How can digital journalism face the pressure to be profitable

What is the future of digital journalism; with a disruption in the traditional business model of journalism and an evolving digital media landscape, we need to explore and examine how organisations and individuals delivering journalism can raise an income and be profitable.

Digital advertising on local and regional newspaper is falling, it has fallen 3.4% 2016-2017 reported by the Press Gazette (Ponsford 2017a), that’s despite data showing that the traffic to these same websites has increased “40 per cent year on year to 11.6m unique browsers per day at the end of 2016” (Ponsford 2017a), this is troubling for a sector that is pursuing a largely digital focused strategy to develop their online presence against the cost of print and its decline in revenues. This goes against the growth in the digital advertising market of just over 17% in the last year (Ponsford 2017a), however its where that growth is going that is the problem for the industry.

This growth in digital advertising is being swallowed by the two global platforms of Facebook and Google, the ‘Duopoly’ as they are referred to by Freddy Mayhew from the Press Gazette “is already taking the lion’s share of new digital advertising revenue” (Mayhew 2007a) and they are predicted to take over 70% of the advertising money spent online by 2020 (Mayhew 2007a). These two giants have been estimated by the Press Gazette to already taken £1bn in advertising revenue that traditionally went to newspapers (Ponsford 2017a). This shows that for other publishers and platforms the digital space is increasing harder to make money from, and additionally due to get harder for those that use advertising schemes such as programmatic advertising.

Programmatic advertising is the concept of computers dealing with the purchase of advertising space automatically to a set of conditions (price / availability etc) set by publishers and advertisers (Rogers 2017) and “has become the dominant way to trade digital media because it matches ads to people on a truly vast scale” (Graves 2017). One major issue that this type of advertising is going to face in 2018 is the introduction of the EU’s new regulation the General Data Protection Regulation (GDPR), these new rules increase the power of individuals over their own data and use of data about them, and increase the responsibilities on companies and organisations that use individual’s data, in essence individuals need to actively ‘opt in’ for anyone to create, use or share their data or data about them. This would make programmatic advertising conceivably impossible because of the consent requirements users would need to give in order for them to be targeted by adverts. This could see the resurgence of traditional spot placement adverts and development of GDPR compliant, advertiser and customer friendly advertising platforms. “GDPR is likely to shift advertising away from the algorithmic models of communicating, back toward a simpler form of advertising, relying on less volume and better-quality data.” (Roy 2017)

Paywalls and digital subscription services.

Paywalls are the process of blocking access to your content except for those readers who wish to pay for it, often sites that use paywalls will enable people to read the start of an article, a way to tease them into subscribing.

In the UK the Telegraph is one such site that operates a paywall, with subscription costing between £1 and £6 a week depending on deals and if the subscriber wants a daily digital edition of the newspaper (Telegraph 2018). The Telegraph do not advertise or share how many subscribers they have but are following a plan to try and increase the number to 10m registered users, with the Chief Executive of the Telegraph Media Group Nick Hugh telling the Financial Times “Registration would give the company a clearer idea of who its readers are, as well as valuable data to power other products and services… Registration is a step towards making money out of [our] visitors” (Garrahan 2017). The Financial Times itself operates a paywall, and was one of the first when it launched theirs in 2002, their subscriptions which are seen as some of the highest between £5 and £9 per, although they do share many articles online free to access. The key to their success, reported over 900,000 paying subscribers (Weissman 2018) is working out what content makes the reader return, they give each reader an ‘engagement score’ “which triangulates how recently that subscriber or trial member visited the FT‘s website with how long they stayed and their frequency on the site” (Weissman 2018) this data enables the FT to work out which of their content works and why, all with the aim to grow the numbers of their subscribers.

One issue with any news platform that requires payment in order to receive the content is that in the Reuters Institute 2017 report they found from their survey, supported by additional data from focus groups and dairies that users have “a continued reluctance to pay for online news in any form – overall more than eight in ten (84%) have not paid in the last year” (Newman et al, 2017, P24), in the UK only 3% have paid for a news subscription in the last year (Newman et all, 2017, P34).

Community Membership and ‘Reader’ supported schemes

Receiving direct funding or income from your ‘readers’ is relatively new, The Guardian newspaper launched their membership scheme in 2014 which sees readers and supporters give on a monthly basis, but they also ask for one off donations via their supporter pages. The Guardian claim that they now receive more money from its readers than advertising, with “more than 300,000 readers are now paying it at least £5 a month as supporters and members… [and they] received more than 300,000 individuals, one-off contributions over the past 12 months” (Mayhew 2017b). This empowerment of the readers to feel part of the organisation, and as such share its values, ethics and editorial approach, and believe in the content and agenda of the organisation, and such a scheme could be very effective with other news brands and organisations. This concept creates a different dynamic between the readers and the organisation, different to other more direct forms of reader support such as buying of print or subscriptions / paywall, as David Pemsel the Chief Executive of the Guardian Media Group told The Guardian “the banner of membership could be a whole number of different iterations about how we build deeper relationships with our readers and get them to make a greater contribution” (Jackson 2016).

Another membership scheme is that of the co-operative, now sometimes being referred as ‘stakeholder media’ the concept that members part own, they contribute to not only the finances but organisation, management and agenda setting.

The Bristol cable is one of the UK’s most well-known examples of these emerging media ownership models, their founding principle is that “journalism is a public asset and therefore should be free at the point of access” (Sheffield 2017), they are a democratically organised member led, their members contribute on average £2.70 a month and they reported they had received their 1,900th member in December 2017. The ‘profitability’ or moreover the sustainability of this model still needs to be explored, in The Cables case they have received additional funding from grants and also currently pay a small number of staff minimum wage and with others such as contributors and illustrators paid a flat rate for their work. There also needs consideration on how operations such as The Cable run democratically and in essence when you move possible editorial and business concerns from single owners or boards to thousands of members, as Sandi Dheensa one of its members told the Independent “Membership means I can vote on things like where the paper is heading, advertising ethics, where to seek funding, what sorts of topics the paper should focus on” (Sheffield 2017).

Hyperlocal, Community Media or Not for profit

One concept that in fact challenges the concept of ‘profitability’ is that of the not for profit media organisation. The concept being that the organisation is serving a purpose, normally the journalistic values to support their local community or a community of interest. There are also those who wish to be independent to not chase profits for shareholders or owners but to pay themselves a sustainable wage. Within journalism directly this is seen within the community and hyperlocal journalism sector, a budding and growing sector which has seen the launch of its own trade body the Independent Community News Network (ICNN) to “The network will advocate and lobby on behalf of independent news publishers across the country and fight for better opportunities for all.”(Meese 2017a) and represent the over 400 hyperlocal and independent publications. (Abbott 2016). Over 40 community media organisations identified in London, newspapers, radio stations and websites / blogs with “most cases they are guided by their social purpose and not by profit” (Merryfield 2017).

In Community Radio, the essence is not for profit that enables the majority to access grants to provide training, access to platform and content for their audiences, which sees around 25% of its income from these grants, and most having a mixed approach also receiving donations and advertising. (Ofcom 2017). Grants can be a very powerful way to develop funding, but are linked not only to not for profit but also to outcomes, so need to be considered with the outcome to develop or sustain local journalism and a purpose to support their communities.

Government funding

In the UK the Government provides funding for journalistic activities, at its core this is funded by the TV License Fee as a form of taxation, which saw £3,787m (BBC 2017) collected on behalf of the BBC.

The BBC itself is a publisher of digital journalism, and not only does it commercially sell its content and operate platforms outside of the UK, but individuals and independent contractors and production companies can make money out of the BBC with many profitable ‘indies’ taking a share of the over £430m (BBC 2017) that the BBC has spent on the independent sector, and whilst exact figures are not clear some of this will have been spent on commissioned documentaries, journalistic features and external reporters.

The most recent development in government subsidy of journalism is the launching of the Local Democracy Reporters scheme, a partnership between the BBC and local newspapers and news organisations, it sees the BBC funding up to £8m a year to around 60 separate organisations such as radio, online media and traditional regional news companies for them to employ just under 150 reporters to create stories based on local government and council activities and “support the scrutiny our news organisations provide for the way public money is spent by local councils and authorities – which is a fundamental part of our local democracy” Ashley Highfield Chairman of the News Media Association who helped setup the scheme told the industry news site Hold the Front page (HTFP) (Sharman 2017a) , with this content then being shared to a wider network of over 700 media organisations as part of the Scheme. (BBC 2017). A lot of these contracts have been awarded to the traditional regional print groups, and with the Government via the BBC funding some core reporting areas it frees up resources in those organisations to create other content, not to mention the other advertising and income generating opportunities from was is effectively state funded content. This government funding has received some criticism, with people expressing that its state aid to support failing traditional media, and why it might not have been better spent on alternative or community journalism. Stephen Kingston stated to HTFP that “This so-called scheme for local democracy reporters looks to us like a total sham. The news groups that have benefited from BBC funding have been sacking journalists for years in the relentless pursuit of more profit.” (Sharman 2017b)

In conclusion, a diverse approach should be considered for any publisher, journalist or media organisation to be ‘profitable’, aside from considerations of the not for profit and community media model which can successfully see journalism succeed in some of its core principles such as holding power to account, while also employing people to write and create the content. The industry needs to consider the change in trends, is the paywall or subscription service sustainable, especially with a growing generation that expect free news provided to them via platforms such as Facebook and Google who are taking more and more of the digital advertising market.

The future for media publishers, should be to consider engaging with their readers via membership or donation schemes, maybe offering online content free online but with a paid for digital subscription of any print publication or dedicated digital layout.

Also, whilst continuing to peruse the digital advertising revenue, as with the possible changes because of GDPR and the Press Gazettes campaign against the Duopoly of Facebook and Google (Ponsford 2017b) there is still hope that online advertising might still help sustain and may in fact provide the profit where all other costs are covered elsewhere.

 

Bibliography and works used to inform.

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