post, which hit 1 million subscribers in September.
At the AOP UK conference, Juan Senor advised content producers to be “An inch wide, but a mile deep.” Fellow panellist, Nic Newman of the Reuters Institute for the Study of Journalism, agreed: “People will pay for scarce or deep or exclusive content, if presented in the right way."
The Membership Model
Quality is clearly key to charging readers for content, but in membership models, audience participation is an additional factor in securing revenues.
Speaking at the Google-sponsored News Impact Summit in Manchester, England, NYU professor Jay Rosen talked about the importance of “Reporting with, not for” publishing audiences.
Rosen is currently director of the Membership Puzzle Project aiming to discover how to make membership models work for publishers in the United States.
The project is a collaboration between NYU’s digital-first graduate program, Studio 20, and Dutch news publisher De Correspondent, which has recruited 60,000 paying subscribers in Holland in just four years.
In a recent post on the Membership Puzzle blog, Rosen described what publishers could learn from 100 news organizations with robust membership models. Building on publisher data that the project has made freely available, Rosen identified three factors common to organizations operating membership programs.
Mission Driven - “No one has ever become an enthusiastic member of a commodity news site.”
Operating Style – “These sites experiment a lot, as they search for the best ways to engage members.”
Participation – “Feedback is constantly requested from members and programs are adjusted accordingly.”
I interviewed Rosen in Manchester for an episode of the Media Voices Podcast. He told me that a membership model is not better than a subscription model, but it is definitely different, explaining that publishers need to pay much more attention to reader members in a membership model.
“You have to design with rather than design for. You have to listen to members. You have to understand what motivates them. With subscription you don't really need to do that; you need to process their check.”
Rosen said the bottom line with membership is you need to put the resources and the systems in place to handle a lot of incoming communication. Get it right, however, and you are building a value-added reader revenue stream.
Leveraging existing reader loyalty, The Atlantic is looking to develop just that with the Masthead, a paid membership program launched for “Diehards.” The early-bird rate for the Masthead was pegged at $100 a year compared to a standard annual digital subscription of $24.50.
The September 2017 launch offers a super-subscription that bundles standard digital and print subscriptions to The Atlantic, with exclusive stories and updates, conference call access to editors and journalists, behind-the-scenes insights, discounts to events, and a members-only Facebook group.
Creating And Communicating Value
Whether you go for a subscription or a membership model, your ability to add reader revenues to your bottom line relies on creating and communicating real value for your audience. Here are a few things to think about if you want to make paid content work.
1. Choose the Right Model for Your Business
Will your audience want to get involved with your content creation in any meaningful way? If not, if you think they just want to read great content then a subscription deal will work best. If, on the other hand, you think your audience wants a deeper relationship with your brand – from attending exclusive events to contributing to story research – then a membership model might work for you.
The Atlantic hopes to prove the two are not mutually exclusive. Subscribers can grow into members.
2. Set Your Pricing Carefully
One of the hardest things to decide in any paid content project is how much to charge. Too little and it isn’t worth the effort, or the investment in the technology needed to support it. Too much and no one will sign up.
One of the tricks used by publishers keen to convert audiences accessing content for free to paying customers, is to offer a very low-priced trial. By allowing people to access premium content at a nominal rate, they become stronger prospects for full subscription sales.
3. Communicate Your Offer Clearly
Convincing audiences to pay for content that they think they can get elsewhere for free is a losing proposition. Campaigns building on the credibility of information and the opportunity to contribute and help sustain quality content are playing well in this era of “Fake News.”
Publishers need to communicate the added value that a subscription or membership brings, whether that is exclusive content, early access, behind the scenes insight, or event discounts. Trial or metered access is one way to allow readers to develop a sense of what they are missing out on, but too much free access can undercut the need to pay.
Peter Houston runs Flipping Pages Media, an independent consultancy and training firm, helping publishers build multi-platform success. He has run Guardian Masterclasses, spoken at Google’s ThinkPublishing and was formerly Editor-at-large for The Media Briefing. He now co-hosts the Media Voices Podcast, delivering a weekly take on the media news and guest interviews with senior players at a leading media organizations, from Facebook to Nieman Lab, The Economist to CNN.