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8 ways media companies can diversify revenue

November 23, 2020 Erin Pearson, Director of GTM – Evalueserve

Traditionally, many media companies earned the bulk of their revenue from display advertising. But as the pandemic continues, media companies face an increased need to explore more innovative models of monetizing their content. Here are several ways media businesses can generate new revenue streams:

1. Data

Data is the future of driving revenue. Consider what Conde Nast is doing with first-party data, with its Now|New|Next Segments. These explore what consumers are buying now, how the behaviors might change, and who will spend next. Increased audience engagement is driving the ability to discover new customer segments, opening the door for advertisers whose doors are closed during the pandemic.

Advertising spend decreased during the early months of Covid-19, but now media companies are starting to look at data offerings to entice advertisers. GDPR and additional privacy laws have dictate that this monetization strategy must emphasize a cookie-less future.

2. Monetizing Talent

Reputation and brand are important in the media industry. Quality journalism keeps people coming back — and talent is a big part of that. Media has begun to recognize the value of monetizing the individual. For example, Spotify gained exclusive rights to Joe Rogan and Michelle Obama podcasts, and The Athletic gathered a cult of the best sportswriters. Quake, a subscription-based podcast founded by media veterans, just launched in October 2020 with $2.5M in seed money. Its exclusive shows are headed by top talent in politics and media, like Laura Ingraham, Soledad O’Brien, Mike Huckabee, Andrew Gillum, Marc Lamont Hill, and Buck Sexton.

If media companies don’t start monetizing talent, the best journalists will begin creating their own micro-brands instead. This will further crowd the competitive space and the talent is likely to take their dedicated followers with them.

3. Ecommerce/Affiliate Marketing

Ecommerce in news media is poised for explosive growth. According to Digiday, 85% of CPG marketers are planning to buy more ads from retail media networks. Many media companies are forming partnerships with retail brands, as retailers are piggybacking on the reputation of established media brands, and vice versa. This could be especially lucrative during the holiday season.

Some ways to explore the Ecommerce opportunity include:

Creating newsletters with embedded content to promote either brand advertising or direct-response advertising.
Allowing partners to pay for news real estate by writing their own opinion pieces.
Opening an online shop, like BuzzFeed.
Offering affiliate links for products mentioned.
Opening a pop-up boutique and e-commerce shop for the holidays.
Promoting events with merchandise (for its livestream with Billie Eilish, Spotify is promoting with an exclusive t-shirt).

4. Paywalls

More media companies are putting digital subscription strategies ahead of other initiatives, and the numbers show that’s paying off. The New York Times has reported an increase in subscribers of 2 million year over year, and their digital subscription model is now finally more profitable than their print model.

And the latest report from the Digital Publishers Revenue Index, shows an overall increase in revenue from subscriptions over the past decade. 10 years ago, subscriptions made up only 7% of digital revenue, and now the data show that has increased to 22% of total revenue. Many publishers have begun to explore paywalls — from soft, hard, metered, and dynamic models. If you’ve not yet done so, now’s the time.

5. Communities and Membership Models

With the cancellation of in-person events and social gatherings, there has been a huge decrease in networking opportunities. Companies like Fortune are successfully solving two problems with one (big) concept. Problem 1: What’s a way to monetize virtual events to decrease revenue loss? Problem 2: What is a new way to bring in revenue and create a loyal customer base?

Traditionally, Fortune’s live events were designed for a finite number of people; there could only be 50 people at the Top 50 CEO’s retreat, for example. But Fortune realized an opportunity to grow its community to include previously untapped leaders and create a broader community by launching Fortune Connect in the fall of 2020. This online learning platform and community provides ongoing networking events and educational content to aspirational mid-tier leaders. Fortune is using a membership model to build, and grow, a sticky community.

6. Over The Top (OTT)

A growing list of brands are expanding into broadcast and streaming TV to grow their brand, engage their audience where they go, and bring in a new revenue stream. TIME & Univision won an Emmy. Vox has a top-ranked Netflix show. Axios is on HBO. Vice, New York Times and BuzzFeed have turned to streaming content. Beyond their well-known “Explained,” Vox has branched out further into unbranded production shows.

OTT is no longer an opportunity limited to legacy video or television brands. Media companies of all sorts are finding creative ways to monetize their video investments because it engages a new audience and establishes a new habit for the consumer to connect to the brand.

7. Education

Media companies are providing a growing number of learning/education courses for readers. For example, TIME has expanded its iconic TIME100 people with TIME Talks. The Wall Street Journal launched a mobile app to help provide resources on managing finances during the pandemic. Morning Brew has been putting together 101 courses on topics like Marketing, Finance, and Branding. And Axios is starting 101 video courses on topics like 5G, which are sponsored by companies related to the topic.

Publishers are seeing an opportunity to develop deep subject matter expertise and be the go-to source on certain topics in addition to news stories. It improves the value they can provide to subscribers and pulls in more targeted advertisers since they can reach a highly engaged niche audience on long-shelf life content that can continuously draw an audience.

8. Evergreen

Most hard-news outlets saw a drastic hit to their advertising revenue this year. Even an increase in subscription revenue failed to offset the advertising losses. But evergreen sites like Dotdash — which owns sites like SimplyRecipes and TreeHugger — have seen an 18% increase in revenue. While Dotdash does rely on an ad revenue model, they use ads about ⅔ less than a traditional news outlet and bet on fast page load and better UX for their growth.

What makes it particularly effective is their diversification of brands and content. Their travel brand ads, for example, have decreased while their health verticals have exploded. Having evergreen content allows them more flexibility in what content to create and how valuable each piece is to them since it doesn’t have a shelf life.

As news media becomes increasingly competitive, companies must find innovative new methods of generating revenue that also help attract and retain new customers. By exploring a wide range of approaches, with a focus on your core competencies and customer needs, news publishers are able to stay competitive and build healthier diversification of revenue sources.

How three media companies are approaching virtual events and monetization

August 6, 2020 Esther Kezia Thorpe – Independent Media Reporter

Many media companies have turned to virtual events as a way to engage audiences on a personal level during the pandemic. From webinars to virtual festivals, teams have worked to evolve their offerings as the long-term outlook for physical events remains uncertain.

The Financial Times, The Atlantic, and Bloomberg, are among media companies that produce events as one of their diversified revenue streams. They are also among those that have had to evolve their revenue strategy as their teams hit their stride with virtual events.

Maturing virtual events strategies

In March, FT Live went from being completely focused on physical events to virtual in just days. As a test, they launched The Global Economic Emergency webinar. And with just three days of promotion, they racked up over 7,000 attendees who logged in to watch.

“We had these huge numbers, and it was a bit of a lightbulb moment for us,” explained Orson Francescone, the Managing Director of FT Live. “We quickly realized that we could do something bigger and bolder.”

Weeks later, the company launched The Global Boardroom. The three-day event featured 110 remote speakers and boasted 52,000 registrations. The event focused on the impact of coronavirus on policy, business, and finance. And it was so popular that a second edition is scheduled for November.

The Atlantic has seen similar success with online registrants, with over 20,000 attendees attending their 28 virtual events. “It’s a larger audience than we would have been able to convene in person,” said Aretae Wyler, COO of The Atlantic. “It’s more international, and we’re seeing the same caliber of attendees.”

Bloomberg faced a different challenge with virtual events, as they already had an established Bloomberg TV offering. For them, it wasn’t a matter of a pivot to video. Rather, it was creating a distinct experience and value proposition for a new offering. This meant the focus for its virtual events had to be on the level of interaction attendees could have, and what the value would be for sponsors.

“Once we got crisp on these elements…what we needed from a platform, resource, and process perspective became self-evident,” Bloomberg Live’s Global Head Patrick Garrigan explained. “Not only are our audiences tuning in, they’re staying with us and engaging.”

The value for sponsors

For Bloomberg Live, attracting sponsors came down to the basics of why clients support events in-person. “We distil it down to three core attributes: thought leadership, brand awareness, and content creation and amplification,” said Garrigan. “Similar to in-person, it then becomes a matter of identifying how our platform can deliver on these metrics.”

Bloomberg delivers this by creating sponsor “moments” throughout its virtual programs, as well as allowing sponsors to share the perspectives of their senior leaders. They then share segments from the events widely across Bloomberg channels.

For the FT, it is their technology stack – as well as their access to large global audiences – that has been a key selling point for sponsors. Early on, the team focused on ensuring they had a strong analytics functionality in place.

“We can analyze who is attending, what stage of the event, how they are engaging, and serve this intelligence to our sponsors,” Francescone outlined. “Sponsors really enjoy our platform because it’s giving them, from an ROI point of view, much bigger and more detailed numbers than in a physical environment.”

Big numbers are also a draw for The Atlantic’s sponsors. The publisher is gearing up for The Atlantic Festival in September which will be entirely virtual, and free to attend. Whereas they would normally have 3,000 in-person attendees, the team is targeting between one and 2 million registrants for the virtual version.

Sponsor interest has grown as The Atlantic’s confidence in their model and ability to pull in high-caliber attendees. “Most of the sponsors that we have worked with in-person have been interested in trying this model with us,” said Wyler. “Part of that is the belief they have in our power to convene and engage audiences. We’ve maintained a 75% average watch time for our audience, which is pretty incredible.”

Reader revenue and data

When it comes to audience revenue, the FT is now charging delegates for all its events from autumn onwards. But for the second edition of its Global Boardroom event in November, FT Live is taking a freemium approach.

The event has three tiers of ticketing. First, they’ll offer a free pass which gives live access to talks, Q&As and polls. A $65 pass provides on-demand access to all talks and summary reports. The professional pass, at $385, adds 1-1 networking, exclusive access to extra sessions, and a business community area.

Beyond ticket sales, the FT sees long-term opportunities for the newly engaged data. “Of the 52,000 people we had attending The Global Boardroom, about 75% were completely new to us,” said Francescone. These attendees can be monetized not just through the event, but as part of the FT’s core subscription strategy.

The Atlantic also sees opportunity in bringing in new subscribers. “We are constantly thinking about how this can be a driver of subscription growth,” Wyler emphasized. “The benefit of virtual events is that it’s an opportunity to convene both the superfans, but also to introduce The Atlantic to new audiences.”

In previous years, tickets to the in-person Atlantic Festival have ranged from $50 to $975. However, registration to the virtual Festival in September this year is free. That said, there will be subscriber-only benefits like exclusive sessions and Q&A opportunities to bring value to existing subscribers and entice new joiners.

Bloomberg has historically not charged for its events. However, the exception is their Bloomberg Break a way CEO membership community, where virtual events have been leveraged as part of the membership package.

“We’ve created content that is exclusively for members. It gives them the tools, best practices, and essential feedback to grapple with the issues that are impacting business,” said Garrigan, highlighting the opportunity to provide another touchpoint to members through virtual events.

The future of virtual business events

Garrigan sees virtual events being a part of Bloomberg Live’s programming for the foreseeable future. “Given Bloomberg Media’s global footprint, virtual events are such a natural fit,” he said. “While we are incredibly eager to get back to in-person events as soon as it’s safe to do so…[virtual events] serve as a way to connect broad geographies in real-time that may not be able to join us in-room.”

For FT Live, their early success gave the team the confidence to run events for the rest of the year in a digital form. But for 2021, they are being cautious. Francescone suspects that they will iterate towards a hybrid event model. However, details (such as access and pricing) are still to be determined.

“We’ve set up a small internal task force within FT Live which is examining what the future is going to look like,” he explained. “What people’s preferences might be today might not be the same not only in five years’ time, but in months or even weeks.”

These publishers may have the scale that makes it easier to convince top-tier sponsors to get on board, but there are lessons for publishers of all sizes. Virtual events offer a wider audience and higher engagement than in-person events, whether that be hundreds or thousands of attendees.

As for reader revenue, features like on-demand viewing or virtual networking can be sold as an add-on, or as a subscriber-only benefit. The key is being flexible in your offerings and understanding what your audience will respond to as the situation evolves.

Featured Post | Revenue

In the battered news industry, are nonprofits best equipped to survive?

April 16, 2020 Kasia Kovacs – Independent Journalist

Over the past decade, the nonprofit news model has offered some hope while traditional news outlets struggled to keep afloat. Without the need to rely on advertisers and instead making money through fundraising and memberships, nonprofit news outlets have proliferated.

But recently, that hope has flickered. The worldwide Covid-19 pandemic, or coronavirus, triggered a tsunami to batter an already troubled industry. With advertisers losing money and pulling ads from news outlets, media companies are furloughing and laying off workers. And, in some cases, publications are being shut down temporarily or entirely.

How will nonprofit news outlets fare in the face of this pandemic and the economic downturn that follows? Perhaps better than traditional news outlets. New York Times columnist Ben Smith went so far as to advocate letting the for-profit model fail while supporting nonprofits instead. However, even with booming readership and engagement, nonprofits are concerned about how an economic recession will affect donations and fundraising, and ultimately, their future.

The promise of nonprofit news

Traditional news outlets began wrestling with declining revenues long before coronavirus spread throughout the world this winter. Although digital traffic has either increased or leveled off, advertising revenue continues to fall. Pew Research Center’s most recent State of the News Media Report found that ad revenue dropped by 13% from 2017 to 2018, continuing a trend that began in the early 2000s.

Further, the number of newsroom employees in the newspaper sector was essentially cut in half from 2006 to 2018. The number of newsroom jobs dropped by 36,510, according to the Pew report.

But nonprofit news organizations sketched a different picture of the future, offering the news industry a sense of hope. “It may be one way to start to repair the loss of trust in and public engagement with journalism in North America,” wrote University of British Columbia associate professors Alfred Hermida and Mary Lynn Young in Nieman’s predictions for journalism in 2020.

Journalism philanthropy quadrupled over the past decade, according to a 2019 Media Impact Founders report. Today, more than 230 nonprofit media organizations are members of Institute for Nonprofit News (INN), an organization that began with 27 members in 2009. Over two-thirds of INN’s members have launched in the past 12 years. INN’s members also employ about 3,000 staff, including 2,000 journalists, according to the organization’s 2019 Index.

Nonprofit strategies

These nonprofit outlets have provided necessary and often resource-heavy journalism that newspapers with dwindling funds might struggle to take on, especially watchdog and investigative reporting. Many nonprofit organizations cater to local audiences or report on niche topics, such as gun control, the environment, or education.

Certainly, many nonprofit news outlets earn some revenue from advertising and corporate sponsorships. However, these organizations rely most heavily on memberships and donations from individuals, families, and foundations. In the past, foundations provided the majority of the funding for nonprofits. However, the 2019 INN Index found that individuals and families contribute now about 40% of nonprofit funding. That same year, foundation funding dropped below 50% for the first time.

Even some for-profit news organizations have integrated strategies from the nonprofit model. The Guardian made an operating profit in 2019 for the first time in two decades after pulling off a financial turnaround strategy. This was, in large part, thanks to donations from more than one million readers.

And, faced with furloughs and possible layoffs, Vox Media is trying its hand at soliciting support from its audience. Emphasizing its wish to eschew the subscription model and keep its journalism freely accessible, particularly at this time, the company is turning to readers for support.

Of course, nonprofit outlets have not been the deus ex machina to single-handedly save the news industry. Journalism scholars have pointed out the shortcomings of a nonprofit business model. These include the risk of catering to elite donors rather than publishing stories for a wider audience. Larger nonprofits also tend to fare better than smaller organizations, which may struggle to raise enough funding.

Enter the pandemic

When coronavirus spread — first to Asia, then Europe, and then the U.S. — it dealt a serious shock to the news industry. Digital traffic to news websites increased significantly, with anxious visitors reading about the growing number of coronavirus cases, troubles with virus testing, and best practices for health and safety.

Despite this boost in page views, advertisers faced with their own losses have hit the brakes on many ad campaigns. They’ve also intentionally reduced the number of ads on digital news websites due to concerns about appearing next to coronavirus news. Buzzfeed News found that advertisers stopped over two million ads from showing up on news sites in the first three weeks of March.

As a result, Gannett is furloughing journalists at local newspapers across the country. Euclid Media Group announced layoffs at its seven publications. Some alt weeklies have shuttered entirely. And with economists predicting a global recession, the long-lasting repercussions of the pandemic look dire.

Traffic climbs

Nonprofits have faced consequences too, although they haven’t been so catastrophic.

High Country News — an independent magazine based in Colorado has maintained its nonprofit status for decades. Like many other news sites, it has seen a considerable increase in online readership of late.

Although the magazine normally publishes articles on issues relating to the western U.S., HCN assigned a team of about 10 journalists to focus on COVID-19. Stories shared details about the dangers of self-isolating on public lands, how to ethically get outdoors, and how rural doctors face the virus.

“Every story that we’re putting out on COVID-19 has just blown up. There just seems to be a huge appetite for those stories,” said Paige Blank, associate editor at HCN who is now leading the coronavirus coverage at the organization.

The number of users in March rose about 48% compared to the same time last year, and the number of new users also increased by nearly 53%. Plus, visitors are not just reading stories, but also becoming more engaged.

“The tip form has been getting a ton of responses from our readers,” Blank said. “We’re actually able to gauge what people are worried about right now. And we’re using those tips to tailor our coverage for our readers.”

But will revenue follow?

But whether that traffic and engagement can translate to sustainable revenue is unclear. So far, HCN hasn’t seen an uptick in donations in March. The magazine hopes to harness the traffic by launching an online fundraising campaign in late April, said Laurie Milford, development director at HCN.

Still, the magazine delayed a 50th anniversary campaign which it expected to raise $10 million this year. (The campaign gala is now scheduled for June 2021.) Overall, HCN expects to see a 25% reduction in general fund receipts in 2020.

HCN’s predicament is pretty representative of what most nonprofit organizations will be grappling with in the coming months, according to Sue Cross, INN executive director and CEO.

“It’s a mixed picture, she says. However, the situation “appears quite a bit better than the situation for for-profits,” Cross said. “(I’m) hearing of really significant increases in individual donor support. But some others that had a lot of events/sponsorship revenue or advertising income are hurting… For most, their community position and funding are up now, but uncertainty remains about future grant funding.”

Not all bad news

When it comes to for-profit news outlets like the Guardian, which also largely rely on reader donations, reader contributions could potentially act as a sort of cushion, softening the pandemic’s severe financial blow. However, thus far, it’s unclear how much of a difference reader donations will make.

In March, the Guardian received about 2.17 billion page views, far bypassing its previous record of 750 million pageviews last October. And the increased traffic appears to be increasing financial support from its online readers, according to editor-in-chief Katharine Viner. However, mid-March the Guardian announced a projected a loss of £20 million over the next six months from declining advertising and newspaper sales, which has led to furloughs and pay cuts.

Indeed, many news organizations hope that readers will see the value of their coverage during the coronavirus crisis and, despite the economic uncertainty, donate. Case in point: Chalkbeat, a nonprofit that focuses on education news in cities like Chicago and Detroit, gained $1,700 in just one week after an appeal for financial contributions

Chalkbeat has focused its reporting over the past month on how schools are dealing with the pandemic. Traffic tripled in March, according to figures from editor-in-chief Bene Cipolla. Like at HCN, Chalkbeat readers have been involved in spurring content; by the end of March, Chalkbeat had published 20 stories based on the responses to callouts asking for reader questions.

Instead of running its annual spring campaign, the organization is treating the COVID-19 crisis as a campaign unto itself. This means sending out weekly appeals, which resulted in significant donations and 21 new members after one week, according to Kary Perez, senior marketing manager.

Community engagement

In addition, “we have also been approached by lots of people asking us to come to their communities,” said CRO Maria Archangelo. “When they see the kinds of information that we are able to deliver to Detroit and Memphis, they realize what their communities are lacking.”

The future is less certain when it comes to Chalkbeat’s philanthropy partners and major donors, who are dealing with the pandemic consequences on their own terms. Archangelo hopes that donors and funders will realize the importance of Chalkbeat’s coverage once the pandemic has passed, and will continue to provide funding.

For Chalkbeat, HCN, and all other nonprofit news organizations, it’s difficult to calibrate the full impact of COVID-19. But for now, compared to the rest of the news industry, nonprofits seemed to have maintained a level of resilience in the wake of coronavirus’ brutal blow.

The rise of tribal subscription marketing

February 13, 2020 Chris M. Sutcliffe – Independent Media Reporter

“Democracy dies in darkness.” It’s an amazing rallying cry, a banner that supporters of The Washington Post flock to. As a tool for signing up potential subscribers, it has the benefit of setting out a core belief that many people share. It conditions the people who support (or profess to) democracy to consider The Washington Post an ally, by appealing to their emotions.

Creating that sense of belonging to a club is a key component of most subscription and membership marketing. You see it across most of the general news titles, from the offers made to “our readers” to the appeals to shared values. It’s even more obvious in the transition to membership rhetoric being offered by news titles, which have made that sense of belonging the central tenet of their marketing messages.

However, as digital subscriptions become the default primary revenue stream for many newspapers, the marketing messages they use to create that sense of kinship is changing. Driven by competition and an electric political climate, some publications are inverting that message. For many, the strongest sales pitch they can make to subscribers is not by setting out the values they stand for – it’s the values and people they stand against.

The changing nature of newspaper subscription

We’re entering the second stage of digital subscriptions. Many publications are altering their membership and subscription marketing messages as more people become habituated to paying for news online. The Guardian, for instance, made a considered decision to move from a message of survival to one of sustainability when it hit one million paying supporters.

Where once it was the sole preserve of the specialist B2B and information provider, now the viability of consumer-focused subscriptions is well established. As a hangover from those early days of B2B success, however, some newspapers still make the exclusivity of their articles and analysis the central focus of their subscription marketing.

John Barnes is the managing director of Sloop Media and a veteran of B2B publishing. He explains: “There’s been a swing back to quality journalism, which doesn’t happen by accident. It has to be funded everybody in the media is benefiting from that.”

Support quality

The Times & Sunday Times in the UK, for example, was an early entrant into the subscription space. The paper has always made the case that readers can only be assured of news quality by paying to support its journalists.

Even for publications without the prestigious history of The Times, the message that information must be directly funded through subscriptions is widespread. The Information, a tech-focused publisher that charges $399 annually for access, justifies its high price that way. Founder Jessica Lessin told the New York Times: “I’ve said this from the beginning, and I continue to say this, but you can’t give away what you expect the reader to find valuable.”

However, due to their positioning and the nature of their content, many news publications have found it difficult to justify using the exclusivity of their content as the selling point for a subscription. After all, in the age of information overload you’d be hard pressed to find a generalist newspaper that isn’t covering the same beats as many free-to-access online outlets. Consequently, they have made their political affiliation or stance the core of their proposition – for better and worse.

In the UK, for instance, The Daily Telegraph recently ran an advertisement for its subscription options that used its close ties to the UK government as the primary message. The current prime minister is a former Telegraph columnist.

Enemy of my enemy

Therefore, many newspapers have decided to lean into tribalism, making it clear that the best reason to support them is that they provide a bastion for a particular way of thinking. You see this most clearly in the messaging of the single subject newspapers, like the UK’s pro-EU The New European and Scotland’s pro-Independence The National. However, it’s equally true at many of the larger titles as well. Nobody’s abandoning the ideal of objectivity, but they’re making a particular slant central to their identity.

Barnes explains that “The big newspapers – the Guardian, The Washington Post – you know, the media organizations that have almost been singled out by Donald Trump… I think they definitely are playing that card of ‘who’s going to hold him to account unless we’re here?’”

The “Trump Bump” has been a boon for left-leaning papers, with the NYT in particular being singled out as the paper of choice for the swathes of the public who oppose him. (Though arguably, the publication has parlayed that into some smart investments in future subscription growth).

In a sense, what those publishers are doing is just an extension of what they’ve always done in print. After all, a particular political niche is practically a prerequisite in an incredibly competitive landscape. What’s changing is how explicitly some titles are making opposition to their competitors and politicians their sole marketing message.

In the UK, the 10-month-old Byline Times is a newspaper defined by opposition. It has made criticism of most other UK titles the way it appeals to disenfranchised readers.

What the others won’t say

Its executive editor Stephen Colegrave told me: “That’s a very strong part of our positioning. We launched originally with the positioning, which is on our masthead, of publishing what the other papers don’t say. So, we’ve had quite a strong position in terms of getting subscribers by actually welcoming people back to newspapers and acknowledging, like most of our audience, that we stopped reading newspapers a long time ago because we didn’t trust them.”

In particular, he singles out the fact that a handful of billionaires own the vast majority of UK newspapers as being of concern to a large enough proportion of the public to be worth launching a newspaper that explicitly is not billionaire owned. The recent outcry over the mere suggestion that a member of the Murdoch family might be about to take the role of Director-General at the BBC would seem to back up that assertion.

Adversarial positioning

That move towards more adversarial positioning isn’t just cathartic for the journalists at a title. There’s a commercial consideration too. As the latest Digital News Report from Reuters demonstrated, people are more likely to trust and (therefore pay to support) the titles with which they share political leanings. Freed from the need to chase scale, but now yoked to the need to create community to aid conversions, publications are fostering tribes.

Consequently, even as Byline Times moves into paid-for marketing, Colegrave believes it would be folly to change tack on its adversarial messaging. “We have to maintain the same positioning. It’s very, very important for us because that’s what Byline is, while also maintaining the newspaper as a central part of that message. So, it’s more about how we communicate that positioning to people who don’t know anything about us.”

It remains to be seen what will happen to that marketing message if the incredibly polarized political landscape cools down. Until then, however, the fact that newspapers are prioritizing converting smaller numbers of like-minded supporters over appealing to vast audiences across the political spectrum means that adversarial marketing is here to stay. If creating a community is key, then it’s as easy to do that through defining what you are against as what you stand for.

Advertising | Revenue

How intelligent paywalls maximize total digital revenue

October 2, 2019 Matt Lindsay, President—Mather Economics

Audience revenue is a growing component of the digital business model, but it often comes at the cost of advertising inventory. News media companies are struggling to support their newsrooms with digital advertising revenue and subscriptions offer a stable revenue source. In fact, media companies of all kids are seeking subscription revenue as they find digital advertising revenue insufficient for sustaining their operations.

However, as they employ a subscription revenue strategy, publishers must consider the potential for lost advertising revenue from reduced site traffic and address it through smarter paywalls. As digital publishers limit the public’s access to their content by putting it behind a paywall, they place some advertising inventory at risk. A membership model strategy, such as that pursued by De Correspondent in the Netherlands, or a contribution revenue strategy, pursued by The Guardian in London, may alleviate some of this lost advertising revenue. But all audience-based revenue strategies will have some effect on advertising inventory.

Advertising revenue will also be at risk due to the product changes required to make a digital product compelling to a paid audience. Improving the user experience typically requires reducing the number of advertisements on a site relative to a pure advertising-revenue business strategy.

Two different stories

A sample analysis of two news media company’s digital audience and advertising revenue is presented below to measure the potential return from employing an intelligent paywall in place of a standard paywall. The data has been adjusted to protect confidentiality, but the relative metrics across segments remains accurate.

Publication One is the second-largest newspaper in a large American city with about 10 million average monthly page views and about 4.5 million unique visitors. It is focused on long-form articles. Publication Two is a regional publication with about 120 million average monthly page views and about 22 million unique visitors. It has infinite scroll and publishes shorter articles. Neither publication had a pay wall at the time of the analysis of their audience.

The current audience for each publication was segmented by engagement. Engagement is defined using three dimensions: the volume of content consumed, the pattern of consumption behavior, and the nature of the content consumed. There are six metrics helpful for quantifying these three dimensions:

Article page views
Frequency (how many visits per month)
Recency (average time between visits)
Time on site
Content breadth (number of content categories visited)
Scroll depth

These engagement metrics are used by many publishers to segment their audience, and they are correlated with a customer’s propensity to subscribe.

**Engagement-based audience segmentation of two news media sites**

In the table, we see that engagement decreases from left to right moving from the Fanatics to the Non-engaged. Metrics for each segment are reported for a 30-day time period. Fanatics and Enthusiasts are the customers most likely to subscribe. Stable Users and Dabblers require more engagement before they are viable subscription candidates. Fly-bys and non-engaged are unlikely to be observed again beyond the one visit captured in this data. Using these metrics, it is possible to estimate a propensity to subscribe for these segments. We are also able to measure advertising revenue from a user in each segment[1].

The propensity to subscribe can be estimated using several approaches, including machine learning methods and econometric models. The segmentation is determined by relative propensity to subscribe, and differences in audiences can be seen in the metrics. For instance, the Fanatics in Publication Two have more article views than the same group in Publication One. This is in part due to the nature of the two products and the mix of mobile browser versus desktop browser traffic. Other behavior metrics, such as time on site and scroll depth, are affected by the nature of the site user experience and hard to compare across sites. However, visits and unique days are helpful for comparing the two audiences. In these two metrics, the audience for Publication Two is found to be relatively more engaged for a comparable level of subscription propensity.

Engage and convert

As expected, the audience segment most likely to subscribe are the Fanatics, which average 2.5% of the site users. The Enthusiasts are the next most likely group of subscribers, with an average of 4.5% of the users. Together, these two customer segments represent the majority of the addressable market for acquiring digital subscribers.

Stable users are potential subscribers. But the best tactic for that group is to grow their engagement via registration, newsletter promotion, and content recommendations before seeking a subscription. Publishers that have print products and all-access subscriptions may have a significant portion of these addressable customer segments already as digital subscribers. Some of these customers may be economically unable to subscribe, and many digital readers will take a long time to convert to subscribers or will not subscribe due to the value proposition of the current digital product.

An important observation from these data is that the customers most likely to subscribe generate a significant share of a publication’s advertising revenue. Asking for subscriptions from this group would appear to significantly reduce advertising revenue. However, not all of the ad revenue from these customers is at risk from a metered or premium content model. Pages that will not be behind the pay wall, such as the home page and index pages, make up a large share of the ad revenue. Other types of ad revenue not affected by a pay wall are also removed from the at-risk revenue. The chart below shows how the at-risk advertising revenue is determined for a site.

**At-risk advertising revenue from a pay wall**

The target groups for subscriptions will have relative high conversion rates, which will also mitigate the loss of advertising revenue. When the at-risk advertising revenue is calculated for the segments and adjusted for likely conversion rates, we find that the revenue at-risk by segment are about equal, as is observed the following chart.

**Advertising risk by engagement segment**

Balancing risk and rewards

A conclusion from this analysis is that an across-the-board pay wall will increase the advertising revenue loss. If the pay wall limits access to only those customers likely to subscribe, the lost advertising risk will be significantly reduced. Another conclusion is that the across-the-board pay wall will attempt too few subscription sales to the target audience because it is balancing the revenue streams across all customer segments and not just the segments likely to subscribe.

To illustrate these points, the table below gives forecasted results for two alternatives for a site currently using a 10-article pay wall. The first alternative reduced the number of articles a reader will receive before reaching a pay wall modal with subscription offers from 10 articles to 5 for all users. The second is a targeted meter of 5 articles to only those customers in the likely-to-subscribe segments and a meter at 10 for all other readers.

**Comparing a targeted pay wall strategy to the current state and across-the-board meter of five article views per month**

The key findings from these alternative pay wall scenarios is that targeting the readers most likely to subscribe with acquisition offers increases the number of acquired subscribers by 11% while saving about 30% of the lost advertising revenue relative to the more aggressive across-the-board strategy and raising the net digital revenue by 27%.

A metric for measuring the effectiveness of a subscription acquisition strategy is the ratio of incremental subscription revenue to lost advertising revenue. In the table above, this metric is labeled the Dollar Tradeoff, and the use of targeted acquisition offers yields $5.98 of subscription revenue for every dollar of advertising revenue lost compared to $3.78 for the more aggressive across-the-board strategy.

Devising a strategy to maximize audience revenue while minimizing lost advertising revenue is the challenge facing digital publishers. Finding the best path forward requires innovation in product design, content marketing, and subscription sales tactics. An often-overlooked aspect of a successful digital subscription model is retaining customers once you have them. Understanding the economics and engagement of the current readership is the starting point of a digital audience revenue strategy, and an intelligent paywall is an important tool for implementing that strategy.

About the author

Matt Lindsay is the Founder and President of Mather Economics, a consulting firm that works with publishers around the world on audience analytics and subscription revenue strategies. Its clients include the many of the largest news media publishers in North America, South America, Europe, Asia, and Australia/New Zealand.

[1]
This data comes from the Listener data capture tagging solution. Ad impressions are captured in the data with JavaScript tags and revenue per ad is added to the data from the advertising billing systems, advertising platforms, and other sources.

Featured Post | Revenue

Why publishers see a future in a DTC/advertising hybrid model

December 13, 2018 Chris M. Sutcliffe – Independent Media Reporter

After a brief hibernation, the era of direct to consumer revenue (DTC) is back and booming. Over the past six months, paywalls have sprung up around areas that used to be free and become smarter about who they let through. Paid newsletters are booming, even emerging around topics like cryptocurrency. Podcasts have gone members-only, membership models have undergone a Cambrian explosion and emerged vastly more disparate, and new funding methods for “slow journalism” outlets have come into being.

It’s a far cry from the distant days of 2016, when nearly every news publisher was rushing headlong into distributed publishing on social channels, relying primarily on the reach of the platforms and their ad networks to deliver significant revenue. Now, following some high-profile casualties of that publishing model and the “Trump bump” reviving interest in subscriptions, direct to consumer revenue is the name of the game for many publishers.

The value of a subscriber

The benefits of regular revenue straight from audiences are obvious and mutually reinforcing: Compared with other sources of digital revenue, the number of players is small, so less gets taken out of the value chain between consumer and publisher. At a time in which the digital advertising space is overcrowded (and dominated by two or three players), it’s no surprise that publishers would prefer to earn revenue directly from one consumer over sharing a tiny piece of the ad pie.

Consequently, one paying subscriber is worth many times that of a consumer monetized through advertisers. According to Jasper Jackson, digital editor of the New Statesman, which went behind a paywall in March of 2018: “One subscriber is worth many thousands of digital readers that you’re only monetizing through advertising. I’m pretty certain that subscription revenue is a better funding mechanism for good journalism, and particularly for the kind of journalism we do.”

Are subscriptions the right move?

That is also the contention of News UK around its subscription-based news products. Alan Hunter, head of digital for The Times and Sunday Times, said that while the industry has been in the grip of the chase for advertising revenue through scale, the pendulum is now swinging back the other way:

“When we first introduced subscriptions, people thought we were crazy. For a long time we’d go to conferences and people would pat you on the back and say ‘Oh I’m really sorry about this’, but if you look back on it it seemed very logical that journalism costs money and you have to pay for it one way or another.”

Subscription history

Similarly, many of the larger English-language newsbrands have a history of DTC revenue from their time as physical newspapers, when a significant proportion of their revenue came from subscriptions. Many of those organizations were in the early stages of figuring out how to convert digital readers to a similar system years ago, before they were seduced by the appeal of digital ad revenue through platforms.

Small wonder then that as the promise of digital advertising revenue failed to materialize for quality content producers, they have transitioned back to subscriptions and memberships to sustain them. It does mean trading a large proportion of the scale that comes from existing as a ‘“free” ad-supported publication. Jackson says that “pure reach is a wonderful drug.” However, for publications that have the requisite reputation and audience to make it work, the trade-off is worth making.

The New York Times, for example, reported 2017 subscription revenues of $1 billion early in the year. It also reported annual average growth of almost 50% for its digital subscriptions since the paywall was introduced in 2011. Based in the UK, The Financial Times is close to having 1 million subscribers, almost 80% of them digital.

The Guardian, too, has made direct-from-consumer revenue a core tenet of its plans for the next few years. And a strong showing from its membership scheme to date suggests that engaged audiences might be willing to pay for content that is nominally free from a brand that they feel an affinity with.

Subscriptions: not just newsworthy

Nor is the drive to direct monetization of users limited to newsbrands. Consumer-facing titles are introducing new membership tiers to generate more revenue from core audiences. And, while it’s now reportedly struggling to make it work effectively, even Google’s YouTube is feeling the pressure from OTT services like Netflix to introduce its own subscription-based premium video packages.

While these brands have a strong legacy to lean on, some digital pureplay brands are transitioning to hybrid advertising-membership models. Quartz, for example, has launched a membership model based around a partial paywall and the ability for its members to talk directly to editors and journalists, a perk that is also in effect to a greater or lesser degree at the Guardian, The Times and The Atlantic. Meanwhile, BuzzFeed, which was the poster child for scale, social distribution, and branded content revenue for years, has also launched a membership scheme … with mixed response.

DTC takes work

However, these shiny new opportunities for DTC revenue come with new considerations for publishers. Outlets like The Times are investing more in tech to reduce churn, since research from The Financial Times demonstrates that it costs four to fives times more to attract new subscribers than to retain existing ones.

The propensity to pay for online news is still relatively low outside the Nordic countries. according to the latest Reuters Institute Digital News Report, only 16% of people in the US currently pay for news online, and mainly to liberal leaning newspapers (though the proportion is increasing). That suggests that there is currently not enough digital subscription revenue going around to support all the outlets that are transitioning to direct reader revenue.

Risky business

Despite these new challenges, publishers have taken note of the fate of outlets like Mic and Mashable, whose strong valuations in earlier years belied an over-reliance on social distribution to achieve scale and indiscriminate digital advertising revenue. Subsequently, their respective collapses have galvanized other publishers to seek to transition to direct to consumer revenue.

Despite that, most digital publishers are not seeking to abandon other sources of revenue entirely. Many media businesses recognize that advertising can still provide a significant source of revenue. Jackson from the New Statesman explains: “Digital advertising, if you do it well, cleverly, can bring in significant revenue. There’s also an argument that pure reach is a very good marketing tool for print sales.”

In the future, then, it’s unlikely that direct-to-consumer revenue will entirely supplant advertising revenue as the primary means of monetisation for digital publishers. Instead, both will continue to play a role in publisher business models based around a wider variety of revenue streams.

Featured Post | Revenue

Moving readers from free to fee: An inside look at successful premium publishing strategies

October 25, 2018 Erik Martin—Independent Journalist

In a world where consumers are accustomed to getting many digital goods for free—from apps to podcasts to instant facts online—convincing them to fork over funds for content remains a tough sell. And hanging on to those hard won customers is a challenge unto itself. For proof, consider the subscriber churn rate among publishers, estimated at 30% last year.

Yet many publishers today are tackling this problem with a variety of successful tactics designed to convert more freeloaders into subscribers. And recent data suggest that publishers are learning from past mistakes and become better attuned to what attracts and retains paying patrons.

By the numbers

Per The Lenfest Institute for Journalism, fewer newspapers are giving away the store than they used to. They have found that 78% of American newspapers charge for digital access. Eighty percent of these use a metered model while 4% employ a hard paywall.

“Publishers are becoming more successful at moving folks from free to paid than just a few years ago,” says Matt Skibinski, reader revenue specialist at the Philadelphia-based Lenfest Institute. “In the past several years, we’ve seen publishers achieving better results by engaging in more sophisticated marketing tactics and centering their newsroom around producing content that their readers are willing to pay for. As a result, the number of current users who are turning into paid subscribers every month as a percentage of total audience has gone up, while the number of free articles allowed under a metered model has gone down.”

The American Press Institute recently found that around 73% of news organizations polled provided free trial subscription offers for digital content, with less than one quarter of free trial readers converting to full-price subscriptions. Discounted trial subscription offers fared better, with nearly 72% of polled organizations reporting a greater than 76% conversion to full-price subscriptions via this method.

A separate API study of 4,100 newspaper subscribers revealed that several factors motivate people to pay for content: access to local news (chosen by 30% of respondents); convenience of print/home delivery (15%); a discount or promotion/discount (12%); a topical focus (12%); and trust/quality (9%). Additionally, 45% eventually subscribed because of a free trial or promotion, and a paywall meter triggered around 50% of digital subscribers to subscribe.

Metered might

The metered model has been especially valuable because it allows publishers to monetize engagement, rather than page views. The most important metric for publishers that want to grow digital subscriptions is engagement Skibinski says.

“Engagement means encouraging the user to build a relationship with a publication and develop a habit of reading it every day,” says Skibinski. “Engagement is best measured in terms of people—the folks who are actually likely to subscribe. Publishers can measure the number of users or visitors, for example, who view one piece of content in a given month versus those who view five or more articles.”

The key here is “segmenting your audience into groups of people based on their behavior,” Skibinski adds. “Page views may drive advertising revenue, but engagement helps you better measure digital subscription success so that you can make the right decisions about what kind of content to invest in and what kind of promotions and marketing to pursue.”

Data collected by the Lenfest Institute show that most successful metered publishers stop 5 to 10% of their digital audience with a payment gateway.

“In order to get your readers to pay for your digital content, you have to actually ask them to pay. In the past, many publishers were too conservative with their meter rules, and as a result, they would only ever ‘stop’ a small percentage of readers with a subscription ask. We’re now seeing publishers become more confident in saying to readers, ‘we have content that is high quality, valuable, and worth paying for,’” says Skibinski.

A metered paywall isn’t for everyone, of course. The Financial Times gravitated from the latter to a four-week trial for $1 model in recent years and hasn’t looked back (its annual premium content subscription is $559).

“Years ago, our challenge was to make people understand why valuable content and great journalism is worth paying for. Today, our challenge is more around ensuring that we remain their go-to content provider and reminding them of the value they’re getting,” says Fiona Spooner, global marketing director, B2C, for The Financial Times, based in London. “The four-week trial gives us an opportunity to engage them and communicate this value without the threat of any metered limitations.”

Spooner’s motto? “If you want people to buy something from your shop, you have to welcome them in but not let them walk out with your merchandise without paying for it,” she says.

Membership has its privileges

One of the first brands to launch a subscription paywall—back in 1997—was Consumer Reports. It shifted from a subscriptions to a membership model earlier this year, offering four tiers: from free to all-access content (at $55 annually). Since then, the average order value is up 20%, the take rate for its all-access tier is twice what was anticipated, and new membership benefits and features have garnered half a million interactions.

“Our research shows that consumers want relationships with brands they can trust. And people are more open to the idea of paying for convenience and unique value that extends to content that’s curated and personalized,” says Kim Stehle, vice president/CMO for Consumer Reports, headquartered in Yonkers, New York.

“I like to think of the mix of free and paid content we offer as akin to relationships. You start with a chat and then maybe move to a first date. You’re still testing the waters. That’s where free content comes in,” says Stehle. “As in any relationship, you get more comfortable with each other over time. The commitment deepens, and eventually you get married. That’s where paid content comes in.”

A tiered membership model doesn’t necessarily have to focus on value or prestigious journalism as a main driver. Spirited Media, which manages Denverite in Denver, Billy Penn in Philadelphia, and Pittsburgh’s The Incline, asks its readers for monetary support at any level, although three higher levels of membership (starting with a “supporter” membership, at $35-99) are encouraged and come with extra perks.

“We’re not forcing people to pay for content. We are asking people to pay because they love us. To succeed at membership, our readers have to believe, in their hearts, that we’re an essential part of their community. And to get there, to believe in our ‘essentialness,’ they must identify with our point of view, which is, ‘We love this city and the people who live here, so we want it to be better,’” says Brian Boyer, vice president of product and people at Great Falls, Virginia-based Spirited Media.

Boyer believes that quality journalism, while important, “isn’t sufficient to convert readers into members. You can’t count on the work to speak for itself. You have to know your point of view and express it.”

Best practices from the pros

If you want to improve your paid conversion rates, be prepared to do your homework and try a little tinkering. Your first task: Look closely at your data and segment it by user behavior.

“Their behavioral data tells you how much value they’re getting out of your product. For instance, a user who views five articles per month is far more likely to become a subscriber than if they are reading only one a month. And that reader is up to 15 times more likely to pay for content if he or she is also subscribing to your e-newsletter,” says Skibinski.

Next, make smart decisions based on that data you parse.

“When you’re sitting in a product meeting or talking to your staff about how to measure success with content, review how many engaged readers looked at a given article as opposed to total page views,” Skibinski notes.

Experiment to create the optimum mix of free and paid content, too.

“Don’t be afraid to change or tighten up the number of free articles you offer. Ask people to pay after you’ve made them aware of the value your brand offers,” says Skibinski.

Consumer Reports’ Stehle recommends trying more personalized content. “We now offer a premium paid service called ‘Ask CR,’ where paying members can receive personalized buying advice from our specialists,” says Stehle.

Mighty messaging maneuvers

Using the right messaging language that moves users from free to fee is equally crucial.

“A lot of publishers have had to test different messages, but they typically employ the voice of the brand and target those most engaged,” Skibinski says. “The Seattle Times did a successful campaign that spoke about its quality, integrity journalism. Others have great success offering something like a Snow Day sale—‘get 50% off for the first three months if you subscribe today.’ A paper like the Dallas Morning News may do better with a message crafted around football, which is a huge sport in that city.”

The secret to successful messaging is acknowledging the relationship you already have with the consumer and the moment they are in.

“Even if their current relationship is ‘free,’ you can convey how much more they could be getting from your brand if they were willing to pay. We’ve found that using language around ‘upgrade’ or ‘gaining access’ works, because they intuitively connote additional value,” Stehle says.

About the Author

Erik J. Martin is a Chicago area-based freelance writer and public relations expert whose articles have been featured in AARP The Magazine, Reader’s Digest, The Costco Connection, EContent Magazine, The Chicago Tribune, and other publications. He often writes on topics related to digital media, technology, real estate, and business. Read his blog at martinspiration.blogspot.com.

Featured Post | Revenue

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.

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.

Industry-Research | Revenue

Strategies for building audience revenue

February 28, 2018 Rande Price, Research VP – DCN

Publishers are rethinking their editorial practices and diversifying revenue streams to become less dependent on advertising or foundation funding. They (especially digitally native publishers) are implementing mixed revenue approaches, which include advertising, corporate underwriting, foundation funding, article syndication, events, affiliate programs, merchandise, and book sales revenue. The newly released report, Guide to Audience Revenue and Engagement from the Tow Center for Digital Journalism, provides insights on strategies for building audience revenue and engagement.

To win a share of consumers’ valuable attention and money, paid news products (whether supported thorough subscriptions or member donations) must be vital to the subscriber. They must also clearly represent an editorial mandate they support.

The Tow Center identifies key strategies to support the develop of direct audience revenue:

Offer a unique perspective as a publisher. Readers become members when they want to be part of a unique community and access a valued news brand.
Clearly express your mission to accurately reflect the values you provide the world and your member community.
Identify activities and programs that are interesting, valuable and useful to retain members
Develop a strong editorial engagement with readers.
Build and monitor the steps in the audience revenue program conversion approach: research, expose and attract, engage and deepen, convert, and sustain.
- Research (to learn about prospective member needs)
  User experience research
  Segmentation: reach different audience groups strategically
- Expose and attract:
  Increasing reach through social media
  Increasing reach through in-person community events and conferences
- Engage and deepen:
  Editorial engagement
  Article pages and site structure
  Email newsletters
  Using events to engage readers
- Convert:
  Campaign structure
  Managing data infrastructure
  User data effectiveness
  Giving and asking frequency
- Sustain:
  Recognizing and thanking members
  Engaging and sustaining members
Engage your audience through your journalism, face-to-face interactions, product design and email newsletters. Each is a great way to build a loyal and engaged audience.

Importantly, when developing editorial products, it’s important to ask what do people want (desirability), can we make what they want (feasibility), and can we make what they want successfully (viability).

Further, developing audience segments based on user research and site analytics is important in understanding the different reader experiences. It’s critical to maximize the individual user segment experiences to ensure each is fully engaged.

Overall, online news consumers aren’t used to paying to support publishers. However, this transition is evolving. That’s why it’s important to establish a series of interactions to engage individuals to help shift the occasional reader into a paying supporter.

Innovation | Perspectives | Revenue

Inside a local media company’s pivot to reader revenue

January 26, 2018 Chris Krewson VP of Strategy—Spirited Media

We were wasting time chasing display advertising dollars.

That’s the big lesson Spirited Media learned at the end of 2017, an awakening of sorts for us at the parent company of Billy Penn in Philly, The Incline in Pittsburgh and Denverite in Denver.

Now don’t get me wrong, we believe still that there are companies in and around our cities that are interested in partnering with us to reach our audiences — which are generally young, affluent and very civically engaged. And we’d had an encouraging start to the year by pursuing display ad sales. We needed that success to continue; that’s what we built our budgetary projections on.

And then that early ad success faded. It stands to reason why, of course: Going head to head with Facebook, Google and the largest newspaper websites was always going to be tough, And our staffs (no larger than six doing editorial work) can’t tell the same traffic story as sales folks repping newsrooms 15-20 times that size.

Instead, we looked at all the other ways we’ve been able to grow revenue, and prioritized those internally into three tiers. We stuck display advertising at the very bottom. In other words, we’re happy to get it, but we can’t burn staff time and effort to chase it. We’ve got bigger things in mind.

Tier One:

There are three things in Spirited Media’s most important revenue tier: the first is sponsorships and ticket sales for the events we’ve become so adept at organizing. The second is a membership program we’re rolling out in the coming weeks across all our sites. And the third is offering our custom platform for others to use. Let’s talk briefly about each of them.

Events

Billy Penn launched in October 2014 – I was the site’s editor at the time – and we began hosting the first of our events a few months later. At the time, our staff numbered five people – myself, a community manager and two reporter/curators, and a brand new sales and events director. So, when we decided to start getting our audience together in person, putting together a lot of programming for those events wasn’t realistic. The same people building that event were the ones building our daily news report, after all. So the events (we tried many, but what worked best were happy hour gatherings) were very light on the programming. And when I say “light,” I mean we’d maybe grab a microphone for 20 minutes of a two-hour event.

These events proved incredibly popular with our audience and they had several things that recommended them over intrusive advertising on our site. One, the events lasted for a set amount of time; two, the events could only hold a certain number of people. In other words, we were able to create the scarcity that is nonexistent in a land of infinite Web pages. So events — the smart execution of them, ticket sales to attend them, and sponsors to underwrite them — are one of the pillars in our most crucial revenue tier. And, of course, events (and the potential early access to their tickets, or even their planning) will play in very heavily to the next item on our revenue punch list.

Membership

One of the things I consistently heard from Philadelphians as I walked the streets of the city was how much those who read Billy Penn loved it. Not just liked or respected, but connected with in a visceral way. So as we looked at how to build a business model that could withstand the seismic shift rocking the ad-supported media world, we of course considered whether we could turn that loyalty — hell, that love — into monetary support. But we can’t make this happen alone, so we’re working with the News Revenue Hub (Motto: “Fortifying the public’s access to quality journalism by helping news organizations build sustainability”), a spinoff of the stellar digital operation Voice of San Diego, a company that’s helped many newsrooms figure out how to turn their audiences into members. We’ll launch membership across our sites in the next few weeks, directly making a pitch to our readers that the work they’ve been consuming requires their direct support to continue. That’s because, plainly speaking, it does.

Platform

We’re proud to be a company that puts our users first. Editorially, that means we pay attention to what we think people want to know. And we’ve also committed to respecting their time and their experience online. That means unlike other news providers’ sites, we don’t pop advertisements up in front of the story you’re trying to read, or force an auto-play video into your quiet office, or load up the top, middle and/or end of your story with some photo you just won’t believe about a 70s TV show star. We try to respect people’s time and their attention.

How’s that working out for us? Well, our research shows that more than half our audience is under age 35, and 75% of our readers are under age 44. That’s a startling figure for a media company, and it’s due in no small part to the way we’ve built our sites, using a custom WordPress theme that gives us what we think are clear advantages in the market:

One, it’s very easy for journalists to write and post their work onto our sites (and, automatically, Facebook Instant Articles, and Google AMP pages). We’ve also baked newsletter functionality into the back-end as well. Because we have very small staffs, there’s no separation between a reporter, an editor and our audience.
Two, our sites make a small amount of content look and feel like a lot. The home pages of Billy Penn and The Incline (and soon Denverite) spotlight the most important stories we’ve published, and then present a list of the most important events and other news stories happening in and around our cities, whether or not we’ve written them, in what we call “The Stream.” It’s basically a Facebook feed of what you need to know at any given moment.
Three, we’ve baked membership tools right into the platform. These pages, and the action funnel on which they’re built — driving occasional readers to become repeat readers, into newsletter subscribers, and into paying members — take advantage of a sea change in how the news industry is realigning itself in the midst of the great advertising breakdown.

And we’re finding that this suite of tools is attractive to other small publishers that are also seeking revenue that’s immune to the whims of Facebook and Google. In fact, we’ve closed one deal with a publisher to provide them the same tools we’re using, and following up on other requests about it that have come over the transom. We’ve seen enough interest, in fact, to prioritize platform sales as part of our most crucial revenue streams in 2018.

Another thing we’ve heard through the course of our existence is that people were interested in starting a “Billy Penn” newsroom in their city, but owned and operated by them. Until now, we have not pursued those arrangements; however, in the course of our reevaluation, we’re willing to explore arrangements like this.

Tier Two:

Consulting

My boss Jim Brady, the former editor-in-chief of Digital First Media, former editor of washingtonpost.com, and a former news executive at AOL, has also consulted at many of the world’s biggest and best media brands — ESPN, USC and The Guardian, among them. Our VP of Product, Brian Boyer, was most recently the Senior Editor for Visuals at NPR; he came there after building the News Apps team at the Chicago Tribune. Me? I’ve been the Executive Online Editor at the Philadelphia Inquirer, and the top digital editor in two of Hollywood’s oldest news institutions, Variety and The Hollywood Reporter.

Among us, we’ve worked in newsrooms covering local, national and international news; in verticals (sports, entertainment, politics), launched departments and won awards for videos, innovation, public service and more. And we’re finding interest in accessing that expertise among other media companies, which out of necessity have cut their digital workforces down in the face of the ad cataclysm.

So we’re putting out our consulting shingle, and negotiating with those seeking everything from advice in reaching the audience we have now or the audiences we’ve reached in our past. Why isn’t this a Tier One revenue stream? Simply put: bandwidth. While we can hire developers should interest in our platform take over, we can’t easily clone ourselves to grow a consulting arm. But the money we make in this fledgling endeavor can help extend our company’s runway as we push toward profitability.

Grants

We’ve already received grants to support our work —we hosted a Knight Foundation fellow for one year in Philadelphia, and are the proud recipients of a $106,000 grant for work on a Playbook for Mobile News. We’re also finalists for a Report for America grant, which would support a Spirited Media reporter working in Pennsylvania’s state capital of Harrisburg. These kinds of efforts can help underwrite important journalism in our cities while easing the burden on our budgets. In addition, a two-year partnership with Politifact funded a reporter position to help us fact-check Pennsylvania, thanks to a grant from the Democracy Fund. So we’re no stranger to grant-funded journalism, and are actively seeking out new ways to bring it into our newsrooms.

Tier Three:

Display Advertising

Finally, we’re not going to say no to companies that only want to buy space on our sites. But, as we said, it’s just not a great use of our time to sit through endless agency meetings on the off chance that we score the rapidly declining dollars to spare, once Facebook and Google gobble their share. We’re delighted with the roster of repeat advertisers we’ve had across all our sites, of course, and hope to continue working with clients as diverse as the Philadelphia Eagles, Comcast and Beneficial Bank — but, as often as possible, we’re hoping to convert those advertisers into sponsors supporting the events that are increasingly part of the future of our businesses.

We’re confident that future is bright. After all, local news is a lot closer to our users than the national and international sources. We’re down the street, just around the corner from our readers. It’s sobering but heartening to come to the realization, as a company, that those readers are even more directly responsible for our future than we’d first considered. But then again, that makes sense. We’re always telling them how important they are. We’re now giving them the opportunity to prove it.

Innovation

A great local news story: the growth of Spirited Media

September 28, 2017 Ron Miller—Independent Technology Journalist

When Spirited Media launched Billy Penn in 2014, the online publication had a broader mission than simply covering local news in the City of Brotherly Love. Co-founders Jim and Joan Brady wanted to do no less than rejuvenate local journalism itself by building a new business model that made local news coverage relevant to a younger audience, who saw traditional print media as old and stodgy.

It was a tall order by any measure. Brady and his intrepid team had just five people to cover Philadelphia—a huge city. They knew they needed to pick their coverage battles and find ways to engage with their target demographic to make their stories resonate with them.

Brady, a 20-year veteran of the news business, had witnessed the decline of local media first hand and knew it was time for a new approach. It was clear the old ways weren’t working. Local papers were either shuttered or had severely cut back coverage, and citizen journalism had not filled the gaps as many had hoped a decade ago. Without local news, there was a news gap that left uninformed citizens in its wake. And, as Brady knew all too well, a local news vacuum also left room for corrupt politicians to operate unimpeded without the white-hot journalism spotlight shining on them.

Brady understood that Spirited Media couldn’t fix all that ailed local journalism, but they were going to try to deliver news in a new way that would attract audiences and revenue. Today it consists of three local publications with Pittsburgh and Denver joining Philadelphia (in May of 2016 and this March, respectively).

Building new models

When Brady and his team prepared to launch Billy Penn, they knew that the under-35 crowd wanted to get their news digitally – and they wanted news with a voice. “We decided the site wouldn’t have a dry unemotional voice. The site had to reflect energy,” Brady said.

What’s more, they’ve found that their audience wants to go beyond the news and get involved to help shape the direction of their communities. “We have a fair number of stories about things in the community you can get involved with and how to connect with issues you care about,” he said.

Instead of trying to be a publication that delivers all the news from sports to art to politics, they decided to focus on a smaller set of stories that Brady and team believe their readers care about. Then, to create that larger scope, they plug into a broader system of sites. “There is a whole little solar system of smaller sites biting off pieces of everything the big papers once did – art, sports, education, city hall. You have a lot of journalists covering a lot of interesting things in Philly,” he said.

Getting readers together

While the Spirited Media approach still uses an ad model, it concentrates on mobile ads, not display ads, which Brady says don’t really work for digital news. Even more importantly, Spirited wants to be more than another publication pumping out posts with ads to support the mission. It wants to get its readers involved.

That requires putting readers together with the people behind the stories, whether the reporters themselves or the subjects, and having an advertiser sponsor the event. Brady says they learned the hard way that a panel on a stage wasn’t what people wanted. Instead, they host smaller, more intimate gatherings. As Brady said, if you put a bunch of interesting people in a room with food and drink, interesting conversations tend to happen. A happy byproduct is that advertisers can buy a package that includes ads and event sponsorship, which means additional revenue.

Spirited Media is also planning its own take on the membership model, which is slated to kick off in October. Readers who become members will have special access to the publication’s events, which will include meeting interesting people from the community and accessing places they might not typically get into like a tour of the Steeler’s locker room in Pittsburgh or a VIP City Hall tour in Philadelphia.

The Spirited Media approach appears to be working as the company has grown its team to 26 and expanded to two additional cities. Brady notes that the company earns just 40% of its diversified revenue from ads. And as for that younger demographic target, all three publications have more than 40% audience in the under 35 age group – with Billy Penn hitting 45% in that demographic. For ages 44 and younger, it’s more than 65% with Billy Penn’s audience comprising 71% in the 44 and younger age group.

It’s still early days for Spirited Media. However, it has developed a fresh take on the local model that publications of all types can learn from. And that is certainly good news.