"to be a journalist in these times was bliss —for us, anyway. I’m afraid we felt a bit superior to those without the same access to information that we enjoyed. It was easy to confuse our privileged access to information with authority or expertise. And when the floodgates opened —and billions of people also gained access to information and could publish themselves— […] Newspapers began to die in front of our eyes.” This is how Alan Rusbridger describes the beginning of the end for traditional press in Breaking News: The Remaking of Journalism and Why It Matters Now (Canongate Books, 2018). The democratisation of the internet, which began in 2000, the 2007 smartphone boom and the ensuing popularity of social media upset the way in which the business of print journalism had been conducted until then. Furthermore, we had a recession from 2007 to 2011 and advertising revenues slumped. Newspapers were knocked out cold by the combination of all these factors. The good news is that it is not too late to react.
Up until then, news outlets had been the middle man between political rulers and citizens, setting the public agenda. But as the popularity of social networks surged —in particular, Twitter’s—, political leaders began to communicate directly withe the public and news media became mere amplifiers for their messages.
drop in profits over 5 years
With the advent of digital editions, newspapers thought they could transition from highly-profitable print advertising to the online equivalent. However, they failed to account for online pop-up blocking technologies and the fact that advertisers prefer platforms such as Facebook and Google that can guarantee them access to much better segmented audiences and allow them to monitor the return on every cent they have spent.
As Gonzalo Giráldez explained in his PhD dissertation, the circulation of Spain’s top media corporations fell by over 42 per cent between 2011 and 2016, with an advertising revenue drop of 35 per cent. The sector’s operating profit plummeted from €242m in 2005 to €40m in 2016. And the bleeding hasn’t been stemmed. Circulation in 2019 has kept a downward trend with a decrease of over 10 per cent and an 8 per cent drop in advertising revenue for print editions.
Where do we want to go?
In Alice in Wonderland Lewis Carroll wrote that “if we don’t know where we are going, we will never find the way”. It is very important to know where you want to go in order to get there. So you need to come up with a plan, picture your objective and take the necessary steps to achieve it. In the case of the press, the plan mandates changing the business model. “A model is needed where users are the main source of income. Anyone who fails to grasp this will have a serious problem”, says journalist Ismael Nafría, the author of La reinvención del NY Times [How the NYT Reinvented Itself]. For readers to become the main source of income, first they must be at the centre of every strategy. The future of news media depends on the five key steps that we have summarised below.
1. Readers take centre stage
In his book Winners, el método para ganar clientes en la era Amazon (Penguin Random House, 2019) [Winners: the Method to Attract Clients in the Amazon Era] author Pablo Foncillas explains how Lady Gaga has perfectly understood what it means for the user to take centre stage. “Connecting with your clients starts with listening to the market. Understanding what the market is interested in. In Lady Gaga’s concerts the songs she plays include the most popular tracks on Spotify for the city where she is performing. The gig’s setlist will be different in Berlin, Santiago de Chile and Miami. This is how she was able to sell out her Wembley Stadium date in London (nearly 100,000 tickets) in only 45 seconds”, Foncillas remarks.
rise in digital newspaper subscriptions
Focusing on the client means investing to offer them a great user experience and a top-of-the-range product that will foster loyalty and make them feel part of a community. That is how you build mid and long-term relationships. Therefore, the future of journalism means bringing our audiences to the foreground. Jacqui Park, a journalist and researcher with the University of Technology Sidney, has written that “innovation in news media has circled through three overlapping cycles: digital-first publishing (that is publishing news online first), social media distribution and, now, audience-centred publishing. It has taken these three cycles to understand what is at the core of the disruption challenge: audiences. The audience comes first”. We need to find out who our audience is and what they want to buy (market studies) to offer them the sort of quality, differentiating news that they are willing to pay for. Like Lady Gaga, we need to find out what songs they want to hear. This differentiating information should also be useful on a day to day basis, so they can see a return on the investment they made when they subscribed. This is the only way for repeat readers to become loyal subscribers.
2. Obtaining revenue straight from readers
According to WAN-IFRA, the World Association of News Publishers, from 2013 to 2018 the number of digital subscriptions rose by 208 per cent worldwide and a further 13 per cent increase is expected in 2019. The general public are becoming increasingly used to paying for content. Even in Spain, a country were pirated content sites such as Series Yonkis and Roja Directa were all the rage, people are now subscribing to Netflix, Movistar+ and Spotify. In his book Los medios ante los modelos de subscripción (UOC, 2019) [News Media and Subscription Models] author Pepe Cerezo explains that “the drop in circulation and loss of traditional advertising revenues has not been offset by a growth in online advertising, which is weighed down by the power of technology platforms. That’s why we are witnessing a new transformation in the sector aimed at obtaining revenue straight from readers”.
The NYT provides a key reference point for subscription models: 60 per cent of the paper’s revenue comes directly from subscribers, 32 per cent from advertisers and 8 per cent from other sources. It is worth noting that in the case of ARA, whose subscription model is also unique in Spain, revenue provided directly by readers and subscribers is 63.5 per cent of the total, with advertising and other sources accounting for 27.5 and 9 per cent, respectively.
3. Hight quality standards for paper and online editions
If you expect to be be paid for your content, you cannot offer the same as others are offering free of charge. Therefore, changing your business model also requires a change in the way news is provided. This means a larger number of in-house stories and news coverage that is different from what readers may already find for free. Quality is not just about better news stories, with a fresh focus and new formats, but also about producing fewer pieces. Less is more. In the UK The Guardian —whose model is based on contributions by its reader members— saw their readership rise following a 30 per cent reduction in their number of daily online news stories. In the latest meeting of the Global Editors Network (GEN) held in June this year, the British newspaper’s editor-in-chief, Katharine Viner, stated that The Guardian always puts quality first: “We are not about print first or digital first. We are about putting news stories first”. Content comes first.
of ARA’s revenue is from readers
Furthermore, we live in a world where there is a surplus of information which readers have limited time to take in. That is why we demand that news media establish a hierarchy.
4. Suitable data exploitation
Having a business model centred around revenues that come straight from your readers means knowing them intimately so you can offer them what they want. Due privacy protection by overseeing bodies and the disappearance of cookies make it indispensable to implement strategies that encourage registration. By having your readers register with your paper’s website you can identify them and offer them bespoke content that will be useful to them.
What’s more, this new business model also requires changing the measuring systems currently in use. So far newspapers have focused on the number of pages viewed by a user. If subscriptions or payments by the community members are the main source of income, we need to know what content leads to the largest number of conversions, not to the largest number of views.
5. Revenue diversification and partnership building
In 2019 the Financial Times, with one million online subscribers, launched a new business based on consultancy services offered to other companies that are looking to exploit a subscription-based model. The UK paper has put all its know-how in the subscription business at the service of other firms who wish to obtain additional revenues. Other media outlets offer writing workshops or training courses. In an increasingly complex, interconnected world, diversification must go hand in hand with developing new partnerships. For instance, ARA has set up a reporters’ campus in partnership with Fundesplai. We teach the job of being a reporter and Fundesplai contributes its expertise in the field of educating in leisure. The goal of the campus is to draw a young audience, to promote and enrich ARA’s community and obtain new revenues.
drop in print advertising revenue
To sum up, faced with an increasingly uncertain future, we need to adopt a holistic strategy that combines constant innovation in content (in terms of new formats and quality) and business models built around direct income from readers, with accurate distribution (at the right time and through the right channels), as well as an outstanding product (good user experience). All that should allow us to seize our readers’ loyal attention time and again. It’s innovate or perish!