Future of Online, Part Three: Making it sustainable
- Branko Brkic
- 11 Nov 2010 02:38 (South Africa)
In our previous chapters we discussed how online news media found itself in a sticky space and what needed to happen for it to be taken seriously. Now we need to find out what global online news outfits will have to do to survive and even make some money. By BRANKO BRKIC.
If there is one statement that can be (fairly) uniformly applied to the entire planet's online news media today, it is this: they are all either unprofitable or barely making it.
Even those few outlets, like The Huffington Post, that are not doing too badly have uncertain futures. A champion of the advertising-only model, HuffPo recently announced that it was finally profitable. But its profitability is based on having millions of readers, cheaply acquired page impressions and ever-increasing reliance on half-naked celebrity photos and supermarket tabloid-style news sharing front page with news of global importance. Its editorial staff is miniscule compared to proper news organisations. So it has this combo of huge, globally affluent audience and low costs (Huffington Post does not pay its bloggers and aggregates real news-gathering organisations' content for free), coupled with Arianna Huffington's incredible self-promoting skills (she even ran for governor of California as an inexpensive popularity stunt), and yet, it’s barely profitable more than five years after it arrived on the world's liberal scene with thunder and smoke. Why is that?
Because online advertising, as it stands now, is blindingly cheap. As we explained in our first chapter, talk to any online publishing executive anywhere in the world, and the first thing you'll hear is how it is impossible to live from online advertising and that is the reason editorial costs need to be cut in a never-ending race to the bottom. As a result, news sites themselves often become nasty and cheap, necessitating further cuts in ad rates.
And then there are paywalls. The logic behind them is rather simple: You want to read our phenomenal and wonderful publication? Pay. Not too many publications in the world have managed to apply this logic very well, however. Every time someone mentions paywall, next to it is the name of the Wall Street Journal Online, that has been successfully charging its readers access since 1997. The proponents of that approach believe their content is unique and that readers would willingly pay for it. The WSJ owner, Rupert Murdoch, applied that logic to his other prized property, Sunday Times, only to see a precipitous fall in readership numbers.
There is a good reason for that: Paywalls simply do not work.
The very idea of paying for content is based on a false premise, one that readers are paying for news in print so they should be paying for news online too. Wrong. Terribly, catastrophically, stupidly wrong. When buying newspapers, readers are not paying for content, but rather contributing towards print and distribution of the physical, paper copy they have in hands. That simple truth sends paywall's entire logic into the garbage bin.
And if you are an executive getting ready to take your publication behind a paywall, you may want to think again. The newspaper you're buying this morning has an extra layer of protection – that of being one of the few daily publications you can find in a shop. Your online publication does not have that territorial protection, and there will always be many, many publishers who can't wait to take your readers away.
At this moment, the paywall proponents will jump in and raise the WSJ Online as comprehensive proof that paywalls can work. But have a look at the WSJ numbers. It has around 400,000 subscribers contributing $50 million a year in revenue. Running an organisation as huge and expensive as WSJ costs billions. And, when at some point in the medium-term future the newspaper is no longer printed, the paywall proceeds will not even be close to paying for the WSJ's costs, let alone making for profits.
Paywalls are publishers' attempt to put the genie back in the bottle, the one that disappeared long ago. The only way they could work would be for the entire global publishing community to switch them on at the very same moment, and at hugely increased prices. For many reasons it will not happen, not least of them the fact that such concentrated action would fall foul of anti-trust laws in any functioning democracy.
So what does online do about this toxic combination of sickening prospects, cheap online advertising and hopeless paywalls? We need to go back to basics. Online publications must be perceived by readers as good reads and by advertisers as good advertising media – as good as print. Simple in words; mightily more difficult in reality, of course.
As a first step, we, the online news media, have to admit we are on the wrong track. Instead of complaining that online advertising prices are crap, we need to first make sure that what we give readers and advertisers is not crap. The race to the bottom, to deliver cheaper and greater numbers of “eyeballs” to already oxygen-starved advertisers will eventually bring us to, well, zero.
Somehow, by going online, we decided to throw away a lifetime of relationships built between print readers, publications and advertisers. Somehow, the “new media” geniuses believed that we could pull the wool over everyone's eyes and make piles of money by investing little or nothing; that the readers and advertisers would accept a new world in which readers would have to be the editors, wading through piles of rubbish to find a few articles worth reading. And that advertisers would be masochistic enough to be happily stuffed next to “Dare to date me” and “12-month online MBA, success guaranteed” ads. Then we box them in minuscule spaces, so we can ram many more victims onto the screen. Personally, none of us in the media and advertising community ever look at such ads – actually, we actively hate interrupting advertising; and yet, the advertising clients and readers are served a continuous stream of screaming banner ads, pop-ups, pop-unders, shopping trolleys that drive across the screen … the list is endless. And they are served mind-boggling gobbledygook about why this was the only way to do things online.
Then we leave them all clueless as to where and when their ads were run. Instead of pride and affiliation experience, we give advertisers spreadsheets. And then we're surprised that readers don't regard online reading to be as good as print, and that they hate online-advertising, and that advertisers are not ready to pay any decent prices for those ads?
Doesn't anyone see the craziness of the situation we have created?
Wrong, wrong, wrong. If everyone wants to survive and thrive in a post-print future, honesty must be our fundamental intention. Or, to put it more biblically:
Design unto others as you would have others design unto you.
The only way we can get out of this situation is to admit that we were wrong, terribly wrong and work on fixing our catastrophic failure. We need to be honest with ourselves and stop treating readers and advertisers as brainless victims of our clever ploys. Perhaps then we will finally be able to bring online the big spenders, brand advertisers, who are still too horrified by what's on offer to move away from glossy magazines.
We need to treat our online brands the same way we treat print ones: We need to offer a well-rounded publication in which we guarantee everything that is published, where we care for the reader's experience and where we do our utmost to keep them coming back. We need to give our advertisers' brands a space to breathe. We need both readers and advertisers to feel good about being there.
Only then will we be able to reach the point where the future of online news media is guaranteed; a moment when online advertising is as valuable, and valued, as is print advertising, and similarly priced. With the additional benefit, of course, of not having to build the price of printing and distribution into it.
Right now, right here, is the point where we decide whether it will be life or death for credible news media. The post-print world is upon us. This is not the time for another in an endless series of experiments that are moving us all away from the truth. The entire online media community can continue the way it is now, hoping that five years into the future a miracle technology will arrive that will save us all. Or we can finally admit that no technology can breathe life into a dead body. We need less technology and more meaning in our online media. More understanding of why we are here. More honesty. The only way this could all work in the long run is through and with more honesty.
And this is probably the moment at which you, our reader, will ask what we at The Daily Maverick are doing about all of this. The answer is simple: We're living it. DM