This article was first published by INMA.
The media and publishing industry is undergoing a transformation. It is moving from print to digital, diversifying revenue streams since advertising revenue is becoming unreliable and uncertain, enhancing the quality and authenticity of content, gathering first-party data, and experimenting with new content formats like podcasts and videos. Additionally, it is adapting to challenges brought about by the pandemic.
Publishers have started prioritising their digital transformation strategy. Their top focus areas are now gathering first-party audience data, accelerating reader revenue, and implementing the associated technology, such as data and products). All of this points to one thing: the emergence of paid-for digital content, a chasm that publishers are attempting to cross.
The goal is quite clear — generating and maximising reader revenue — but the process for successfully realising this goal is still not clearly defined. So, let’s uncover how publishers can cross the reader revenue chasm.
Considerations for sustainable reader revenue
People pay for good quality, and this applies to content as well, regardless of whether it’s text, audio, or video. So, the key to generating reader revenue is producing high-quality content on topics that resonate with the audience. Publishers also have to identify what content themes and which formats best suit their audiences before launching a reader revenue model.
A critical question that needs to be answered is whether they should put all their content behind a paywall, or whether they should limit this to premium content. If it’s the latter, then how would premium content differ from free content? And, if the former, at what price and price range should the subscription plans start?
Also, would there be just one plan, or would there be a tiered plan to suit different content consumption habits? And is there data available on who among the audience will consume premium or gated content?
Going beyond content, publishers may also have to invest and reshuffle their technology stacks and marketing teams. Consumers today want personalised offerings that are accessible on demand. Having the right tools in place and ensuring data flows between them accurately is critical. Of course, by extension, this also begs the question with whether publishers are equipped to deal with the sunset of the third-party cookie.
Implementing and launching a reader revenue model is a strategic project and requires high investment and board sign-offs. With high levels of uncertainty, it would be worthwhile for publishers to take more informed steps when crossing the chasm toward reader revenue.
Kickstarting the reader revenue journey
Simply putting up a subscription paywall without answering the above questions can backfire immediately. Consequences could include a drop in pageviews, uncertainty around revenue, risk of low return on (high) investment, and risk of losing existing ad revenue. Succeeding in generating sustainable reader revenue means playing the long game by running experiments, gathering data, and incorporating learnings back into the reader revenue strategy.
A good first step toward sustainable reader revenue is understanding the performance of each piece of content in an unbundled manner. Seeking voluntary contributions on each article is a sure way to find out which authors or which content emotes loyalty from which audiences.
While this does not sound like much, the truth is a contributions solution offers valuable insights into the subscription worthiness of each piece of content — a critical factor for reader revenue success. In addition, a contributions solution does not cannibalise site traffic and, hence, does not put the existing ads revenue at risk.
A pay-per-content paywall, on the other hand, can be strategically implemented to get your audience used to gated content. Such a paywall allows publishers to gauge price points for different audience segments and geographies. It further helps establish micro-bundles for different audience segments without having to offer the standard all-you-can-eat offer for every user.
Data relating to unbundled content consumption using micropayments starts becoming increasingly valuable. Using such insights, publishers can offer customised content bundles to their audience. For example, if John consumed eight articles about sports, politics, and technology, a custom bundle can be extended for John relevant to his interests. Chances are he would be willing to subscribe to this bundle.
If this approach works with a portion of the audience, then it makes sense to launch a subscription model in conjunction with a pay-per-content paywall for “never subscribers” and a contributions solution to understand which content should lead the user’s subscription journey.
Micropayments as the first step toward reader revenue
One may debate here that, over the last decade or so, some publishers have tried micropayments and failed. But as with any business opportunity, timing and market readiness must be considered.
The current pandemic has increased Internet and smartphone penetration and usage across demographics. More importantly, with every publisher leaning toward a subscription model and with multiple newsletters around, subscription fatigue has become real phenomenon. Alternative payment solutions such as local e-wallets have also become more rampant in recent years. With the increasing understanding that quality content costs money, micropayments are starting to look like a permanent revenue source for most publishers.
Every business evolves its products and services over time. There’s only that so much a pure subscription model and ads yield can achieve. Even with subscriptions, churn starts to set in. Micropayments can help bring those churning users back into the reader revenue fold. After all, the proportion of never-subscribed audiences for a publisher is always much higher, and micropayments can assist publishers in converting them into subscribers in the long term while generating permanent revenue.
This quote by Renn Turiano, senior vice president of new subscription products and revenue at Gannett, captures the need for going beyond conventional subscription models to generate reader revenue: “Consumers are looking for short-term subscription opportunities such as a la carte microtransactions like paying a small amount for a single piece of content or a limited experience with no expectation of commitment. Conventional wisdom says we should do whatever we can to lock in those subscription commitments and absolutely discourage ‘hit-and-run’ consumer behaviour. I’m not so sure. I think consumers are demonstrating less willingness to surrender control.”