Finally the emperor has no clothes. The creative media will never be able to adapt to the internet the way it is now. More and more people are saying it. Media is dying.
Why? Because it’s starving. There simply isn’t enough money to pay for everything. However good the media has been at garnering audiences and data, the impossibility of trading those things for meaningful amounts of money has become apparent to even the most optimistic enthusiasts.
Without money, media withers and dies. Newspapers, with a few stand-out exceptions, are withering away at an alarming rate. Magazines, long dependent on their print editions to keep going, have hit a wall.
The simple and seductive idea that advertising could translate internet popularity into money has proved itself wrong. We need not dwell on the reasons other than to observe that that advertising isn’t working, and has never really worked, as a sustainable revenue source for online media. After roughly twenty years waiting and hoping that things might change, the patience and financial reserves of the media have begun to run out.
Which leaves a gloriously simple problem. The media needs to make more money. It needs to translate audience into revenue.
If advertising can’t do it, what can?
There’s only one other source of money and that is the audience themselves. The stand-out exceptions I mentioned above are thriving because they’re charging for access. The London Times, the Washington Post, the Economist and so on.
For them, subscriptions are the central focus. The Times of London is profitable for the first time in living memory as a result of its obsessive, long term, subscription focus.
The only way customers can be persuaded to pay, and keep paying, is if The Times focuses on nothing more than producing a product which entertains, informs, delights and surprises them. That is great news for customers. The Times has to be trustworthy. It has to be consistent. It has to be, and to stay, excellent or people will simply decide not to pay for it.
The same is not true of free products, which need to capture enough readers to generate data to sell to advertisers. They often do this by generating “click-bait” stories, which, as the name indicates, are a form of con and hostile to readers. Free products need to display as many ads as they possibly can to maximise the (still pitiful) revenue that data can generate. They need to cut their investment in content and the creators who make it, to try to make ends meet, thereby short-serving their readers.
So even if being asked to pay seems, initially, like a bad option, it turns out that for a significant numbers of users it is not. But only if the product is good enough to justify the cost.
That’s an important factor for publishing people to consider when they find themselves thinking “but nobody will be willing to pay”. It is surely true that persuading people to pay for a product which has been optimised for being free, and in the process become unsatisfying and hostile, is tough. But it’s not a generic truth that people won’t pay.
People will pay. They’ll pay for anything for which their desire exceeds the cost being demanded – whether it’s media, groceries, cars or jewellery. The amount of desire, the acceptable cost and the product might vary from person to person, but it is that basic equation which drives all consumer markets.
The task of the media is to bring cost and desire for their products into line.
If the cost has to be more than zero in order to remain in business, what has to happen to the product to make it viable? Self-evidently it has to be attractive to enough customers. That probably involves more change than simply putting a price sticker on it. But where there’s a return there’s a business plan. Investment to make the product better is justified by the improved bottom line that stands to be gained.
Lastly, what about the cost? The Times and others have shown the way by creating a high value product that sells, to hundreds of thousands of people. They have found a lot of people willing to part with a fair amount of money every month because their desire for the The Times exceeds the cost being asked.
It isn’t cheap, though. The Times is most certainly a high-end product aimed at affluent individuals. That’s why the subscription base is somewhere below 10% of the people who want might otherwise choose to read their product. The other 90+% just have to be ignored, or, in some cases given a certain amount of free content in order to tempt them in.
For other publishers, with larger and less affluent or less committed audiences, the investment in making the product more desirable has to be justified by a price much, much lower than the subscriptions currently doing so well at the very top of the market which appeals to a much broader demographic.
Lowering that cost and creating really huge new sources of revenue and profit is the next challenge.
Which will be the subject of the next blog…