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How publishers are navigating the perilous path to diversification

September 27, 2018 Chris M. Sutcliffe – Independent Media Reporter

Many quality publishers are navigating the “valley of death” on their migration from an advertising-funded model to one more reliant on direct reader revenue. It’s not a journey that they’ll all survive. But publishers are being driven by the realization that solely ad-funded models won’t work in the age of platform intermediaries and tech giants, which control both content distribution and advertising revenue. However, for publications with a loyal, engaged audience, the journey is worth the risk.

Truth be told, it’s almost as unlikely that a solely subscription-based model will be able to support news publishers at the scale at which they currently exist. Just as the relative value of digital advertising is significantly less than print advertising, so too are most digital subscriptions worth much less per user than in print. The obvious solution, then, is to have a much more diversified revenue model, made up of a combination of advertising, ecommerce, events, and subscriptions.

The Diversification Dilemma

The dilemma for many publications – particularly digital pureplays – is that precious few people will pay to support them directly, kicking away one leg of that ideal diversified revenue model. Through a combination of low propensity to pay for digital news in most countries, generic content available elsewhere, and increased competition in the direct reader revenue space, there simply isn’t enough money going around for every publication to have that stable source of income.

Consequently, many publications are reappraising what their ad-funded, free-to-access properties are capable of when it comes to building additional revenue streams. Many have correctly realized that a free at point of access touchpoint with readers has advantages for launching new products (and reaching a wider consumer base) that aren’t replicable behind a paywall.

Going to Market

Time Out group, for instance, which has kept control to an extent of the events listings that for the most part migrated to new platforms, has used its website and widely available free magazine to promote the Time Out Market in Lisbon. That space, designed to capitalise on the huge audiences who visit the site, saw revenue growth of 50% in the six months to June 30 this year. Time Out also plans to launch five new markets in North America next year, including New York, Miami, Boston, and Chicago.

Similarly, in the UK the free newspaper the Evening Standard has been making a play to own the experiential space with events of its own, capitalizing on its own widespread availability as a free touchpoint in major cities to support its efforts. Despite a £10m loss this year – due in no small part to a mangled redesign spearheaded by its new editor – it’s an advantage the Standard is continuing to push by increasing its free circulation.

ShortList magazine is actively engaged in the same endeavor. However its Chairman Mike Soutar told an audience at this year’s Magfest in Edinburgh that the costs of delivery free media in print necessarily limit where those audience touchpoints are viable:

“I think free cannot work outside of urban conurbations, because you need audience and you need people to act. The proof of free media is engagement and the proof of engagement is when people do something, they buy a product, they do something with it.”

Engaging Experiences

So if free print titles are diversifying into events and experiential marketing based on having touchpoints in viable areas in the real world, how are free digital titles diversifying? They don’t, after all, have the advantage of a guaranteed audience in a specific geography, nor a controlled circulation. which all but guarantees a decent amount of advertising revenue. They’re also more exposed to the ravages of the tech giants’ push for control of ad revenue. And, while they don’t have legacy print costs to content with, content creation is costly no matter the medium. Only this month The Outline, the Joshua Topolsky-founded news and culture site, laid off its last two remaining full-time staff writers, despite a valuation of over $21m earlier in the year, for instance.

For the most part, digital pureplay publications are instead launching new premium products in their vertical. Quartz, for instance, is launching its first paid-for product with its cryptocurrency newsletter Private Key. BuzzFeed, meanwhile, is taking advantage of its position to diversify further into ecommerce revenue: In his ‘9 Boxes’ memo its founder Jonah Peretti explicitly set out his vision for diversification of revenue by referencing its Tasty sub-brand, around which it has launched a raft of ecommerce propositions.

Regardless of whether a free publication is in print or digital (or occasionally both), the idea that advertising will not solely sustain it has become widely accepted. As a result publishers are diversifying revenue as fast as they possibly can, given the limitations of funding and time. Whether that’s diversification using a print title to buoy events and experiential, or by launching new ecommerce propositions around a vertical in digital, the question is no longer who is diversifying, but how quickly can they own the space into which they are expanding.

5 crucial questions to ask before launching your podcasting business

September 20, 2018 Mark Glaser, Founder and Publisher – MediaShift

Podcasting continues to grow by leaps and bounds, and it now seems like every media business has a line of podcasts. But should they? And if they want to enter the podcasting business, what should they keep in mind?

First let’s restate the obvious: Podcasting is hot, especially when it comes to advertising. The IAB anticipates that ad spending on podcasts will more than double 2017 revenues ($313.9 million) to $659 million by 2020. That’s still only a tiny proportion of the wider U.S. radio and television advertising market, but it’s growing at a much faster rate than the more mature mediums. The recent Podcast Upfront (the fourth annual edition) added even more buzz to the topic, with broadcasters and podcasters alike — including NPR, Univision, iHeartMedia, and Midroll Media — promoting their podcasts to advertisers.

But before you launch your podcast business, make sure you can answer these five key questions:

1. Do you have a unique topic with unique expertise to tell the story?

Now that it seems like everyone has a podcast these days, it’s important to differentiate yourself from the noise of the pack. That means strategizing, and amplifying, what makes you unique.

Part of what makes the New York Times’ “The Daily” so popular, for example, is that they are in the unique position of bringing their own reporters on air to tell the stories they know well — to offer a behind-the-scenes, human perspective. “Recode Decode” with Kara Swisher, no doubt, built an audience who appreciates Swisher’s deep expertise in reporting on the tech industry, and her sometimes off-the-cuff, very blunt style of interviewing. (Just have a listen to her interview with Mark Zuckerberg, if you need an example).

So what has come of these forays into podcasting? Well, look at “The Daily.” It now reportedly has 5 million unique listeners a month and can charge $290,000 a month for sponsorship. It is even putting up billboards on Hollywood Boulevard that are attracting the attention of passersby who are taking pictures in front of them. While it’s not clear yet how the billboard ads are contributing to more downloads, it’s obvious that “The Daily” is continuing to engage its listeners in the physical world as much as through audio speakers.

2. Do you have sponsors in mind beyond vanilla ad networks?

Programmatic targeted advertising on podcasts is not yet mainstream. So, it’s not uncommon to hear advertisers catering to a podcast’s whole audience, rather than audience segments. But that doesn’t mean you have to go to the same advertisers as everyone else. Squarespace and Casper Mattresses, for instance, have become such default advertisers on podcasts. Having podcast-centric advertisers can have the side effect of making the podcast itself seem less unique from the pack. As with any medium, good advertising comes from knowing your audience well. And while podcasts do tend to attract younger, more affluent and educated listeners than other mediums, this audience is certainly not homogenous.

Take, for example, a recent collaboration between Sony and Midroll. They created a custom “minisode” of the popular podcast “My Favorite Murderer,” in which the hosts talked about the movie “Searching” and featured listeners’ examples of people who hide secrets (a theme of the movie). It was — as the hosts put it directly to their audiences — a “big long commercial” for the movie “Searching.” This kind of direct sponsorship of an entire episode can avoid ad-skipping on podcasts and keeps listeners engaged. And it’s catered directly to the kind of audience the podcast would attract anyway.

Another good example is “Shattered: White Boy Rick,” a podcast from WDIV local TV in Detroit, which includes ads for the new movie, with comments from stars such as Matthew McConaughey. I’ve been listening to the podcast while traveling, and those ads were so relevant to the story that I never fast-forwarded through them.

3. Can you rise above the noise and promote it effectively?

This goes back to being unique … and being clever with how you promote yourself. It helps when a popular podcast (like “This American Life,” for instance) can hype up a new show (like “Serial”). This turns an established audience on to a new show that needs to build an audience from scratch. Similarly, with broadcast networks now looking to attract podcast listeners, they can also reap the benefits of having a large platform to reach an audience. That’s what iHeartRadio and NPR executives both said were to their benefit in promoting their podcasts.

It also helps to build a relationship with your audience. This has as much to do with having an engaging host who seems like your friend, as much as it does with being specific with how, and why, you’re engaging your audience. That audio is “the theater of the mind” has become a common pitching point for people interested in getting into the podcasting space. Don’t forget that you have to do the work to get the audience to that level.

4. Do you have solid metrics to prove your audience and its engagement?

And doing the work to bring the audience to the hyper-engaged, imaginative visualization of audio brings us to metrics. This is tricky territory and becoming a bigger part of the podcasting conversation. This year’s Podcast Upfront, for instance, was much more about targeting, measurement and results than in the past. While it’s still hard to prove true listenership (including listening to ads) with just a raw number of downloads alone, metrics and data are improving, as are the chances you can prove your audience and engagement.

Which brings us to another point: Before even trying to attract advertising, it’s important to build a foundation of listeners and episodes — a resumé, if you will — to showcase why you’re worth the investment. And it’s also worth considering if creating a new podcast is really best for a given publisher. While some branded podcasts exist (for example, Tinder launched a branded podcast with Gimlet about dating), it’s also possible to, say, pitch an episode to an existing podcast, and reap the benefits of a built-in audience who already trusts their host. This is especially important to consider if you don’t have the time or resources to build an audience — otherwise, it is very easy for a podcast to stay in the territory of being an experimental investment that might not necessarily reap financial or editorial benefits.

5. How much can you extend the podcast brand into ancillary revenues?

Think about how “Longform,” another popular podcast, and Recode have partnered to create live “on stage” podcasting events you have to purchase tickets for. The New York Times sent the stars and creators of its popular podcast “Caliphate” (reporter Rukmini Callimachi and producer Andy Mills, respectively) to participate in live New York Times subscriber events around the country. While these events were generally recorded for specific local podcasts, attendees came to find Times tote bags on their chairs.

And movies and TV are part of this equation. The TV show “Alex, Inc.,” was loosely based on the popular Gimlet podcast “Startup.” The podcast “Limetown” is expected to hit the small screen as well. And HBO created a TV series based on the popular “2 Dope Queens” comedy podcast from WNYC Studios.

That’s just a few examples. Remember, a good story has the potential to live anywhere. It’s not uncommon for books to be turned into movies. So why not podcasts?

So, while podcasting – and podcast sponsorship – is growing, it’s still vital to take stock of what you can offer and how much you can invest before you find yourself in the weeds. Podcasting may be less expensive medium to break into than most other media (e.g. video), but that doesn’t necessarily mean growing a podcast is a piece of cake. The more you take it seriously, plan ahead, and learn lessons from the masters, the more it can deliver for you and your audience.

Has Google outgrown democracy?

September 13, 2018 Chris Pedigo, SVP Government Affairs – DCN

Last week, the Senate Intelligence Committee held a hearing to examine the extent to which foreign actors manipulated digital platforms to meddle in the 2016 elections. To their credit, Committee Chairman Richard Burr (R-NC) and Ranking Member Mark Warner (D-VA) side-stepped the partisan wrangling and focused on how these bad actors attempted to undermine our democracy. And, for the first time, Senators Burr and Warner insisted the top executives from the big tech platforms testify in person. Given the dysfunctional state of the American political discourse, it’s especially remarkable that a group of Senators agreed to tackle an issue in a bipartisan fashion. Facebook agreed to send COO Sheryl Sandberg (Facebook CEO Mark Zuckerberg already testified in the spring). Twitter sent its CEO, Jack Dorsey. Remarkably Google declined to send Alphabet CEO Larry Page.

It’s anyone’s guess as to why Google didn’t feel it needed to participate. Its dominant role in the distribution and monetization of content, through its search and advertising platforms respectively, certainly would have been relevant to the Committee’s work. And that is before you even get to YouTube, which helped make Russia Today its #2 news property through much of 2017 and spread of misinformation in Chemnitz last week. Google certainly has enough lobbyists on retainer to fully prepare. Whatever the reason, the fact that “declining” was even an option demonstrates just how big Google has become.

Data Wars

One area not well understood in Washington is the relationship between data collection and the incentives that allow foreign actors to manipulate them. Damian Collins, the Tory MP of UK Parliament, has led a brilliant multi-party effort to document its findings in this area. Other policy experts have also begun to explore how data protection may help curb disinformation.

Again, this is where Google’s role as the company that collects enormous amounts of data on the public needs to be more clearly explored. A few weeks ago, we distributed research entitled Google Data Collection, by Vanderbilt Professor Douglas Schmidt which, for the first time, cataloged the expansiveness of Google’s data collection machine. Google owns the #1 browser (Chrome), the #1 mobile platform (Android), and the #1 search engine (Google Search). On top of that, Google’s analytics and advertising tools are impossible for consumers or publishers to avoid. All of these touchpoints allow Google to conduct a massive surveillance operation on consumers who have no way to avoid it.

Professor Schmidt’s research shows that a dormant, stationary Android phone (with the Chrome browser active in the background) communicated location information to Google 340 times during a 24-hour period. That’s an average of 14 data communications per hour – with location information constituting 35% of all the data samples sent to Google.

When an iOS device was running Safari in the background, but not Chrome, Google could not collect any appreciable data unless a user was interacting with the device. Conversely, an idle Android phone running the Chrome browser sends back to Google nearly 50 times as many data requests per hour as an idle iOS phone running Safari.

Perhaps the most striking revelation in Professor Schmidt’s research is that approximately two-thirds of the data that Google collects about consumers is collected in passive ways. That’s an incredible amount of information being gathered in the background, where consumers wouldn’t expect it.

Power Play

Google’s pervasive surveillance have enabled the company to rake in massive profits and squash competition in a variety of ways. However, there probably is no surer sign of their dominant position than their ability to decline – with no worry for the consequences – a bipartisan request to testify from the Senate Intelligence Committee.

At the same time they declined to participate in this hearing, rumors began to circulate that Google is creating a search engine just for the Chinese market that will allow Communist leaders to block access to content they don’t like. Google appears to be a willing participant in the suppression of over 1 billion people.

Is it time to start asking whether Google has outgrown democracy?

Ads are coming to streaming TV. But will consumers buy in or opt out?

August 30, 2018 Mark Glaser, Founder and Publisher – MediaShift

One nice bonus of being a cord-cutter is that you don’t get inundated with a lot of ads. Many over-the-top (OTT) streaming services offer ad-free viewing, and those with ads have tried not to anger viewers. But as streaming services gain more and more viewers, advertisers are finally getting a chance to reach the “unreachables.” And the numbers back that up: The connected TV advertising spend will hit $8.2 billion this year, according to Tru Optik, rising to $20.1 billion by 2020.

Recent acquisitions and new technologies signal that companies such as AT&T, Sinclair, Adobe, and even Netflix are planning to add advertising to the mix, which will give targeted ads on OTT programming a new path forward. This heavy investment in OTT shows where advertisers are placing their bets. But ultimately, good advertising — advertising that’s relevant and interesting for audiences and profitable for marketers — is what will make these moves worth it.

A Megamerger for Addressable Ads

Now that the AT&T/Time Warner acquisition has finally closed (despite an ongoing lawsuit from the Department of Justice), AT&T can take advantage of the data trove Warner offers to focus on addressable ads that scale. This means it can take viewer data and information to craft highly specific, highly targeted advertising. AT&T has been experimenting with addressable TV for a while, as I previously wrote.

In June, it announced it would also acquire the digital ad platform AppNexus, which helps AT&T expand advertising beyond its own devices and partner with media companies. The goal for AT&T is to reach both the streaming audience and the traditional TV audience; it wouldn’t matter where a viewer is watching from or whether they have a cable or satellite subscription.

And AT&T’s plan is not a completely novel concept, as CNBC’s Michelle Castillo wrote:

“The service would be similar to Comcast’s Freewheel, which is used by TV networks and major video distributors to serve ads on their streaming content. Freewheel places addressable ads on NBCUniversal content (owned by Comcast), as well as partner networks like Viacom and Disney. Ads can appear on traditional (linear) television programming, on video-on-demand content accessed through cable set-top boxes, and on streaming OTT services that use a device to connect to the internet.

Emerging Ads, Emerging Tech

Not to be outdone, Sinclair Broadcasting Group recently launched CompulseOTT, an ad product to help sell local ads into streaming services around the country. CompulseOTT currently has more than 2,000 segments advertisers can use to target audiences and is available on multiple OTT platforms.

Recent deals in the ad tech world also show that both networks and advertisers are making bigger bets on targeted ads on OTT. Liveramp, an identity unification platform, recently inked deals with the data company Inscape as well as Adobe. With Adobe, Liveramp will use its data to oversee Adobe’s Advertising Cloud. With Inscape, Liveramp will be able to better merge TV and digital audiences, and therefore offer a more fluid audience to marketers.

iSpot has also been helping marketers move more easily between digital and TV audiences. It’s been tracking advertising throughout the entire TV ecosystem and recently developed a custom-segments feature that advertisers can match their digital segments against. Theoretically, iSpot’s tools can help brands optimize their spending.

And even Netflix, the bastion of ad-free viewing, has started experimenting with ads that promote its own shows. That move definitely ruffled users’ feathers. Subscribers expressed disdain at the breaks they were paying to avoid – not to mention worrying if pay ads might come next for the highly leveraged streaming giant.

Making the Audience Happy

But here’s the rub: As much as addressable advertising is becoming more and more possible, giving marketers detailed targeting for streaming audiences, the question remains if the public will buy in or opt out.

Seventy-four percent of Americans don’t believe TV advertising is relevant to them, according to research by Adobe Digital Insights. Nearly 60% of Americans are streaming content, and mostly with Netflix (and don’t forget: its viewers were pretty angry at the idea of ads). Skipping and blocking ads is just as routine as paying money to have no ads at all.

In other words, the route to reach audiences may be different with OTT programming. But the experience of reaching them will likely mirror advertising elsewhere. So, before marketers can claim a breakthrough with streaming audiences, let’s see what the new process of making ads interesting and relevant will be — and make sure the costs of doing so don’t exceed the benefits.

For Hearst’s Kate Lewis, data fuels strategy but the audience is in the driver’s seat

August 23, 2018 Ron Miller—Independent Technology Journalist

Reading Kate Lewis’s list of responsibilities as Chief Content Officer of Hearst Magazines boggles the mind. She oversees content strategy, which includes managing all of the company’s editors-in-chief and digital directors in the U.S., while working with its international network to coordinate global content.

Keep in mind that Hearst is a sprawling global publishing empire with 300 print editions and 240 digital brands. Lewis in charge of the 25 print and 25 digital publications in the U.S. The former has an audience of 89 million, the latter 108 million.

Kate Lewis, Chief Content Officer of Hearst Magazines

As though that weren’t enough for any single human, she also works closely with the product and technology teams, consumer marketing, and the division’s branded content unit, HearstMade – just in case she has some spare time.

Lewis is in constant motion. One thing is clear, to monitor this network of brands, she has become keenly aware of the value of data, which drives strategy across both print and digital. It also provides her with critical insights into the audience’s needs, desires, and expectations.

It’s all about that audience

Given her broad purview, Lewis has developed a core guiding philosophy (and great communications skills), which allows her to maintain a consistent approach while also considering each publication’s unique audience.

“Our approach is driven by our audience. What do they want from us, brand-by-brand, on every platform where we deliver content. We create and design content differently depending on the platform. And, of course, print is a huge platform for us. It’s where this all started! So, the thinking first will always be: ‘What does the audience want from us in this encounter?’ And yes, that is always evolving,” she explained.

As an example of that evolution, she points out that when she started at Hearst, they were very focused on Facebook to drive traffic. Now, they think about it as a way to get video views, among other things. “This kind of persistent change is something that feels digital in nature, but I think will be meaningful in the print world,” she said.

Digging the data

Back in the days before digital, it was hard to know much about your audience beyond subscriber numbers and some basic demographics. However, Lewis points out that today, print publications have access to the same data as the digital properties so that both can take advantage of it.

That means arming editors with as much information as possible. Hearst has a dedicated data operation called Hearst Data Studios, which feeds data across the brands. “This comes down to the efforts of our Hearst Data Studio, as well as an openness to sharing the data, the insights we have across our many, many brands.”

Beyond that, Lewis said that employees need transparency about how she is using the data internally to measure success or failure. “Sharing and being honest about wins and fails will be key. And truly defining, clearly, what a win and a loss is. My feeling is that content can rise from access to data, collaborative editors, and clear goals. We have established all the above amongst the digital team and I hope to add to what’s already being done on print.”

The future is now

Lewis believes that the biggest challenge on the content side of things remains distribution. And, she says that it’s getting harder to know your audience when it comes from many different sources. “People still hunger for content, big and small, but our direct connection to them has been somewhat obfuscated. It can be challenging to get in their face these days whether because of the decreasing number of newsstands or the increasing presence of social media. Our audience is huge but comes to us in many ways, not necessarily directly,” she said.

One way that media companies have tried to keep their audience front and center is through newsletters. Lewis acknowledges newsletters provide a kind of direct connection. However, she worries that consumer inboxes are becoming overloaded, which may sever that direct link. She sees chat as one way to fill the gap. “Chat is pervasive from grandmas to 10-year-olds,” she said. She also sees voice-driven media like Alexa and Siri also coming into play once they mature.

Ultimately, though, Lewis feels that everything boils down to audience engagement. It’s up to brands to figure out how best to keep the audience coming back as technology continually changes the way consumers interact with content creators. “Brands evolve based on generations and trends and the measure of good, and as the caretakers of the brands we’ll push them to be relevant and worth engaging with.”

Featured Post | Industry-Research | Policy

Google data collection research

August 21, 2018 DCN

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While the public has been focused on the ongoing Facebook and Cambridge Analytica scandal, Google has largely avoided public scrutiny about its data collection practices despite having the ability to collect far more personal data about consumers across a variety of touchpoints. There have been efforts to document individual practices by Google such as their efforts to circumvent controls on Safari. More recently, an investigation by the Associated Press revealed that Google continues to track location data even after a consumer has turned off the setting. While these research efforts have been important to the public policy dialogue, no research exists which looks at the breadth and depth of data collected by Google.

In “Google Data Collection,” Douglas C. Schmidt, Professor of Computer Science at Vanderbilt University, catalogs how much data Google is collecting about consumers and their most personal habits across all of its products and how that data is being tied together.

The key findings include:

A dormant, stationary Android phone (with the Chrome browser active in the background) communicated location information to Google 340 times during a 24-hour period, or at an average of 14 data communications per hour. In fact, location information constituted 35 percent of all the data samples sent to Google.
For comparison’s sake, a similar experiment found that on an iOS device with Safari but not Chrome, Google could not collect any appreciable data unless a user was interacting with the device. Moreover, an idle Android phone running the Chrome browser sends back to Google nearly fifty times as many data requests per hour as an idle iOS phone running Safari.
An idle Android device communicates with Google nearly 10 times more frequently as an Apple device communicates with Apple servers. These results highlighted the fact that Android and Chrome platforms are critical vehicles for Google’s data collection. Again, these experiments were done on stationary phones with no user interactions. If you actually use your phone the information collection increases with Google.
Google has the ability to associate anonymous data collected through passive means with the personal information of the user. Google makes this association largely through advertising technologies, many of which Google controls. Advertising identifiers—which are purportedly “user anonymous” and collect activity data on apps and third-party webpage visits—can get associated with a user’s real Google identity through passing of device-level identification information to Google servers by an Android device.
Likewise, the DoubleClick cookie ID—which tracks a user’s activity on the third-party webpages—is another purportedly “user anonymous” identifier that Google can associate to a user’s Google account. It works when a user accesses a Google application in the same browser in which a third-party webpage was accessed previously.
A major part of Google’s data collection occurs while a user is not directly engaged with any of its products. The magnitude of such collection is significant, especially on Android mobile devices, arguably the most popular personal accessory now carried 24/7 by more than 2 billion people.

DCN is grateful to support Professor Schmidt in distributing this research. We offer it to the public with the permission of Professor Schmidt.

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Why outdoor advertising is having a renaissance

August 16, 2018 Mark Glaser, Founder and Publisher – MediaShift

It’s a tough market for traditional advertising. Virtually every sector will see a drop this year, except one: outdoor advertising. What’s driving the growth? Intense interest from large tech companies advertising on billboards and even buying into billboard companies. Plus, new technology allows better digital tracking of who seeks billboards. Not to mention the fact that some billboards end up being photographed and shared as memes on social media.

Both Google and Facebook, as well as Netflix and China’s Alibaba, among other companies, have started investing in outdoor advertising. And out-of-home ads are expected to expand by two percent this year, compared to one percent from last year. These incremental gains don’t mean that aging billboards will proliferate, of course. But with interest from tech behemoths – and startups trying to disrupt the buying process – outdoor advertising is having an unexpected renaissance. (Plus, no one has invented an ad blocker for real-life billboards yet.)

Tech Giants Drive Interest

While Facebook touts its targeted online adverting and rakes in billions, the social giant is actually pushing its own marketing campaigns to the physical world. Case in point: Facebook recently ran an outdoor advertising campaign to showcase its approach to user safety and privacy.

And Google is now bringing targeted ads to outside advertising after three years of testing programmatic ad technology on billboards. With an emphasis on transit points and the times and people who show up there, the company is banking on targeting ads toward these populations. These might be affluent commuters or die-hard soccer fans, as Bloomberg’s Alex Webb explained. Although a recent AP investigation is drawing attention to the ways Google tracks your location without your consent, this very location-targeting — assuming users are aware it’s on — is what will give Google an edge in serving relevant outdoor ads.

The renewed interest in old fashioned outdoor advertising is not just an American phenomenon. Chinese e-commerce giant Alibaba, for one, has invested $2.23 billion in Focus Media, a company based in Shanghai that operates outdoor digital advertising screens in China, Singapore and Hong Kong. The move goes back to Alibaba’s “online-to-offline” strategy, also referred to as “New Retail,” that Alibaba hopes can be an alternative way of reaching China’s growing middle class.

New Technology, Digital Tracking

Of course, billboards today are much more than static images. Digital billboard advertising can switch screens every 10 seconds or so. And with their size, (especially if you’re stuck in traffic) they’re hard to ignore. Clever ad campaigns on huge digital screens can prompt viewers to share the experience of the ad on social media. Clear Channel Outdoor Holdings, which operates more than 1,200 digital roadside billboards in the U.S., uses mobile data from third-party providers to know which phones are passing in front of billboards.

Despite all the interest from tech firms, the buying process for billboards is still complicated and byzantine. To circumvent some of these issues, Reddit co-founder Alexis Ohanian is now backing a startup, AdQuick, that hopes to smooth the process of purchasing billboard ads. AdQuick has secured $2.1 million to develop targeting and measuring tools. This included what CEO and co-founder Matt O’Conner hopes will include voice technology like Amazon Alexa or Google Home. The idea is that passersby will be able to ask digital voice assistants to ping billboard information directly to their phones.

Netflix Gets Exposure in Hollywood

Online advertising may get all the credit for being hyper-targeted. However, for some companies, this kind of targeted advertising is also possible when you’re in the right place at the right time. Netflix, for example, bought half the assets of Regency Outdoor Advertising, a Los Angeles-based company, in a $150 million deal. Its focus: Sunset Strip.

Why? Sunset Strip is the everyday pathway for actors, directors and writers — and would-be actors, directors and writers. So, Netflix can both promote its existing shows while enticing talent for upcoming projects. It’s a no brainer, according to Nancy Fletcher, the president and CEO of the Outdoor Advertising Association of America. “In the entertainment capital of the world — where your waitress could be producing a movie — Netflix chose to buy billboards.”

But while Los Angeles is happy to plaster the highways with billboards, not every city is so welcoming of them. Nearby San Diego, for example, has long fought “sign pollution and visual blight,” but could be affected by a new California bill that would loosen the rules on outdoor advertising and allow more digital billboards. With the amount of potential revenue these advertising campaigns offer, though, this could be a tough bill to fight.

The opportunities for outdoor advertising seem endless with the right amount of investment and creative technique. Viewers might not always be happy about being bombarded with yet another advertisement — but then again, when are they not? The question is whether new technologies and interest from tech companies can truly make billboards a long-term growth story, or just another blip in the tech boom.

With a little help – and a little weirdness – readers understand why it’s important to help local startup newsrooms pay the bills

August 9, 2018 Dave Burdick, Editor–Denverite

Reporters have a lot of fun. They get to call remarkable people every day.

Editors don’t do that quite as much, so Thursday was exciting for me. After a brief email exchange, I called a remarkable person who had only a couple of minutes as she walked between obligations.

The remarkable thing about Molly Trujillo is that she’s been really persistent about giving money to Denverite, a local news organization (where I’m the editor). And this is despite the fact that there’s no paywall and even though she’s unlikely to be able to get to any of the member-only events her contributions entitle her to because of her commute.

She’s had two credit cards stolen in the past few months. The first time, she canceled her card, then set up another recurring donation with Denverite. The second time, she was frustrated by the process of having to set up her various donations and payments for everything associated with that card all over again. So, she set up a larger, annual donation with Denverite, just in case something like this happens again.

When we launched Denverite’s membership program, just weeks before our Spirited Media colleagues at The Incline and Billy Penn launched theirs, we had some guesses about what might cause people to donate. We knew that our newsletter open rates were outstanding, and that Denverites enjoyed our story selection, our voice and our reader-focused suite of news products. But would that be enough to get people to help us pay the bills?

I asked Denverite members why they donate.

Trujillo told me she just really likes Denverite.

“You guys are looking at the things that are really, really interesting,” she told me.

“In one email, I can find out what’s going on this weekend, I can find out who did what to who,” she said. “I can find out where there’s going to be problems in Denver, I can find out where there are going to be really great things. The whole rundown. I just love that. The good, the bad, the fun stuff.”

Hours later, I called Jan Marie Belle, who became a member of Denverite as soon as she could. She also pays for the New York Times, the Washington Post, the Denver Post and has contributed to the Colorado Sun crowdfunding campaign.

Belle said she reads our email newsletters every day. She particularly appreciates that we have local stories that no one else has.

“You get news there that you can’t get anywhere else, and you get it early, and you get it often. And your daily emails and the way you link to things — it really is valuable because there’s a lot of information there and you seem to get it up sooner than anyone else.”

Belle, a pretty engaged Denver native, said it’s important to her that local journalists are producing local news — stories about housing and neighborhoods, especially. And it’s important to her that she and others read multiple sources of news. That’s all important to us, too, and we’re pretty loud about it.

Understanding the bigger picture

A Denverite member event.
Photo by Kevin J. Beaty, Denverite

“The first reason I paid for it is, I figured if you didn’t get some money, you might not be there,” she said. “I understand that people have to have money to run a business.”

When she said that, my heart skipped a beat. Yes! Correct! That’s the whole deal!

That’s why our partners at the News Revenue Hub coached us to make our messaging really clear about that: If you’d miss Denverite if it was gone, you might want to help us pay the bills, because reporting costs money, and if the money runs out, the reporting stops.

We’d long had people asking us to put a “DONATE” button on our site, but launching membership was of course more involved than that. News Revenue Hub helped our newsrooms build email campaigns that explain why we need reader support and what that support pays for.

Our first membership program email was pretty honest about our financial situation: We’d just laid off three reporters a few months before, and we needed to make some changes to the way we were doing things. Most urgently, we needed support from the readers, starting right away.

Since then, we’ve highlighted the different types of work we do. We’ve also described the processes of local journalism in a little more detail for people who have no reason to already know how it all works.

Not everybody knows at the outset that it takes time, patience and skill to report and write the kinds of stories that connect the dots between the machinery of local government and the reader’s day-to-day needs and desires.

Inspiring love notes

“I love reading Denverite.” “You make Denver feel like a small town again. Interesting topics, great writing.” “I just discovered you and you are just what I need.”

Those messages accompanied new members’ first donations. Belle told me she loves that we ask readers for suggestions and that we’re responsive. Trujillo wrote after we’d spoken to add, “I really like the personal and witty delivery in each email.”

That makes a big difference for people, in our experience. It’s good to be useful, and it’s better to be useful and delightful. Do good work with a sense of adventure and a sense of humor. Think about how and when your audience is using your products. And do things other players can’t or won’t do.

Another new member, James Anthofer, donated within hours of attending a Denverite event in which we walked a little over five miles through the city.

When I asked him via email why he donated, he said that he’d found himself checking Denverite more than other local news sites to find out what’s going on in the city, but the thing that pushed him over the edge was something quirky.

“The turning point might have been this article, which answered a question I had wondered for long time a couple of months ago,” he wrote. “Denverite’s website found that story when I typed ‘parking lot horse statue’ or something like that into the site. I started subscribing to Denverite because I want it to continue to exist and answer my weird questions.”

About the Author

Dave Burdick is the editor of Denverite. He lives in Denver and is probably on a bike, laughing just a little too loudly somewhere or staring reverently at the moon. Read Denverite or else.

Snap rises as Facebook falls

August 2, 2018 Mark Glaser, Founder and Publisher – MediaShift

For so long, Facebook has been the classroom bully in social media, with Snapchat taking it on the chin when Facebook copied Snapchat’s Stories format on FB, Instagram and WhatsApp. But now, the little tyke is exacting revenge as Facebook deals with blow after blow in the public arena: ongoing Russian meddling on the platform, incendiary posts inspiring real-life violence in Myanmar and Sri Lanka, and a stock market plunge that encapsulates its challenges fighting misinformation. Meanwhile, Snap has been quietly rolling out new deals with publishers and making itself out to be a much friendlier space to do business.

While it’s hard to compete with Facebook’s 1.47 billion daily active users, the story of Snapchat as the underdog fighting back is one to watch — especially as publishers tire of Facebook’s litany of problems.

‘Brand Safety and Control’

While Facebook consistently dominates tech news coverage, Snapchat also turned heads recently when it launched a private marketplace for advertisers akin to its own premium programmatic advertising marketplace. Now, advertisers can book space on specific shows and channels from a variety of publishing partners, including BuzzFeed, ESPN, and NBC Universal. Previously, brands could buy Snapchat ad inventory, but not target their advertising to specific publishers.

The beauty of this? Publishers can set their own ad rates, target only certain segments of a show’s audience, and advertisers can find more brand safety on Snapchat than they currently do with Facebook and Google’s YouTube. This is of course a boon for Snapchat too, as AdAge’s Garrett Sloane put it:

“Advertisers have been concerned about the type of content that appears on both YouTube and Facebook. Snapchat is trying to take advantage of the industry’s unease by offering a higher level of brand safety and control: Discover already operates as a gated community for professional publishers only, and the private marketplace now lets advertisers expressly select the shows they want while still using ad tech.”

On top of this, Snapchat is planning to sell six-second, unskippable ads in the private marketplace — meaning the chances of sustaining audience attention is even higher.

Broadening Discover’s Horizon

Snap also recently announced a new Discover partnership with an LGBT publisher — its first one — the U.K.-based website PinkNews. According to PinkNews CEO and editor-in-chief Benjamin Cohen, part of the incentive is that Discover is still a curated platform, meaning that accessing the humans behind the automation is still possible. Snapchat was also enticing in part because Facebook traffic for PinkNews— as is the case with many publishers — has gone down, Cohen said, and so he was looking to broaden audience traffic elsewhere.

The idea of working with a social platform like Snapchat that is actually willing to pay publishers became even more attractive for PinkNews. The partnership is also, undeniably, a win for Snapchat. It gains an outlet that will help the platform attract a young audience willing to push the boundaries of sexuality.

Indeed, it’s obvious that Snapchat is on the hunt to broaden its 191 million daily active users. In addition to working with traditional publishers, Snapchat has made a bigger effort this year to partner with digital publishers and social media stars that appeal to younger audiences. That includes Daquan Gesese, a hip-hop and pop culture personality with a huge presence on Instagram, and Fanbytes, an 18-month-old digital media company that runs four popular accounts on Snapchat, and operates a network of mostly 15- and 16-year-old creators who run their own accounts and publishing brands on Snapchat.

In May, Daquan launched his own Discover channel, and Fanbytes and Snapchat are currently trying to figure out whether “official” versions of its channels could be tailor-made for Discover.

More Flexiblity

But here’s what’s ironic about the Snapchat comeback: It wasn’t that long ago that Snapchat was ridiculed for a redesign that paired friends and family in one stream, and publishers and advertisers in another. Audiences complained, publishers worried.

“Content producers from eight publishers I spoke to said that the redesign had made their metrics go haywire,” Vanity Fair’s Maya Kosoff wrote. So it seems pretty natural that some publishers don’t necessarily see Snapchat as a particularly good long-term strategy if they can monetize better elsewhere, as one publisher anonymously confessed to Digiday last month.

However, it’s also understandable — decent, really — that Snapchat is letting publishers introduce non-exclusive shows to Snapchat Discover. Syndication is not particularly sexy, but even if shows have already aired on YouTube or Facebook Watch, this is a chance for Snapchat to build a Discover audience — and it’s a chance for publishers to ignite new revenue streams for its most popular intellectual property without having to create something original for each platform.

While publishers aren’t going to give up on a massive platform like Facebook anytime soon, Snapchat is getting back in the game on two counts. First, it’s actually the steady performer as Facebook struggles. And second, it is finally serving publishers in more ways while opening itself up to newer creatives. As with all platforms, there’s only so much trust publishers can give third parties who change their practices and rules on a whim, but it’s a good thing that Snap is trending up at just the right time – finally getting off the mat to give Facebook a few good licks.

Advertising | Featured Post | Perspectives

Duopoly dystopia

July 26, 2018 Chris Pedigo, SVP Government Affairs – DCN

Google and Facebook’s dominance of the digital advertising market is well documented. Pivotal Research’s Brian Wieser estimated at the end of 2017 that these two companies “accounted for 73% of all digital advertising.” In the same report, he also estimated that the duopoly accounted for 83% of all growth, which means their grip is only getting tighter.

Scale is the main reason these companies dominate. Facebook has a huge user base, particularly when you factor in its ownership of Instagram and WhatsApp. And let’s not forget its “like” buttons on more than 8.4 million websites, a number Facebook recently disclosed in its answers to lawmakers’ questions during the Cambridge Analytica hearings. Despite lingering legal questions, those “like” buttons continue to collect data about the sites visited by Facebook users regardless of whether those consumers are logged in to the platform. Even more concerning, the buttons also collect data about non-Facebook users. The result is a massive and rich database of consumers’ personal information and activity, which Facebook offers to advertisers for targeting ads to very specific audiences on and off Facebook’s properties.

Google also offers hugely popular consumer services including its search, Gmail, Chrome, and maps applications. Of course, it mines them for very sensitive information about consumers (e.g. personal messages, friend networks, interests, location). Oh, and let’s not forget that Google has a hand in every part of the digital advertising supply chain. Like Facebook, Google is ubiquitous and nearly impossible for consumers to avoid.

No competition

Some might be tempted to argue that these companies serve as competitors to one another. Except that they don’t compete on price. The fact that these services are offered free of charge has enabled their lawyers to shield them (so far) from any antitrust scrutiny in the U.S. What they really compete over is which company can collect more data about consumers. This unbridled competition for data is even more corrosive as it lacks transparency and they offer no effective choice mechanisms for consumers.

Consumer groups assert that this dynamic is bad for privacy. And, they might have a point: Consumer trust is at all time low while adoption of ad blockers continues to rise. Yet, Google and Facebook haven’t felt the impact of this lack of consumer trust. That’s because these companies don’t care where ads are served and they have virtually unlimited places to serve ads (meaning ads can appear near any content, which can create a negative impact by association). Instead, other tech companies, marketers, and publishers bear the brunt of consumer ire.

A dangerous game

But, there is more going on here. Facebook and Google have created a feeding frenzy in the vast, and expanding, data pool. Other companies recognize that have to jump in or risk their ability to compete for digital advertising dollars. Verizon bought AOL and Yahoo! solely to have more ad technologies and inventory. Combined with the significant information about the activities of their user base, this might give them an opportunity to compete for the duopoly-dominated digital advertising dollars. Not to be outdone, AT&T bought AppNexus, the largest independent ad technology company. It’s hard to fault these companies for joining forces given the world they’re competing in.

From my perspective, the duopoly is creating a giant game of musical chairs. If this dynamic is allowed to continue, it’s not hard to imagine that publishers will be forced to pair up with a telecom provider or to form giant conglomerates in order to ensure that they have a chair when the music stops.

Unfortunately, this will have profound effects on well-known premium publisher brands and an even more devastating impact on the ability for new voices to emerge. Ironically, the internet was supposed to increase the number and diversity of voices. Instead, the duopoly is quietly reshaping the web into a dystopian data collection machine.

Will IGTV deliver for publishers?

July 19, 2018 Mark Glaser, Founder and Publisher – MediaShift

With a new platform comes the recurring decision for skeptical publishers: How much should they care? And in the case of a new platform from Facebook, there’s every reason to be wary.

Still, publishers must consider the new Instagram TV (a.k.a. IGTV) video app because of two big reasons: 1) Instagram’s very large active user base of 1 billion; and 2) the chance to reach a younger audience via video.

IGTV launched last month as a vertical video version of YouTube, with users able to upload pre-recorded video up to 10 minutes long – or up to an hour for the coveted influentials and those with large followings. Every Instagram user has their own IGTV channel to post this content. For a generation increasingly eschewing linear TV for digital streaming options, it’s yet another way to consume and create video.

Indeed, IGTV puts Instagram in direct competition with YouTube, which has 1.9 billion monthly logged-in users and has long been a destination for video creators. It also competes with its parent company Facebook, which has been boosting its own viewing platform, Facebook Watch. Whether publishers can reap the financial benefits of this new form of production and consumption, though, largely depends on opportunities for monetization. And right now, there aren’t any video ads. Plus, publishers will have to produce programming for yet another platform, possibly leaving IGTV as a place for experimentation and not much more.

Building a Younger Fanbase

At its launch party for IGTV, Instagram cited data that teenagers are watching 40% less TV than they did five years ago. According to a survey by Trendera that was commissioned by video producer Awesomeness TV, 71% of Generation Z say their mode of entertainment consumption is streaming — with 71% also saying YouTube is the best place to watch longform content, and 75% saying Snapchat is the number one platform for staying connected and informed.

If Instagram can marry the Snapchat and YouTube worlds well with IGTV, it can be a prime destination to entertain a younger fanbase that’s used to viewing vertical video, and prefers the direct interaction Instagram offers. For YouTube stars looking to gain younger followers and wanting to take advantage of Instagram’s swipe-based search that makes their videos easily discoverable, it makes sense to experiment with IGTV. And because influentials earn most of their money with brand marketing, they have nothing to lose. So even if Lilly Singh might actually turn to Twitter to announce hiccups with loading content to IGTV, it makes perfect sense that she’s on IGTV.

Whether IGTV will become the primary mode people view other kinds of entertainment, though, is another story. Part of the beauty of YouTube’s horizontal viewing experience is that it is the place where linear TV can become digital. That’s why it’s become a prime spot to watch that late night news clip or music video. And as Wired’s Louise Matsakis and Lauren Goode pointed out, watching video on YouTube isn’t just an isolated personal viewing experience — it can also be social, in that people can play YouTube video on a television or play it out on a computer monitor for friends. “It’s hard to gather around a phone to watch vertical video and even more awkward to [broadcast] one onto a TV,” they wrote.

Publishers Take Note, and Take Chances

For advertisers and brands already turning to Instagram stories, IGTV seems like a natural destination for longer content. However, there’s the risk of looking too stuffy, stilted or worse: an infomercial. News outlets, meanwhile, can use IGTV to release more experimental video stories that can’t fit into Instagram Stories’ one-minute time limit. BBC News, BuzzFeed, Sky News, Vice, The Economist, and Vogue are all early adopters.

The greatest chase scene of all time. Filmed for the first time, hatchling marine iguanas are attacked by racer snakes hunting on mass. Taken from the Islands episode of Planet Earth II. https://www.bbcearth.com/planetearth2

A post shared by BBC Earth (@bbcearth) on Jun 20, 2018 at 9:22am PDT

But at this point, their IGTV content is a mixed bag. BuzzFeed has been re-posting content from its other social platforms, The Economist is trying its hand at airing short documentaries, and 12 different BBC accounts are funneling content into the BBC’s IGTV channel. The way publishers experimented with Facebook Live comes to mind here.

Although many publishers also had financial partnerships with Facebook to use Live, after a while, the initial excitement at a new method of distribution waned to the reality of resources. Much of that has to do with the fact that for social content to succeed, it has to be customized for the platform — and many outlets just didn’t have time to cater content for Facebook Live. While publishers like the BBC are seeing some success with IGTV, they’re also realistic that we’re still in its early stages.

“We’re not looking to reinvent the wheel, as we want to test the platform and see if it works for us,” Ciara Riordan, BBC News’ deputy social news editor, told the Press Gazette’s Sam Forsdick.

The consensus among publishers at a recent roundtable discussion at CUNY gets closer to the truth: It makes sense for publishers to experiment with IGTV, especially if they can repurpose content from elsewhere and the financial stakes are low. But for IGTV to be worth it, the financial benefits have to be high. Otherwise, IGTV must show itself as a game-changer in attracting new audiences. And so far, neither are true. Instagram has said ads will eventually come to IGTV. But with no way to currently monetize directly from the platform — and the dominance influencers already have on the attention economy — it’s no wonder that publishers, even if they can attract younger audiences, are fine taking a wait-and-see approach to IGTV.

How publishers can (and should) harness the power of membership

July 12, 2018 Robbie Kellman Baxter, Founder—Peninsula Strategies LLC

Adopting a membership orientation can be a simple and powerful way for media companies to reinvent their business models. In fact, membership can make them practically disruption proof.

Over the past decade or more, publishers have had to deal with two related transformations that are causing them to rethink their business models: the shift from print to digital and from ad-centric to reader-centric.

The shift to digital dominance has changed the economics of production, the limitations on timing and publishing frequency, and the reach on distribution. Startup media companies can establish a brand, create content—perhaps without a dedicated team of content creators—and distribute it globally with a minimal investment. Legacy publishers have had to seriously rethink everything in light of the shift—and rising competition.

There is a glut of content available, much of it available for free. This means that many readers are less willing to pay for much of the professionally created content of traditional media companies.

Meanwhile, advertisers have more places to advertise, at the same time as consumers are increasingly able to hide or ignore the ads, making advertisers less willing to invest in cost-per-click ad models.

What’s a publisher to do? The answer could be rethinking your offering beyond the current product, with a membership mindset.

The Rise of the Membership Economy and the New World of Subscriptions

With the rise of what’s come to be known as the Membership Economy, companies in virtually every industry from software (Salesforce) to hardgoods (Peloton) have been moving from ownership to access, from anonymous transactions to known relationships with customers, and from one-time payments to ongoing payments.

Technology is extending the ways companies can interact with the people they serve. Always-on devices, declining costs of both generating and distributing content, and perhaps most of all, the ability to leverage data and algorithms to provide a more personalized experience, have changed consumer expectations. Consumers expect companies to optimize services for their individual needs, and to “learn” their preferences over time.

Companies that optimize their services around building a long-term formal relationship with their customers, rather than focusing on their own products or short-term revenue, are disrupting long-time players. Think of what Amazon, and particularly Amazon Prime, has done to retail, or what LinkedIn is doing to professional associations and recruiters.

These membership-oriented businesses are able to build predictable revenue through subscription pricing, even as many traditional subscription businesses struggle. This is because they understand that the initial moment of transaction is the starting line, and not the finish line. To move from a subscription to a membership approach, businesses need to focus on engagement, and understand the warning signs of churn.

Membership is the mindset of the company—the focus on understanding what the customer wants and is willing to pay for, forever, and delivering that. Subscription is just a pricing decision. Many media companies have always offered a subscription option, but few have been focused on treating their subscribers like members, and focusing on their evolving, long-term needs.

But some media companies have committed to membership approaches, focusing on winning their subscribers for the long-term and in many cases offering new features to better achieve their subscribers’ goals. New media companies like Spotify and Netflix have pointed the way to success, and traditional media companies like the Wall Street Journal, the Guardian and the New York Times have followed that lead with a member-centric approach.

Three Steps to a Membership Mindset

This approach can be adapted to suit virtually any media company in 3 steps.

Step one

Get a clear picture of who your “members” are. Are you in business to support advertisers or readers? There is no shame in either. But too many publishers are getting lost in the middle—trying to become more reader-centric while not being willing to give up any ad revenue. The problem is that advertisers want volume of eyeballs while readers want unique content and experiences. Their goals aren’t aligned, and media companies that spread themselves too thin, trying to manage both, end up doing neither well.

Step two

Determine your “forever promise” to those members. Is it around entertainment or deep analysis?

If your focus is on readers, is your promise to be hyper-focused on a specific topic like The Information or broad and high-level like theSkimm? And if you serve advertisers, how creative are you in devising solutions that help them achieve their ongoing business objectives? If you asked your best (happiest, most loyal) subscribers why they stayed with you, what would they say?

Step three

Use that “forever promise” as a guiding principle in determining the content and features you offer. Don’t be limited by your current product and packaging.

Netflix used to offer “3-dvds-out-at-a-time” and then moved into streaming content. Now they are investing $8 billion to create unique content to deliver through multiple channels including cable and mobile device. But their forever promise of “a great assortment of professionally created video content delivered in the most efficient way possible with cost certainty” hasn’t changed at all.

Once you start focusing on your best members, and optimizing your offerings around them, instead of building around your products (magazine, newspaper, 30-minute sitcom) you will create a virtuous cycle of product and service creation that protects you from competition and builds tremendous loyalty.

Does Information Really Want to Be Free?

There’s a piece of Silicon Valley folklore that has Steve Wosniak and Stewart Brand in conversation at the first “hacker conference” in 1984. Apparently Brand told Wosniak that information wants to be free. To this day many believe that consumers are unwilling to pay for any kind of content. This is simply not true as everyone from Netflix to The Financial Times has proven.

While it’s OK to give some content away for free, as a trial, or even invest in a freemium model, it’s critical to make sure you understand the return on investment of your free component.

Many organizations are using a “metering” model, in which readers get a certain amount of free content each month before hitting a paywall. With a few exceptions, this is generally a terrible model. Consumers can “game the system,” consuming as much free content as they can get without any intention of paying. Publishers aren’t able to discern between good prospects and free riders. And they can’t treat different segments differently.

Metering is neither a clear trial—a way for someone to understand the value you provide—nor does it provide a benefit to the company (like data insights) or to paying subscribers (a network effect, like LinkedIn). It’s a tactic in search of a strategy.

An increasing number of savvy publishers are closing the metering loophole, like the Boston Globe, which has gone from 10 to 5 to 2 free articles per month, since launching digital in 2011. The New York Times has also dropped from 10 to 5. At the same time, organizations are tracking the journey from prospect to paying subscriber, making note of the articles and topics that drive conversion and retention.

When you optimize content around paying subscribers, and treat those subscribers like members, the metric changes from clicks to engagement among paying subscribers and qualified prospects. Suddenly Kim Kardashian articles aren’t seen as successful, while in-depth analysis of the bond market, with its small but fully committed following, becomes “Most Valuable Content.”

Taking the Plunge to Membership

It can be scary to change the business model. Moving to membership requires focusing on a specific group of people, and letting other readers go. It requires clarifying your corporate mission. If you are going to have an obligation to your readers, be specific. By “readers” is that anyone who might ever read an article? Or paying subscribers? And if none of them paid you, do you still have an obligation? Just because you have always offered certain features or content, if it doesn’t attract new subscribers, or hook them so they’ll never want to leave, there’s no reason to keep those features.

You also might want to look at new features, like live events, in-depth research or educational content to more fully deliver on your promise.

I recently spoke to a group of senior business and editorial executives of major publishing companies. Many held that their businesses would be unable to survive without advertisers. And yet, many others (of all sizes and from across the globe) have been able to build new models blending old offerings with new ones and being paid by their consumers. It’s possible, but it requires focus and discipline.

It’s hard enough to join the Membership Economy as a startup, paths blazed by Salesforce, LinkedIn and Netflix. But for companies that have been around for decades, or even centuries, transformation is hard.

There are the tactical changes: how does content creation change when the goal is paid loyalty and binge watching and not anonymous “drive by” consumption? What about selling to consumers and not corporate advertisers?

But there are also cultural changes: it can be hard to take a more data-driven approach in an industry based on experience and instinct. As new skills become more important, what happens to the influence of long-time employees? And how do you find the courage to take very real risks that might tank a proud and successful organization?

It’s not just publishing facing these challenges. Retail, consumer products, nonprofits, services, manufacturing—any business that depends on customer engagement and loyalty is dealing with disruption.

And the north star to guide these new paths is the customer.

About the author

Robbie Kellman Baxter is the founder of Peninsula Strategies LLC, a consulting firm based in Menlo Park, CA that helps companies excel in the Membership Economy. Her clients have included large organizations like Netflix, SurveyMonkey, and the Wall Street Journal, as well as smaller venture-backed start-ups. Over the course of her career, Robbie has worked in or consulted with clients in more than 20 industries.

Robbie has been quoted in or written articles for major media outlets, including CNN, HBR.org, and The New York Times. She has an AB from Harvard College and an MBA from the Stanford Graduate School of Business.

Before starting Peninsula Strategies in 2001, Robbie served as a New York City Urban Fellow, a consultant at Booz Allen & Hamilton, and a Silicon Valley product marketer.

A sought-after keynote speaker, Robbie has presented to thousands of people in corporations, associations, and universities around the world.