The business of online news
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It's notoriously difficult for established news organizations to make money on online news. In this presentation, I explain why publishers have to stop worrying about lost print revenue and start focusing on regaining profitability. I outline a number of technologies in publishing and advertising that help publishers create engaging user experiences and profitable businesses.
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The business of online news
- 1. The new business of news Sanoma Media Parade, 18 April 2012 Christian Toksvig @ctoksvig
- 2. Agenda • What has happened to the business of news and publishing? • Where are the consumers of news going? • What are the forces threatening traditional publishers? • Ways publishers can save their bottom (line) by applying technology • Why you should care (even if you don’t work in publishing) 2
- 3. Over 140 newspapers closed in the US in 2009 alone Over 30 free dailies have closed worldwide since 2009 Over 40,000 newspaper editorial jobs gone in the US since 2007 3
- 4. US 1 print reader is worth the same as 25 online readers Publishers lost $27 in print for every $1 gained online NY Times print circulation revenue: $650m. Online subscriptions: $80m 4
- 5. 5
- 6. That’s weird…because we’re actually using the web for news - a lot! 6
- 7. Top 15 news websites in the world, April 2012 Million unique visitors/month 120 100 80 60 40 20 0 7
- 8. Videogrowth of the onlinegrowth The and social media video universe Number of People Streaming (000) Streams (MM) 180,000 40,000 160,000 35,000 140,000 30,000 120,000 25,000 100,000 20,000 80,000 15,000 60,000 10,000 40,000 20,000 20 000 5,000 0 0 May May May May May Jan '06 Jan '07 Jan '08 Jan '09 Jan '10 Mar '06 Jul '06 Sep '06 Nov '06 Mar '07 Jul '07 Sep '07 Nov '07 Mar '08 Jul '08 Sep '08 Nov '08 Mar '09 Jul '09 Sep '09 Nov '09 Mar '10 Jul '10 Sep '10 Nov '10 http://www.personalizemedia.com/garys- Link to social media counter: social-media-count/ © comScore, Inc. Proprietary. 14 Source: comScore Video Metrix 8
- 9. creator creator 9
- 10. The web has unlimited inventory 10
- 12. NOW WHAT? 12
- 13. Time to get real. Time to get smart! • The top line has gone forever – time to save the bottom line • Smart about publishing • Smart about advertising • Smart about charging for access 13
- 14. Technology applied to publishing • Publishing is multi platform and 24/7 • Publishers must create rich and engaging sites • Attract people onto your site, and encourage them to stay • Much more content per website is needed, with fewer resources to compile it • Solutions: – Dynamic content aggregation – Content APIs – Recommendations and related content become more important • Examples: Kalooga, Outbrain 14
- 15. ways to gain web audience 1. Unique web content 2. Celebrity news 3. Big pictures 4. Long homepage (link to aftonbladet.se) 5. Long, long headlines (link to DailyMail.co.uk) 6. Several clicks per story (link to BusinessInsider.com) 7. Involving the readers 15
- 16. Publishing made easy with technology • Daylife video • Link to video: :http://vimeo.com/40317011 16
- 17. Dynamic content • Link to Forbes Billionaires List • http://www.forbes.com/profile/bill-gates/ • Example of auto-created page 17
- 18. Advertising technology • Real-time bidding • Personal data • Retargeting 18
- 19. To pay or not to pay? • Paywalls are a divisive issue with no easy answer • Free – go bankrupt • Paid – lose users – then go bankrupt • Freemium – make the keenest users pay • National paywall – the case of Slovenia 19
- 20. YOU ARE HERE Thank you! @ctoksvig 20
Notes de l'éditeur
- Before start:Open Forbes Billionaires ListGary’s Social Media engineBusiness InsiderMail OnlineAftonbladetI’m here to talk to you today about news. News plays a very important role in our society, and press freedom is one of our basic human rights. But news is also a business, and as many of you know, it’s a business that has a lot of challenges. A little about me. I work for Getty Images and we supply content to the publishing industry. So in many ways, our own future is linked to the future of publishing. And that’s one reason why this is a topic that’s close to my heart. But I care very much about news and publishing. I’ve spent a big part of my working life publishing magazines and newsapers, so I’m kind of an old media guy. I’ve got regular sized thumbs...
- Today we’re going to look briefly at what has happened to the business of news and publishingWhere are the consumers of news going? And what are the forces threatening the traditional model of publishingAnd I’m going to share some tips to how publishers can apply technology in order to get back to a profitable existence Most of the examples and numbers I use are from the US and the UK. These are the markets I know best, but the trends are the same here in Holland and all over the world. So if you work in publishing here in Sanoma in Holland, then this is as much about you as it is about your colleagues in other countries. Because only if our press is financially sustainable can it fulfil its role in society
- There are probably a lot of publishing people in this room. Now, I’m not trying to make you depressed here. Just set the stage for today’s media landscape where news in concernedHere are covers of six newspapers. Can anyone tell me what they have in common? PAUSEYes, that’s right. They are all closed. Big famous newspapers with long histories in each of their markets. Casualties of financial crisis and in the case of one, too many threatening law suitsThese are some of the more well known examples. But across the world, hundreds of newspapers are going out of business. In the United States alone, 140 newspaper titles went under in 2009In the market of free dailies, which I know very well, a lot of titles launched in the last ten years, and a lot went away again. In job terms, the picture is also bleak: Again, using U S data, over 40,000 editorial jobs eliminated
- The reason for all these newspaper deaths is obviously the decline in their business, from both advertising and circulation. This is the picture for all American newspapers. We’re basically back to where we were 60 years ago!And this trend does differ quite a bit between different countries. Here in the Netherlands, newspaper advertising spending has “only’ fallen by about 50% since 2000. And while there is a lot of growth in online advertising, it is at prices that don’t compare with what newspapers used to chargeThe cost to an advertiser of reaching one online reader is 25 times less than reaching a print readerEven though publishers are gaining digital revenue, they are losing $27 or print revenue for every $1 of digital revenue gainedLet’s take one of the most analysed newspaper brands, for which we have very good and transparent data: The NY Times. It also happens to have the biggest newspaper website in the world, so it’s a benchmark for others. NY Times has managed to build an online subscriber base of 390,000 paying customers. That’s less than 1% of all the visitors to its site. But it’s enough to earn around $80m per year just for access (not advertising). That’s an impressive amount of money from digital operations. But it’s less than 15% of what it makes from selling the printed newspaper. SO there is a lot of lost ground to make up.
- This is the last one, I promise, and then we will get onto something more cheerful…It shows how much was lost in print advertising and how relatively little was gained in digital sales in the period since 2005. This is just for newspapers in the US, so doesn’t include digital only news brands. OK enough doom and gloom. You get the picture…it’s bad…
- It’s weird that the money isn’t just moving online because we’re actually using the web for news – a lot!
- Digital news is HUGE! Web and mobile users love news. It’s the most popular category of content on the web except for porn and gamesThis is a list of the world’s biggest news websites. As you can see, the biggest one is Yahoo with over 100M unique users per month. There are only two sites on here that are not from the US, and that’s the Daily Mail and the BBC, both of whom have a global audience. For comparison, the most visited sites in the Netherlands are nu.nl and De Telegraaf with about 3 million uniques each
- But people aren’t just reading the news online. They are watching it on video and generally communicating like crazy! This is really one of my favorites because it shows that people are streaming more and more video, as they get better broadband connections and share video experiences with each other. See how even though the number of people watching video is growing quite slowly (orange bars), the number of video streams tripled within the space of 18 months (black line), again these are US numbers. Video is becoming so much bigger at the moment, both on the web and on mobile. People are creating news themselves in a big way. This little site shows how much is actually going on on the social web every second. GARY’S SOCIAL MEDIA COUNTERNote FB likes vs Google +1’s Note email still the biggestAnd a LOT of this is for public consumption. You and I could go in and read or watch it right now, if we wanted to.
- All this activity shows that traditional publishers have lost the monopoly on creating and distributing news. A couple of clear trends are showing: Everyone is a creator and consumer of newsE.g. news gets broken directly by the people involved on twitter or mobile. When Bin Laden was tracked down in Pakistan, the first mention of the event was from a local resident on twitter. When the Costa Concordia hit the rocks in Italy, the coast guard rang the ship, not the other way around. And with social publishing platforms, creators have an avenue to market with their content that wasn’t available before. Example from book publishing: The best selling ebook on Amazon UK in Q4 2011 was a self published book
- The web has unlimited inventoryThis is as much a problem as an advantage in terms of information. Everything is on the web, but it’s difficult to find, so search and recommendation become extremely important. This is also why advertising on the web is so cheap – there is infinite inventory and zero marginal cost of producing an extra webpage
- And finally, everything is news When there is unlimited inventory, then news can get extremely granular, and is shared among lots of different communities. I’m interested in world news, national news (UK and Danish), I’m also interested in my mum’s birthday party. That is news – at least to me and my immediate family. And there’s no way De Telegraaf or nu.nl is going to cover it, so I have to do it myself
- So the audiences are huge and they are very active. That’s great, but they are going all over the place and becoming publishers themselves. Meanwhile, the revenues of the professional publishers are going down. And as we know, you can’t pay your staff and your suppliers in users or clicks, you need real money…NOW WHAT?
- Well, it’s time to get real. And it’s time to get smart!The top line is gone forever – time to save the bottom lineWhat I mean by this is: publishers have to stop thinking that there is a way back to the kind of revenues they used to have, from circulation and from advertising. There isn’t! But just because the revenues are down, it doesn’t mean you can’t be profitableTherefore, time to focus on the bottom lineAbout publishingAbout advertisingAbout charging for accessThis can be done by employing some new technology in publishing and advertising – and a lot of common sense about what people do when they’re online
- So what are the requirements of you as publishers today? Publishing is multi platform and 24/7Publishers must create rich and engaging sitesAttract people onto your site, and encourage them to stay through discovery of content or communities, that’s how you get the audienceMuch more content per website is needed, but there are fewer resources to compile itSo the solutions are - technology: Dynamic content aggregation, this means content that is created on demand when a user clicks on a link. Content APIs – this means people like us have to make our content available to be embedded straight into other people’s workflow and on their sites. Recommendations and related content become more important – this enables users to discover more content and stay longerExamples: Kalooga, Outbrain
- I’m going to share seven ideas for gaining a web audience and show some examples. They may not all be to your liking but they will get you an audience. 1. Unique web contentLike any other product, you have to be unique to stand out. WSJ and FT are known for the best business news; TMZ and People.com are known for the best celebrity content. If there’s one area where a news organisation should not cut its budgets, it’s on origination of stories within its core area, whether it’s local news, reviews, sports or something else. This is what defines a news brand more than anything else. 2. Celebrity newsCelebrity and sport are the two biggest drivers of audience to news sites. We make not like it, but that’s how it is…3. Big picturesAnother ingredient that many publishers have figured out is big, bold use of pictures. Lots of pictures and video. This one I like a lot, as you can imagine! 4. Unorthodox designMost web usability experts don’t like news sites with an endlessly long homepage. And it’s messy for the audience as well. But it has two advantages: users know that everything is on the homepage so they don’t have look anywhere else on the site. And it boosts search engine rankings, by fooling them into believing stories "must be important because they are linked off the front page".Example:Aftonbladet.seThis is Sweden’s biggest news website and one of the most profitable news websites worldwide. It’s long!5. Long, long headlinesAgain, this is a Google trick. Packing your headlines with common search terms makes them appear towards the top of the Google rankings.For example, the MailOnline has taken Search Engine Optimisation to a whole different level. Its headlines are so long they are like mini stories in themselves. Let’s have a look 6. Make people click several times to read one story. This increases the number of page views on a site.Business Insider is a master at thisLet’s go to BI and see how many clicks they get out of one story7. People love getting heard and contributing. That’s why smart publishers are creating forums for debate, sharing. That’s content too. Sometimes the comments are the best bit.
- When resources are limited, publishers will have to use smarter ways to create content with very little involvement. We can’t wait for some designers to create a page, the editors have to do it themselves!I promise, this is NOT a sales pitch but we actually own a share in this company called Daylife. It is a web publishing software that makes publishing just too easy. I’m going to play a short video, because you have to see how easy this is, especially if you’re into web design or publishing.
- Another way is automatically curated content. Here’s an example from Forbes Billionaires ListWe go to a person on the list, and the page is built for me, in real time with fresh content pulled from a set of defined sources across the web. So this page is never static, always shows something new.
- OK that’s a bit about publishing technology which allows you to make more with less. Now, we’ve also got to make some money here, so there are some advertising technologies that are absolutely crucial for publishers who want to get their cost per thousands, and revenues up. The first one is real time bidding: This is a technology that auctions off the ad space on a page the moment you click on it, based on your browsing profile. In theory this means that your click goes to the highest bidder – in real time, and the ad you are shown is the “winning” adSecond one is personal data: I know the Dutch have taken a robust approach to personal privacy and I understand why people are worried. But from a publisher point of view, the more we know about you, the more relevant we can make the content AND the commercial messages you get. Third one is retargeting, also a controversial technology. This is the technology that lets an advertiser follow you around the web. You’ve probably tried breaking off a transaction on the web, for example for a hotel room. You then get followed by ads for that very same hotel room on other websites. There clearly needs to be work done to protect people against misuse of their personal data and browsing history. But all of these technologies are necessary if publishers are to understand their audience and monetise it better.
- The second income stream for publishers is charging users to access news. So, should you close off parts of your website to the public or shouldn’t you? Paywalls are a divisive issue with no easy answerMany publishers are refusing to go behind a paywall which essentially excludes them from the search engine traffic that is such a big part of their overall trafficThose who have done it, have mixed results, except a few specialised ones like FT, WSJ and BloombergAmong general news publishers, NYT seems to have hit a good balance of freemiumAnd then there’s the example of Slovenia…not usually a country on the cutting edge of technology! But they have two great things that set them apart from other countries: No one else speaks Slovenian, and no one else cares about Slovenian news! This means no traffic to Slovenian news sites from abroad. So all the publishers basically have ganged up together and put a paywall around ALL news websites. Users pay a fixed fee to the company that manages the paywall, and the subscription company pays out each publisher according to the hits its site gets. Same model as cable TV. It’s an interesting model. I’m not sure if it would work in Holland. It certainly wouldn’t work in the UK where websites get a lot of traffic from abroad. And besides, the UK publishers all hate each other, so they could never agree on something like this!
- You don’t have to do all of the things I’ve mentioned here. But if you’re not doing at least some of them, then you have a problem. So, in summary I think – I hope – that we are at this stage of the development of our industry. And I hope that I have given you some confidence and ideas to a profitable future in publishing. Thank you!