Distributed content has turned the digital publishing business model on its head. Once an easy source of quick ad revenue, distributed content has changed how and where people consume content. Today the majority of publisher site traffic often comes from one-and-done, anonymous readers who click away almost as quickly as they arrived.
Meanwhile, the programmatic advertising that was once a windfall for publishers is falling victim to its own success. With more publishers entering the ring to take a share of easy ad revenue, the supply of inventory continues to increase faster than advertiser demand. As a result, the revenue that publishers can generate in a pure advertising model continues to drop year-over-year. These elements have combined to threaten what was once a profitable business model for publishers.
Yet, most publishers have clung even tighter to the ad-driven model, propping up their declining ad revenue with platforms and more intrusive ad placement. Unfortunately, these measures have only deepened the divide between publishers and their audiences: poor ad quality has diminished user experiences on owned sites, and platforms have cut publishers off from direct contact with their audiences. Worst of all, these steps are only short-term fixes; they don’t address publishers’ real problems. The problem isn’t with propping up their business model; it’s with the business model itself.
As revenue continues to fall, publishers can no longer afford to rely solely on digital advertising. Instead, they must diversify their business model in order to reduce their reliance on platform traffic and support the continued development of content. The window for procrastination has passed; if premium publishers want to take control of their revenue, they must look towards the paywall.
Premium Publishers Need to Monetize Readers Directly
This need to diversify revenue is especially pressing for premium publishers who have high cost structures for content creation. A publisher with a team of journalists in a Manhattan office has a very different overhead than a few kids in their Midwest garage. While an ad-driven model might support the cost of a cheap operation that simply reposts Reddit content, the creation of reliable, high-quality content demands a business model that’s equally reliable.
Fortunately, there’s hope for these publishers. With a glut of cheap content crowding out quality, audiences are looking for ways to cut through the noise. More than ever, audiences realize this content may come at a price, which is why recent surveys have found that audiences are more willing than ever to pay for digital content. It’s important that publishers take advantage of this shift in audience attitudes.
The print business model depended not only on ad revenue but on subscription fees from readers. In order for publishers to continue creating content that engages their readers, they must return to monetizing their readers directly. Building these relationships with readers is the only way publishers can weather changes to their constantly evolving industry.
The modern paywall
For years, publishers put off paywalls because of concerns about implementation, technology, and whether these walls would cut off access to ad revenue. The paywall has evolved to address these concerns, allowing publishers to put up paywalls that fit their content and audiences. At this point, it’s no longer a question of if premium publishers should use paywalls, but how best to put it into practice. Publishers can test paywall variables, such as the number of articles that can be accessed before requiring payment, in order to ensure their paywall is optimized for maximum revenue.
Many publishers, such as The New York Times, have turned to the metered paywall. This grants access to a set number of articles per month, allowing publishers to generate subscription revenue from dedicated readers while still generating ad revenue from passing visitors. Other publishers, such as The Wall Street Journal, place content behind a hard paywall. Their name recognition and strong reputation for quality has enabled them to completely wall off content successfully, even as they cut off that content and its potential traffic from search and social.
Still, for publishers to see the maximum benefit from paywalls, they must nurture readers from passing visitors into devoted subscribers. This makes direct relationships with the audience even more important. Publishers can’t nurture these relationships with platforms; they must make use of email to develop their audiences. Paywalls can be configured to capture email addresses or give readers access to more content in exchange for their email, as a first step in nurturing readers towards a paid subscription.
In this new era of content distribution, the publishers that are hurting the most are the ones that have invested in quality content. The diminishing returns of ad-driven business models are no longer sufficient to support the creation of quality content. In order to monetize their audiences, premium publishers must turn to paywalls.