In times of crisis, many media outlets are looking for new sources of income and try to change their business models. Which of them are currently popular among publishers around the world and how to implement them correctly? Grzegorz Piechota, a researcher at the International News Media Association (INMA), spoke about this during his presentation at the Fojo conference.
One can distinguish between four main monetisation models used by media outlets today. Publishers can receive financing from readers, from newsmakers (for example, oligarchs), advertisers or foreign sponsors/impact investors.
Oftentimes, though, the authorities use advertising as a tool to put pressure on independent media: once the outlet is called “unwanted”, advertisers do not dare to buy ad inventory from it. According to research, this is the most common way to pressure the media. Investor and sponsor money is not a reliable source of income either: these programs are usually designed for temporary support, but not for the long term. Receiving money from politicians is unacceptable for independent media. What is left then?
More and more media outlets are placing subscription at the center of their business model, according to the INMA’s survey of more than 100 publishers worldwide. Over the past three years, the number of digital subscriptions has grown by an average of 130%. These indicators were initially affected by the pandemic: during the crisis, the demand for high-quality journalism increased. In addition, publishers have consequently learned how to sell their product better. In recent years, the share of reader’s money in the income of news publications worldwide has exceeded 50%. At the same time, according to the study, it is subscriptions, and not one-time transactions, that bring most of the income in the field of paid content (72% vs. 21%). INMA expects subscription growth to continue next year.
The benefit of the subscription model is clear: it is a proven media revenue model, relatively stable and convenient for both readers and publishers. Direct contact with users allows you to collect additional data, which can also be monetised. This aspect is especially important in Europe and America, where the restrictions on the transfer of user data to third parties are getting ever so strict. Here, 86% of the most popular media outlets have already started selling ads directly, without sharing reader information with ad networks or advertisers via cookies.
However, do not forget about the challenges that the subscription model brings with it. When the demand for news drops (and this happens in cycles), you will have to invest in product promotion to get new subscriptions. Many subscribers do not actually use the product they are paying for. According to INMA’s research, about 40% of Western media subscribers visit their websites less than once a month. Obviously, there is a considerable risk that such customers will unsubscribe.
The transition to a subscription model also requires a significant restructuring of the way your team works – not only in a technical sense, but also in an operational one. The Norwegian concern AMedia is a good example of how the business model affects the team structure: out of 2,000 employees, 120 people work in the IT department, and about 20 more – in the data analysis department.
This large proportion of ”technical” employees is not surprising. The transition to the reader model requires, among other things, a more serious approach to working with user data. Among the priorities of the data strategy, Grzegorz names a deeper, multi-parametrical audience research. It is also important to be able to extrapolate the available data to those users who are “unreachable” for your digital analysis tools. For example, some readers choose not to share any of their data, but you can ”guess” their age or gender, since their ”reader profile” matches other users who you do have information on. And, of course, in order to monetise this data, you must be able to target ads on your platforms and sell this option to advertisers.
Based on the experience of global publishers, a good first step to collect user data is to motivate them to register on your website. This will give you a convenient way to identify readers, plus you can collect this data across your different platforms and aggregate it. According to INMA, now only about 10% of readers of news sites globally are registered users. But in Scandinavia (where digital subscriptions are very popular as a source of media revenue), this figure reaches to 86%. Effective data collection allows you to improve the product for your readers, but also improve the offer for advertisers.
Watch Grzegorz’s full speech in video format (in Russian) above.
Fojo’s Fourth Annual Experience Exchange Conference “Practitioners to Practitioners: Content, Audience, and Monetisation in the Times of Crisis” was organized with the support from the Swedish International Development Agency and the Swedish Institute.