The changes in the world of media over the last two decades have been so fast and so furious that it is hard to believe that the past has any lessons for today, let alone the future. We now have a single device in our hand that provides much of what a newspaper, TV, and a cinema house, combined, used to provide. Filling that device with local and global news, articles, shows, and films, as well as things we had never imagined (selfies, dubsmash etc.), can be easily done by amateurs and professionals alike, and costs close to zero. And finally, if you don’t know what you want to do today, between friends on Facebook and Google searches for your obsessions, you have a way to discover things you never knew. All this is changing the way media is created, curated, and consumed.
In a stark instance of these changes, six out of 10 Americans got their news from social media, according to a 2016 survey by Pew Research. The implication for news publishers is clear — the Facebook newsfeed algorithm is your single biggest reader; you need to figure the beast out, or risk losing more than half your readership. In India, the numbers are further skewed towards mobile and social media reading and viewing. Beyond news, in the larger entertainment sector too, the long predicted cord-cutting — people giving up cable connections to rely only on the Internet for TV — is gathering pace. As Netflix, Amazon, Hulu and others added subscribers, cable TV including live sports providers like ESPN who were previously considered less vulnerable, lost viewership in 2017. India is ahead of the trend with Hotstar’s live streaming of IPL in 2016 exceeding total TV viewership of the event for the first time.
In a stark instance of these changes, six out of 10 Americans got their news from social media, according to a 2016 survey by Pew Research. The implication for news publishers is clear — the Facebook newsfeed algorithm is your single biggest reader; you need to figure the beast out, or risk losing more than half your readership.
If you are a producer of news, information, or entertainment it is natural to believe then that the new world is nothing like the old one. That would, however, be a short-sighted assumption. While these changes are indeed fundamental, the lessons from early successes in the new environment have some distinctly old-fashioned flavors. The digital world has been in a state of ‘permanent revolution’ for the last decade, which means that what we consider success could change. Here is the current running list of drivers of success that runs contrary to prevailing beliefs about new media firms:
Quality can be a winning strategy
In the news category, even as the hype around: ‘user generated viral content’ (e.g., 9gag); repackaging because ‘no one wants to read’ (e.g., Circa); social sharing (e.g., Upworthy), algorithmic personalized feeds (e.g, Prismatic) and other new ways of promoting readership has risen and then receded, we have also seen high-quality, old school publishers like The New York Times and The Washington Post investing in traditional journalism while co-opting some of the innovations.
Not only have they attracted more readers, in 2017 they also gained more paying readers for digital than ever before. And, it is not just deep-pocketed old firms who have shown that quality can succeed. The Brainpickings site and newsletter, produced by the lone writer, Maria Popova, reaches millions of readers every month, and Popova has built a name and career for herself on the basis of her work on this site.
Closer to home, The Ken is experimenting with a daring (in the Indian context) model of $42/ year subscriptions for one in-depth story every weekday. They claim to have signed up a few thousand subscribers in about a year’s time and while it is too early to claim victory, The Ken has at least made a dent in the belief that Indian readers will never pay for digital content.
What unites these old and new digital offerings is a distinctly old assumption: readers and viewers care about quality and editorial independence and will pay for it.
If you are a producer of news, information, or entertainment it is natural to believe then that the new world is nothing like the old one. That would, however, be a short-sighted assumption. While these changes are indeed fundamental, the lessons from early successes in the new environment have some distinctly old-fashioned flavors. The digital world has been in a state of ‘permanent revolution’ for the last decade, which means that what we consider success could change.
Diversified Revenues
Most long-lasting media companies like Advance/Condé Nast — publishers of magazines like The New Yorker and Vogue thrived by building a portfolio with a mix of revenue models — some ad-heavy offerings alongside cash-flow-rich trade journals. They remained relevant through new launches that were ‘seeded and weeded’ over time (e.g., Wallpaper, Wired). While the Internet has upended the print business in the US, the old strategy of mixed revenues is still relevant.
Not surprisingly, new media ventures like Vox are now clearly building a portfolio with individual elements targeting distinct audience segments. While most of the digital-only big companies like Vox are ad-supported models, there are others like the travel industry site Skift who have scaled-up through a combination of branded content, conferences and subscriptions ($1,795 per annum) to its research service. Eventually, these new approaches are likely to consolidate with a digital portfolio that might look similar to earlier print or TV channels.
Premium Advertising
Digital advertising is a sore subject for media companies. Even as digital ads surpassed TV and print in US and UK markets accounting for upwards of 35% of expenditure, three-quarters of that has ended with the Google and Facebook “duopoly” platforms. However, as the CEO of Bloomberg Media, Justin Smith, recently pointed out, the transition is not complete yet. In this first round, platforms had a natural advantage because what shifted to digital first was direct-response advertising where micro targeting (easier and more cost-effective to execute via digital media) is critical.
The next round of transition, on the other hand, will include brand advertising (roughly $250 Billion in US alone), where publishers have much to offer — rich content, brand-safe environment, and ability to create engaging stories that can be shared. According to the Financial Times, Quartz, a digital publication from Atlantic Media has succeeded in breaking-even in about three years after launch with just such an approach — magazine-quality ads and deeply-researched branded content for some of the best-known brands in the world. Buzzfeed has attracted premium sponsors for its ‘Tasty’ food videos which reached 1.5+ billion monthly views last year.
Instead of relying on the much reviled but typical pre-roll video ads sponsors now reportedly accounts for a sizable portion of all revenues. These ideas and approaches in digital, are not entirely different from the decades’ old tactics of newspapers, magazines, and TV — insert magazines, sections, holiday specials, shopping guides, industry surveys — for creating special packages relevant to advertisers, without losing editorial integrity.
Closer to home, The Ken is experimenting with a daring (in the Indian context) model of $42/ year subscriptions for one in-depth story every weekday. They claim to have signed up a few thousand subscribers in about a year’s time and while it is too early to claim victory, The Ken has at least made a dent in the belief that Indian readers will never pay for digital content.
A new report by consulting firm BCG predicts that in India by 2020 4G enabled devices will grow six-fold from today to about 550 million. Given intense competition driving down the cost of data, the consumption is expected to grow even faster by 10–14 times. It is a fair bet then that the mobile screen will handily exceed all other ‘attention merchants’ by a wide margin. As new digital media firms try to figure out the business model for this future, the ultimate irony will be going back to the basics of old media to make money.