Friday, September 22, 2017

Publishers look beyond Facebook, Google for revenues

A deal with the devil.

A new study by the World Association of Newspapers and News Publishers (WAN-IFRA) confirms what I have suspected for a long time: when publishers rely on Facebook for distribution, they are making a deal with the devil.

"Reality Check: Making Money with Facebook" was based on a survey of an "expert group" of 150 publishers. On average, Facebook was contributing only 7% of their revenues in spite of the fact that much of the publishers' content was being consumed on that platform.

And Facebook is stingy when it comes to sharing revenue with publishers, compared with Google, Spotify, Twitter, and others. It "seems to share proportionally less revenue with content creators than other platforms do."

Loss of branding power

The WAN-IFRA findings are also troubling because studies by Pew Research (see paragraph 4 of the study) and the Reuters Institute for the Study of Journalism (see p. 16 of the study) have shown that users think Facebook or Twitter produced news stories that were actually produced by a news organization. In other words, news organizations are losing their brand identities in social media.

If news organizations are going to have a chance of survival in the new digital economy, they will need to rely on the power of their brands  as trusted sources to persuade people to pay for their content.

Publishers won't get help from Google and Facebook. eMarketer is reporting that the duopoly keeps gobbling up an ever-greater market share of digital advertising revenue in the U.S.--this year an estimated 63%.

Everyone else is becoming increasingly irrelevant. The message is clear: publishers will need to look beyond digital ad revenue for sustainable income.

The WAN-IFRA study concluded that "new revenue sources such as digital subscriptions, e-commerce and branded content may bring news publishers greater returns than monetisation programmes on the platforms in the short term, and in the long term they seem to offer greater opportunities than digital display advertising can provide."

Winning strategies for publishers

Another tactic that publishers should be considering is developing email newsletters from their own databases of users. The links in the newsletters carry users directly to the publishers' own websites and advertisers so they keep the revenue and user attention rather than sharing it with the duopoly of Google and Facebook.

Rather than going for scale through distribution on the platforms--millions of clicks--publishers should be developing a relationship of loyalty and trust with users who count on them to deliver news and information that is credible and reliable.

Publications such as De Correspondent in Holland, in Spain, and the New York Times are
generating from a third to all of their revenue from relatively small numbers of users. They try to convert the casual users into paying subscribers or members.

The battle for digital advertising is pretty much over. Publishers are finding that their long-term sustainability will depend on standing out as trusted brands. When people distrust the news in general, they are more willing to pay for digital news that they trust.


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