Media outlets must harness the power of quality journalism online
JEFF Bezos knows a thing or two about sustainable online business models. Speaking at Vanity Fair’s New Establishment Summit last week, the owner of Amazon and the Washington Post seemed to pour cold water on publishers’ attempts to monetise online audiences through paywalls and micropayments. He stated that the Washington Post needed to move from making a relatively large amount of money from a small number of consumers to making smaller amounts from a far larger audience.
“These things can change, but I don’t see evidence yet that consumers are amenable to those kinds of micro-payments,” he said. “In the early days of music subscription services, consumers were not amenable to music subscriptions — they didn’t want that, they wanted to buy it a la carte. Habits and behaviours and patterns of consumers do change slowly over time —maybe one day they will pay.” When pressed whether Amazon could facilitate frictionless 10c to 15c payments for news articles, Bezos replied: “I’m currently a little sceptical about that. I think there’s so much advertising-supported news out there that it may be difficult to get people to pay 10c.”
If the Washington Post/Amazon axis can’t do it, what hope is there for other publishers, which don’t have the benefit of an association with the world’s biggest online retailer?
So it’s no surprise that media outlets are looking beyond paywalls. Especially seeing as the decline in desktop traffic is putting display advertising under pressure.
The New York Times seems to be sitting pretty in terms of paying subscribers. The paper now boasts more than 1.4 million digital-only subscribers who contribute around $56m to the paper’s coffers. But it’s not taking them for granted and is looking for sustainable revenue elsewhere.
Last week it found some in the form of the consumer recommendation site the Wirecutter, which it bought for $30m. Sure, it’s small beans in comparison to last week’s mega merger of AT&T and Time Warner Inc. for a whopping $85.4 billion. But it’s just as telling in terms of the future of media consumption.
The Wirecutter and its sister site, The Sweethome offer consumer-focused research and in-depth product recommendations for gadgets and homeware respectively.
The New York Times likes the cut of Wirecutter’s jib for two reasons. Firstly, it makes money. Each product reviewed includes direct links to online merchants like Amazon, Dell and Apple for a percentage of any ultimate sale. So the Wirecutter and the Sweethome are in the lead generation game.
In many ways, the leads they generate are more valuable than those that Google’s search delivers. These are people who go to the trouble of researching the product that’s best for them. So, how much money does the Wirecutter make? Well, earlier this year Bloomberg claimed the site was driving $150million in e-commerce transactions per annum, and keeping anywhere from 4pc to 8pc of that for itself.
Secondly, the acquisition of the Wirecutter will allow the New York Times to improve its “service journalism” offering. That means providing information that’s of use to readers, answering their questions, and solving their problems. It’s a subtle but important shift from just reporting the news.
Here’s what the president and CEO of The New York Times Company, Mark Thompson had to say about the deal: “The New York
Times is the definitive source for news, information and entertainment and now we’re working on becoming an authoritative destination for service journalism, with verticals like Cooking, Watching and Well. The approach that The Wirecutter and The Sweethome take to product recommendations embodies the same standards and values that are the pillars of our own newsroom. Their service-focused guides align with our commitment to creating products that are an indispensable part of our readers’ lives.”
Cultural alignment is key to any successful merger. Many mergers fail solely due to unresolvable culture clashes. In this instance, the Wirecutter and its new owners seem to be very much aligned around a commitment to serving their readers and rigorous reporting. Both realise the power of quality journalism – whether applied to coverage of elections or earphones – and the brand loyalty that this can create. This should be the cornerstone of any media outlet’s sustainable online business model.