Nic Newman: ‘Monetisation of news is tough, but not impossible’
Not enough people are paying for online news, and even when they do, it is mostly for one major subscription only. This is one of the main findings of this year’s Digital News Report by the Reuters Institute in 38 markets across the world. What alternative business models exist for small and medium-sized outlets? Are we moving towards more media concentration? How can the media regain trust? GEN caught up with Nic Newman after his exclusive presentation of the report at the GEN Summit 2019. Newman says media needs to break its dependency on the big tech and build a long-term, direct relationship with customers to remain viable. He also shares his views on the rise of messenger-based news and platform aggregators.
GEN: Monetisation of content clearly stands out in the report as one of the major challenges for publishers. On the one hand, the digital subscriber growth overall remains stagnant and advertising revenues continue to dwindle. On the other hand, tech companies are increasingly investing in journalism and making significant profits along the way. Will newsrooms have to become ever more dependent on big tech companies, if they want to stay financially sustainable?
Nic Newman: Monetisation of news is tough, but not impossible. A number of companies have now shown that a relentless focus on reader payment (subscription, membership or contribution) combined with great content and user experience can deliver significant and sustainable profits. The problem is that these models work best for large news brands, mostly at the quality end of the news market and for some niche brands. It is proving much harder in countries with little tradition of paying for news, where journalists are not trusted or respected, or for companies without sufficiently valuable original content.
Platforms will of course remain important for generating traffic, as a way of acquiring customers, and perhaps as a source of direct revenue too. But publishers must break their dependence on platforms. There can be no long-term future for news companies that don’t build a direct relationship with customers that value their content and brand in an on-going way.
As few large tech companies are increasingly shaping the media landscape, is the move towards concentration inevitable? How could it affect media diversity?
Yes, further media consolidation is likely, partly as a response to platform power but also because of the need to cut costs generally. It makes sense to share technology and advertising solutions rather than having each individual brand bear the costs. Across Europe in particular, we’re also seeing more newsroom consolidation with sharing of editorial content across different brands and there is clearly a danger of a reduction in media diversity. On the other hand, the explosion of content that has resulted from cheaper internet distribution means there is unlikely to be a shortage of diverse views and options in most countries.
The report suggests a ‘winner takes all’ dynamics, as readers, albeit few, tend to subscribe to only one publication, mostly to a large national/global outlet. What alternative business or engagement models do you see for small to mid-sized local and regional media?
Our report suggests that most people who currently pay for content will only pay for one news subscription. And this is true even in countries like Norway and Sweden where subscription is more widespread and where people tend to value news highly. In Germany 70% of those who pay for online news only support one news organisation. With brands like Bild (423,000 digital subscribers) and Zeit (105,000) having some success, it will be hard for regional and local papers to persuade people to take out a second high-price subscription.
For local and regional media there is no one answer — and certainly no easy ones. Local media needs to re-establish itself at the heart of the community but this can’t be done with a website alone. Survival is likely to involve a range of physical and digital products and business models that include membership, contributions, events, advertising, and providing marketing and content services for local companies. This will need to be combined with cost cutting and consolidation to keep non editorial costs and overheads to a minimum.
According to the report, publishers may struggle to retain an audience even for a ‘single title’ subscription, as audiences increasingly choose to pay for entertainment services (Netflix/Spotify) over news. Some media outlets are already partnering with Netflix to increase outreach. Can Netflix become a major platform for news consumption, competing with Google and Facebook?
It is clearly not a zero sum game. Online subscriptions of all kinds are growing but news now competes fiercely for people’s time with entertainment services and needs to convince consumers that it delivers as much value.
In terms of the opportunities for publishers, neither Netflix nor Spotify are news platforms, but as they face more competition, they are looking for more current affairs type content to keep existing subscribers happy and attract new ones. But content will need to be distinctive and of the highest quality to attract the interest of these platforms. Additionally, not all publishers have the skills or inclination to produce video documentaries or high quality podcasts, which is what these platforms are looking for.
How can publishers use the rising trend in news consumption through messaging apps to their advantage? While this shift is largely happening in the global South and parts of Europe right now, do you expect a global shift towards messenger-based news consumption in the future?
I do expect the shift towards messenger-based news consumption to extend to western countries, indeed it is already happening in Southern Europe and German speaking countries. Facebook itself is encouraging the move to private messaging, recognising that not everyone wants to broadcast every detail of their life in the ‘public square’. WhatsApp is clearly the pre-eminent app, but Facebook itself is focussing more on its group functionality while a number of other messaging apps are popular in Asia and Central Europe.
By definition, it will be hard for publishers to use private messaging apps to seed and distribute content as they have been able to do in open networks like Facebook and Twitter. Traffic will be generated, but mainly through organic reach. If content is compelling and relevant it will be talked about and spread. But publishers could also think about using WhatsApp to generate news or tips as many south American news companies are already doing effectively.
The rise of mobile news aggregators appears rather important, with Apple News in the US reaching ‘more iPhone users (27%) than the Washington Post (23%)’. Is this an opportunity for publishers to reach larger audiences or more of a threat?
As ever with platforms it is both a threat and opportunity. Consumers love the convenience of swiping left for news and the extra reach can be seductive for publishers, but the value to news brands is not always clear. Often consumers say “I got the news from my phone” and don’t remember the news brand that provided the content. In addition, mobile aggregators will want a share of any advertising or subscription revenue. Publishers will need to be strategic about how they use these platforms to build some kind of connection.
The report demonstrates a growing mistrust of the media and the survey participants criticise the media for prioritising ‘breaking news’ over explanatory journalism. What are your thoughts on the rising trend of explanatory and slow journalism (e.g. Vox, Tortoise, Delayed Gratification)? Can they effectively retain audiences and raise the level of trust in the news?
Both our survey and the focus groups we did this year showed the frustration ordinary people feel about digital media. Many feel overwhelmed and bombarded by news — often the same story from different sources — but they don’t feel better informed. Others feel the news is often too negative or too depressing. Only half (51%) of our combined sample felt that the media did a good job in helping people understand the news.
These trends are driving the growth of so called ‘slow news’ operations like Tortoise Media in the UK, Zetland in Denmark, Republik in Switzerland, and the English language version of De Correspondent. But explanatory journalism and daily news podcasts are other responses to the demand for more meaningful content and may in the long term reach more people. Consumers want these type of approaches to be integrated into existing news services. They don’t necessarily want to go to a separate brand or take out a separate subscription to get this kind of coverage.
Edited by Ana Lomtadze
Nic Newman is a journalist and digital strategist who played a key role in shaping the BBC’s internet services over more than a decade. He is currently a Visiting Fellow at the Reuters Institute for the Study of Journalism and a consultant on digital media.
He was a founding member of the BBC News Website, leading international coverage as world editor (1997–2001). As head of product development for BBC News, he helped introduce innovations such as blogs, podcasting and on-demand video. Most recently he led digital teams, developing websites, mobile and interactive TV applications. He has played an important part in the development of social media strategies and guidelines for the wider BBC.
Read the Reuters Institute Digital News Report 2019 here.