There’s a revolution going on in publishing, writes Peter Houston: we’re making readers pay for content again.
In the last two or three months, The News Statesman, Wired, Vanity Fair and Bloomberg.com all announced new paid-content initiatives. The New York Times already has two million paying readers, The FT is chasing a million and The Guardian is on track to break even next year thanks to reader revenues.
On the geopolitical scale, it doesn’t seem like such a radical ideal; getting the people who use the stuff you make to pay for it. That’s how most businesses work… butchers and bakers and candlestick makers. It’s even how magazines and newspapers used to work.
The cynics among you, and there will be a few, will see this as just another publishing pivot, another fad in an industry long-defined by fads.
But this is different. This is a welcome return to first principles.
Past strategic shifts in publishing, at least since the turn of the century, have been driven by technology. Publishers, old and new, repeatedly embraced innovative new content distribution platforms and formats with the dream of winning at Silicon Valley scale.
That dream is dead. Mark Zuckerberg killed it when he promoted baby pictures and news of local fetes above publisher and brand content in Facebook’s newsfeed.
Returning to paid content doesn’t mean abandoning technology, forgetting new places to publish or new ways to tell stories, but it does place innovation firmly in the service of meeting reader needs with products that they will pay for.
That’s the revolution… The overthrow of a 25 year-old advertising-funded regime that demanded content be published everywhere for free.
The utopian ideal that all information should be free was not necessarily a bad idea. Ev Williams, CEO of Medium and Twitter co-founder has even said, “It may have even been the right idea at the time.”
Without print and distribution costs, digital publishing didn’t seem to need reader revenues; advertising income would be enough. What no one foresaw was the pressure to sell out ‘brand, quality and audience’, but joining a commodity business dominated by scale brought that.
Over a quarter of a century, the scramble for audience numbers online decimated publishing’s reader-revenue streams. And what started out as the provision of first-class content for free became a race to the bottom. Online publishing has come to be defined by third-rate clickbait funded by increasingly interruptive advertising and insidious behavioural tracking.
“Online publishing has come to be defined by third-rate clickbait funded by
increasingly interruptive advertising and insidious behavioural tracking.”
Fed-up readers joining the revolution
There’s good news for publishers looking to overthrow the tyranny of ad-only business models.
Publishers are rising up against the twin terrors of free content and platform distribution because the digital-advertising revenues promised have failed to materialise. But as fed up as they are with the digital advertising business, online audiences are even more fed up.
In a media landscape dominated by awful advertising experiences, privacy breaches and fake news, readers are ready to pay just to find content that is easy to access, relevant and accurate. They want to be able to trust their information sources again.
Trust is one of the most discussed topics in Western media at the moment, mainly because there is none. Between Brexit and the election of Trump, both sides of the political divide continually question the motives and methods of the media, especially online.
Edelman’s 2018 Trust Barometer showed a collapse of trust in online information sources, especially social media. Only 25% of the UK population expressed trust in social media as a source for news and information.
Efforts to improve public trust in our esteemed profession are many and varied. In the UK, the LSE’s Truth, Trust & Technology Commission is looking at the causes of media misinformation. In the US, there are so many projects trying to rebuild trust in the media that The Nieman Journalism Lab wrote a guide to help people tell them apart.
But while the gnashing of teeth and wringing of hands continues in academia, more commercially minded media players are exploiting the opportunity. A little ironically, given the publishing industry’s hysterical embrace of all things social, 61% of the public say they do trust traditional media. And that is a real bonus for serious publishers charging for content.
Political weeklies, from The Economist to The Spectator, are enjoying record reader numbers in print and online on the back of an uncertain political landscape. But even GQ is doing well, with editor Dylan Jones hoping that people have realised that “if you want quality journalism, you have to pay for it”.
“Trust is one of the most discussed topics in Western media at the moment,
mainly because there is none.”
The Netflix effect
Publishers are also benefiting from a growing acceptance of online subscription services - from Netflix and Spotify to Dollar Shave Club. The subscription economy in Europe is estimated to be worth 350 billion euros annually, with households spending an average of 130 euros a month on subscriptions, from videos and music to phones and even food.
As consumers become increasingly comfortable with monthly payment plans, forecasts for the value of paid content show consistent growth in consumer spending. In January, the UK Digital Publishers Revenue Index (DPRI) reported a 21% rise in subscription revenues for the third quarter of 2017 versus the same period in 2016 and an annual rise of 11%. Deloitte predicts that half of us will have at least two online-only media subscriptions by the end of this year and four by the end of the decade.
Exactly what those subscriptions will look like depends on the publisher and the readers they are serving. The product at the centre of the purchase might be content, but what audiences are paying for comes in a range of packages.
Oversimplifying paid-content to the binary ‘Pay or go away’ approach option of a hard paywall is not the most popular sales and marketing strategy. Conversion generally requires some level of content sampling, although how much free access is granted varies from publication to publication and prospect to prospect.
Offers are increasingly complex, stretching from print-digital bundles, paid newsletters, and membership schemes. The one thread running through all of the deals being offered is added-value for the reader: early access and exclusive content; perks and discounts; even the promise of an easier conscience knowing that your subscription helps fund independent journalism.
“Mixed revenue models, balancing advertising and subscriptions, make sense again.”
Publishers join the revolution
For most publishers, subscriptions are a tried and tested revenue generator, or at least they used to be.
Before the world wide web, reader revenues – single-copy sales and subscriptions – were a key line on every newspaper and magazine balance sheet. They still are for most, it’s just that digital advertising revenues have stolen the limelight for a long time.
Now, the limitations of ad-funded media are crystal clear to both publishers and readers. Mixed revenue models, balancing advertising and subscriptions, make sense again.
Refocusing on reader revenues gives publishers back some of the control lost to platforms; control over their brands, the relationship they have with their audiences and over their revenue.
Developing a loyal paying reader base brings a predictability to cash flow that isn’t always there with advertising. The extra income from subscriptions or memberships is crucial to businesses suffering print decline and advertising flatlines, but charging for content brings benefits beyond regular revenue.
Paid-content publishers reclaim the relationship their readers have with their content. Social media drive-bys are replaced with identified, paying customers sympathetic to regular communication. They create actionable behavioural data that can be used to improve products and services. They provide insights that can be leveraged into new products. From newsletters and news-briefing apps to member-only events and digital crosswords, add-ons are regularly rolled out for existing subscribers.
“Social media drive-bys are replaced with identified, paying customers
sympathetic to regular communication.”
No off-the-shelf strategy
Signing up for your own paid-content revolution isn’t a simple matter of ticking a few boxes on a paywall order form – there is no ‘off-the-shelf’ paid-content strategy. And just because online audiences are fed up with fake news and bad advertising, they won’t automatically start paying for content.
To charge, you need to be ready to deliver added-value and that generally means investing in content creation and differentiation.
And even with the best content in the world, you’re going to have to overcome the notion that content should be free and, if it’s not free on your site, it will be somewhere else. Your marketing will need to communicate the value of your content, and you need to be able to demonstrate that through metered access or low-cost trials. Conversion and retention of paying content customers is hard work.
Beyond marketing, your paid-content infrastructure needs to work for your audience, and your business. You need to make choices between hard, soft, or metered paywalls, between subscriptions and memberships.
And if you have ambitions of dumping ad sales altogether, paid-content and advertising are rarely mutually exclusive. Most publishers rely on a mix of income streams – even the New York Times needs the 40% of revenues that come from advertising. That means maintaining traffic at a level that will support advertising / sponsorship and that generally means striking a sensible balance between paid-for content and content that is free to access.
Hopefully, a broader revenue mix will bring greater sustainability to many publishing brands. And the focus on audience satisfaction needed to secure subscription sales and renewals will improve online experiences and start to rebuild much needed trust in our industry.
But before you get started on developing your own paid-content strategy, there is one thing you will definitely need… bravery. Overcoming the fear that audiences will not pay for content is probably the biggest obstacle that any publisher needs to overcome in the paid-content revolution.
“You need to be ready to deliver added-value and that generally means
investing in content creation and differentiation.”