This guide will focus on the challenges and opportunities of the shift from print to digital in monetizing content. While print advertising may be going away, the assumption that print legacy media is dying along with it is misguided. The “print vs digital” argument tends to conflate format and content.
If you start with the premise that you have loyal customers that identify with your brand, and you see this as a chance to engage them even deeper with a rich digital experience, then your new paid content model becomes less reliant on the whims of advertising and more supported by stable, recurring subscription revenue.
The core of the New York Times, for example, is not its physical newspaper, but rather its journalists, its brand, its culture, its reach, its values. That’s a strong intellectual brand that people are willing to pay for. Newspapers are intellectual assets, not physical ones. Their core product consists of making smart editorial decisions and publishing sharp voices. Whether you choose to read those voices on a phone or on a broadsheet makes no difference.
Hundreds of smart publishing groups are leveraging the loyalty of their existing print subscribers in their transition towards primarily digital revenue models. And they’re taking advantage of a variety flexible pricing & packaging models to do it.
After all, as a consumer of news, why should it matter whether you’re reading a physical paper or flicking your finger across an iPad? Many people today have blended media experiences; they use their phone on the subway, their iPad in bed, and they peruse the paper at the breakfast table with a cup of coffee.
Forrester Research, which keeps tabs on roughly 85% of the global GDP, thinks we’re at the beginning of a new 20 year business that they call “The Age of the Customer.” They see a broad, systemic shift in capital models pivoting towards serving a newly empowered generation of customers that have the ability to price, critique and purchase anytime, anywhere.
Yes, this has a lot to do with smart phones, but believe it or not, Generation Y actually spends 38% more time reading newspapers (online and off) than Generation X. So as long as papers continue to create great content, hire quality journalists and come up with inventive new ways to bring their readers into the fold, they’ll do just fine.
Let’s take a look at the successful growth strategies in place at three of the world’s leading newspapers.
“While journalism and the print-newspaper or print-magazine industry have close ties to one another, and have since the 1950s or so, that doesn’t mean they are synonymous, or that because one is fatally ill the other must necessarily die. In fact, by some measures, journalism has never been healthier. And there’s every reason to believe that it is actually getting stronger because of the web, not weaker — regardless of what’s happening to print.” Matthew Ingram, GigaOm
Let’s take a look at the UK, which is currently seeing a huge amount of creative entrepreneurialism in print-to-digital media. News UK, the Financial Times and the Guardian are each defining what it means to be a “company formerly known as a newspaper.” While their business models vary with their audiences, they share some common approaches.
First, they create non-commodified content. This doesn’t mean having a consistent political slant. They recognise that they can’t compete with social networks in terms of aggregation, so they make sure to offer informed perspectives, strong arguments and compelling entertainment that readers can’t find anywhere else.
Secondly, they study online behaviour with relentless curiosity: what time of day people read, how they browse (“lean back” versus “lean in”), which content consistently surfaces and why. As a result they can accommodate a broad spectrum of online reading habits and significantly improve conversion rates. John O’Donovan, CTO of the FT, told an audience in London last month that the newspaper has doubled some of their sales funnels with relatively minor adjustments to its user flow. Data scientists are the new publishers.
Thirdly, they bundle additional services sensibly. Whether its mobile sports video highlights or free music streams, they make smart choices about which additional services actually enhance the reader experience, as opposed to being simple perks. News UK made a considered decision to partner with Spotify because lots of people like to listen to music while they read, and most journalists love music and are happy to contribute playlists. It was a natural fit.
Fourthly, they are tilting their revenue balance away from advertising and towards content. The FT actually makes most of its money from content, essentially flipping the modern newspaper business model on its head. But this has benefits on the advertising side as well. The greater behavioural and demographic insight that comes with membership plans and paywalls helps newspapers move away from empty calories like slideshow page views towards more valuable engagement metrics like time spent.
Finally, along with dozens of other industries, they recognise the increasing importance of live events. The Guardian is a pioneer in this category – or at least it will be when its event space opens in 2016. Membership access to TED-style forums, celebrity speakers, music concerts and Mediterranean cruises is one way to broaden the subscription experience and connect like-minded readers.
“The content revenues are in many ways much more comfortable to work with than advertising revenues. We have tremendous visibility, particularly where an annual subscription is part of that base. I know pretty much what we’re going to be getting from subscriptions right through to the end of this year. That’s never been the case with our advertising business. We’re not doing it for that reason, we’re doing what we are doing because actually we’ve seen long-term risk against both print advertising and online advertising….therefore we’re looking for other ways to make money and we feel content revenues are the obvious way to do it.” Rob Grimshaw, Financial TImes
Most people are willing to pay for content as long as the process is simple. Much of the recent success against widespread media piracy can be attributed simple, intuitive content marketplaces. Paywalls require lots of research and back-end IT, but the applications themselves are fortunately very intuitive.
A hard paywall typically only displays an article title and a few introductory paragraphs before prompting the reader to pay. They’re more common among professional and financial titles.
The introduction of a hard paywall results in a dramatic and immediate loss of digital audience, but over time it can cultivate a dedicated readership. The Times of London lost over 90% of its audience after the debut of its paywall, but it now generates over $60 million a year of previously nonexistent revenue.
The Wall Street Journal’s version of a hard paywall includes a range of selected free articles – it launched in 1997 and now has roughly 900,000 subscribers.
Currently the most popular subscription platform, the metered access paywall was pioneered by the Financial Times and later successfully adopted by the New York Times and hundreds of newspapers around the world. It allows a certain number of free articles per month, after which the “velvet rope” subscription prompt is lowered.
For the metered paywalls, determining the right paid content threshhold is very important. Publishers have to make two core decisions: how many stories to give away, and what to charge afterwards. Typically this is done through A/B testing over the course of several months.
Metering can also be attractive for out-of-market audiences: a newspaper could charge its domestic base but offer its content free to international audiences to help develop a global audience.
Hard and metered paywalls are a good option for high-volume sites with traffic in the millions, but a poor option for more low-traffic, niche-specific or regional titles. Publications that are targeting a smaller audience should adopt consider a “reverse paywall,” or freemium model that divides free and paid access by type of content, not number of visits.
Premium content including (behind-the-scenes videos, bonus podcasts, in-depth articles) can be paired with conferences and social events to help cater to loyal readers who are happy to pay extra money to support a favorite brand. This has a broad application in the software world, where developers dealing with single digit conversion rates don’t want to sacrifice organic traffic.
Ultimately, the kind of paywall is less as important as the shift to a stable, recurring revenue based business model. And subscription models are increasingly attractive to advertisers, who typically pay a 30% premium to reach subscribers versus a general audience.
Ad-based customer insight is to subscription-based customer insight as Betamax is to IMAX. Subscription plans make your advertising more intelligent by an order of magnitude, particularly when it comes to the nascent field of native advertising.
Native advertising, as broadly defined by Sharethrough CEO Dan Greenberg, is a form of paid media where the ad follows the form and function of the environment in which it’s placed.
Both are paid promotions that arguably stand on their own as thoughtful, compelling piece of editorial content, and were inspired by earlier long-form editorial efforts like “Snow Fall.” (The Wall Street Journal is also running a native ad series with Brocade.)
Why the sudden interest in native advertising?
Because the effectiveness of display advertising is dismal. According to HubSpot, the average banner ad has a 0.1% clickthrough rate (CTR), and the standard 468×60 banner has a 0.04% CTR.The average person is served over 1,700 display ads a month, and only 8% of Internet users account for 85% of their click-throughs.
Is it a coincidence that the most notable successes of quality native advertising have come from newspapers with intelligent, agile subscription platforms? No.Ad-based platform don’t have nearly the same demographic insight and customer visibility to justify the investment in creative new advertising.
As Trevor Fellows, global head of ad sales at the Wall Street Journal, says: “Sponsored content shouldn’t be commonplace. It shouldn’t be second rate. It needs to be high quality, not dull or predictable. And it shouldn’t be a pale imitation of editorial content that may be done better somewhere else. If done well, it’s more about giving insights than information. That’s what bonds reader and brand together.”
That’s the advantage the “50/50 Club,” (or the group of publishers who have an equable split of subscription and advertising revenue) currently enjoys – the insight from the first half of their revenue stream strengthens and defines the second half.