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Paywalls: The Wrong Solution for News

Posted on Apr 2, 2012 in Newspaper Revenue | 2 comments

I’ll go out on a limb and say it flat out: paywalls are a clear sign that the news publisher doesn’t yet understand digital news revenue and where the industry needs to turn for online profits. And no, “online profits” is not an oxymoron (see my previous posts about John Paton and what you can do to drive plenty of online revenue). Yes, banner network advertising pays out next to nothing. Dumping cheap banner ads is the first thing a publisher should do. But going to paywalls is a mistake. Publishers have rarely derived significant revenue from news consumers; most revenue has been from advertising, and will continue to be. And there is plenty of money to be made in digital advertising, if you are willing to look at how businesses are spending their (growing!) advertising budgets. Let’s think about the paywall model a bit. Pundits (and desperate publishers) like to cite The Wall Street Journal as an example of a paywall that works. Well, unless you are publishing a financial journal, forget about the comparison. Subscribers themselves rarely foot the bill for their WSJ subscriptions: the subscription fees are subsidized. How? Because you can take WSJ as a corporate expense. Heck, you can take it off on your taxes as a business or professional expense (in the US, it’s a legitimate “unreimbursed employee expense” for many people). But who is going to let you put your hometown newspaper (or the New York Times for that matter) on an expense report? It just isn’t a business periodical. Some of us read with interest the story about Piano Media, the initiative where content from all nine news publishers in Slovakia are delivered under one national paywall. (Here is one article about it from Columbia Journalism Review: Is this a model for the free world? Consider this: if you want news content in your native language, and someone holds a monopoly on all news in your language, then yes, perhaps under these artificial circumstances, a paywall will work: “With all the major newspaper publishers (and one broadcaster) involved and little Slovak-language competition from outside the nation’s borders, readers would seem...

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How to Drive Online News Revenue

Posted on Mar 28, 2012 in Newspaper Revenue | 1 comment

It breaks my heart when I read articles like a recent one by Michael Wolff of The Guardian describing the news industry’s “imploding business model” and “portending, once again, the end of the world as we know it.” ( His article describes why the growing trend toward mobile news is going to kill the news industry, because it will further erode revenue from CPM (impression-based) banner advertising. As if banner ads were a viable model for news regardless. I suppose I shouldn’t be too surprised by the report; last month John Paton (CEO of Digital First Media, the second-largest media company in the US) said “And for God’s sake stop listening to newspaper people. We have had since the mid-90s to get this right and clearly we are no good at it. Put the digital people in charge – of everything. They can take what we have built and make it better. It is so very important we get this right – not just for the industry and investors – but for our communities.” ( As one of those “digital people” I’ve been working to transform the news industry by introducing digital media innovation, both on the newsroom and the sales revenue side. I generally work with clients to help them tailor a sales strategy that will work with their market and their editorial focus, but I thought I had better discuss in this blog some of the tangible options that a newsroom can bring to bear. And none of them are banners or paywalls! If there is one thing I have learned from 20 years working in Silicon Valley, it’s that you have to follow the money: in this case, you have to analyze where businesses are spending their ad budgets. And so that’s where I started, by looking at business advertising spend. For the past 3 years I have focused on local and specialty news outlets: those news and magazine publishers whose target demographic is either geographically local or psychographically tuned to both their audience and their advertisers. (In other words, where the advertisers are targeting, in the publication’s readership, a highly qualified demographic of consumers.) So if my suggestions below seem too focused...

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Trusted Advertising: The Value of Newspaper Web Sites

Posted on Feb 3, 2012 in Digital Marketing, Newspaper Revenue | 0 comments

In 2010 comShare published a study titled “Site Matters: The Value of Local Newspaper Web sites” (sponsored by the Newspaper Association of America, representing some 2000 US newspapers) that “measured consumer attitudes and behaviors regarding local newspaper Web sites and content compared with other online sources of local news and information.” While the study discussed which types of online content consumers most trusted for local information, one remarkable fact emerged that bears discussion in this blog: Newspaper web sites ranked highest in terms of the credibility and trustworthiness of their advertising. This is an important fact missed by many newspapers; the fact that their web sites are more capable of selling than any other local sites. Someone please alert the newspaper sales department! Newspapers are not only themselves trusted brands, as discussed in my previous post. They are also purveyors of trust: some of the faith that people have in the reliability of local news rubs off on the newspaper’s advertising as well.  Place an ad in your newspaper’s web site and people will more likely believe the message. When you add to this the fact that local news consumers are also well-qualified leads–they live, work, and make purchase decisions in the same market area as the newspaper advertiser, you start to realize the extremely high value of newspaper advertising. In other words, newspaper consumers are also, demographically, the most likely consumers of the advertiser’s goods and services. It is great news for newspapers that their web sites are the most trusted sources of advertising. But they now need to (1) market this message to their advertisers, (2) position themselves as a high-end advertising solution, and (3) price themselves accordingly. This means using a “page sponsorship” model, not cheap banner ads. Sponsorship is an old and well-tested model. Newspaper web sites can charge advertisers a fixed fee, not based on ad impressions, but on visibility to the highly qualified local consumer community, for a range of sponsorship placements. These placements can be anything from a logo appearing beside the mast, to co-branding the daily email newsletter, to display ads that follow standard IAB banner sizes but are not sold by ad impressions. Sponsorship ads...

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