Where are newspapers and commercial broadcasters seeking new sources of revenue?
by Emma GoodmanA new Reuters Institute report Private Sector Media and Digital News shows how newspapers and commercial broadcasters are seeking to diversify their revenue streams beyond traditional advertising and subscriptions. Focusing on a sample of 25 private sector news organisations in six countries - Finland, France, Germany, Italy, Poland and the UK – the report identifies native advertising, new content areas, and a variety of different services as the most significant new revenue streams being developed.
Native advertising, or branded content, has become more appealing to news organisations both as a result of the rise of ad-blockers, and because so much content is now being consumed off site, on social media, the report explains. Some outlets are already reporting that native advertising accounts for a large share of their digital advertising revenue. The German tabloid BILD, for example, has a dedicated BILD Brand Studio that produces branded stories and videos for the paper’s advertising partners. According to the paper’s digital director, Donata Hopfen, it might be their biggest advertising product this year.
Many publications in the English-speaking world are also experimenting with branded content, but as the report noted, this is not the same across all of Europe. Italian interviewees, for example, commented on resistance within the newsroom to sponsored content.
New content areas
The French newspaper Le Monde is an example of a diversification strategy focused on producing content that goes beyond its core offering. Pixels is a section covering new technology, digital culture and online gaming, while Les Décodeurs looks at fact checking, data journalism, busting hoaxes and explanations on hot topics. Campus is targeted at students and their families, addressing various aspects of student life. Catherine Joly, general secretary of the Le Monde Group, describes these new initiatives as ways of adapting the paper’s distinctive journalism to a bigger audience and to target new, younger readers. Other European newspapers are engaged in similar experiments with new content areas and with re-packaging of content in additional apps and newsletters.
The Daily Telegraph in the UK is one of several newspapers pursuing alternative sources of revenue that would not traditionally be part of a news outlet’s offering. The paper has launched travel, financial and event services. For example, the paper is offering ‘Telegraph Tours,’ which comprise organised trips to destinations near and far with one of the Telegraph’s columnists or correspondents, or another ‘expert’. Its travel section also advertises discounts on hotel packages when booked through the site or phone.
Its financial services area provides advice on inheritance tax or mortgages, ways to buy health and travel insurance, and information on credit cards. The site explains that the financial services offering is entirely separate from the paper’s editorial division covering finance, but draws on being part of the paper:
‘As part of The Telegraph, we’re able to pull on our strength in world-class content to provide meaningful guidance, tools, information and offers across our range of products and services in a way that’s tailored to your needs and preferences.’
Its events arm hosts a variety of events, from trade shows such as the Telegraph Ski and Snowboard Show, to book launch evenings with authors. Such events organized by news publishers are becoming relatively common in the UK, planned by several major dailies including the Economist, the Guardian, and the Times
“What we provide as a business is a perspective on the world,” said Peter Lindsay, The Telegraph’s director of strategy. Revenue generated by these activities is already rivaling the amount the paper generates from digital subscriptions, Lindsay said.
Other newspapers, like the German regional newspaper Westdeutsche Allgemeine Zeitung, are developing business-to-business services too. WAZ has established a digital marketing agency offering small- and medium-sized business companies a range of services, from Google AdWords and search engine optimisation support to website construction.
Diversification of revenue is not a new phenomenon, but it is becoming more important as reduced revenue from news organisations’ traditional business model isn’t being replaced by the same streams in a digital format.
The report found that newspaper publishers are still making 80-90% of their revenue from their eroding print business. So despite significant investment in digital content and considerable output from most players, digital business only accounts for 10-20% of revenue. For broadcasters, the slice of digital revenues is generally even smaller, as income from their legacy business has not decreased as much as print businesses have, and developing a digital news business has been less of a priority.
Will it work?
While especially newspapers are increasingly experimenting with new business areas, there was no consensus amongst the 54 industry leaders interviewed for the report on whether or not this kind of diversification is a good idea. Low digital advertising rates, combined with the so far limited number of people willing to pay for news online, mean that news organisations are realizing that their traditional sources of revenue are not going to be enough to support their business and current cost structures in the future. But there is no one clear model for the road ahead. The report identified three different attitudes to diversification of revenues and investment in new business activities amongst those interviewed:
Some saw finding new sources of revenue as opportunities that can be fully exploited only with strong investment
Others saw diversification as a possibility but something to be pursued with caution and incremental investment
Finally, some believed that news organisations should focus on their core business of journalism and not experiment with other products
There is also no agreement yet on which alternative revenue streams will be most effective. What is clear, however, is that while considering new business and revenue opportunities, it’s important to focus on products and services that in some way effectively leverage news organisations’ brand identity and build on existing resources and expertise, if they are to differentiate themselves and be successful.
The report stresses that the new initiatives aren’t entirely unconnected to the outlets’ editorial activities. Speaking about the Telegraph in particular, the report’s lead author Alessio Cornia said: “Their asset is their relationship with the audience and the perspective that they share – they are exploiting these commonalities to start other kinds of business.”