Why most publisher paywalls are destined to fail

Picard: News organizations need to focus on creating value for users

Picard: Your content has to be exclusive and specialized.

Now that Google, Facebook, and other tech platforms have taken away most of their ad revenue, news publishers are realizing they need to get revenues from users to stay afloat.

Well, good luck with that. Most of the paywalls or freemium products they have created are doomed to disappointment.

Publishers will have trouble breaking their bad habits. They have been so busy delivering mass audiences to advertisers with increasingly frivolous or sensationalistic content, or delivering profits to investors by cutting key editorial staff, that they may not have the know-how or talent to produce content valuable enough that people will pay for it.

Media economics guru Robert G. Picard saw all this coming a decade ago and laid out strategies to counteract the disaster. It's all there in his prophetic book, Value Creation and the Future of News Organizations: Why and how journalism must change to remain relevant in the twenty-first century. Lisbon: MediaXXI, 2010.

Versión en español

Here are some of Picard's strategies for value creation in news media (with some updated comments of my own).

"Only by being distinct can one achieve higher value and profit" (p. 111). If all media are covering the same major news events--the latest natural disasters, lurid murders, tweets by political operatives--users can get it free somewhere else. Why pay?

The products of most news organizations are designed to attract the largest possible audience rather than serve the needs of individual users. Pandering to the audience creates short-term value for shareholders, but not for users, Picard said a decade ago. Still true.

Emphasize news and journalism rather than entertainment and "soft" topics. Content about celebrities, sports figures, sex scandals, and "evergreen" topics can be found everywhere all the time; it is not unique, and has less value.

Content has to be specialized geographically or thematically, and of high quality. Target the news to specific audiences segmented by rural-urban, young families, seniors, high income low income, etc.

Reduce the flow of information into a manageable form. Publishers can create value for users by saving them time. They can do this with design of their products, with teasers, indexes, related items. E-mail newsletters on specific topics can alert users to news they care about.

Interact with users and bring them into the conversation. "Forms of news and information delivery increasingly need to permit interaction and participation that engage the audience in selection, reaction, and conversation" (p. 111). In other words, crowd-source the audience for story ideas, allow them to interact with each other, respond to their comments.

Add value to news and information by processing it. Put it into context for the user so that it adds knowledge, Picard says. Present the information in the form of graphics or maps that help readers understand the information. Otherwise, journalism is like an agricultural product, a commodity with little added value.

Become the preferred provider across platforms and day parts. Tailor content differently for each platform. Picard suggests that publishers stop limiting the usefulness of their product to 3% of the day. Use other delivery methods to provide news in forms appropriate to different day parts of their customers' lives. (Let users choose to receive newsletters delivered, for example, before or after the work day.)

Keep journalism talent by increasing the value of working at your organization. Decent salaries are important. But for many journalists, professional development opportunities, such as training or attendance at conferences, gives them peer recognition and possibilities for career advancement.

Increase value for society by covering issues that matter to users. The needs and problems of users often have to do with issues such as the quality of public education, access to health care, the environment, social justice, public corruption, gender and race discrimination, small business, and other topics that receive cursory coverage in conventional media.

Increase value for investors by developing multiple revenue streams. Some potential revenue streams for media include public events, online stores, media consulting, sponsored investigations, access to databases, syndicated content, crowd funding, and membership.

Increase value for advertisers by giving better service to them; be more like an agency. However, advertisers will be less important than users in the new world of multimedia, and advertisers must recognize that audiences will never be as big as they were in the past.

++++

Picard was something of a prophet in that he recognized and described the market trends that were emerging and the implications they had on business models for news organizations. It has been interesting to see that only in the past two or three years, major media organizations have started to see the need to transform themselves.

The Reuters Institute for the Study of Journalism recognized this trend among 171 of the most important news organizations from six European countries. The study found that most daily and weekly newspaper sites had some type of pay model for news while broadcasters and digital natives allowed free access.

The consulting firm KPMG just came out with a report on Spain titled  "The Present and Future of the Media Sector" (in Spanish) in which media executives and analysts described what they see ahead. Among the five trends they identified were creation of paywalls by news organizations, and, related to that, a trend toward quality and credibility in contents rather than quantity in order to make users more willing to pay. They saw this trend also creating value for advertisers seeking "brand safety", ensuring that their ads don't appear next to objectionable content.

As Picard put it in his book, "The essential issue is making the news and information content important and useful to audiences so that they perceive material from news organizations as more vital and valuable than the brief overview and bits and pieces provided by non-news organizations" [meaning the tech platforms], (p. 109).

Related: Publishers pivot toward users and credibility rather than digital advertising