Can the Newspaper Industry stay relevant in the digital world with a subscription model?

At the Geneva-based Communica conference in October, the heads of two major Swiss media companies discussed the challenges they are facing since the digital revolution, which has strained their traditional business model based on print advertisement. It was interesting hearing them talk about the difficult transition and their lack of a strategy to keep their businesses growing in the digital world.

Indeed, the revenue generated by traditional media digital platforms will have a difficult time replacing lost revenue from dwindling print advertisement. The companies actually making a mint with digital advertising are Google and Facebook. The media industry has all but lost control of online ad distribution to these web giants.

Individual media companies have failed to come up with a compelling solution to the problem of generating enough revenue from digital media to finance journalistic operations. Most paywall experiments have had little success outside of very specialized publications. Now the industry puts a lot of hope in micro transactions. You can bet it will probably not work in the same places a paywall does not: it is difficult to get people to pay any amount of money when the value to be received is unknown before the transaction takes place.

The most popular models in 2016 are the freemium model, where the most exclusive content requires a subscription, and the metered model, which gives a number of free articles before nagging you about a subscription. None of the current models offers a compelling solution; newspapers are still having a hard time getting people to pay for subscriptions.

This does not mean people are not ready to pay for journalism. But if you want them to pay, you need to offer greater value than they are getting for free today.

Consumers want convenience and are ready to pay for it. Pay-walls are inconvenient, micro-transactions are inconvenient, as is an overabundance of advertisements.

Current digital news subscription schemes target a single digital property. By splitting their digital efforts among each property, most media companies, as big as they are, put themselves in a position of being unable to compete against the likes of Google and Facebook in the digital world.

The publishing industry would do well to look to the recording industry for answers. As the first victim of the web revolution, they had to face the deadly combination of a new efficient audio compression algorithm and the internet going mainstream at the same time. After many years of fighting piracy with the wrong tools (repressive), the industry finally understands that people will pay if you give them value. Subscription models for music are increasingly successful (Spotify, Tidal, and Google Music) and provide the consumer with a better experience than can be had for free (illegal torrents, YouTube…).

Households have a limited but significant amount they are willing to spend directly on newspapers and magazines. (It was SFr 1.9 billion in 2004 in Switzerland.) The question is how to capture this potential from households that are now used to getting their news online for free.

Consumers who are interested in a digital news subscription will have mostly already gotten one. In order to increase revenue, it is necessary to find a way to provide the consumer with a greater value than the existing subscription models to incentivize new subscriptions. One way to increase the value of the subscription model is to offer more for the same price.

Instead of trying to sell individual newspaper subscriptions and watch their lunch being eaten by the digital giants, the media industry should work together to create a global subscription scheme that would grant access to a large number of newspapers with a mechanism to fairly redistribute the pool of subscription money.

Using metrics such as views, likes, and word count, it should be possible to create a subscription system that provides great value to the consumer while fairly redistributing a large amount of money between the media companies taking part in the network. As most people would not subscribe to several digital newspapers, it does not matter if that Blick subscription you ordered provides access to all the major Swiss papers as long the subscription money is fairly distributed based on content popularity.

The whole industry would benefit from joining forces to create a single subscription platform instead of everyone trying — and failing — to create their own walled gardens.

Time is pressing. If such an initiative does not come from the media industry soon, it will likely come from one of the digital giants or a new player who will be happy to keep 30% of subscription revenue for the privilege of having done it first.