Digital display ad revenue alone is not, and will not, be able to sustain the vast majority of news publishers. That’s because the low cost-per-milles (CPMs) that publishers can command from advertisers, exacerbated by the sheer number of rival publications online, essentially means that display ad revenue won’t be enough to cover the costs of news production.
This is an argument we’ve made for some time here at TheMediaBriefing, and a panel at the Global Editors Network summit in Barcelona yesterday did little to change our view.
The panel featured speakers from Blendle, Pressreader and Piano Media who discussed the pros and cons of various methods of achieving that. Blendle is essentially an iTunes equivalent for news in which consumers can pay for individual articles, while Pressreader is an ‘all-you-can-read’ subscription model closer to Spotify in model.
Piano Media specialises in finding ways to monetise publishers’ subscriptions. Its CEO Kelly Leach believes that publishers’ biggest mistake was to double down on growing ad revenue by scaling up their audiences at the expense of other revenue streams:
“One of the bad things for the industry is that publishers were getting too dependent on ad revenue. When I see the stats of ad blocking use by consumers, it’s scary. It’s a dangerous and risky place to be. Consumers…are voting they don’t like digital advertising.”
Other revenue sources are therefore required, whether that’s diversification into events or a membership scheme or becoming a technology company. But a media company is always going to produce content – it is after all central to its brand – so are there ways to monetise that content other than through advertising? For that to happen there needs to be an industry-wide reset of the inherent value of news content.
Recalibrating your audience
A potential solution is to recalibrate audience’s willingness to pay for the news content itself. That’s easier said than done, of course, but whether it’s through hard and metred paywalls or via a subscription to a news aggregator like Blendle there is evidence that some people are still willing to pay.
In fact, it is the stated aim of both Blendle’s head of international Duco van Lanschot and Pressreader’s Nikolay Malyarov to reeducate a younger audience that online news is a service that should be paid for.
In order to do that, news publishers need to step away from the low-quality high-frequency publishing model that has allowed clickbait to thrive. van Lanschot explains that Blendle’s iTunes-like model – which allows consumers to receive a refund on articles with which they are not satisfied – demonstrates that people aren’t willing to pay for clickbait:
“The problem with clickbait article is… there are articles that show 40% refund ratio. That’s useful information because [publishers need to] know ‘is the content good enough that people will want to pay for it’?
“Focus on quality. What will in the end deliver is the difference between a quick piece and… quality content.”
Pressreader’s Malyarov goes a step further. The sheer volume of news sites online, he says, means that consumers are unwilling to pay for generic content they can get free elsewhere:
“If you think this content will drive a subscription, you are mistaken. It’s the USP you have on that content that is chargeable and we’ll do everything we can to educate people to pay for it.
“It’s not what we as the industry think should be the price; it’s what the consumers think the product is worth.“
Recalibrating your audience’s willingness to pay, then, requires you to recalibrate your approach to content. It was the contention of the panel that the most useful metric a publisher can receive is not unique views, which only serves a digital ad-based system, but knowing the article that caused a consumer to becoming willing to pay. Leach said:
“During the time at the Journal…what started being shared were what articles were prompting the most people to subscribe. To me that was such an important thing; it parallels what you’d see in the offline world with what’s happening at the news stand. Now you can have it on a much more granular level.”
A legacy advantage?
The overall lack of willingness to pay for purely digital news – as demonstrated by the recent Reuter’s Institute Digital News Report– is the sticking point for publishers.
One potential solution, says Leach, is to rebundle all the digital and print content into a single subscription:
“The print subscription price becomes a reference point. I still think in consumers’ minds they expect digital should be cheaper. What we’ve seen work well is not specifically breaking it out, but publishers having a bundle and being able to price up that bundle and not necessarily making it a choice.
For your print subscribers who are paying a certain amount for your print subscription, it is an opportunity to bundle it in and price up a bit.”
So do legacy publishers – who have that print audience – have an advantage over digital pure-plays when it comes to convincing their audiences their digital content should should be paid for?
van Lanschot believes so, citing a study showing consumers were willing to pay three times more for digital content associated with a print product, and admitting that’s the only reason for including PDFs on Blendle.
Mayarov similarly believes that legacy publishers have an advantage, this time when it comes to the trust consumers have in them over digital pure-plays. However, that advantage is waning:
“Legacy brands have an upper hand. They have much deeper pockets. There is an established, trusted relationship.
“Brands are important because they validate the trust element… although it is diminishing. 72 percent of 18 – 35s, their trusted news source today is Google. Google doesn’t produce news.”
As Leach explains, it’s still early days for creating digital subscription models, and ultimately it’s likely there won’t be a single, definitive path to success for publishers. But that means there’s a variety of ways for them to experiment in the space, whether it’s through paywalls that redefine their content as being worth paying for or by distributing their content through aggregators like Blendle.