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Digital Journalism – The Way We See the Problem is the Problem

Internet killed print journalism. Now the Internet is killing Internet journalism. Is it so?

It’s been all around the news. Twitter has been hosting some serious conversions on the media layoffs.

Media companies, one after another, kept announcing their restructuring (ahem, layoff) plans. Verizon Media, BuzzFeed, HuffPost, Vice Media, McClatchy, Gannett, you name it. As many as 2100 people have been laid off in two weeks.

The theme that echoing everywhere, is the business model. People always hated ads. Now, it’s a chance for them to push the advertising out of the media landscape, once and for all.

The Winner Takes It All. But Who’s the Winner?

It’s imperative that ad-supported journalism powered the media for the last two decades. Is it the end line? If so, what’s next?

Some go with micro-payments, some with subscriptions, some still stick to contextual ads (no behavioral targeting).

While it’s apparent that the media landscape isn’t currently doing a great job, tacking the problem with a business model will eventually skew the decision.

For instance, Dotdash, which rebranded itself from About.com* still relies on ads. It posed an annual revenue of $131 million and 85 percent of the revenue is from advertising. It had to breakdown its brand recognition but ended up building what readers and advertisers want.

*About.com was a repository where people come to know about a variety of topics. The publisher realized that it didn’t fit anywhere in the readers’ daily routine. 

“About.com is a funny thing. Everyone knows what it is, but it doesn’t mean anything to anyone”

– Neil Vogel, CEO of Dotdash.

It rode the dot-com boom and when search engines hit the shed, it had to rebrand itself to thrive.

Paywalls

Paywalls, on the other hand, worked for a few. NYTimes had to attempt thrice to run a sustaining paywall business. The Guardian, which relies on contributors is still heading back into the black.

Though the Guardian isn’t exactly a micropayment-powered publisher, it is the closest example we can look upon right now. From being questioned to now the largest revenue source, it mastered how to get the contributors for its content.

So, micro-payments work well?

Micro-payments didn’t work before. It may not work today, especially for the preponderance of publishers in the landscape. The most commonly cited reason is the mental transaction cost.

“This strategy doesn’t work, because the act of buying anything, even if the price is very small, creates what Nick Szabo calls “mental transaction costs,” the energy required to decide whether something is worth buying or not, regardless of price. The only business model that delivers money from sender to receiver with no mental transaction costs is theft, and in many ways, theft is the unspoken inspiration for micropayment systems.”

-Clay Shirky.

But I think the mental transaction cost can be obliterated. The issue in hand is quite different.

Crossing the border

WeChat, an app that has everything you could imagine (Social network, messenger, payment, online booking, news, etc.) has a ‘tipping’ feature which lets users do a micropayment. As per CJR, one WeChat columnist receives $602 per article. 

Told ya. Readers do make micro-payments. Great, so we can just apply it for sites?

There’s a problem.

WeChat payment’s market share is a whopping 40 percent. So, users are using WeChat to actually make payments and besides, WeChat hosts users (after all, it’s a networking app) for a significant amount of time, unlike news outlets.

Simpson’s paradox

I recently read a theory named ‘Simpson’s paradox’ – “Trends which appear in groups of data may disappear or reverse when the groups are combined”.

It is necessary to consider the paradox while making a decision here. At first glance, WeChat example seems convincing – Micro-payments worked well for journalists. When I peeled off a layer we saw that people use WeChat as a payment app and it’s a network where people come to stay connected.  That’s a red flag.

Publishers wouldn’t check those conditions – Users are here to read the content they found interesting (for free) and they’ll stay in a site for a few minutes.

Currently, many of the payment apps have an option to contribute something you might care about. WeChat asks for a contribution towards someone you read (or follow) using the app. So, users didn’t do anything new while making payments. They did it like they always do, just for a different person that they know online.

Where we fit?

Ads, subscriptions, micro-payments, we can try switching the payment models for online sites. But that’s not how I see the problem. The way we see the problem is the problem here.

Most, if not all, are skipping the question they need to ask themselves – Where do we fit in the lives of our readers?

Media companies need to figure out where they belong first and then the business model. Not the other way around.

  • Why your audience read your content?
  • Where will they read it?
  • How will they read it?
  • What they do next?
  • What they do before reading?
  • How do they find you?

If there’s one thing I learned after spending almost half-a-year on the growth/sustainability of successful publishers (The New York Times, The Guardian, The Financial Times, etc.), it is that they know their readers well (aka they had the answers on the wall).

When NYTimes.com put up a paywall for the third time, it had a wealth of data about their readers and patched up whatever they missed the previous time. When theguardian.com started with its contributor-based model, it didn’t just dare to do so; the publisher knew how to make it work.

The same theme repeated itself in different ways across all the successful publishers I’ve studied. And, one more thing. Content on the open internet wouldn’t be relying on one business model anymore. Plurality is the future.

By Rasheed Ahamed

I am Rasheed, a startup enthusiast and a growth marketer working with interesting tech cos. I reside and write from Bangalore mostly. Always happy to help, meet, and discuss with like-minded people.

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