Cheatsheet: The state of paying for news

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As news consumption has moved online and distribution has spread across digital platforms, publishers have focused on making direct connections with their readers to develop deeper bonds with them and ultimately get them to pay.

But here’s the challenge: After years of publishers putting news and information online for free in the pursuit of audience scale, most people have gotten used to the idea that they don’t have to pay for content.

Here is a look at the state of paid digital news consumption in the U.S.:

The numbers:
54 percent: Globally, more than half of readers say they see no point in paying for news online because they can get the information for free already, according to research released last week by the Reuters Institute.
• 16 percent: The percentage of U.S. consumers who paid for online news last year. For comparison, 33 percent of American adults pay for a digital video service such as Netflix, and 22 percent pay for digital audio content, also per Reuters.
• 79 percent: The share of U.S. readers who say they are unlikely to pay for news in the future. That percentage is higher in most European markets, especially Germany (90 percent) and Finland (89 percent), again per Reuters.
• $18 billion: That’s how much print ad revenue U.S. newspapers made in 2016, a 63 percent drop from the $49 billion they earned 10 years prior, according to the News Media Alliance.
• 89 percent: The percentage of digital ad revenue that Google and Facebook claimed together in 2016, according to third-party calculations conducted using Interactive Advertising Bureau data, leaving just 11 percent for the rest of the digital ecosystem.

The business models:
• Publishers such as The New York Times, where advertising once drove the lion’s share of revenue, have now openly stated they will shift their focus entirely to driving subscriptions. In the Times’ most recent quarterly earnings report, the paper announced it had nearly 2 million digital subscribers. That puts the Times closer in line to other subscription-focused publishers such as The Economist, which sees ad revenues as nice to have but not necessary for survival.
• In the past couple years, there’s been a small but growing number of digital-focused publishers including The Information and De Correspondent that rely mainly on digital subscriptions for revenue.
• Other publishers have launched membership programs that offer additional benefits like paywalled content, research or exclusive access to events. These have been instituted by digital publishers including Stat, Slate and the Charlotte Agenda.
• Third-party vendors are peddling various ways to get people to pay up. Blendle, a Dutch news platform that lets readers pay by the story, claimed 250,000 global users last year. It has tried to get a beta off the ground in the U.S. for a year and a half. In Australia, startups Inkl and Tapview both offer a kind of pay-as-you-go model, in which readers can either pay by the story (normally 10 cents per piece) or pay a flat fee for unlimited access to its partner publishers’ content. Inkl claims a conversion rate of 15 percent from free to paid on its monthly active users, and its paying readers read an average of 50 stories per month, according to CEO Gautam Mishra. Tapview gives ad-blocking readers the option to pay to read specific stories. In the U.S., the magazine-bundling startup Texture, a joint venture between big magazine publishers including Hearst and Time Inc., is promoting its service to users.
• A few publishers, even those committed to remaining ad-supported, have experimented with crowdfunding campaigns. Guardian US raised $50,000 in 31 hours to fund an investigative series about the threat to public lands.

The problem:
“People are working harder and harder to get views, and they’re getting less and less from the advertising,” said Matt Carroll, a professor at Northeastern University and former head of the Future of News initiative. “It’s totally striking that more publishers aren’t working harder to create paid digital circulation.”

The solution:
“I think you’re going to see a lot more people focus on paid,” Carroll added, noting most publishers’ monetization efforts are still focused advertising. “Everybody’s resources are pointed in the wrong direction right now.”

The counterargument:
While a shift toward paid circulation might entice one segment of publishers, it’s not for everybody. “I think there are some subscription models that are really interesting,” said Josh Topolsky, the founder of The Outline. “But as far as I’m concerned, we are just at the beginning of digital advertising. We’re just at the beginning of people understanding what people expect out of their digital products.”

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