Imagine paying to read this article online. It’s published by one of the most influential sources in the marketing industry. It contains timely, thought-provoking commentary (says the author, humbly) on an issue that’s completely disrupting how the advertising business operates. The author speaks from firsthand knowledge and experience, using well-researched data points to reveal mind-opening insights.
So, would you pay for it? Or would you simply click away in search of someone else’s opinion?
Such is the question that is soon to confront readers of most major newspapers in Canada. In closely coordinated fashion, The Globe and Mail, Toronto Star and Postmedia have each announced plans to erect paywalls, effectively ending the editorial free ride enjoyed by consumers over the past decade.
But will paywalls stem the slide for news publishers? While they may help, newspapers must work hard to reinvent their business model further so they can continue to have a strong, clear voice in shaping public opinion.
Let’s start by reviewing some facts. According to the Pew Centre’s 2012 “The State of the News Media,” ad revenues in the U.S.* are now less than half of what they were five years ago. Losses from print revenue far outstrip online gains, by roughly a 10 to one ratio. By continuing to decrease the costs of print production, newspapers avoid having to replace revenue dollar for dollar, but even then there will be a shortfall.
In Canada, a recent study by NADbank confirms that the challenges facing the newspaper industry are an advertising revenue problem, not a circulation or readership problem. Even though print readership has held steady over the past few years, the rub lies in the fact that adults 18 to 34 are twice as likely to consume their news online, from a computer, smartphone or tablet. For them, the cost of a subscription has always been zero.
And while they may find newspapers to be a reliable and relevant source for news and entertainment, they don’t possess the same emotional bond to newspaper brands as their parents. When confronted by a demand to pay, this age group is likely to go somewhere else to read the story—another newspaper, blog or other credible media source.
With diminished traffic, news publishers risk losing relevance. In the face of the commoditization of news, newspapers have countered by focusing on quality content—feature articles, opinion writing and multimedia formats. Limiting access to this content will not only diminish consumption, but curtail influence.
Paywalls are anti-social. If people can’t tweet, blog or share newspaper content, then newspapers risk no longer being part of the conversation. This has an impact on two levels. Newspaper brands lose status and diminish their role as the fifth estate responsible for keeping corporations and the government in check. On an individual level, if opinion writers feel like their articles are losing influence due to lack of readership, how long before they take their act somewhere else?
We’ve seen this pre-paywall with the rise of sites like Huffington Post, which have become reliable and reputable news sources, staffing an army of former “traditional” journalists and bloggers.
The emergence of the tablet is sure to aid the monetization of content. Unlike the computer, the tablet mimics that “lean back” experience of reading the printed page. Page layouts are eye-pleasing, multimedia content is well supported and there’s less squinting compared to reading on a smartphone. Heck, even the ads look clickable. Little wonder that two in five tablet owners already read newspapers or magazines through their tablet device, according to comScore.
No doubt, Canadian publishers are buoyed by the early paywall successes of The New York Times and The Wall Street Journal. But there are other things newspaper publishers can do to help float the boat.
Pay-for-play advertorials have become a popular and effective way for publishers to kill two birds with one stone—content is generated and revenue is made. But what else might work? One opportunity may be for publishers to help brands with social content. Most brands have invested heavily in building social channels without fully realizing that they need to produce a regular drumbeat of content to keep a community interested and engaged. Is there a way for publishers to redirect their resources so they can work directly with brands and their agencies to produce low-cost, high-quality, entertaining content to fill corporate blogs? Facebook communities and LinkedIn Groups would be eternally grateful.
So, will traditional news print ever return to its former glory? Probably not. The competitive field is too broad and news content is ubiquitous. To continue to play its vital role in our society, the newspaper industry must find new ways to monetize its content and the people who create it. Tablets offer some hope for monetization, but newspaper publishers need to find other revenue streams in order to survive.
*This story has been updated. The Pew report is based on Newspaper Association of America numbers. In Canada newspaper advertising spend has fallen by about 25% in the same period according to ZenithOptimedia’s most recent “Advertising Expenditure Forecast.”
Patrick Gladney is senior vice-president channel strategy at High Road Communications.
