Australia is on track for a new swathe of media laws that appear to even further concentrate media power into fewer hands. These changes to legislation forced by declining profits in legacy media continue to be a fact of life simply because newspaper management here and around the word are incapable of adjusting to the online world. And that is because they don’t understand its most fundamental ingredient.
Sadly, the inability of legacy media to evolve and understand the demands of the online world means we will see media battles based on which company has the deepest pockets rather than who can creatively come up with a model that works. It means that unless things change, the big boys like Murdoch will inevitably win at the expense of media diversity.
The crippling legacy of the broadcasting model
There is one particularly big sticking point for legacy media, like newspapers, radio and television, when they move to the online world.
Legacy media still runs on a broadcasting model.
Media executives have whined for a decade and a half about the problem of trying to find an online news model that works. It’s their fault. Despite their once mighty resources, not one of them has made a genuine effort in that time to look beyond this pure broadcast model.
Instead they continue with the journalist as gatekeeper, with everything parsed by reporters, the back desk and editors. Only rarely do we see original documents, full interviews and all of the vision that these organisations hold.
Take away the new improved looking websites with “interactive” graphics, videos and comments (that are really just a real time letters page anyway) and it very quickly becomes apparent that nothing has changed. It’s the same broadcast model we have had for decades and it doesn’t fit online. It’s like trying to put a truck frame on a motorbike chasse – it won’t fit and even if you do manage to smash them together, the new vehicle isn’t going anywhere fast.
Why communities are the future for media
Now, have a look at Facebook, Twitter, LinkedIn, even Google, which news organisations constantly carp on about. Sure we get information and news beamed out from these big online players but that information comes from a different foundation – that of communities of interest.
Every successful online outlet starts from the point of a community. Facebook is a community built on friends. Twitter is a community built on shared interests and peer groups. LinkedIn rises out of a community of business people and contacts. Google is more foundational still – it gives us the tools to find our communities.
Real estate may be about location, location, location but the online world is about community, community, community.
But where is the community model in online newspapers? There have been a few newspaper sections that have focused communities of interest but when they are found to be profitable in themselves these sections are isolated and quickly hived off to be completely separate entities.
You see this in real estate sections, where you will find a community of buyers, sellers, investors and many people thinking about a home in the near future. This is a huge, evolving, sharing community and it has significant amounts of money moving through it. A great example of the power and profit of this community is when News Corp took a 40% stake for $2.2 million in realestate.com.au. Its main Australian newspaper competitor, Fairfax, rejected the same investment opportunity back in 2000. That stake is now worth $700m to News Corp.
When it comes to buying and selling cars, teens, mums, dads, families, rev heads and the ignorant purchaser seeking advice all come together. It’s another big, evolving community with dollars ready to spend. PBL saw this and made an investment on carsales.com.au over a decade ago. It has turned into a $560 million profit since then.
But don’t think newspaper management made these investments because they saw a community to develop. No, they moved in that direction because they were chasing existing advertising dollars and an established community that had supported a big portion of the newspaper industry for decades.
The car and real estate community already existed and provided enough income to help pay for these focused websites. This was not an investment in developing a community, it was just a dollar chasing exercise.
And those news companies that didn’t invest in these established communities failed to make the move because they had the hubris to think they could go it alone by coming in after the upstart company. They imagined their old model was too big to fail.
Seek, Australia’s largest online job market is another well-established community that highlights this. Fairfax was offered a 25% stake in Seek in 2003 and it would have raked in millions had it taken that offer. Instead it is an example of how by being slow to move and pursuing existing print dollars after thinking it could go it alone with its job classifieds, it lost a community, income and had no investment in a company that is now, by itself, worth twice as much as all of Fairfax.
But even after seeing the wealth generating impact of these established communities of interest, the major news websites are still trying to be nothing more than broadcasters. They have rubbed right up against successful models but for some unbelievably blinkered reason they still can’t see the root cause of this online success and can’t change their model to fit this foundation.
When will they understand, success online is not about broadcasting a version of the news they want us to read? It’s about developing communities of interest to share, engage and get something more.
Finding a model that works
So, is there an online community model that works for online broadcasters? If so, what kind of model could allow an online news site to take advantage of its huge resources in photography, archives, reporters and still massive online readerships to build a community that could go on and make a profit of reasonable proportions?
The paywall approach
To date, if a legacy media outlet online is offering unique, niche, trusted information to an already established community flush with cash, it inevitably follows that it will be put behind a paywall. If the now paywalled news site maintains the quality and insight that built that community and there is no cheaper or more trusted competitor, this tends to be a successful option.
The downside? Growth slows because the market is now ring fenced to only those in the know.
But in a world of competing news sites with similar offerings and no niche community, the paywall approach spells disaster. Dare to put your general news behind a paywall and, as readership figures show, readers migrate elsewhere en masse to free news hosted elsewhere.
And that’s the rub. If there is no real area of difference in what is offered on online news sites other than slight shifts of points of view according to the political spectrum of a broadcaster and there are other outlets that offer the same news for free, why would a paywall work?
The classified ad streams have now dried up, transformed into single self-contained companies, meaning legacy news outlets come to depend even more on display advertising. Throw in the advent of ad blocking software and even if you do masterfully get eyes to your free news website, a big portion of readers never even see the advertising while most others can't be bothered to click on it.
This handicaps legacy media even more because if display advertisers get no return, why would they advertise with you?
Business marketing approach
Another approach being trialed across a number of online and real world broadcasters is to make your news broadcast business part of another business. For instance, suppose a company that is fully controlled by the news organization puts on an event.
The role of the media site is to promote the bejesus out of the event using these news sites. After the event, the news site doesn’t directly profit except where there is advertising spend. However, the event company does make a profit and because it is part of the news organization it rolls some of those profits back into the established news site, so next year they can do the whole promotional gamut again. It's a case of robbing Peter to pay Paul
The more event companies you have in the organization, the more money feeds into the media website. So while the media site is not profitable in itself, it is a vehicle for profit in other parts of the business model and will continue to be funded by them.
In short, you get to maintain your news stream for free to the general public but when a linked company has an event the news outlet becomes a glorified advertising hording for that event. As always in the newspaper game, the outlet will disguise some of these promotions as news and also offer prime ad placements as part of the deal. At its essence it is that old standard of journalism, advertorial (advertising dressed up as editorial), in a brand new dress.
And, oh yes, classical advertorial of spruiking a company's wares as part of your program / news cycle is also growing in frequency across all legacy media channels because it is still the easiest way to bypass ad blockers. You can see examples of that here and here. It’s why so many presenters and reporters are suddenly finding themselves on free jaunts sponsored by advertisers.
Advertorial opens a can of worms around potential conflicts of interest that will certainly be highlighted by opposing media outlets.
To be honest, the advertorial business model is a reasonable option in desperate times but it relies on narrow sources of prime income being given extensive air time or column space that could otherwise host multiple advertisers. It could also seriously threaten the independent reputation news sites try to build, be open to scandal or end in tears with the collapse of major feeder businesses. Surely we would want a broader income base and one less likely to reduce trust even further in news organisations.
With the exception of the established paywalled community model, online news outlets continue to rely on broadcast not community models for their existence. It’s an insane approach when they have already witnessed the success of community models and even invested in some to great profit.
So, let’s look at how we might get a community model to work.
What everyone wants from a community based news model
When I left newspapers back in 2008 after a couple of decades as a reporter, sub-editor and editor, one of the key reasons driving me away was the online revolution. I could see it barreling through our lives and careers but mostly I could see how upper management had no idea what made the online world tick.
To give you one example, I had a very senior manager in a major news group suggest an online pumpkin growing competition where the pumpkins were live streamed, so people could tune in to see how large they were every minute of every day. I’m not sure if that competition ever went ahead (I think it did) but the silence in a room full of editors when the suggestion was made said it all.
Later a few of us went out to have a few drinks and pondered whether a competition where readers could watch paint dry could be in our near futures.
It was around that time, I came up with an online model that, even to this day, I believe would work.
Now, before we get into the basic skeleton of this model, we need to be aware that there are a few very simple things in the newspaper game and online that experience tells us almost always guarantees public interest.
- When something is useful (calendars of events for instance)
- Competitions with prizes
- Being first
- Exclusive content
- Sharing our knowledge and opinions with like-minded people.
And there are a few things advertisers like
- Adverts that will actually be seen
- Hitting high volume focused markets that are likely to have an interest in their products.
- The ability to analyse the response to their marketing.
Let me entertain you
To get to the skeleton of our model, let’s look at legacy media online to find where communities of interest exist. There’s sport, travel, politics, business, entertainment/gossip and probably many more.
For this example, I am going to select entertainment because it has a large audience with a discretionary income looking to spend money every day of the week and in particular on weekends. It also has a broad range of potential advertising clients, it has communities within communities and most exciting of all it is filled with a passionate audience full of opinions they want to share. (Sport nails all these needs beautifully as well).
The big problem is that today these entertainment communities are scattered and fractured and it can be hard to place advertising where it has the most effect.
The skeleton of the model I’m looking at is a partial paywall but the paywall cost is intentionally small, let’s say $2 a week, because its about drawing those genuinely interested in investing time to that section rather than making profit from the paywall. A small investment will bring an audience to that section first when they visit a news website for no other reason than they paid for it.
But while there is this paid component, the currently existing entertainment section on the website and all other parts of the news site remain exactly as they were before the fee came in, free to view. No restrictions, no limitations. So, you keep your existing readers
But that modest fee opens the door to much, much more than you find on those normal pages. It's a value add. So, what do you get for your two bucks in the Entertainment section?
Let’s start with the useful, a gig guide.
This gig guide includes everything – music of all kinds, theatre, dance, movies, public events etc. It allows bands, events manager, marketing people to add events. Of course a verification system will need to be put in place and there are multiple options to accomplish this. It must be free to add to the gig guide but you can pay for some flashy extras. The most important thing is that the gig guide is as comprehensive and as accurate as possible because that’s what will help build your community.
The gig guide must be searchable and each entry should link to other pages where you can buy tickets or at least show where you can buy them. There should also be a description of the event/band/film etc and the opportunity for each band/event/film to have its own page with images.
Next up exclusives. Exclusive competitions run every day for subscribers. In addition, the section should offer special products, discounts, fan gear just for your subscribers and a host of other specials. These competitions and subscriber specials are potential gold for advertisers looking to target an audience and for the media company in terms of developing very focused and useful lists while growing to understand the various target audiences.
Subscribers also get more than others when you run interviews. As anyone who has worked in legacy and even new media knows, the stories, photos and videos that make it to the broadcasting model are distillations of longer interviews, longer video segments and many, many more photos (30 photos shot – only one used). The final product is essentially a summary.
But in this community model, subscribers get access to multiple never-before-published photos from the photo shoot, a full interview transcript, extended or complete videos and an archive of past interviews and photos with the same interview subject. Make your archives work for you. For fans of someone with a public profile, this stuff is invaluable.
It may also be worth adding externally shareable but watermarked content that can be used to bring other people to the section as they become embedded on other websites and communities like Facebook and LinkedIn..
By adding these exclusives, suddenly the $2 subscriber content becomes worthwhile to fans from around the world, not just in your readership area. To give you an example of this potential wide reach, I recall a small country paper that was in its last two weeks of operation because it had such a small readership and was no longer profitable. In that last week the paper's photographers took some photos of Hugh Jackman on a movie set in the local area. In the space of less than a day, the website count went from having almost no hits to hundreds of thousands from around the world.
To complete the community model I propose, you need to give it – surprise, surprise – the voice of the community. Let the fans write reviews, as well as your professional reviewer. Maybe allow some of the quality contributors who rise to the top over time to interview the stars on behalf of that community. Ask the subscribers to provide your reporters with questions for interviews. Allow them to send in footage. Essentially, open the doors for the $2 subscribers to add content and to engage with you and each other. You build their playbox, so they have a place to play and make your resources available.
At the same give the stars and members of the entertainment industry the opportunity to talk directly to your subscribers.
There are so many other opportunities that become available for your readers, advertisers, entertainers and reporters when you build a community model. Advertisers can accurately target these markets with advertisements, articles and competitions that offer a return to the community and don’t just broadcast to them.
Everyone gets feedback in multiple forms that will guide the direction of this community model. The community can lead the reporters, advertisers and the website. It's leading taste makers automatically become part of the news site's team.
The will almost certainly suggest exciting new sections that you haven't even thought of. This is not only a community funded but a community directed model.
Yes, there is an investment needed here but with careful, thoughtful planning the potential return on developing a community rather than just broadcasting what you or your editor might think is a good story is huge.
Do this right and you can actually get a community to help you design the site before it even goes live. Get their input from day one.
This basic idea is not sophisticated in itself, although its execution may be and requires thought. It’s about building a community, giving it something that seems fair value and, most importantly, giving it a voice.
For too long, legacy media groups have tried to keep their audience at arms length. Comments after articles are really a sop to the online world but do little to instill a sense of community.
If legacy media groups want to succeed online they need to invest in a model that genuinely offers something new and builds its own online community as part of the process. Let the leaders of the communities that develop from these sections peer under the hood of media and give those community members exclusive access to things that once only reporters saw.
The online broadcast model is failing. It has failed for more than a decade because it still tries to be the gatekeeper and taste-maker rather than invest in building new communities. We will continue to lose important media outlets because not one of them has the gumption to trust its audience and engage readers in a model that gives them a voice, makes them architects of a news site and increases their access.
We know online community models work. It’s time legacy media took a deep breath and let them in.