Paid content
Someone gotta be charged
This text is part of a comprehensive look at the Brazilian news environment.
“Paid content” is a comprehensive term that embraces different ways of charging for journalistic information: paywall, specialized reports, syndication, content on-demand, micropayment, and membership are the subtypes that will be discussed here.
Having users paying for content is not an easy strategy. The various formulas currently adopted are attempts to convince the user to pay for something that one day was free — what Ethan Zuckerman, from MIT Media Lab, calls “The Internet Original Sin.”
The author, who helped to develop the beginning of the commercial World Wide Web and is the “father” of pop-up ads, believes that the choice of starting the Internet with free content and services was a mistake, but their intentions were the best ones.
“It’s obvious now that what we did was a fiasco, so let me remind you that what we wanted to do was something brave and noble,” says Zuckerman.
What they wanted at that time was guarantee that people would try this new thing called Internet.
Defending the same argument to Caio Tulio Costa, News Corp’s VP Raju Narisetti commented, “Fifteen or sixteen years ago, several of us said we wanted to increase our audience. Now we need to go back and think properly, because we made a mistake before, offering news for free.”[1]
Hence, when traditional media started to populate the digital environment, they were letting available online the material originally developed to their print products. As Costa notes, the pioneer in charging for content was The Wall Street Journal, which adopted a paywall in 1997, one year after launching its website. In almost 20 years, different media outlets have been evolving from a hard paywall, which only allows access to content after a subscription, to a porous paywall, which allows access to some content before requiring a subscription. JOTA, one of the cases studied here, is adopting the latter model, selling subscriptions for both users and companies.
The relationship between media organization and brands has created new forms of generate earnings with paid content. One of these ways is the sale of specific and exclusive reports to other companies, which usually happens when the vehicle is addressing a niche market and is perceived as an authorized voice in related communities. Offering this type of service makes the news venture assume a function typically executed by consultancy groups.
A second way is producing content on demand, as Catraca Livre, Papo de Homem, JOTA, and J++ are doing. In this case, the product is not aimed to be published on the website. Rather, this strategy places the vehicle in a market occupied by marketing agencies.
Lastly, a third way to categorize these commercial deals is in a method known as syndication: when a media outlet outsources content to other media outlet. This study will present two slightly different Brazilian organizations that are using or aiming to use this tactic: J++ and Blog Mural (in its future form).
Two more revenue streams that are related to paid content, but are less common in Brazilian landscape are micropayments and memberships. The first one is being experimented by the brand new Brio, a company that was launched while this research was conducted. Basically, in this model, the user pays for each article read/consumed.
Memberships were not found among the organizations studied, therefore will not receive a separate section. However, it is in the horizons of every niche organization this research covered. The idea behind the membership model is to offer a range of products and services that would build a sense of community among the “lucky” ones who are part of it.
The set of privileges offered may not be only having access to virtual webinars, forums, debates, and exclusive information online, but also offline activities, such as attendance to certain events, dinner with influential people, access to lectures or classes. In other words, media organizations may take advantage on some of their assets to create an experience to their users — an experience that is valuable for them and for which they are willing to pay.
This again is another moment when journalism and marketing tactics get together. “It is where journalism should be going. People who are interested in specific types of news comprise passion markets. They want to talk with others like them to express their opinions and to learn and dialog with the experts. And they are willing to pay with dollars, data or something for those opportunities,” says Randy Hlavac[2], author of the book Social IMC: Social Strategies with Bottom-Line ROI and the blog Social IMC, where some of these strategies are described.
All those methods of charging for content may also be evaluated according to the aimed audience: individual customers (business to customers or B2C) or other businesses (business to business or B2B). Typically, to generate a relevant amount of profit, B2C approaches must pursue large scale, trying to reach as many users as possible, since the individual rates are low. Nonetheless, B2B approaches are more strategical, inasmuch as companies have greater purchasing power than single users.
If we were to locate all the six methods in a spectrum, with B2C cases in one side and B2B cases in the other, paywall would be in the middle, because it may aim both for companies and individuals. In the left corner, we would have micropayments and membership; in the right, specialized reports, syndication, and content on demand.
Porous paywall
JOTA’s strategy of selling to individuals and companies
The paywall, as already discussed, is an approach commonly used by media organizations to monetize on their content. In hard paywalls, a subscription is required to access any content a given platform offers. Porous paywalls allow the user a limited access to the content until a certain number of articles is reached. Although in Brazil “porous paywall” is a fairly common approach among legacy media, it was almost not present within the cases here studied. JOTA (the Portuguese sound of the letter J) is the only exception.
JOTA is a website launched in the second semester of 2014 that specializes in the Brazilian Judiciary System. It is an expression of an opportunity that emerges from a moment of crisis. Over the years, with traditional newsrooms shrinking more and more, the Justice beat was increasingly de-prioritized — complex issues like this are less appealing to the average reader, therefore are more likely to lose the battle for clicks.
Felipe Seligman, who specialized in this area as a reporter, decided to quit the traditional media and start a website devoted to the Judiciary. He made a round of investment with friends and family, raising money enough to hire some reporters and develop a platform. In less than a year, JOTA has about 500 subscribers, a staff of 14 fix employees in Brasilia and Sao Paulo, 20 columnists, over 65,000 fans on Facebook, and is being recognized by lawyers as an authority in the field.
“We are a startup. We are solving a problem under conditions of uncertainty. The problem we are attacking is the lack of good information in the field of Justice,” resumed Seligman.
The entrepreneur believes that the use of business strategies, such as relying on three revenue streams and applying metrics to their results, is helping them to achieve good results since the beginning. The sources of revenues are a porous paywall, specialized reports and content on demand.
The reader has access up to five articles per month for free. After that, a subscription is required. Subscribers also receive daily newsletters with a summary of other media outlets coverage about legal issues. Besides the traditional option of selling subscription to users (B2C), JOTA has special plans for companies (B2B), aimed at law firms that want to stimulate their lawyers to read this kind of content.
“When we look at the number of subscribers, we feel that we are in the right path,” commends Seligman in showing the numbers of his paywall.
According to the entrepreneur, JOTA is investing since the very beginning in digital marketing, notably by using Facebook ads.
“We are promoting our content, but we are not spending energy specifically to promote our subscription plans. It came naturally,” adds the journalist.
He also envisions offer special deals for law students in the future.
In order not to lose the pulse of their business’ evolution, JOTA is using some predictable KPIs (key performance indicators), such as the number of users (Google Analytics), subscribers, revenue, and costs. However, they also developed a metric designed to calculate their reputation. The indicator includes different JOTA’s numbers, including its Klout Score, an algorithm that measures persons and companies’ level of influence.
Specialized reports, the apple of niche market organization’s eyes
JOTA, Ponte, and Mural
Niche market organizations are realizing that their specific knowledge in certain areas may be a relevant tactic to improve profits. Specialized reports and dossiers, developed for companies, are an opportunity to sell content B2B with higher margins. It happens not only because companies have more financial power than individual users, but mainly because the type of information required from the media organization in this kind of service is normally strategic and valuable for the company that is buying it. This approach is being largely used by JOTA, and it is in the future plans of Ponte and Mural.
JOTA, for instance, has a specific area in their website to take care of these reports, JOTA Analysis. In their website, they explain that Brazil has 100 million of ongoing lawsuits and millions of current law and regulations. Everyday, thousands of decisions are delivered and thousands of regulations are created or pulled back.
“The scenario is chaotic and contradictory, which makes it hard for companies to plan and an make decisions. JOTA Analysis comes with the mission of collecting, organizing, combining and analyzing public information to minimize the legal uncertainty faced by companies.”
In other words, JOTA is also acting as a consultancy group.
“We want to create a Chinese wall between the clients and our staff. Thus, our staff would not know who has asked for the information,” says Seligman.
Although JOTA Analysis has been a profitable revenue stream, the entrepreneur understands that these business opportunities come from the image built with the journalistic website.
“We can’t let the quality of our articles go down because we are focusing in our other clients. We must be very careful about that.”
Considering future plans, specialized reports are in the horizon of Ponte and Mural as well. Ponte (Bridge) is an organization launched on 2013 that specializes in public safety and human rights. The founders were well known reporters devoted to those areas in traditional media.
“We believed that the way journalism is being done today is not possible anymore. Younger generations want something different. We believe that this kind of independent journalism may have an important role in the ecosystem of news,” says Claudia Belfort, cofounder of Ponte.
Until now, operations that maintains a website with one or two daily articles are based on self-financing.
“We had an idea, an opportunity, and we wanted to put it up and running as soon as possible,” says Belfort.
The business model that was just finalized counts, in first place, with funding and grants from international institutions, then reader’s donations, events, and specialized reports.
“We all have our careers and reputation. We have to access people, we have specific knowledge. Selling specific reports and bulletins is definitely a way to go. Ads, for instance, are less adequate for us due to the tough nature of our issues,” evaluates Belfort.
In the long term, her team expects to build a platform recognized for its coverage on public security and human rights, as well as to promote and have influence in public policies regarding those issues.
Mural is also planning to offer exclusive reports taking advantage on its area of expertise. In its current form, Mural is a blog hosted by Folha de São Paulo, the most influential Brazilian newspaper. Since 2010, a network of 60 citizen journalists who live in the outskirts of São Paulo is producing news about relevant stories on culture, economy, infrastructure, education — anything, but violence and NGO projects. More than 1,000 stories were published so far. “The city will only work if it is working for everybody,” affirms the Izabela Moi, responsible for this network and currently a John S. Knight Journalism fellow at Stanford.
During her program, she organized a business model to be implemented on the second semester of 2015. Her goal is to build an agency that will keep reporting on areas that traditional media does not cover well, but will also offer a set of new products. It’s based on six revenue streams: syndication, funding and grants, crowdfunding, live events, and reports.
“We are telling stories that nobody is telling. We are getting to know people, problems, solutions. Those are the kind of data that can be monetized, as long as we guarantee that we are following our principles and values,” remarks Moi, who is on the verge of deciding between making this agency a nonprofit or a company.
“It’s hard to have funding in a moment when the industry is going through a revolution. But I also see an opportunity, since we are alone in this market. Other organizations tried, but were not successful in proposing a sustainable model for hyperlocal journalism.”
Content on demand: monetizing on the ability of creating content
Catraca Livre, Papo de Homem, JOTA, J++
If preparing specialized reports is a way of generating revenue by selling information for companies, another analog strategy that can be deployed is the content creation for brands in journalistic style. This strategy is being used by Papo de Homem, Catraca Livre, JOTA, and J++.
In Papo de Homem, the department specialized in developing content for brands, or custom publishing, has a special website, a special team, and is called Escribas (Scribes). This sector is responsible for their main source of revenue, together with native ads.
“We started using the newsroom staff to work on those projects. But it was a disaster! Those projects have specific demands and are very energy consuming,” says Guilherme Valadares, founder of Papo de Homem.
The necessity of having the content for brands being produced separately from the newsroom was also felt in Catraca Livre. “We thought it was better to have two different bodies, the newsroom and the ‘content house’. Our main concern is to make sure that both are aligned with the same editorial principles,” affirmed Gilberto Dimenstein, founder of Catraca Livre.
With JOTA, the dynamics is a bit different. The company offers services of coverage for events that discuss topics related to the Judiciary system. “We may be hired to cover a juridic convention that is too much is specific, even for us. We write texts about the lectures, the sessions, we write institutional content” explains Felipe Seligman, CEO of JOTA.
J++ is another example of a company that provides special content for brands. Together with its sibling Escola de Dados (School of Data), which will be discussed later, J++ is an example of media organization that does not have a platform to distribute news, but exists to support other companies and media organizations with their trendy and craved expertise: data journalism.
“We are navigating on a non existing market. The founders are all friends doing what they like to do: working with data,” says the cofounder Marco Túlio Pires.
Launched in March in São Paulo, J++ is part of a larger network operating in other six cities in the world: Amsterdam, Berlin, Cologne, Paris, Porto, and Stockholm. All independent companies of this network provide similar services, all related to the use of data. One of their revenue streams comes from working with all kinds of companies in order to gather, organize, display and publish the clients’ data and help them to serve their audiences in a more efficient way. J++’ goal is to help any company to tell better stories with data in any kind of digital platform.
A second way of serving companies deployed by J++ is helping organizations to better architecture their information and organize their internal data. This type of service represents a deviation on the “content on demand” category because the deliverable here is not a content per say. However, it is still a high valuable service, similar to what consultancy groups do, offered to another company. Other J++’ revenue streams will be discussed on syndication and training.
Syndication
J++, Mural and the science of having peers as clients
Syndication is the word that describes the revenue stream based on a media organization selling products or services to other media organizations. In this method, the relationship built between those two has to be of partnership, rather than competition. This is one of the main focus of J++ and is seen as an opportunity by Mural.
As already discussed, J++ specializes in helping companies in general to tell stories using data. Media organizations are naturally one of their most recurrent clients. “Very often, newsrooms do not have teams trained to work and report with databases. So they hire us to develop the project,” explains the cofounder Marco Túlio Pires.
“Usually our job starts with a necessity expressed by the editor. He says: ‘If only we could collect some data.’ The thing is that it is normally possible, he only does not know how to do it.”
J++ may be responsible for the entire project, from the investigation to the development of data visualization tools. Conversely, it may support the newsroom in different steps of the newsmaking process, helping other journalists to discover trends and gain insights to their stories, for instance.
Syndication is also a revenue stream considered by Mural. For the time being, Mural is a blog where stories about the outskirts of São Paulo are told by a network of local journalists. In its current form, it is hosted by Folha de S.Paulo, the most important Brazilian newspaper. With the agency that is being organized, the idea is to provide stories to other vehicles as well — including from abroad.
Micropayment and Subscription
The experiment of Brio
There is hype surrounding micropayments in journalism these days. The idea is to charge the users per article, allowing them to choose which pieces of their news experience they want to read and pay for. So far, this approach has both a collection of enthusiasts and critics.
One of the most respected defensors of the idea was the legendary journalist David Carr. In 2009, he wrote an article claiming “Let’s invent an ITunes for news,” in which he analyzed how Steve Jobs and his team have disrupted the music industry — an industry that at that point was losing the battle against pirating, file sharing, and free downloading. The critics, in turn, claim that that readers are not used to this system of charging, that content has become a commodity, and there are no good examples proving the contrary.
The controversy was enlightened again on March, when The New York Times, The Washington Post and The Wall Street Journal closed a partnership with the Dutch-based startup Bendle. Launched on March 2014, the company put all the major newspapers and magazines in the same platform and charges per article. The reader only pays after consuming the news, if he/she thinks that should. One year later and with 250,000 users, the founders are now planning to expand operations beyond the Netherlands. In addition to the European case, the Winnipeg Free Press adopted this model on April and is charging the equivalent to USD 0.21 per article.
Will Federman, editor-in-chief of Neon Tommy, reacted to both announcements (the partnership with Bendle and the Canadian experiment) with skepticism. “Consumers who are forced to pay per story are not going to invest in content they do not want to read. They won’t look at outside sources that challenge their worldview, but are more likely to pay for articles that reinforce their opinions. They’ll lean toward the familiar. Publishers will be left with consumers more polarized than ever before,” he said in the article “Micropayments for news articles are terrible, horrible, no good, bad idea.”
In Brazil, micropayments in journalism are still a big novelty. Weather or not news organizations here will find room to apply this approach in the country, it is still early to say. But the experiment that is being run on Brio since late May may help to come up with some conclusions. The platform is an initiative of a group of journalists who felt the need of having more options of long form, multimedia and investigative pieces in Brazilian journalism. One of the founders is Felipe Seligman, also CEO of JOTA.
“We have our storytelling code. We want to report about issues with social and political relevance, we want to have individual stories that represent something bigger, we want 10,000 words in a very good language, and we want multimedia formats,” details Seligman.
All content published on Brio is available in Portuguese and in English. The users may buy one article (micropayment) per USD 3.99 or may subscribe (hard paywall).
“We are aware that it is an experiment. Let’s see how it goes,” said the entrepreneur few weeks before launching the platform.