The issues of online ad revenue and audience reach has been an issue for journalism in the digital world since it’s birth. There is no way that online ad income can ever compare to print, so other options have been explored. Click through and sell through advertising models have proven largely a disappointment and so firewalls and paid content are now a more viable option.
A free, ad-based strategy may have made sense when online was a small, supplementary business for newspapers. Now that various digital platforms are becoming the medium of choice for so many readers, it makes sense to charge for what is expensive to report and edit professionally.
However, even the most promising streams of digital subscription revenue can’t compensate for the declining print revenues for advertising and circulation. But as news organizations begin assembling other collections of revenue to make up as much of that ground as possible, digital subscriptions will surely have a role.
The American Press Institute (API) has surveyed the many options currently being discussed for paid content and “fair use” fees from Google and other aggregators, and basically endorses them all as a remedy to what ails the newspaper business.
In a 31-page white paper prepared for last week’s newspaper executive’s summit in Chicago, API concludes, “newspapers can make the leap from an advertising-centered to an audience-centered enterprise” and should get on with it immediately.
The report, titled Newspaper Economic Action Plan, recommends that industry leaders follow five new “doctrines.”
True Value. Establish that news content online has value by charging for it. Begin “massive experimentation with several of the most promising options.”
Fair Use. Maintain the value of professionally produced and edited content by “aggressively enforcing copyright, fair use and the right to profit from original work.”
Fair Share. Negotiate a higher price for content produced by the news industry that is aggregated and redistributed by others.
Digital Deliverance. “Invest in technologies, platforms and systems that provide content-based e-commerce, data-sharing and other revenue generating solutions.”
Consumer Centric. Refocus on consumers and users. Shift revenue strategies from those focused on advertisers.
It can be argued that putting all content behind a firewall will result in substantial traffic loss and audience reach because people will refuse to pay. Financially, it is not an issue. Micropayment methods make more money with fewer viewers. Not to mention that more and more online content is found behind firewalls so viewers will most likely not travel to other sites for their content.
The reduced risk of losing viewers, along with modestly encouraging early subscription results, should be enough to provoke some serious thought among the late adopters. Given the long-term vulnerability of online advertising prospects, news organizations owe it to themselves to explore the possibilities for online subscriptions.
For example, take The New York Times; It has built the best trafficked Web site among American newspapers. The NYT, with fellow national titles The Wall Street Journal and USA Today, has maintained paid circulation much better online circulation at a subscription price more than double what anyone else charges. Because online ad growth has slowed to almost zero, this new model must be implemented.
Interestingly, most agree that paid content has improved digital attitudes in the newsroom. Said Jim Roberts of The New York Times: “There is more of an investment I feel in the newsroom among our journalists since the introduction of the paywall. They feel a greater stake in the product. People seem a little more willing to work on a piece of video, file early for the Web, etc.”