Digital pub­lish­ers can no longer af­ford to pro­cras­ti­nate on pay­walls

Newspapers & Technology Magazine - - Contents - ▶ by Keith Sib­son VP Prod­uct & Mar­ket­ing, PostUp

Dis­trib­uted con­tent has turned the digital pub­lish­ing busi­ness model on its head. Once an easy source of quick ad rev­enue, dis­trib­uted con­tent has changed how and where peo­ple con­sume con­tent. Today the ma­jor­ity of pub­lisher site traf­fic of­ten comes from one-and-done, anonymous read­ers who click away al­most as quickly as they ar­rived.

Mean­while, the pro­gram­matic ad­ver­tis­ing that was once a wind­fall for pub­lish­ers is fall­ing vic­tim to its own suc­cess. With more pub­lish­ers en­ter­ing the ring to take a share of easy ad rev­enue, the sup­ply of in­ven­tory con­tin­ues to in­crease faster than ad­ver­tiser de­mand. As a re­sult, the rev­enue that pub­lish­ers can gen­er­ate in a pure ad­ver­tis­ing model con­tin­ues to drop year-over-year. These el­e­ments have com­bined to threaten what was once a prof­itable busi­ness model for pub­lish­ers.

Yet, most pub­lish­ers have clung even tighter to the ad-driven model, prop­ping up their de­clin­ing ad rev­enue with plat­forms and more in­tru­sive ad place­ment. Un­for­tu­nately, these mea­sures have only deep­ened the di­vide be­tween pub­lish­ers and their au­di­ences: poor ad qual­ity has di­min­ished user ex­pe­ri­ences on owned sites, and plat­forms have cut pub­lish­ers off from di­rect con­tact with their au­di­ences. Worst of all, these steps are only short­term fixes; they don’t ad­dress pub­lish­ers’ real prob­lems. The prob­lem isn’t with prop­ping up their busi­ness model; it’s with the busi­ness model it­self.

As rev­enue con­tin­ues to fall, pub­lish­ers can no longer af­ford to rely solely on digital ad­ver­tis­ing. In­stead, they must di­ver­sify their busi­ness model in or­der to re­duce their reliance on plat­form traf­fic and sup­port the con­tin­ued devel­op­ment of con­tent. The win­dow for pro­cras­ti­na­tion has passed; if pre­mium pub­lish­ers want to take con­trol of their rev­enue, they must look to­wards the pay­wall.

Pre­mium pub­lish­ers need to mon­e­tize read­ers di­rectly

This need to di­ver­sify rev­enue is es­pe­cially press­ing for pre­mium pub­lish­ers who have high cost struc­tures for con­tent cre­ation. A pub­lisher with a team of jour­nal­ists in a Man­hat­tan of­fice has a very dif­fer­ent over­head than a few kids in their Mid­west garage. While an ad-driven model might sup­port the cost of a cheap op­er­a­tion that sim­ply re­posts Red­dit con­tent, the cre­ation of re­li­able, high-qual­ity con­tent de­mands a busi­ness model that’s equally re­li­able.

For­tu­nately, there’s hope for these pub­lish­ers. With a glut of cheap con­tent crowd­ing out qual­ity, au­di­ences are look­ing for ways to cut through the noise. More than ever, au­di­ences re­al­ize this con­tent may come at a price, which is why re­cent sur­veys have found that au­di­ences are more will­ing than ever to pay for digital con­tent. It’s im­por­tant that pub­lish­ers take ad­van­tage of this shift in au­di­ence at­ti­tudes.

The print busi­ness model de­pended not only on ad rev­enue but on sub­scrip­tion fees from read­ers. In or­der for pub­lish­ers to con­tinue cre­at­ing con­tent that en­gages their read­ers, they must re­turn to mon­e­tiz­ing their read­ers di­rectly. Build­ing these re­la­tion­ships with read­ers is the only way pub­lish­ers can weather changes to their con­stantly evolv­ing in­dus­try.

The modern pay­wall

For years, pub­lish­ers put off pay­walls be­cause of con­cerns about im­ple­men­ta­tion, tech­nol­ogy, and whether these walls would cut off ac­cess to ad rev­enue. The pay­wall has evolved to ad­dress these con­cerns, al­low­ing pub­lish­ers to put up pay­walls that fit their con­tent and au­di­ences. At this point, it’s no longer a ques­tion of if pre­mium pub­lish­ers should use pay­walls, but how best to put it into prac­tice. Pub­lish­ers can test pay­wall vari­ables, such as the num­ber of ar­ti­cles that can be ac­cessed be­fore re­quir­ing pay­ment, in or­der to en­sure their pay­wall is op­ti­mized for max­i­mum rev­enue.

Many pub­lish­ers, such as The New York Times, have turned to the me­tered pay­wall. This grants ac­cess to a set num­ber of ar­ti­cles per month, al­low­ing pub­lish­ers to gen­er­ate sub­scrip­tion rev­enue from ded­i­cated read­ers while still gen­er­at­ing ad rev­enue from pass­ing vis­i­tors. Other pub­lish­ers, such as The Wall Street Jour­nal, place con­tent be­hind a hard pay­wall. Their name recog­ni­tion and strong rep­u­ta­tion for qual­ity has en­abled them to com­pletely wall off con­tent suc­cess­fully, even as they cut off that con­tent and its po­ten­tial traf­fic from search and so­cial.

Still, for pub­lish­ers to see the max­i­mum ben­e­fit from pay­walls, they must nur­ture read­ers from pass­ing vis­i­tors into de­voted sub­scribers. This makes di­rect re­la­tion­ships with the au­di­ence even more im­por­tant. Pub­lish­ers can’t nur­ture these re­la­tion­ships with plat­forms; they must make use of email to de­velop their au­di­ences. Pay­walls can be con­fig­ured to cap­ture email ad­dresses or give read­ers ac­cess to more con­tent in ex­change for their email, as a first step in nurturing read­ers to­wards a paid sub­scrip­tion.

In this new era of con­tent dis­tri­bu­tion, the pub­lish­ers that are hurt­ing the most are the ones that have in­vested in qual­ity con­tent. The di­min­ish­ing re­turns of ad-driven busi­ness mod­els are no longer suf­fi­cient to sup­port the cre­ation of qual­ity con­tent. In or­der to mon­e­tize their au­di­ences, pre­mium pub­lish­ers must turn to pay­walls.

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