When publishers should consider digital paid content

The subscription economy is on the rise and in the digital age everything can be bought at a fixed monthly fee – from streaming media to dog food. This should be old news for many publishers who’ve proudly sold their print editions as subscriptions for many decades. Yet many of them have, surprisingly, not adopted this business model properly to the digital age. If they do, the rewards can be huge, and one solution to the ongoing revenue problem in the industry.

An industry in turmoil

The last decade has been particularly rough on the publishing industry (here defined as newspapers and periodicals in particular). Since the 2007-2008 and the global financial crisis, their print ad revenues have dropped sharply. While new digital ad models have compensated slightly, for many publishers the new digital reality has a significantly lower total revenue than pre-2007. There are many reasons for this drop in print ads, such as: changed buyer behavior, the abundance of digital advertising choices, drop in circulation/reach for publishers, believed/actual lower ROI, etc.

During the same period of time publishers have seen a steady decline in their print circulation numbers. Many companies have compensated with price increase for their print editions, which sometimes have been a successful (although short-term) strategy, and sometimes have just accelerated the drop in circulation and thereby the long-term drop in reach and ad revenue. At best, publishers find themselves with a slowly declining or flat circulation revenue.

About 3-5 years ago many companies in the industry put all their energy into digital ad models, in a hope that this would compensate for the drop in print ad revenue, as well for the flatness in circulation. For years this seemed like the one and only model for many publishers, and for some it is still a very successful model. The development and current state of the digital advertising complex is a question too large to cover in this piece. However, we’ll quickly conclude that there are plenty of factors speaking against digital ad models for publishers, such as: most users are very tired of being constantly bombarded by ads online and that the global platforms players have already conquered the digital ad market.

When faced with a declining top line, publishers find themselves having to brutally cut costs. For many this is a necessary, yet short-term strategy, for surviving and “extending the runway” of their digital transformation. What many publishers face when trying to cut different departments’ costs is the following:

Production/distribution: Usually a very large part of publishers cost base, though difficult to optimize as it contains a lot of fixed costs (printing facilities, distribution networks, etc.). It is often basically as expensive to delivery ten newspapers to a building, as it is to delivery one, meaning that price per copy rises sharply as circulation declines. Fluctuating and unpredictable prices in raw materials can complicate even more.

Editorial: Though there are definitely opportunities to increase efficiency in many newsrooms and editorial departments, the fact is this: Quality journalism and content is very costly to produce, and it is not cheaper just because it is digital. On the other hand, there are plenty of new roles needed in the digital newsroom, such as social media editors, analysts, data journalists, etc.

Administration: Often not the biggest category, but definitely with room for improvement. Publishers can use new digital technologies to increase efficiency and lower their overhead. Company groups with several media properties can leverage their size and build efficient shared centers to handle most of their administrative work.

Technology: Building digital products is expensive. Building good digital products is really expensive. Many publishers find themselves with an ever-increasing technology budget which often is far larger than their digital revenues. There is always room for improvement, but this category will remain large. One can argue that technology costs is the new production/distribution costs of the digital age.

Faced with dropping print ad revenue, slowly rising or flat digital ad revenue, flat or decreasing print circulation revenue, (hopefully) declining costs – the publishers face the following brutal fact: They need new sustainable sources of revenue as quickly as possible, or they will perish.

What options do we have?

Let’s take a step back and look at what revenue models publishers can choose from in the digital age, before trying to understand if and when paid content is right. We like to split them in five categories, which we believe more or less cover most of the viable models for publishers today. Note that there are other ways of looking at revenue models, but these work well for the purpose of this article.

  • Mission based: Having a strong following of readers or benefactors who chose to donate and support the publisher voluntarily. Case in point: The Guardian.
  • Audience access: Every kind of ad model out there. When publishers sell access to their audience in any way, to a third-party. Examples: Digital ads, affiliate marketing, etc.
  • Addon services: Selling products or services that goes along with the content and is targeted to the same audience. Example: E-commerce, apps, tools, etc.
  • Expertise driven: Selling services related to the expertise you need to produce the content. Examples: Speaking engagements, content production, etc.
  • Paid content: Selling access to content, to the reader. Examples: Digital subscriptions, day-passes, piece by piece selling.

In practice most publishers tend to use 2-3 models at the same time, which often is a successful strategy. We believe one thing is important though: Pick one that will lead. Often organizations get a split focus if they are not clear on which model should be prioritized. For most publishers this is a choice between paid content (i.e. subscriptions) or audience access (i.e. ads).

When is paid content right?

We believe that many, but not all, publishers should use digital paid content models as one important tool in their toolbox. For many titles this should also be the leading revenue model. Asking yourself the following questions can help determine if paid content is right for you:

Is my digital content unique enough and not widely available elsewhere? The simple truth is: No one will pay for what is free. Publishers who produce commodity content will have a problem getting paying customers. On the other hand, if you are producing unique and one-of-a-kind material which is not easy to copy – then you’re in luck.

Do I have loyal digital readers that keep coming back? Having users that directly and purposely access your digital products is a great start. However, many publishers find themselves in a constant “atomization race”. Meaning: users mostly access the current promoted atomized piece of content on social media and/or via Google, and then never return to your brand by themselves.

Do I have paying print edition customers which I can convert? A large print circulation base can be a blessing and a curse. On one hand there are multiple ways of working with digital conversion – bundling, upselling, digital win-back, direct conversion, etc. However, many publishers who have tried this find a surprisingly clear gap between their (often older) print customers, and their (often younger) digital customers/users. Often, it is simply not the same customer group.

Is my brand and the perceived value of my product strong? Publishers with strong trustworthy brand will have an easier time introducing paid content models. If you have a high perceived value in your original product, it’s easier to transfer that value into the digital domain. The Economist is a very good example of this.

Is my market size large enough? This can be a very tough question to face, as it might involve some hard truths. In reality many small language, local content, or otherwise niche publishers might not have a large enough audience to produce the right scale needed for digital paid content.

Note that we should not become fatalistic: Even if your answers to the above questions are mainly “no”, you might have opportunities to adapt and transform. However, if that change is too difficult, it might be easier to look at the other revenue models mentioned.

What benefits are there?

Publishers who have introduced and matured into paid content models find many benefits. To mention a few:

It produces tangible, sustainable, and predictable revenue. Subscription models are fantastic in the way that they are so predictable. If you have a base of subscribers, then you can be pretty sure that that will result in real money in the bank, and that you can predict for the next 6 months what that revenue will look like.

Paid content aligns the incentives. When working with paid content models the incentives between the business people, the editorial people, and the readers, are fully aligned. Better content equals happier paying customers and more revenue to the business. The opposite can be said about digital ad models and especially click-baits.

There can be a virtuous cycle. Though some publishers are (rightfully) worried about declining traffic (and therefore less digital ad revenue) when introducing paid content models, we believe that there can be a virtuous cycle. See image next to this text and see if you agree.

Image text: The possible virtuous cycle of paid content for publishers, where paid content models and ad models can support each other.

Who have made it so far?

If we take a look on which publishers who have made it so far with paid content models, we see a timeline of maturity – moving from international newspapers (e.g. NYT who is leading the game) and to local and niche media (where maturity still is low). Summarized in the figure below, where the color describes our estimated current maturity of paid content models, for each of those markets. In Niche media, we include both B2B media and Lifestyle publications, even though they of course differ in many ways.

Image text: A simple representation our estimation of the current maturity in paid content models, divided by possible market that a publisher has, and the type of content they produce.

Let’s start by mentioning the New York Times, the journalistic institution which has led the way in digital paid content. From its introduction of the metered paywall in 2011, it had over 2.5 million paying digital-only subscriptions by the end of 2018. They have done a fantastic job in leading the way for paid content in quality journalism and in the process, they have probably saved their own future. However, the case of NYT is a special one, where other publishers might find inspiration, but also need to consider how they stand out. For example: They have an English language product with a huge domestic and international audience, meaning they have a virtually endless market size for digital paid content. There will not be space left for many more NYTs on the world market.

Secondly, we should talk about the Wall Street Journal. With about 1.5 million digital subscribers by the end of 2018, they have been tinkering with their paywall since 1997. They are currently in the forefront of how to use data to convert and retain digital subscribers. A similar case to that of NYT, in the fact that they have a massive digital market to tap from, and also a high propensity to pay given their affluent and business-oriented target audience.

Thirdly, let’s talk about national publishers, be they general news or financially focused. This is where the examples of success are getting a bit less scarce and where a lot of development is ongoing. There is light in the tunnel, especially in many European markets. We can mention several successful examples from our own market in the Nordics. Verdens Gang, a Norwegian tabloid owned by the media group Schibsted, was early in the game and introduced their paid content model in 2011. Though being a tabloid and thus going for reach, they have successfully combined this with a premium model and currently have about 175,000 subscribers (March 2019). Another successful example is Dagens Nyheter, the Swedish morning paper. Introducing their premium model as late as 2014, they now have about 160,000 subscribers (March 2019). The success of Dagens Nyheter is due to a combination of bold business decisions/focus, a successful organizational strategy, and a reliance on quality journalism.

Lastly, for local and niche media, the story is often different. There are some successful examples of niche B2B publishers and even some Lifestyle publishers who have made progress – such as NYT Cooking, Vanity Fair, and Wired. However, many are still struggling with small markets, international/national competition and too small technology budgets. This is truly the next frontier in paid content, where successful examples are direly needed, but hard to come by.

How publishers can succeed with digital paid content models

When the decision is taken to move into paid content, several things need to be put in place. Outlined in our coming article, we believe that publishers need to focus on five areas to be successful with paid content:

  • Vision and focus: There need to be a strong vision aligning the organization, and making sure that paid content is a top priority. Editorial have to be on board. There will be difficult choices to make where other revenue models might have to come second.
  • Content and packaging: Publishers need to understand which content should be premium and which should remain open, and how this should vary over time. Also, how is the product packaged and tiered, and what the price point(s) should be.
  • Optimized experience: Publishers need to ensure a smooth customer experience. Where everything from payment and invoices, to the actual experience of the digital product must be as smooth as possible for the user.
  • Data-driven workflow: Publishers need to adapt a data-driven workflow, where everything is measured, understood, and forecasted. The question must always be: What do the numbers say and how do we improve them?
  • Flexible organization: Paid content models are a moving target, and the market is constantly maturing. Therefore, you also need to make sure that your organization is flexible enough to adapt for these changes.

Read the details in our upcoming article on how publishers can succeed with digital paid content models.

We hope this article inspired to get started with paid content models. Do you want to know more or need help with a project related to this topic? Talk to us on to see how we can help. We always welcome your queries and feedback.

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