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What are news media companies selling?


  • News companies have historically been focusing their revenue strategies on content or audience monetization
  • While the ad revenue path has been troubled lately, the revival of subscriptions alone is not going to cut it for most publishers
  • A vast number of other revenue sources have been explored to complement subscriptions and advertising revenues
  • In future, another component will have to play a larger role: services, based on trust. Services in the area of navigation, personalization, and verification.
Photo by Lydia Gulinkina on Unsplash

What are news media companies selling? And also, what should they be selling, now and in future? Historically, for many news media organizations, their monetization focus has shifted several times, evolving in multiple stages. What remained central is the focus on either content monetization (through subscriptions) or audience monetization (through advertising):

Source: own illustration

What do I mean with these stages: Initially, there was the content age. While ads played a role in newspapers from the very beginning, their role was second to the content itself. Newspapers were just the only way to be informed about pretty much anything. Still, fully ad financed newspapers were also a thing early on, e.g. already in the 1880s the “General Anzeiger für Lübeck und Umgebung” in DE, was apparently for a while purely ad financed. However, such early examples were not the thing or the common focus. Over the years, newspapers’ monetization of the audience for ad revenue started to work better and better, and for most western economies, not even the introduction of the TV could stop that. France seems to be an exception to the rule here, where due to the particular media landscape at the time, the sector suffered heavily from the introduction of the television, as a competitor for advertising dollars (ou bien, Francs).

Second, came the internet age, where, for a time it looked as if the newspaper companies would be the ones in the pole position to make the most of it and double-leverage their audience. Ad revenues could now not only be generated from the print audience, seemingly non-cannibalizing, additional revenues were generated online, pushed through the already established ad agency ecosystem. In parallel, many thought that no money could ever be made in selling online news content, who would want to read from a screen anyway?

Then, around the year 2000, the ad revenue party was mostly over. Alongside the dot com bust, the market realized, that news companies were in fact not the ones that could best leverage online audiences. While some can still do that sufficiently good even today, the overall advertising revenue that the newspaper industry has generated since, dropped harshly (in the US almost back to 1950 levels, see graphic). The advent of the internet is not having the same, moderate impact on the advertising revenues generated, as the introduction of the TV had (with the French exception). The dynamics at play here, in the attention economy, are much more complex and require different companies to thrive. Thus, since the 2000s, the sector is waking up (some faster, others slower) to the reality, that monetizing the audience is not going to fly in the long run, especially not for quality journalism products. In contrast, monetizing content, the subscription, is making a comeback since ~10 years.

Source: BDVZ Title: “Development of Ad-based and Subscription-based revenues”

This shows how in Germany, the newspaper sector could to some extent compensate the decline of advertising revenue (gray) with subscription revenues (dark red). This all in all is certainly a good sign, people are paying for online news after all. However, this also rises the issue of “pricing out”, not everyone can afford newspaper subscriptions. But this is a topic for another post.

If you don’t buy in to the subscription revival and still believe that news media companies can truly compete with attention economy era companies on ad dollars, there is hardly a better chart for you than this one here:

Source: Twipe / Monday Note (2017)

This illustrates, that while the NYT is sufficiently good at monetizing its content (through subscriptions), they are terribly inefficient at monetizing their audience for ad revenue, compared to the advertising giants of modern times Facebook and Google. On top of that inferior efficiency, the 2020 and ongoing pandemic has illustrated, how crisis exposed the ad revenue channel of news companies is. While the NYT ad revenues in the first quarter of full impact 2020 were down 15% YoY, those of Facebook were up 17% YoY! Read that last sentence again.

The decline in advertising revenues and the only partial compensation found in renewed subscription love, has made news publishers creative. Many have started to explore different avenues to fortune, also others than the traditional content vs. audience monetization. Hence the very initial graphic of this post probably should be adjusted, if it were used to also predict the future.

What other forms of monetization are explored, you ask? Well they are plentiful, Michael Rothman was kind enough to establish an entire catalog, so I won’t repeat that here. The options vary from educational offerings, to software, to ecommerce, to community & events, and beyond. Have a look at the link, the list goes on.

Unimpressed by the emergence of new revenue streams, monetizing audience and content will remain the core pillars for most news companies. We have seen that of those two, the advertising pillar is greatly pressured already — and while the subscription pillar is making a comeback, I have some bad news for you; I also see this one under threat in the coming years. The trend, back to subscription and content monetization, which many have found to work well for them, relies largely on the publishers ability to differentiate their content, mostly through quality and/or focus. By principle, differentiation as task, is getting more and more difficult, the larger the field of available alternatives. The bad news is, that this field is about to explode in the coming years — due to automated translations. You have an interesting topic you want to read about? Well here are 32 “comparable” (dear journalists, please don’t kill me for using this word) articles on it from publishers out of 14 different countries. Most of them are available for free, as you did not reach any soft paywall limit there yet.

Which one are you going to read? And if you pay for the one you are getting, what are you paying for, if you could also get “the same” (please be merciful) for free?

Don’t worry, you are not spending money for nothing, more on that later.

If you think that automated translations of acceptable quality are nowhere near yet and no form of trouble for publishers, I have to disappoint you once more. The fluency and adequacy perceived of automated translation is on sentence level already on par with human translations, on document level we are getting closer day by day. This obviously depends also on the translated languages in consideration, not all benchmarks are on the same level.

Nonetheless, we are almost there, and we will be on the level of human parity or “acceptable quality” soon enough, for publishers banking on internationally relevant content to worry. The differentiation of subscription content will be substantially more difficult, the moment the field of available alternatives gets increased from “your language” to “all the languages”.

To circle back to my previous question “what are you buying?”, please read this excerpt out of “Inevitable”, a great book by Kevin Kelly, about technological shifts that will shape our future. (I am too lazy to paraphrase it, and fear I would only make it worse. Thanks for not suing me Kevin)

When copies are free, you need to sell things that cannot be copied. Well, what can’t be copied? Trust, for instance. Trust cannot be reproduced in bulk. You can’t purchase trust wholesale. You can’t download trust and store it in a database or warehouse it. You can’t simply duplicate someone’s else’s trust. Trust must be earned, over time. It cannot be faked. Or counterfeited (at least for long). Since we prefer to deal with someone we can trust, we will often pay a premium for that privilege. We call that branding. Brand companies can command higher prices for similar products and services from companies without brands because they are trusted for what they promise. So trust is an intangible that has increasing value in a copy-saturated world. There are a number of other qualities similar to trust that are difficult to copy and thus become valuable in this cloud economy. The best way to see them is to start with a simple question: Why would anyone ever pay for something they could get for free? And when they pay for something they could get for free, what are they purchasing?

This applies 100% to the news media industry. In a time when information, false or accurate, is available at abundance, you want a news brand that you can trust. Trust is of course not new and is already today a vital part of the brand promise of most media companies — but it will become even more important. With more and more information available, you will want a news brand that you not only trust regarding verification (making sure you don’t get exposed to false information), but that you also trust for personalization and navigation. In a growing abundance of information (and continued maximal 24h per day for each of us), I would argue that a news brand can be — and should try to be — the trusted brand and information gateway of choice.

Me: “I trust you, dear media brand, to show me all my topics of interest and all relevant perspectives to them. And I trust you to provide an automated audio or summary version of it, without dropping any essentials.

My media brand: “Ok, here is yournalism.”

So what’s the next monetization focus for news companies? Trust & Services.

Source: own illustration

As we know trust is built over a long time, but lost in an instant. Hence it has to be treated with utmost caution. Does aggressively testing and altering headlines for the sake of clicks, at the loss of accuracy help with trust? Does linking article popularity with journalists’ pay?

I think not. What might work is an even lower reliance on ad revenues, as this will reduce temptations for sensationalism, and take away some pressure of the fast vs. accurate steam pot in which all news companies nonetheless remain.

What did I get wrong? How can trust be gained and maintained? Let me know in the comments, happy to hear from you!

This article was researched and written using Varia Research




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Georg Horn

Georg Horn

Co-Founder & CEO @ Varia

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