Make 'engagement' your mantra as an online news publisher

The Web publishing business is a bit more complex than “more traffic = more revenue.” While years have watching ABC circulation figures have trained many journalists to want the largest circulation possible, business-savvy journalists long have known that not all audiences generate the same revenue. But how do you reach the audience that will allow your publication to stay in business?

Before I go any further today, let me again make the point again that the audience is not your customer. Your customer is whoever writes you a check. In most cases, that means our customers, as publishers, are the advertisers who pay for placement in our news publications. A customer also can be the non-profit foundation or angel investor that funds a news website. It even could be, as the New York Times hopes, the audience itself, if there’s a paid content scheme in place.

But keeping that audience/customer distinction in mind, even in the case of paywalls, is essential for journalist-entrepreneurs to have any hope of success in the news publishing business. Let’s take a look at a diagram I whipped up:

Venn diagram

The beige circle is all the available audience out there that might be interested in your website.

The red circle is all the available audience out there that your customers (advertisers, foundations sponsoring your grants, etc.) want to reach.

The yellow circle is your current audience.

The orange overlap is the audience that you are reaching and that your customer wants to reach, too. Congratulations, that’s where you are making your money.

The rest of the yellow area? You might be doing public good by reaching that audience there, but it’s costing you money to publish to them and your customers don’t care. And if you are charging your customers to reach those audience members, reaching them is costing your customers money, too.

You goal, as a news publisher, ought not simply be to expand the size of your yellow circle. It should be to expand the size of that orange overlap area – meaning that you are attracting a larger number of the audience members whom your customers wish to reach.

First approach – shrink the circle

Some publishers have recognized that you can increase the orange area while making the yellow circle smaller. This, ultimately, is part of the thinking behind many paywall/registration schemes: Put up a barrier that drives away the “yellow audience,” so that your audience circle looks much more orange.

I don’t like that approach because it’s a negative one. In turning away audience, you might turn away some of the audience your customers want to reach, as well. (BTW, on the subject of paywalls, if you think paywalls are simply about raising money to support additional journalism, let’s not forget that the first 51,000 new annual paywall subscriptions to the New York Times will pay for only the salaries of the Times’ top two business executives last year. Paywall revenue supports the print news industry’s bloated business sides and profit margins as well as journalism.)

Crafting a negative strategy that eliminate the yellow “free riders” while retaining the lucrative “orange” audience is a tough task. As the perfect is said to be the enemy of the good, at some point, efforts to minimize or eliminate free riders cuts into your share of the lucrative audience, as well.

If you really want to reduce advertiser cost in reaching an audience that doesn’t deliver for them, consider restricting the placement and distribution of ads on your site, instead. This can help make your remaining ad inventory more valuable, and even result in higher revenue.

Be proactive about culling garbage pages from your site, as well: duplicates of existing coverage, empty comment pages and forums, spammy user-generated content and early versions of now-updated stories (redirect to the current version, unless there’s some strong archival value in the drafts). Don’t waste your audience’s time and clicks. Deliver value on every page for them, and you’re more likely to deliver value to your customers, as well.

Second approach – move the circle

If certain topics on your website are attracting the audience your customers want to reach, and other topics are not, it’s natural that publishers will choose to deepen coverage in those first topics, and reduce or eliminate coverage in the latter ones. This isn’t unique to the Web. I remember plenty of print sections dying for lack of advertiser support in the past.

Essentially, this approach is an attempt to move the yellow circle, to overlap the red one. It’s using a change in content to attempt to do what the pay- or registration wall was to do in the first approach – to eliminate less coveted audience members. But the implied addition of new content that appeals to the coveted audience would keep the overall size of the audience roughly the same. What you lose in one area, you gain in another.

Again, why eliminate audience? I agree that publishers need to consider customer value in deciding how to spend money on staff, licensing and assignments. But an audience member who lives in the yellow area of the circle today might move to the orange area tomorrow. Change the mix of your offerings too radically, and you might break many of your audience members’ reading habits, depriving you – and your customers – of those eyeballs on days when they are looking to support your customers’ causes.

Third approach – grow the circle

That’s why I recommend that publishers think about a third approach: growing the circle – not your yellow circle, but your customers’ red one.

Ultimately, publishing’s customers – whether they be advertisers or non-profits – are looking to reach an audience of individuals engaged in the customer’s community of interest. And the customers’ purpose in funding the publishing is to get those audience members more directly engaged in the customer’s cause.

For a shopkeeper advertising on a local news site, that cause is likely getting locals into the store. For a non-profit, the cause might be to raise public awareness of, or action on, a specific issue. In either case, though, the desire is engagement.

Make that word your mantra as a publisher: engagement. That’s why I dislike the first two approaches, because they include active disengagement by a publisher toward its community.

Instead, a publisher’s mission always should be to more deeply engage the community he or she serves. If you can grow the number of people in the community who are actively engaged with it – emotionally, politically, socially and, yes, even commercially – you’ve grown the red circle of potential audience members that your potential customers want to reach.

Focus on delivering, then, what your audience members need so that they can be, will be and will want to be more engaged with their community.

I can’t draw you map for doing that in your specific community. But I can, and do, urge you to adopt a positive attitude toward community engagement journalism. It’s our industry’s only hope to survive economically in the Internet’s business environment.

The paywall debate: The challenge of charging

The publisher of The New York Times, in a letter to readers, detailed the specifics of their latest paywall attempt Thursday.

The two main points:
1. Users can view up to 20 stories (including video, slideshows and other multimedia content) a month.
2. Stories you are linked to from blogs, social networking sites and the like will not count against the 20 story limit.

The Times is testing this approach on Canadian users now and it will expand to U.S. and the rest of global readers March 28.

“It’s an important step that we hope you will see as an investment in The Times,” wrote Publisher Arthur Ochs Sulzberger Jr., “one that will strengthen our ability to provide high-quality journalism to readers around the world and on any platform.”

From a business standpoint he may be right. Newspapers’ current model isn’t working and they have to pay for all that great journalism.

Now for the BUT.

The Times attempted something similar to this and failed with TimesSelect, returning columnist content to free in 2007 after two years of behind a paywall.

This is what then-Times executive Vivian Schiller (we won’t get into what’s happened to her since) was quoted by Reuters as saying of the decision to end TimesSelect: “We now believe by opening up all our content and unleashing what will be millions and millions of new documents, combined with phenomenal growth, that that will create a revenue stream that will more than exceed the subscription revenue.”

So the logic then was to increase potential ad revenue by increasing the potential audience. Now it’s to do the opposite. It’s been pretty well established that putting up a paywall decreases views and thus decreases advertising revenue.

Then there is the other issue that so often gets overlooked: The is hardly the only source for news. Many other sites, particularly those run by television networks have no incentive to charge for content. They never have. Savvy news consumers can simply go to or or a myriad of other sites to get essentially the same news.

Content is so widely available that, except for very specific stories, users don’t need The New York Times as much as The New York Times needs the audience for advertising. But legacy media, particularly media organizations with a proud history, have a hard time recognizing that.

That is a long way around to make my connection to television news and the challenge of paywalls.

For all of the other newspapers in cities across the country that have three, four or five television stations or more producing news and running their own websites, the news of the day is readily available for free. All a paywall will do is push people to other sources. No one likes to pay for something they can get for free someplace else.

Back to the Times, the decision to allow all users to read stories they are linked to makes their entire paywall moot, anyways.

If I really want to read a particular Times story and don’t want to pay, all I’d have to do is google the headline and find it linked from somewhere else and get it that way. That would just take a few seconds and not cost $15-$35 a month like the Times.

Can Bottled Water Save Journalism Online?

The October 20 survey was depressing and unsurprising news. Approximately 1,820 Brits out of 2,000 – that’s 91 percent – told Lightspeed Research that they would never pay for news online.

“Online it should be free,” said 19-year-old Shauna O’Brien, an economics major at the University of Massachusetts, Amherst.

In the fatalistic gloom of the news industry, Shauna’s words and the British survey reinforce what a long string of failures, from Times Select to Salon Premium, have shown anecdotally: people just won’t pay for Web news. Paired with stubbornly low online ad revenues and a high demand for news online, many news organizations find themselves cornered into a budgetary free-fall. The conventional wisdom is that changing this equation is impossible.

“This is the Google Generation,” wrote Wired editor Chris Anderson in his book Free, “and they’ve grown up online simply assuming that everything digital is free.”

“Nothing will work,” blogged NYU adjunct professor Clay Shirky. “There is no general model for newspapers to replace the one the Internet just broke.”

Perhaps. But could there be a lesson from something Shauna O’Brien does pay for?

Shauna buys a five-dollar pack of bottled water every few weeks. “My family has been buying water forever,” she said. In that the O’Briens have a lot of company: bottled water is a 12 billion dollar per year industry in 2009, double its size in 2000. Tap water, of course, is free, and available almost universally in the U.S. In taste tests, people often can’t tell the bottled brand from the tap.

Does the bottled water industry have any lessons for online journalism?

So how are these companies making so much money? Skillful marketing, says Dr. Chiranjeev Kohli, a professor of marketing at Cal State Fullerton, has had a “dramatic, significant impact” on bottled water profits.

“When they start pumping money into advertising, that’s when the consumers buy into the concept­– or, if that’s your perspective, they get sucked into it,” he said. “This is one of the most fascinating case studies in marketing. This is a product that used to be free.”

Bottled water marketers, he said, have used a cascade of claims to grow their business, from health benefits to purity to convenience.

Carol Elder has co-owned Famous Mineral Water Company in Mineral Springs, Texas, since 1999. She combines a firm belief in the quality of her Crazy Water mineral water (“More healthy than regular bottled water,” she said) with clever guerilla marketing. You can find a YouTube video of hockey player Mike Modano plunging into a dunk tank sponsored by Crazy Water.

“Our company is growing exponentially,” Elder said. Two years ago her company had six wholesale outlets; today it has over 700. In fact, the company is doing so well that they plan on using a growing marketing budget to buy ads in print magazines.

Could the successful and lucrative branding of bottled water work for free online content? I asked Rob Frankel, a branding consultant in Los Angeles.

“Absolutely,” he said.

“How?” I asked.

“I can give it to you in two words: hire me,” he said. “Branding is about creating the perception that you’re the only solution to your prospect’s problems. I haven’t run into a problem yet that couldn’t be solved.”

For bottled water, marketers have created that perception. They succeeded in branding bottled water as a healthy, pure alternative to the tap. (Plenty of people, including Dr. Kohli, are skeptical of some of those claims). In other cases, bottled water marketers act as if they’re selling convenience, not water. That’s worked too.

Undoubtedly, getting people to pay for news content online will be a rough slog. “If it started out charging, then this wouldn’t have been as much of an issue, said Dr. Kohli, who believes news organizations “can’t charge now for what they’ve already been giving away for free.”

But that doesn’t mean they can’t charge for new add-on services. Dr. Kohli, who grew up in New Delhi, said he would pay a dollar or two per month to the New York Times if they customized his page to have news from India appear front and center.

Apple, after all, will sell 50 million iPods this year– a fact impossible to untangle from the financial success of iTunes. With an Apple reader rumored to be imminent, perhaps news content producers can maneuver towards earning revenue from the hardware. Shauna O’Brien pays for music online, too, although she’s downloaded it for free in the past. She said she buys five or six iTunes songs every month because it’s “easier to purchase instead of researching and trying to find [the music illegally].”

Can journalists make this marketing work while still following high ethical principles? Radiohead could give their album In Rainbows away for free but charge for customers to see them perform in person. However, the proposed Washington Post “Salons” last summer created an ethical uproar. It’s one place where the parallels between the other free-to-pay industries and journalism begin break down.

Certainly those parallels are not perfect. From the point of view of even the most optimistic subscription or micropayment model online, the revenue generated could not support the large staffs of nearly every newspaper in America.

The fact remains, however, that bottled water proves that the American public will pay for a product that they used to contentedly get for free.

This article is a thought experiment, not a full prescription for the future financial stability of newspapers. But it’s worth remembering that logic is on the side of those who charge, if not empirical success.

“It’s strange to me that people will pay 44 cents to mail a letter, but everybody thinks that email should be free,” said Cat Armstrong Soule, a marketing PhD student at the University of Oregon who studies why consumer’s refuse to pay online.

And if organizations can find a more stable way to pay for their fixed newsgathering costs- the NPR donation model, or better online ad rates- the added upside of charging for content could be significant. Online, “once you meet your fixed costs, it’s all profits after that,” Soule said. “So if someone pays you 50 cents, then that’s better than nothing, right?”