New study: How to build revenue by connecting with your audience

Design by Leon de Postma, De Correspondent.

Social media has fundamentally changed how publishers reach their readers—and  publishers’ business models have had to adapt dramatically to that change. With Facebook and Google now controlling the bulk of digital advertising revenue, and Facebook deprioritizing news articles on the News Feed, publishers are once again rethinking how to make publishing a sustainable business.

From The New York Times to Honolulu Civil Beat, we see sites large and small pursuing multiple revenue sources. We set out to document this complicated calculus, and, in the process, found reason for hope.

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Over the last three years, we’ve interviewed staff from dozens of news organizations that are pursuing direct revenue from audiences in the form of subscriptions, donations, and/or memberships, including ProPublica, The Texas Tribune, De Correspondent, Stratechery, and Slate. These arrangements support a more collaborative vision for the relationship between journalists and the audiences they serve than news organizations have historically engaged in. Many outlets are taking the massive economic and technical changes rocking the news business as a prompt to act differently, and they’re finding that audience engagement and audience revenue are two sides of the same coin.

Today, in collaboration with the Tow Center for Digital Journalism, the Membership Puzzle Project, and the Institute for Nonprofit News, we’re publishing the full findings from our research in a “Guide to Audience Revenue and Engagement.” This report is aimed at publications in the early stages of exploring how to use audience engagement to drive both revenue and loyalty.

Could your site be a candidate for this kind of implementation? Here’s what you need to know.

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  1. Understand the different forms of direct audience revenue: subscription, membership, and donation.

There are, generally, three models of audience revenue generation:

  • A donation model encourages audiences to give their time or money to an institution in support of a common cause or common values. Donation conveys a charitable relationship.
  • A subscription model requires audiences to pay money to get access to a product or service. Subscription conveys a transactional relationship.
  • A membership model invites audiences to give their time, money, connections, professional expertise, distribution to their networks, and/or ideas to support a cause they believe in. Membership represents two-way knowledge exchange between journalists and members. You might think of membership as a more committed relationship that is robust and active.

 

  1. Direct audience revenue can be a cornerstone revenue stream, but it is unlikely to be your sole business strategy.

Rarely did we find news organizations funded by direct audience revenue alone (including membership, subscription, and/or donation). Digitally native publications including MinnPost, VTDigger, and Berkeleyside are among those that are relying on a mix of revenue approaches—sometimes including advertising, corporate underwriting, foundation funding, article syndication, events, affiliate programs, merchandise, and book sales—in addition to direct revenue from audiences.

 

  1. Are you niche? Subscription revenue works best for highly differentiated news products.

For publications with subject-area or region-specific journalism and a strong audience base in their coverage areas, a product-based subscription offering can work. If readers, listeners, and/or viewers see a site’s news and analysis as providing enough unique value, subscription might be a viable revenue strategy. A subscription strategy can work especially well for publications with strong institutional audiences in specific industries and when subscribers’ employers can pay the cost of work-relevant media.

A subscription strategy can work especially well for publications with strong institutional audiences in specific industries.

There are a few notable examples of publications that are growing subscription revenue with paid email products on top of free-access membership models. The politics and public policy site The Texas Tribune publishes The Blast, a “premium daily newsletter” that is used by elected officials, lobbyists, consultants, and political junkies looking for insider intel beyond what they can get on the site for free. Politico publishes Politico Pro, a paid “policy news service offering indispensable policy news in real time” which includes two exclusive daily newsletters, breaking news alerts, and special events.

 

  1. Identify participation opportunities for members that are also valuable to the publication.

For publishers who are building membership programs, finding participation activities that are both of interest to members and valuable to the publication is one of the major challenges in creating a sustainable membership program. De Correspondent’s members lend their expertise as technical proofreaders on select stories while, with some staff training, supporters of other sites serve as comment moderators and podcast editors. The Scottish investigative site The Ferret offers educational value to its supporters in the form of workshops about reporting, investigating, and video editing. We found that a good way to start identifying potential projects is to ask current and prospective members how they want to participate and what they want to learn.

 

  1. To build a robust audience revenue strategy, the publication needs a story, too.

In crafting an audience revenue strategy, it’s imperative that a publication can tell compelling, accurate stories about its mission, as well as identify the value it provides in the world and the reader community it wants to foster. These “who we are” stories are strongest when they reflect what audience members say they value and need from the organization. That story, which includes the publication’s mission and values, becomes core to the brand.   

As the Voice of San Diego was launching its membership program, it conducted a series of focus groups to understand the publication’s positioning relative to other media organizations, and to learn what readers found valuable about the publication. Mary Walter-Brown, former publisher of the site and now CEO of the News Revenue Hub, said, “We asked a lot of questions in the focus groups  to intentionally help us understand what people were so passionate about with us. We asked them things like, ‘What word comes to mind when it comes to VOSD? What do you appreciate about our journalism?’ ”’ VoSD used the resulting responses to craft a story about the site’s origin and values, which became the basis for its membership program and benefits.

 

  1. Think broad—and specific—to start.

If you choose to build an audience revenue program, think about your conversion strategy as one of progressive stages in a funnel: research, expose and attract, engage and deepen, convert, and sustain. Research entails deeply understanding your audience’s needs, preferences, and daily habits. Attracting potential supporters requires exposing your content to a wide audience. Bring as many audience members as you can into the top of your funnel by making smart use of social media and in-person events.

Think about your conversion strategy as one of progressive stages in a funnel: research, expose and attract, engage and deepen, convert, and sustain.

 

  1. Try well-planned email newsletters. They are one of the most powerful engagement and revenue tools at publishers’ disposal.

The most successful digital publishers engage their audiences and deepen relationships with them through the practice of their journalism, face-to-face interactions, and the design of their digital products. Email newsletters are one of the best digital ways successful publishers are building a loyal and engaged audience that they can turn to for support. When it comes time to convert those audience members into paying supporters, successful publishers are making good use of the data they have to target their appeals, aren’t afraid to ask for support often, and thank their supporters in meaningful ways.

Ben Nishimoto, director of philanthropy at Honolulu Civil Beat, shared with us that his site finds newsletters to be a useful tool for member acquisition, and an important and successful standalone editorial product. Civil Beat has emphasized that the newsletter have its own unique voice and not just read like a feed of Civil Beat articles. The hiring of an audience development editor at Civil Beat, who brought a fun, more human-sounding tone to the newsletters, has helped lead to a self-reported 30 percent open rate and 10 percent click-through rate. Both of these percentages are high compared to other online communications, which often net less than a 5 percent open rate for email newsletters.

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  1. Know that membership in news isn’t about “stuff.”

News membership isn’t about premiums, tote bags, mugs, or local business discounts. We’ve heard in member interviews that readers become members or donors when they want to be part of the larger cause that the news organization represents, or when they think it represents something unique in the world. To put it another way, no one ever became a member of a journalism site offering news that feels like a commodity. While some supporters do appreciate physical benefits, especially when joining for the first time, they most often tell us they’d rather have their money go back into the site’s journalism.

No one ever became a member of a journalism site offering news that feels like a commodity.

 

  1. Be aware that focusing on audience revenue and audience engagement often requires difficult culture change in the newsroom.

Becoming an audience-driven—and especially member-driven—newsroom requires an organizational change for reporters and editors that demands significant leadership. The two-way engagement between publication and audience required to sustain a successful membership strategy can initially feel uncomfortable for those who expect a clear boundary between newsroom staff and audience members. But culture change is possible.

While trying something new can feel vulnerable, the current dependence on ad revenue is shortsighted. The most successful strategy, no matter your organization, is to have an attitude of curiosity and experimentation about alternative models for financial sustainability and audience interactions.

Read the full report here.

The report is funded by the Democracy Fund, First Look Media, Institute for Nonprofit News, John D. and Catherine T. MacArthur Foundation, and John S. and James L. Knight Foundation.In tandem with the report, they have published an open glossary of terms and an open list of helpful resources so you can add to this knowledge.

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Elizabeth Hansen and Emily Goligoski are the authors. This report is written by Elizabeth Hansen and Emily Goligoski. Elizabeth is a research fellow at the Tow Center for Digital Journalism and the Shorenstein Center for Media, Politics, and Public Policy. Emily is research director at The Membership Puzzle Project and formerly led audience research in The New York Times newsroom.