As digital ad revenue is diverted to Google and Facebook, big publishers are embracing subscription revenue, enforced by paywalls online, with new enthusiasm. However business models are far from figured out.
Global publishers operating in Australia are also increasingly turning to analytics to better understand their audience in an effort to build relationships that will shore up their financial futures.
“Advertising is a smaller and smaller piece of what we do, but I do find hope in some of the other things that can work to fill that gap,” said Damien Cave, New York Times Australian bureau chief.
“Subscriptions are our main business and they have been growing significantly in Australia and around the world.”
According to the company’s financial results, online subscription revenue grew nearly 18 per cent to reach US$400 million in 2018, while digital advertising rose 8.6 per cent to US$259 million (digital accounts for 40 per cent of total revenue).
The NYT subscription program has been so successful that the company is now planning to test higher prices for digital subscriptions, according to Business Insider.
Cave argued new revenue sources will emerge, for example the NYT’s hit podcast The Daily, which the publisher is exploring turning into a TV show called The Weekly.
Outside of journalism, the Times is also generating revenue from its crossword puzzles and cooking subscription products. In total more than 3.3 million people pay for the company’s digital products.
“There’s just new models that will continue to emerge and I think we are in the fortune position of working for big enough companies that can invest and try these things,” Cave said.
He was less optimistic about the road ahead for smaller publishers.
“I often worry about the smaller ones, the ones that cover particular niches or particular smaller communities and it is much harder for them to survive and the only thing that seems to be working, if you look at newsletters like TheSkimm and other things like that, is really building intense communities that are passionate and willing to contribute to what they are doing.”
Cave was speaking on a panel hosted by Telum and Google’s News Initiative in Sydney this week, alongside David Winning, the Wall Street Journal bureau chief for Australia and New Zealand and Jamie Smyth, the Financial Times’ Australia and Pacific Islands correspondent.
The newsroom leaders discussed what was on their editorial agendas for the year ahead, as well as they way news business is changing.
A smaller pie
Locally News Corp and the Fairfax papers, now owned by Nine, have also come to embrace paywalls, with The Australian enforcing a hard paywall and SMH and The Age rolling out a softer paywall strategies.
Speaking during a webinar hosted by Which-50 in November last year, Jess Ross, chief product officer at Fairfax, said digital subscriptions now make up the majority of Fairfax digital revenue.
She said the shift in strategy had been informed by the understanding that, “In the digital world ad dollars are not going to play the same role that they have in print, from a revenue perspective.”
As a result, the company has adopted new KPIs which focus of loyalty, Ross said.
While publishers may not be able to rely on digital ad revenue like they once did with print advertisements and classifieds, the digital ad revenue certainly still helps said David Winning.
“We certainly don’t want to turn down digital ads, they are very helpful in terms of the revenue equation,” he said.
“I think it helps. The question is can you rely on it? And I think we are seeing with the likes of Vice and Buzzfeed and the job cuts there that it is tougher. I think the statistic is that for every new ad dollar that is created, Google and Facebook take 80 per cent, and that leaves a very small pie, for the rest of us.”
Winning said WSJ has experimented with blogs but have scaled back the amount of content readers can access online for free, comparing it to seeing something you like in a shop window which then leads you to buy a subscription.
While subscriptions are seen as the way forward now, Winning also noted business models are in flux and emerging technologies like wearables or voice could play a role in the delivery of news in the future, shifting the market once more.
The paper now also has a better understanding of its readers, Winning said, thanks to online anlytics tools, which have helped retain subscribers and direct editorial resources to producing things readers value.
FT’s diversity push
Having a clearer picture of the audience and their behaviour is influencing product strategies which is reflected in editorial decisions.
”The disruption that we have seen is forcing us to change and be a lot more responsive to our readership,” said Jamie Smyth, FT’s correspondent for Australian and Pacific Islands.
“We know who is now reading every story, how long they’ve landed on that story and where they go next.”
For the Financial Times, the makeup of its traditional audience doesn’t paint a particularly healthy future for the 131-year-old paper.
“We did this survey a few years ago and we found that we had less than 25 per cent female readers, and most of our readers were over 50 — that’s not good for your business model,” Smyth said.
“We made a really conscious decision to become more diverse, to try to seek out female readers.”
To address its diversity problem, the paper was recruited more women, including into leadership roles where 45 per cent of senior management are women, and deployed a bot which scans coverage to keep track of how many women the paper has quoted in its articles. (Last year Which-50 also began tracking the number of women quoted in our articles – albeit with a much more manual process).
Smyth noted the organisation “still have a massive gender pay gap of 18 per cent” that it is working to reduce.
NYT’s Cave agreed that audience diversity is important to publishers’ futures.
“All our audiences are older and whiter and more male than they need to be for us to survive,” Cave said. “For a long time you could pretend that wasn’t the case but with new audience metrics that’s no longer the case.”
“For us to thrive and survive we need to be more diverse, we need to be different.”
For its part, the NYT is courting younger readers, more than three million US students now receive free access to nytimes.com. The program is paid for from contributions from 30,000 Times readers under the ‘Sponsor a student’ subscription program introduced in 2017.