How News Organizations Can Succeed and Make Money in the Digital World
How do online platforms really make money? That’s the million-dollar question in the digital world in an era where free content is readily available anywhere and anytime. With connectivity and data processing continuing to improve globally, anybody has the capability of starting an online website or blog without any real barriers to entry. That has left the whole concept of “journalism” to significantly change, as anybody can express their thoughts online using any platform, ranging from social media to a Wordpress site to YouTube to a communal blogging platform like Medium.
As simple as it can be for any one person to become an overnight sensation from a viral post, it has become increasingly difficult for news organizations to adapt to a different business model from the old-school newspaper and cable/magazine subscription days. As a dwindling number of millennials and Generation Y people read newspapers and purchase cable plans, many established news organizations, both locally and nationally, have completely gone out of business.
Some of the foldings include the 121-year old Tampa Tribune, the 150-year old Rocky Mountain News, and Newspaper National Network (owned by 20 newspaper publishers). According to the New York Times, the number of newspapers in America has fallen from approximately 2,700 in 2008 to only 2,000 by the end of 2016. In addition, more than 1 in 5 households were cable-free last year, according to Fortune magazine.
At the same time though, many other media outlets have emerged this century, notably Mashable, Buzzfeed, Bleacher Report, Slate, Huffington Post, Vox, Barstool Sports, Yahoo News, and Google News. In some of these non-traditional news websites, general colloquialism and informal/derogatory language are being used more frequently in an attempt to directly relate to their audiences. This trend has significantly altered the media landscape, as the balance of power has shifted from the organizations to the individual bloggers/journalists.
With so much content and competition for news out there, how should a media organization attempt to monetize their content, through subscription or advertising? Or both? Here are the criteria for building a strong digital news organization:
Priority # 1: Hiring Talent/Identifying Target Audience’s Wants And Needs
Before publicizing any of their work or attempting to earn money through their content, organizations must identify their core target audiences and offer the readers/viewers worthwhile content to view. Otherwise, that company cannot and will not survive in the rapidly changing world.
This places a larger premium on finding popular journalists/online personalities who relate very well to their following. With no barriers to entry and a lack of ethics code online, content creators do not need to write in any specific style or use “proper grammar and etiquette”. They just need to communicate their thoughts and beliefs to their desired demographics.
One organization that has mastered this concept is Barstool Sports, who recently got sold to Peter Chernin for multi-million dollars after just starting out as a Wordpress site blogging about bar conversations on sports and pop culture. The three faces of the organization, Dave Portnoy, Dan Katz (“Big Cat”), and Kevin Clancy (“KFC”) successfully used their blogs and social media platforms to directly connect to the “common man” in America. They have published several written blogs on funny, uncensored topics and a separate video show called “The Rundown” from a couch talking about sports and pop culture. As a result of their consistent work, these three bloggers have developed a fiercely loyal and growing following all over the country. This has allowed them to monetize their work in several ways, from subscribing to different events, selling merchandise, having sponsored advertisements both on their blog and in any corresponding videos, and hosting events for their target audiences. Because of its popularity, Barstool Sports can offer all of its written and video content free of charge, allowing the organization to continue to grow its following.
Although many organizations have had their issues with Barstool Sports, the satirical blog showcases the need of expressing content that aligns with the target audience’s demographic. The “fraternity culture” all over universities across America can directly relate to the content and language expressed in this blog. When a group of people support a specific platform, a community forms, allowing for several monetizing opportunities in the future.
Other successful organizations that have properly identified their target audiences include Huffington Post (liberalism), The Onion (humorous people), Breitbart News (traditional blue-collar Americans), and Tech Crunch (developers/people interested in technology). These websites have performed extremely well because they deliver content that directly aligns with their readers’ values and desires.
Too many online websites have made the common mistake of attempting to “go viral” or “create the next big thing” without taking the time and effort to develop a strong, loyal presence that directly connects with their viewers. One viral post does not typically result in a sustained audience. As with the majority of successful and sustaining businesses, it takes a repeated string of quality content to draw in the viewer for a long period of time. Websites like Elite Daily and the The Cauldron, which rapidly gained a big following in little time, went bankrupt as they got too big too quickly without establishing a legitimate rapport with their viewers.
If advertisers do not know exactly who they are targeting to, online news outlets have almost no chance to make money using that platform. That places extremely high importance on the quality and popularity of multimedia journalists, bloggers, analysts, etc. There is more competition than ever to convince people to spend time on any particular platform. Online bloggers and media platforms have become ubiquitous. No matter the industry or demographic targeted, finding the right mix of talent to express one’s thoughts or opinions is absolutely essential for any online news organization to thrive and survive.
Priority # 2: Adaptability
With social media, almost anybody has the platform to become a reporter. Applications such as Facebook, Twitter, Snapchat, Instagram, LinkedIn, Periscope, and Vine allow literally anybody to report any video or written content from anywhere at any point. With so many outlets out there, the era of “breaking news” on TV platforms has all but dissipated as every single person has an opportunity to report any news or express his or her concerns to the world. Elite sports players have used platforms like “The Players Tribune” and “UnInterrupted” to provide breaking news to the world instead of going through traditional reporters and news outlets. Musicians have used “Tidal” and “Vevo” to display their newest tracks. Production studios have used YouTube to showcase their newest trailers.
With all of these various platforms out there, news outlets have become increasingly less about reporting factual news and more about providing unique content to the viewers, whether it be in-depth profiles, investigative journalism, humor and comedy, satiric humor, opinions on certain topics, and/or showing live events. These supporting media elements complimenting the factual stories plays an integral role on the success of the news organization.
Because information now moves at an alarming rate, every single media outlet must adapt and be able to post reactionary content immediately. The moments following a major news moment will often lead to the peak interest of the collection of viewers on that topic. That puts enormous pressure on every news outlet to provide its target audience with the necessary complimentary information related to the news story.
Competition is fierce, as any single human being can express their opinions or provide facts related to any subject matter immediately following a major event. Live events such as the Oscars, Presidential Debates, and sporting championships often involve multi-screen activities, with one screen fully dedicated to researching information and following news on social media. This places an added value on showing original information instantaneously, as a growing number of media personnel are being sent to cover live events. Each single media person working a popular game or program is striving to get that viral soundbite or video clip that can increase name recognition. As the 2016 election proved, there’s no such thing as bad publicity in this era; all that matters is getting the name or brand well-known.
Even good organizations with talented writers and quality analysis, such as Grantland, can go out of business. Some old-school techniques and practices in journalism will not work in this era. That has led to all kinds of layoffs in the writing world, as many tenured journalists whose skills have gotten outdated have gradually faded out of the scene. Both organizations and journalists must evolve to the environment to continue to succeed.
Priority #3: Methods to Make Money
A news organization can only consider earning enough money to support itself after establishing a steady online presence and the ability to accustom to modern times. There’s no other way around it. Facebook did not even earn significant money until eight years after its inception and over a billion daily users. Other blossoming media outlets have similar stories. There are several financial growing pains at the beginning of the process, but it’s imperative that the full focus of a successful news outlet involves producing the right kind of content and relating to its audience.
Once a company develops a strong following, it can start earning money. That can come from either from digital subscriptions and/or online advertising, both of which can get tricky. There are certainly several ongoing challenges with the effectiveness of online advertising and how people use illegal streams and ad-blocker to watch and read free content online. This poses a major challenge for any online business let alone media outlets, which predominantly rely on their platform to earn money. However, instead of traditional TV or billboard ads, companies are pouring significantly more money by the year into digital advertising.
According to eMarketer, digital ad spending should approach $80 billion in 2017, with Facebook and Google controlling a little more than 60% of the digital ad market (Google with search and Facebook with Display). Since Google and Facebook can effectively use every single person’s personal data through their entire online search history and track the locations of every individual through their smartphone, both technological behemoths have effectively used targeted ads to appeal to the consumer based on his or her preferences.
The remaining 40% (roughly $32–34 billion) will go to mobile and online advertising, depending on the content published. For instance, sporting goods and apparel companies can pay a certain amount of money to ESPN or Fox Sports to create a 15–30 second video ad or a photo with a link to purchase or learn more about their products. Media outlets with millions of unique visitors daily will have a prime opportunity to convince businesses to market their products or services on the webpage. For instance, on any article related to finance on Forbes, investment and financial companies will compete to promote their products on that platform.
Whether online or on mobile devices, the company will pay the media outlet either through the cost of a thousand impressions (CPM), cost per click (CPC), click-through rate (CTR) and/or cost per acquisition (CPA). This is where qualified media outlets (with a large following) must stay ahead of the game and prevent readers with ad blocker softwares to view their content online. Furthermore, media outlets must effectively place targeted ads, whether smack in the middle of an article or easily viewable to the reader/viewer. Sure, a small percentage of people will likely even bother to view these ads in full attention, but it’s completely up to the media outlets to maximize this percentage by providing the most effective platform for the advertisers to market their products.
Another alternative news outlets can use to make money involve weekly, monthly, and yearly subscriptions. For established brands transitioning from print to digital subscriptions, such as the New York Times and Wall Street Journal, they can sustain themselves with readers paying for their content because they have developed a strong audience. Both organizations provide comprehensive and in-depth analysis on a variety of topics, including politics and health/wellness in the NY Times and business/finance at the WSJ.
Only companies or subjects providing unique, in-depth and comprehensive analysis on specific subjects that appeal directly to the consumer can begin to offer subscription packages. Scientific journals like the New England Journal of Medicine, political in-depth organizations like Foreign Affairs, and even sports outlets like Sports Business Journal will often only offer subscription packages instead of digital advertising because they provide deep, in-depth content on a particular subject.
Companies that can thrive on subscriptions are usually far better off in the long run because they have a team of content creators that have the ability to provide quality content that people are willing to pay for. Skills like writing quality in-depth research papers are much harder to acquire than generic multimedia journalism and reporting. Thus, many different organizations are more than willing to pay high costs for travel/exposure/equipment in order to get the most premium, in-depth stories on different global issues. It will allow more subscribers to jump on board and pay for good content.
One of the biggest challenges in the online world is maintaining full integrity while attempting to monetize a specific platform. Everything seemingly came crumbling down during the 2016 Presidential Election, with the term “FAKE NEWS” being used to describe the media countless times during the election. The digital news world has certainly contributed to a more “far right” and “far left” culture in America’s political system, due to the needs of the media outlets to establish a target audience and loyal following. One opposing view that threatens the principles of an organization’s beliefs and precious viewers and readers may jump ship to another outlet.
As technology only becomes more prevalent going forward, the need to establish a strong following only becomes more critical. Information is now everywhere around the globe, as people in Asia and Europe are following many of the political actions and sporting events in America. Every single mistake in the media world will be scrutinized more than ever, as anybody can also start a media platform from scratch and without cost.
There’s no right or wrong way to go about running a news and content-based organization. As long as content creators can satisfy their audience’s craving, whether it be factual information on a particular topic or pure entertainment, they have the potential to grow a respectable following. Every journalist is now required to keep up with the times and adapt to the pace of change, no matter how fast the world moves. Otherwise, that person will be left behind in favor of other up-and-coming news outlets.
News in the digital world is extremely unsympathetic. People showing exemplary ethics and producing quality content can still be out of commission. Relatively few digital media outlets have effective subscription-based models that can thrive on their customers paying for their content. The rest will eventually have to rely on digital advertising, which is far more volatile but can be achieved if specific target audiences can be identified. A company will certainly be willing to pay a greater premium to advertise a product to an audience interested and willing to purchase a good or service.