At the Digital Innovators Summit (DIS) in Berlin earlier this year, Juan Señor, president of Innovation Media Consulting, made the case for returning to reader revenues and moving away from advertising models. “If you’re not extracting reader data or dollars,” he tells us, “you really shouldn’t be in publishing, let alone journalism.”
It’s a bold statement at a time when the traditional industry still seems focussed on keeping up with the latest digital trends. But perhaps it is a fair one. Facebook and Google now command an average 78 per cent of display advertising in every market they operate in, and recent data showed that Amazon’s quarterly advertising earnings have now also broken the US$2bn mark. With GDPR now imminent, and the Cambridge Analytica scandal rocking consumer trust in technology platforms around the world, the allure of quality publisher content does indeed seem to be finding a resurgence. But as Señor explains in this exclusive interview for FIPP, if readers want this quality of journalism, they will need to pay.
“This year, 2018, we’re publishing the eighth edition of Innovation in Magazine Media,” says Señor. “It’s been a long, long ride, and very interesting how this year we’re getting through to a very clear business model to talk about. And it’s really a key innovation that everybody needs to be focussing on, which is how you migrate from ad-revenue to reader revenue. This is the biggest theme: to get back to people paying for our journalism.”
“Whether it be political journalism, lifestyle, fashion, health… unless you restore a balance where you have a significant amount of readers paying for that content digitally, we’re not going to find redemption from our original sin, which was to give it all out for free. There is not digital instant salvation. Technology, virtual reality, gadgets, widgets, events, ecommerce, is really not going to be the salvation of publishing. We need to get back to reader revenue, and we believe that a good benchmark is to aim for 40 per cent of reader revenue.”
When asked if reader revenue equates to subscriptions, Señor admits that this is still the primary focus. But in the digital age when payment models carry endless possibilities, it is perhaps our own definition of ‘subscription models’ that itself needs to change.
“Reader revenue does primarily mean subscriptions. But these subscriptions shouldn’t be seen just as the same old subscriptions in the past. You could have a dynamic paywall where people pay when there’s a lot of demand. You could have metered, obviously hard paywalls, and also we have micropayments.”
“There are many different ways to get reader revenue, but we must be selling our content. If they’re not buying our content, they’re not going to buy our licensed products, they’re not going to come to our events on an ongoing basis, they’re really not going to engage with us on an ongoing basis, or commercially on ecommerce platforms.”
“We must restore that connection with the reader where he expects to pay for what he reads, because that creates a whole bunch of things at a different level to what we’ve had in the past. It creates brand loyalty. It creates brand affiliation of course, a derivative of loyalty, but affiliation in the sense that you’re willing an open to buying more things from that publisher. So it’s not just reader revenue to read, it’s reader revenue to buy things from the brand you’re reading.”
He also highlights the danger of taking on digital platforms of scale at their own game, and emphasises the need for a more offensive-looking global publishing industry once again.
“The reason why this is imperative is because any publishing business based on display ad-revenue is very vulnerable. That business model is broken and is centred out of kilter. Why? Because it’s become a duopoly. Facebook and Google have really cornered that market. They have 78 per cent average of the display advertising in every market going to them. So for us to build a business based on that old promise of traffic, traffic, traffic, which will allow me to sell CPMs against that traffic, it’s gone. We cannot expect to build a business based on that. It’s as foolish as a one legged stool, you’re going to fall off sooner or later.”
“In those markets where display advertising is growing, it’s a swan song, and it’s growing only for Facebook and for Google. Of course there’s a big market out there, there’s a lot of money, but it’s not going to us, to the publishers. At the same time we really have to move on from this Facebook-Google duopoly narrative. We’ve been playing defence for far too long. And remember, before this duopoly there was another duopoly, which was AOL and Yahoo!”
“We have to play offence. We really have to get rid of the addiction, particularly to Facebook, and really treat our website as a destination, get away from distributed content. Facebook is an unreliable partner, they’ve changed the algorithm, they can change the terms at any moment. Becoming a white-label publisher for Facebook is really not the future for a publisher that wants to be innovative. You must restore the habit of people visiting your website, your app, whatever your digital experience, on a daily basis if possible. And not just expect that through Facebook we will create a huge audience that somehow will end up at our sites.”
Finally, we asked Juan about the specific types of reader revenue models available today, and how publishers could begin to make this shift.
“What really matters at the moment is that a publisher is experimenting with reader revenue. What ends up happening is that the answer is not one model. A lot of them end up with a meter-model, and then some of them go to a freemium model. Some of them go to a hard paywall. Some of them now go to the dynamic paywall model that exists today – with a simple algorithm, you can put up a paywall where there’s a lot of demand and a lot of people want to read the content.”
“So it’s not about finding the perfect model. It’s about experimenting with reader revenue. And it’s inexcusable for a publisher today to not be experimenting with it, to not try to demand that people give you their data or their dollars. If you’re not extracting this from your readers today – their data or their dollars – you really shouldn’t be in publishing, let alone journalism.”
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