Over the past six weeks, paywalls have become an especially hot topic of conversation in the media world. In December alone, The Washington Post, The Daily Beast/Newsweek, and The Atlantic all announced that they will likely experiment with some form of one in 2013.
And, just like that, 2013 has already become “The Year of the Paywall.” Over the course of the next 12 months, we can expect a constant stream of selectively released paywall data flowing through the columns of media reporters. Interest will be intense. Winners and losers are ready to be crowned.
Major media brands just showing up to the paywall party are late. Entrance now simply reflects a long overdue recognition of something that many analysts have already understood for years: that, in our increasingly digital world, traditional media companies will have to charge for access to some form of digital content. Many publishers had been hesitant to fully internalize this need. They waited for industry leaders, such as The New York Times and Gannett, to provide some leadership before dipping their toes into the water. Now, they seem to be coming on board in a wave.
But, 2013 has moved beyond the paywall conversation. 2013 demands something different, more radical, and a bit scarier, from traditional media companies. It demands true product innovation.
Why don’t paywalls qualify as true product innovation?
- They are not an innovative concept; they have been around for a while
- They are an obvious attempt to solve publishers’ problems - dwindling revenue and profitability. True innovation requires solving a problem for your consumers, or audience. An abundance of free quality digital content is not something many people are complaining about
- Alone, they won’t cure the disease for major media publications (see graph below). There are many reasons for this, and they are all well documented. New entrants will realize “digital dimes” isn’t just a catch phrase. It’s a reality, it includes paywall revenue, and it’s been the reality for quite some time
In 2013, it’s fine to begin there. Media companies need to know “how much can we make from selling the product we already produce to the audience we already have?” They also need to do whatever they can to protect legacy revenue streams (not keeping their digital content free helps them to do that). Most of these companies will find a subset of their audience willing to pay something for continued digital access to their existing products, like The New York Times has. They will also learn an incredible amount about digital consumption and monetization behavior in the process.
But, in 2013, that can’t be the only question traditional media companies ask.
They should also be asking themselves the following:
- Who is our audience? Publications should understand as much about their audience as they can -where they live, where they work, what they do, what they consume. The more they know about them, the more they can understand…
- What does our audience need? Not just want, but need. They will be more likely to pay for something that they deem necessary. The more they need something, the more they will pay for it. The key is…
- What can be produced that will be unique and indispensable to them? There should not be any other product quite like any subscription product a publication produces. If there is, and it’s out there for free, you won’t find many people who will pay for it. A publication will better be able to deliver on such a proposition the more they figure out…
- Can we target? The more carefully a publication targets a sliver of their audience, the easier it is for them to deliver on a unique value proposition of some kind. The new digital media entrants that are disrupting/stealing traffic from the major legacy brands have succeeded by targeting a specific subset of an audience by focusing exclusively on a specific vertical (i.e. just business, just politics, or just technology)
So, what should 2013 be the year of?
True editorial innovation. Instead of charging more for a product while slashing the budget used to produce it, traditional media companies should be thinking of what new editorial products they could be investing in.
The most venerable media brands typically have one thing in common: a sizable professional audience with desirable demographics. The value of such an audience in a digital world is increasingly not in only selling the space alongside the stuff they read.
The future, instead, could be in also selling actual stuff to them.
Back to Washington
Let’s look to our nation’s capital. The New York Times, The Washington Post, and The Wall Street Journal are the most widely-read publications in Washington, D.C. Yet, it is Politico that has been most innovative when it comes to bringing new products to market over the past few years. The price for any one vertical of their subscription product, PoliticoPro, sells for multiple times the price of those larger publications, covers only a narrow subset of what those publications do, and is produced for a fraction of the cost.
Without a massive legacy revenue stream, Politico must necessarily identify and create new ones. They are forced to start by asking themselves the basic questions: who is our audience, and what do they need. The result? The Washington Post is asking employees to accept buyouts and introducing a paywall for their existing content; Politico is launching new Pro verticals and now has sizable licensing agreements with over 1,000 different organizations.
More importantly, Politico is a developing a deep understanding of what products the D.C. professional market can use and support, and experimenting with creation of editorial products that represent significant new growth opportunities. This process, as it repeats itself, should pay dividends for Politico well into the future. For traditional media companies to compete in the long-term, they will need to do the same.
2013: The Year of Innovation?
Professionals have incredible buying power. Like general consumers, they may be willing to pay a bit for information they want. But unlike general consumers, they will pay a lot for information they deem necessary to perform their jobs better. The opportunity to introduce new, higher-end subscription products to them that challenge the traditional definition of “circulation” revenue is therefore a compelling one. Highly targeted vertical reporting, competitively priced research services, and access to data, are just a few services major publications could think about providing to them.
However, subscription product innovation could include various different types of products and doesn’t need to be focused exclusively on professionals.
No one has all the answers. But for major publications, 2013 can’t simply be about increasing prices for existing products, selling traditional ads, and cutting more newsroom budgets.
The conversation needs to be extended further, to how traditional media companies can become market leaders in media product innovation. A commitment to the process of true innovation could lead to some interesting, and unexpected, results in the year to come.
Disclosure: The author previously worked for Allbritton Communications, the parent company of Politico