“News is what a chap who doesn’t care much about anything wants to read,” said Evelyn Waugh in his 1938 polemic about journalism, Scoop. He wouldn’t be much use in a modern media boardroom. Content is still, as the old adage goes, king. But the race to make it pay big money has become more complex than ever.
A PricewaterhouseCooper report recently claimed that, with mobile Internet penetration set to hit 55% worldwide by 2018, digital magazines are reaping the benefits. Global digital consumer magazine advertising revenue will be $12.4 billion by then, rising at 17% CAGR. At the same time, print’s CAGR is declining at 3.9% annually. “Currently advertising is centred on magazine websites,” adds the paper, “but, as digital circulations increase, electronic editions will become increasingly popular for advertisers.”
But as the digital market gains traction, outlets are still confused as to where the best money lies. Last month the New York Times and German publishing giant Axel Springer pumped €3 million ($3.75 million) into Blendle, a Netherlands-based startup only six months old, which claims to be iTunes for newspapers’.
The service, which looks like TweetDeck, offers readers the chance to view articles for between $.20c and $1 a go. It already boasts over 140,000 users at home, where it has been used by almost all leading Dutch news media. 20% of Blendle readers convert to paying users.
Alexander Klöpping, the mop-topped, hoodied honcho behind Blendle, comes from a journalistic background. He was fed up that freelance articles he submitted weren’t getting many views. In an interview, the 27-year-old revisits his iTunes theme several times: “We think that journalism is worth money, and users are happy to if it’s easy enough to pay,” he says, adding that there is no current outlet offering a simple, effective pay structure.
Blendle announced that it planned to use its October cash injection to move into other European markets aside from its native Netherlands. For Klöpping fast expansion is necessary because “we’re dealing with quite low margins.”
Springer and the Times clearly think they’re onto a winner. Writing on the site he edits, Monday Notes’ Frédéric Filloux disagrees: “I see many reasons to cast strong doubt about Blendle’s sustainability as an international business, and I see no benefit for digital media,” he writes.
Filloux admits that Blendle has excelled in its home market, making Dutch-language reports attractive to buy. But when it comes to English, the most widely-available tongue on the web, things change. “In a few clicks, I will get an 800-word story from the Economist, a 900-word one for the Guardian, another 700-word article by BusinessWeek and a 1,600-word piece from TechCrunch,” he writes. “And I’m not mentioning the…24,400 other “Blendle” references that pop-up in Google News.”
Besides, Filloux adds, the comparison with iTunes isn’t necessarily a good one: Apple’s average revenue per user dropped from $4.30 per user in Q1 2012 to $1.90 at Q1 this year: a 56% drop. Ears have been increasingly drawn to flat-fee services such as Spotify and Rdio, whose revenues are exploding.
Race to re-monetize journalism
The motives behind the Times’ and Springer’s investment (which pale in relation to their revenues of $821 million and $3.5 billion respectively) are obvious: both want to find ways to re-monetize online journalism. In the case of Springer, a European giant with almost 13,000 employees and projects in over 40 territories, explicitly so. “Blendle is working hard to create an easy to use paid access to quality journalism – we became a shareholder of Blendle because we share the same vision,” said spokesman Michael Schneider.
Springer has been throwing cash bets at an array of international hookups in an attempt to stumble on gold. One of the most recent is an investment in California’s OZY, which offers in-depth features and an attractive design paired with audio content with NPR. For the NYT, which runs on an operating loss of $9 million, the Blendle decision may seem starker. Advertising, also, is down five points this year.
But those numbers are volatile. The Times is a market leader in an industry in flux. It, like other news outlets, has launched a series of apps, which have been adopted by many. Its cooking app, for example, has been discovered by two million users. Britain’s The Guardian, too, has done well to attract views to its website, which to date is completely free-to-use.
The Guardian’s app, however, has adopted a ‘freemium’ model similar to those of many popular mobile games. It offers in-play purchases such as a premium-tier subscription, replete with galleries, editors’ picks and book excerpts. It also features no-ad surfing.
“Digital newspaper payments are taking off, but won’t prove transformational,” adds the PwC report. “Digital newspaper circulation revenue grew by 66.2% through 2013. But although individual publishers report improved fortunes, few are hailing a transformation. Digital circulation will make up just 8% of total circulation revenue globally by 2018.”
All-you-can-read subscription models, on the other hand, will be transformational, the paper says – and will soon reach critical mass. The Financial Times has thrown all of its content behind a paywall. Its digital and services revenues accounted for 55% of total revenues in 2013 – up from 31% in 2008. Its profits leapt 17% this year. Owner Pearson reported an overall 21% slump in 2013 profit. But it maintains that the FT is profitable in its own right.
Clearly, the Financial Times’ reputation for leading-edge economic intelligence makes it more easily monetizable than a traditional newspaper such as The Guardian. Another brand that has worked this to good use is The Economist, a Pearson stablemate, which has historically straddled the gap between an intelligence report and reportage, allows online readers five stories free per month, before offering a subscription of €4.75 ($6) per week.
At the farthest end of this spectrum is The New Yorker, another brand which has leaned heavily on its pre-digital marque to throw almost all content behind a paywall. Its $12-for-12-weeks subscription underlines its dedication to literary, in-depth stories rather than news content. The magazine didn’t even handle its own ad sales until 2011. And this year, on the 90th anniversary of its foundation, the New Yorker’s editors heralded the equality of its web medium with a post entitled ‘A New New Yorker’.
“Publishing the best work possible remains our aim,” wrote the editors. “Advances in design and technology are tools in that effort.” NewYorker.com now boasts over 3 million unique views per month, for under 18 original posts per day. Try explaining that ratio to the editor of Business Insider.
“Not long ago, many people thought of digital news as a race to the bottom: we’d end up with nothing but SEO-driven gossip and multi-page galleries,” Buzzfeed UK editor Luke Lewis recently told Wired. “Now, as page views recede as a key metric, quality is back. I think we’re entering a new golden age. Companies like BuzzFeed and Vice have figured out how to make ad-funded journalism work financially, enabling us to hire reporters all around the world.”
Longform’s revival
Indeed, the past few years have seen a rise in outlets offering high-quality, literary journalism, or creative nonfiction: longform, narrative reports that delve deep into a topic. Ben Wolford is editor of Latterly, a magazine focussed on longform pieces which launched just this month. He says, “Latterly pulls together a few different ideas at the vanguard of digital publishing, but at the same time it’s the kind of publication that I hope appeals to journalism purists.
“We don’t run ads, which means the reading experience is uninterrupted and people know we’re not being influenced by any kind of corporate pressures,” adds Wolford. “The consequence of that is our subscribers pay for everything. And because they’ve got skin in the game, we feel it’s important to show them what we do with their money and invite their feedback and input on editorial and business decisions. We’re providing a service to them: Great journalism that peers deeply into individuals.”
Diversification has been a key component of the digital journalism age. The ubiquity of high-quality equipment, multi-skilled correspondents and sophistication of websites means that adding video, audio or interactive elements is not the hump it once was. Vice and Monocle have based their entire business models around offering consumers a recognizable brand across a multitude of platforms. Monocle 24, a 24-hour radio service, attracts 400,000 listeners per month. Vice’s video news section topped 150 million views last month. The imminent monetization of YouTube could bolt millions onto its value.
Crowdfunding has also weighed in on the scene, with sites such as Beacon Reader offering readers the chance to fund particular writers in return for an exclusive look at their work. Janine Gibson, editor-in-chief of TheGuardian.com, thinks that all avenues for online content are well and truly open: “Will the future be behind a paywall or in the billionaire-funded specialities of extremely talented individuals?
“Broad and narrow or deep and vertical? I think there’s probably a two-pronged direction,” she adds. “One is very fast, real-time and super-social; the second is measured, original, rich and exclusive. The trick is to do both.”
But to pay for individual stories? Spotify, despite Taylor Swift’s angry snub, generated a shade under $1 billion revenue in 2013 – an increase of around 74% on 2012. Springer and the Times are two of the world’s publishing giants. But their silence on what works and what doesn’t (the Times refused to comment on this story) shows how difficult the digital journalism landscape remains to navigate. And despite both putting money where their mouth isn’t – into Blendle – it seems success in this climate is based largely around putting it all out for free, or hiding everything behind the wall.