For publishers and newsrooms, finding an answer to the following question is quite challenging: how to stay trustworthy, respect your readers and preserve the integrity, yet manage to earn enough money to keep the business afloat?
Monetizing content isn’t easy, but there are three popular business models out there:
- Native advertising
- Memberships and donations.
These are not mutually exclusive. On the contrary, many publishers choose to combine them to maximize their revenue rates.
Choosing the right business model (or models) depends on various factors: your organization’s resources, the amount of traffic your website generates, how well read and reputable your publication is, the type of audience you have, the level of your readers’ engagement and loyalty, etc.
All of the mentioned can influence your overall revenue and the business partnerships you try to establish.
So, how do you know which model might be right for you?
Let’s look at the different business models and analyze their pros and cons so that you can assess which might work for you and prepare for potential challenges.
1. Native advertising
Publishers have been testing the waters of native advertising for quite a while now. According to Business Insider, this type of advertising will make up 74% of digital spend by 2021.
Also known as branded or sponsored content, native advertising is a form of paid media that blends into the publication’s editorial content. It is specifically designed to subtly promote the advertiser’s product or services while offering a certain value for the reader/media consumer. Due to its nature, native advertising doesn’t feel intruding or like advertising at all.
This form of advertising aligns perfectly with the way consumer behaviour evolved. With the expansion of the global market and the further democratization of the Internet, consumers found themselves in a favourable position of power that came with the luxury of choice. Point a finger to any industry and you’ll see there are thousands of brands out there, fighting for customers. Consumers expect value and wooing, they want to feel appreciated and important. They want to be acknowledged as individuals and seen as more than just walking wallets. If you disappoint them, they can easily turn their backs on you and direct their money towards some other brand.
Traditional marketing methods that are too disruptive and pushy just won’t cut it anymore. But educational and entertaining content that’s not as direct or aggressive about selling… Well, that’s something that functions pretty well if executed properly. And that’s the core of native advertising.
Publishers can earn a decent amount of money by implementing native advertising as a business model. According to the FIPP’s report on native advertising in 2018, most of the surveyed publishers (26%) reported native advertising makes 10% of their entire revenue, while there is a small, but significant percentage of publishers (7%) who run their businesses solely thanks to native.
Some publishers and newsrooms have their dedicated brand studios, meaning they separate their content teams/journalists that regularly produce content and content professionals who collaborate with brands in order to design stories. Take The New York Times, for example, their COO, Meredith Kopit Levien, talked about the importance of keeping this division clear and explained how storytelling tools can be shared with brands that are looking to advertise, but the sole storytellers (i.e. journalists) – are off limits.
Others think creating a dedicated team of writers whose responsibility is solely to create content in the form of native advertisements – kinda defies the purpose. The logic behind this? Well, native ads are supposed to be cohesive with the page content and there’s no one better to create them than people who already create content for that publication.
In addition, selling native ads does not mean you are selling out or tricking your readers. You can choose brands you want to collaborate with and ensure their values are complementary to yours. If the content is educational and engaging enough, chances are – your readers won’t mind. In fact, INMA’s research shows that 86% of readers don’t have a problem with it.
So, here are the pros of native advertising:
- Great way to boost revenue
- Ability to use existing resources or create a budget-friendly solution by creating a dedicated team or brand studio
- Freedom to collaborate with brands you feel won’t jeopardize the trust bond you have with your readers.
Native advertising is seen as “sneaky” by some as it mimics editorial content and unfortunately – most media consumers are not very good at spotting this type of content. Transparency, as well as using clear language to indicate sponsored content – is mandatory. Some publishers may label a native ad story with “brought to you by” or “presented by”, which may send a mixed message to readers. This is not a con of native advertising per se, but more of a “warning” not to exploit the grey areas and to be careful of how you’ll handle native advertising arrangements. You don’t want to do anything that might hurt your own brand.
Another challenge of native advertising comes down to explaining brands how buying a branded story supports the sales of the products/services. It’s hard to explain the value of simply being on the radar of people, especially if they are in the consideration phase of the sales funnel. Brands want tangible results and they want to know what ROI they can expect.
So, the challenges with native advertising would be:
- Being transparent about sponsored content
- Explaining the value of native advertising to brands
- Suggesting the right topics and identifying in-house authors who will create stories that will truly engage the target audience
- Estimating ROI for brands and proving the success of the campaign
- Controlling the tone of voice and the overall quality of stories provided by the brands themselves (in this case, we’re talking about brands that produce their own stories and are just looking to buy media space).
Tips for implementing native advertising as your business model:
When it comes to native advertising, you have to be profit-oriented, but you also must keep your audience in mind at all times. No matter what figures you get offered, you have to prioritize the integrity of your publication. If the brand that’s looking to publish a piece of sponsored content promotes values you find problematic or controversial – you need to say no.
Sponsored content has to give readers actionable information and aim to primarily make their lives better and help them learn something new or have fun. They have to feel like their time is not being wasted but on the contrary – enriched with great content of value.
As an example of a great native campaign, let’s take a look at the collaboration between Netflix and The New York Times. The paid post was titled Women inmates: why the male model doesn’t work and it’s a real analysis of the problematic position of female prisoners. The story is of great quality, very engaging and captivating since it puts a typically marginalized story in the focus. It’s also enriched with custom-made, interactive visuals. The post promoted the new season of Netflix’s series Orange is the New Black, but this fact doesn’t diminish the value of the story for readers.
According to Dan Rubin, Executive Director at Studio M, Meredith Corporation, 2019 will be the year of “prove it”, meaning that brands will demand proof that the right content is being planned and the right KPIs measured to determine success. So, how do you provide this proof?
At Content Insights, we have our way that’s proven to be successful. Native campaign success is all about audience engagement, so you need to define which metrics indicate the level of engagement, as well as exposure of the sponsored content (see how The Local does it with Content Insights).
Native advertising is surely a business model that’s proving to be very lucrative for publishers, but you always have to be careful and create content that’s mutually beneficial – both for advertisers and your audience.
When it comes to finding a sustainable revenue model, subscriptions might be the promised land publishers have been waiting for.
The digital subscription economy is on the rise and both giant publishers and smaller ones are doing pretty well by monetizing on this trend. Take The New York Times, Wall Street Journal, The Washington Post for example, but don’t forget the smaller publishers such as Gazeta Wyborcza, or Dennik N that recently reached a new milestone of 220,000 registered readers.
Although many publishers feel frightened about implementing a paywall, it seems that modern media consumers got tired of low-quality content and show a willingness to pay for access to quality.
Different types of paywalls include:
- The hard paywall
- The metered paywall
- The freemium model
- The hybrid paywall.
In addition to these, some media companies (e.g. The Wall Street Journal) use an innovative type of paywalls called the flexible (or intelligent) paywalls, which rely on artificial intelligence. Here, advanced algorithms are capable of understanding the individual reader’s behaviour and then delivering personalized subscription pitches, which increases the chances of converting readers into paying subscribers.
The more information you have about the way your readers interact with and consume your content, the more capable you’ll be to monetize on their interests, encourage their loyalty, and keep them engaged.
So, subscriptions imply readers have to pay a recurring price at agreed intervals for access to content. They are usually formed on the weekly, monthly or annual level.
Micropayments are also worth mentioning: here, readers pay only for a single article they are interested in reading. Given the fact that paying for single articles involves a lot less commitment than deciding for a continuous subscription, and it’s tied to the specific combination of factors such as curiosity and feeling of urgency – it has proven beneficial for some publishers, e.g. Winnipeg Free Press. Another example is content provided by The Press Association: when you subscribe to their newsletter and select content preferences, you will receive previews of articles right to your inbox and get an opportunity to buy them and read them in full.
Subscriptions are the publishers’ ideal business model for more than one reason. Firstly, having an audience of paying readers is perceived as the most direct, most honest, and most transparent way of earning money as a journalist or publisher. The value of your work and the importance of your profession are directly acknowledged and you literally get paid for what you do.
The great thing about subscriptions is that they can become a significant portion of your revenue. If you set the right price which is acceptable for your readers, and work hard to live up to their expectations – you can count on a steady stream of revenue. When you think about, it’s quite similar to running a business and having steady clients: if you keep on nurturing the relationship with them, preserve their trust, and constantly deliver quality content – they will be satisfied and won’t have a reason to look elsewhere.
In addition, if you’re familiar with applied anthropology, you might be interested to hear about two types of self humans have, and how this is important for subscription businesses.
There is what we can call “the behavioural self” which reflects how readers truly behave – what they read, like, share, etc. Then, there is “the aspirational self”, i.e. how readers would want to be perceived. Because of their “aspirational self”, people subscribe to magazines they don’t actually read, but they like the idea of being – for example – someone who regularly reads The New Yorker.
So, to sum it up, the pros of the subscription business model are the following:
- Can become a significant portion of your revenue or even its biggest chunk
- The most “pure” and direct form of earning as a publisher (i.e. you are literally selling your product which is your content)
- Subscriptions are scalable and can bring financial stability to your media organization
- You can provide price diversification to increase your overall revenue
- Although your ultimate goal is to be read, it’s good to know the psychology behind paying for subscriptions as you can align marketing strategies and promote your content the right way (e.g. communicate how readers can become their better selves by reading your publication).
Growing your subscription business means juggling several things simultaneously and developing strategies for both acquiring new subscribers and retaining existing ones. This is one of the biggest challenges in the industry.
If someone is to pay for content, they expect for it to be in-depth, of high quality, and truly worthy of their money.
So, the challenges of the subscription business model would be the following:
- Deciding on the type of paywall that won’t cause reader churn
- Identifying the type of engaging content that could be placed behind the paywall
- Solving the “Goldilocks pricing issue” (setting the subscription fees just right – not too low which would jeopardize your ROI, but not too high either, which could turn off your readers)
- Continuously producing valuable content that lives up to the expectations of your audience, while competing with the sphere of free content
- Getting your readers used to great quality, but always introducing fresh content and novelties in order to avoid monotony and subscription fatigue
- Identifying what makes readers loyal and what turns them into subscribers
- Reaching new subscribers and retaining existing ones
Tips for implementing subscriptions as your business model:
If you want your subscriptions to take off, you need to focus on developing relationships with your readers. Prioritize their happiness and show you have utter respect for them, and the profit will come as a natural consequence of this approach.
You need to identify what is your unique selling point, i.e. what type of content can readers find only at your website and not anywhere else? What are you or your team of content professionals truly exquisite at?
Subscriptions have a lot to do with trust, which is a fragile thing. Not to be overly dramatic, but if you disappoint your readers, they might turn a cold shoulder on you when you try to make things better.
Maybe “the safest” types of paywall (especially for publications that are not highly visible and don’t enjoy global recognition) – would be the metered one and the freemium model. This way, you offer readers a taste of your content before they reach into their pockets. They get to form their expectations and gather enough information to make a decision of becoming a subscriber.
Personalized newsletters and niche topic coverage is something that’s advisable for publications trying to shift towards the subscription business model. This is how you acquire new subscribers and encourage interactions. Offering other, accompanying incentives and special deals is also smart: if you take a look at the current subscription model of The New Yorker, they have a metered paywall and offer readers a chance to subscribe now 50% off and get a free tote bag.
Smart move, given the fact that people simply love merchandise, especially if it communicates their values or the above-mentioned “aspirational self”.
Of course, in order to run a successful subscription-based publication, you have to rely on the right data. Metrics that describe engagement and loyalty are the main things you should look at.
3. Memberships and donations
Although often left unrightfully behind, memberships and donations are also great business models you can implement as a publisher.
With subscriptions, readers pay to access exclusive content. In its core, this is a transaction, just like in the case of buying any other type of physical goods. This doesn’t mean subscriptions are stripped from any kind of emotions or relationship with the publisher, on the contrary.
However, memberships and donations are a bit different.
Memberships as a business model generated a lot of attention once The Guardian launched them and noted success: around 20% of the people who have given a donation to the renowned British publisher will donate again, which is encouraging. With their tagline “Available for everyone, funded by readers”, The Guardian truly showed it’s possible to preserve quality and survive. Instead of just asking for money from their readers, they ask for their help to preserve independent journalism.
Becoming a member further shortens the gap between the readers and the publisher, and it has different emotional drivers that are equivalent to supporting a cause you care about.
Readers who decide to become members feel like patrons and somewhat as a part of the media organization or the newsroom they choose to support. They have a strong sense of shared responsibility, meaning they are well aware that money doesn’t grow on trees and that the lack of it might destroy what the world needs the most – objective, quality reporting and valuable content.
There’s one great thing about memberships: they are honest, transparent, and they are about bringing people together. Whereas subscriptions come down to exchanging money for content, memberships are about supporting what you care about and being acknowledged for your contribution. It’s about a higher cause and it makes readers feel important.
With memberships, you are actually focusing on creating a community of engaged readers who love what you do and are interested in investing in your business so that you can continue producing valuable content.
Definitive pros of the membership business model are the following:
- Building close relationships with your readers and generating word of mouth (when you stick to quality and impeccable integrity, you are likely to stand out in the publishing industry)
- Having a highly focused audience that’s attentive to your content
- Ability to produce more relevant content by constantly having access to readers’ feedback
- The possibility of earning great revenue by continuously living up to your readers’ expectations and acknowledging them
- Creating a “unique value mindset”, meaning readers will feel they are taking part in something meaningful and worthy of both their time and money.
Although it is possible to have members who regularly renew their memberships and volunteers commit to supporting your publication, you have to take in mind you might also receive only single donations. Regularly or every now and then? Well, you cannot really know.
In addition, implementing memberships as a business model might be difficult for publishers that still haven’t built a community around their website. So, the first step would be to actually create visibility for your publication and then ensure this audience of yours is truly interested in your content and has built a habit of visiting your website.
In order to ask for a financial contribution from your readers, you first have to build a relationship with them and invest an effort into becoming a part of their daily routine.
So, we’re back to the tricky thing called “the readers’ loyalty” again.
In a way, memberships are more personal, which imposes more responsibility to take care of your readers just like you would take care of your friends or family. You’re putting your reputation on the line and have to live up to the promise you give to your readers.
So, here are the main cons/challenges you can expect here:
- Memberships and donations can be a source of recurring revenue, but they can also be short-term or even once-off things
- People who are your members can be your patrons, but they can also expect special treatment or feel like they “own” a part of your brand
- Setting the emotional tone of the narrative that should trigger people to become members or donors can be tricky (there is a fine line between asking for help and support, and begging for money)
- You have to give people a reason to become members
- Average content is not an option
Tips for implementing memberships/donations as your business model:
Memberships and donations are about inviting people into the conversation. It’s about being honest and transparent about the value you provide. Because people are truly willing to engage in such relationships, the membership or donation business model is gaining momentum. It is more personal than any other business model and as such – the money side of it is present, but not in the spotlight.
Take the Patreon initiative for an example, which exists specifically because this membership model works, despite the many doubting Thomases. They see memberships as the relationship between you and your most engaged fans who choose to support you financially and in exchange – get the exclusive content you offer.
Another dear example is The Brainpickings by Maria Popova. What started as a personal project is now one of the most famous arts and culture blogs with more than a million visitors per month. Popova covers all kinds of topics that cannot be found anywhere else across the web. Even though Popova was accused of earning from affiliate links, according to the site’s homepage – Brain Pickings is an ad-free website which runs on donations. It solely relies on the support of readers.
You can really learn a thing or two from Popova and her approach towards creating content that won’t disappoint her readers:
“I ask myself three things: Is it interesting enough to leave the reader with something – a thought, an idea, a question – after the immediate fulfilment of the self-contained reading or viewing experience; is it evergreen in a way that makes it just as interesting in a month or a year; and, perhaps most importantly, am I able to provide enough additional context – historical background, related past articles, complimentary reading or viewing material – or build a pattern around it to make it worth for the reader to share”
Well, amen to that.
To conclude, memberships demand understanding your audience and nurturing their loyalty, perhaps more than any other business model.
So, what type of business model does your publication rely on? Do you combine several different ones? What do you struggle with the most? Share your comments below and join the conversation.