INMA CEO/Executive Director Earl Wilkinson’s recent blog about the future of community media added an essential voice to a growing cacophony. We’ve all heard the bad news about cuts from the LA Times, Sports Illustrated, Pitchfork, and Reach in the UK. Many news media organisations seem to have entered their final phase.
It’s time to offer some hard truths about how we got to this point — and reasons for optimism.
Facing the truth
Truths first: News media cannot thrive, or even survive, on advertising revenue. Just look at the numbers; ad-dependent media are starving to death.
That leaves consumer revenue as the best hope. However, the slow dawning of this realisation has not been met with energetic innovation and growth. Success has been elusive, and growth, for most, has stalled.
Here’s where optimism comes in: Consumer revenue can and will create scalable and broad-based revenues. The problem is we have been doing it wrong. When we fix that, we will unlock huge opportunities.
News is a mass-market category by nature. Most readers have many interests, and few limit their media consumption to a single product.
Why subscriptions fail
That makes it odd that publishers chose subscription, near-universally, as a consumer monetisation model, locking most people out of the things they want.
We didn’t do this because we analysed and understood user needs, then designed a solution that best fit. We did it because that’s what everyone else had done. The idea that we could design a business model to suit our products and customers seemingly did not occur to anyone. That’s why it hasn’t worked very well.
On the plus side, subscribers represent a recurring revenue stream — until they cancel.
People don’t like subscribing to news products. Conversion rates of 2% of the audience are considered good. Ignoring 98% of what used to be a mass market doesn’t feel optimal.
The fact that some subscribers will always cancel doesn’t make it any easier. When they do, their recurring revenue drops to zero, and we lock them out. We ban them from a product they once liked enough to subscribe to. It’s a wasted opportunity.
Adding to our woes, new subscribers get progressively more expensive to acquire and are worth much less, thanks to discounts. Eventually, subscriber numbers start shrinking, and ARPUs shrink faster as lower-value new ones replace high-value early subscribers.
Even worse, we can’t take advantage of the network opportunities the Internet now provides and retail outlets used to give us. We’re all selling our lonely, singular products in our sparsely stocked Internet shops. Persuading people to enter, let alone subscribe, is challenging. Even mega-brands struggle with this. What chance does a community newspaper serving a few hundred thousand people stand?
It’s no surprise titles are collapsing, especially those serving smaller audiences.
Subscription isn’t a panacea. But that doesn’t mean people won’t pay. We know there is substantial unmet demand for subscription products — look at those conversion rates.
Looking for new opportunities
The news industry needs to try new things. All breakthroughs are impossible until they’re not; think about the Wright brothers next time you find yourselves at 40,000 feet.
Subscriptions got us off the ground. Now, we need to gain altitude. The news industry has enormous untapped potential crowded right outside their paywalls.
They’re a huge opportunity — how could they not be? What other businesses lockout 95% of would-be customers?
If there was ever a time to start converting them to customers, it’s now. We need to determine how to give them what they want at a price that works for them and us.
The new model needs to be built around readers. You want them to pay, but they don’t want to subscribe, so give them other options.
How can you get more would-be readers to become customers? Here are a few suggestions:
- Anyone should be able to get your product whenever they want.
- Eliminate the idea of “churn.”
- Everyone should pay.
- Get rid of walls as much as possible (sign-up, registration, subscription). Minimise the barriers between someone’s desire for your product and their spontaneous ability to access and pay for it.
- Continuously improve your products to attract more customers (and money).
- Stop locking users away. Accept that users want to move around and don’t want to be “owned.” Refusing to “share” them with other businesses, even competitors, diminishes the market for everyone and hands them back to the trillion-dollar platforms at the heart of our demise.
Pursuing new solutions
I started a company called Axate to address these points and more because publishers need a solution beyond the no-win subscription/advertising dichotomy. This is not a sales pitch for that company; it’s a call to action for an industry that is struggling but doesn’t need to be.
If the industry can make consumer payment work the way consumers want, removing barriers and making paying for news spontaneous and frictionless, we can reboot the entire economics of news.
Although we’ll have given up the certainty of recurring revenue from every customer, we’ll have removed the limits of our number of customers. We’ll also have removed the limit on how much they can be worth to us. The more often they spend, the more they’ll end up spending. We’ll get good at getting them to do it more and more frequently.
Rather than a fixed and limited opportunity, there will be an expanding one in front of every publisher. Collaboration and user-sharing will be a form of marketing, not a risk to the business.
We can develop a solution that suits our unique sector and its enormous, engaged network of users.
Our history of trying again and again with both advertising and subscription, to little avail, has robbed us of optimism. But our plight isn’t hopeless or impossible to solve. We must stop doing what we know doesn’t work and start doing something that does.
Far too many news publishers are in their terminal phase. It’s heartbreaking, but it’s not inevitable. Now is the time for radical efforts. Please don’t do nothing.