Ad revenue is not coming back to journalism, at least not any time soon. If publishers want to maintain a business, they’re going to have to make up some part of the shortfall from readers. But bringing in reader revenue requires new organizational structures that allow product teams and newsrooms to cooperate. Inside consolidated media businesses, those structures and workflows are difficult to create.
In the early results of our investigation into newsroom revenue strategies, as part of research for the Tow Center for Digital Journalism and the Shorenstein Center, we have seen that consolidated publishers may have trouble fostering the kinds of collaboration that can earn readers’ engagement, loyalty, and, ultimately, their dollars.
Getting the editorial, business, and product teams of a news organization to work together is difficult for any publisher. But our data suggest that the uphill battle is particularly steep for legacy publishers, many of which have made decisions to centralize their product and analytics teams in ways that don’t serve the cause of reader-driven revenue. Those teams would be better able to help newsrooms attract paying readers if they were instead working much closer to the reporters, editors, and communities their newsrooms serve.
To highlight this, we offer insights from two ongoing studies. The first is an offshoot of the Tow Platform Press study, in which we are tracking workplace changes in mainstream digital and legacy newsrooms as they navigate third-party distribution platforms. That study began in January 2018 with 23 interviews across six newsrooms. The second is the Single Subject News study at the Shorenstein Center for Media, Politics, and Public Policy. That study is an 18-month investigation into the audience development work of nine topically focused, digital newsrooms.
Consolidation in legacy commercial news publishing is exceptionally common. Just 238 companies own the 2,247 newspapers in the US and Canada, according to the Alliance for Audited Media. In the magazine industry, 376 titles are owned by 159 companies. In a world of paper-based production, these kinds of structures make sense: the huge fixed costs of printing and delivery can be spread over many titles in a consolidated corporation. The same is true for sales teams, circulation management, and support functions like human resources. Similarly, the digital infrastructure required to support a set of publisher websites—and to track analytics—can be centralized with huge savings across a consolidated media organization. But perhaps not all parts of this infrastructure should be centralized.
This configuration—in which decentralized newsrooms are supported by centralized production, sales, marketing, and distribution teams—was suited to a business model largely reliant on advertising revenues. Yet as print advertising continues to shrink, and digital advertising fails to replace it, many newsrooms in the last year have made a push to boost and diversify reader revenue in its various forms: subscriptions, donations, and memberships. Indeed, a growing body of research is emerging that describes how best to configure meters and paywalls, set up conversion campaigns, and engage and retain digital supporters.
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In some publishers, the push to reader revenue is paying off. In the third quarter of last year, subscription revenue at The New York Times accounted for two thirds of total revenue, more than doubling its share since 2008. As of 2017, The Guardian reportedly earns more revenue from its readers than from ads. Poynter recently referred to this as the “stories as a service” business model (an analogy to the “software as a service” business model). Reader revenue does indeed represent a new paradigm of value creation in the news business.
Savvy “consumer-funnel” marketing, the linchpin of a reader revenue strategy, relies on directing readers to “sticky” editorial products like newsletters and podcasts, which build regular engagement outside of social feeds. Producing those products, managing their marketing, and getting readers “down the funnel” from simply engaging with the news organization to opening their wallets, requires tight integration between product designers, audience growth managers, social media producers, and editors and reporters in the newsroom. Yet our data suggest that publishers whose corporate structures house product and analytics functions in centralized parts of the organization, even while their newsrooms are decentralized, have difficulty fostering the kind of on-the-ground, close-to-the-reader collaboration between disciplines needed to make a reader revenue strategy really work.
Collaboration between disciplines is difficult on its own. For example, product teams play a vital role in the execution of a reader revenue strategy–they build the paywalls, tune the meters, enable the pop-up calls to subscribe or donate, and make sure that email newsletters are formatted and delivered properly. But product teams are often misunderstood inside newsrooms. The language they use—“development cycles,” “user testing,” “requirements”—is foreign to many editors and journalists. In addition, product teams often have to bridge the business interests of the publication (in advertising formats, campaign timing, and paywalls) with its editorial interests (in storytelling formats and space on the homepage), which can put them in awkward positions.
In an integrated organizational structure, leaders can put in place regular touch points between product and editorial functions—meetings, roles, and lines of accountability can all be tuned to encourage collaboration. In fact, our data suggest that the organizational position of product teams inside newsrooms helps determine how much strategic priority their considerations are given. In news outlets in which a senior-level product person sits on the executive team, we found that product team members reported they are better able to understand and act on both editorial and business needs. In these kinds of publishers (which are often digital-native) product teams are getting the money and resources they need to support a robust reader revenue strategy. Their product leads have a hand in both crafting the revenue strategy and responding to editorial needs.
Consolidated legacy publishers have to work harder to create this kind of context for collaboration because it means they have to work against their organizational structures. In our data, we saw some consolidated publishers opting for centralized product teams that serve a variety of their subsidiary publishing brands with what can feel to their newsrooms dealing with unique and disparate audiences like off-the-rack software. While centralized structures can economize on the costs of developing and maintaining software, centralized product teams often sit too far from the “end-users” of their work—the journalists and editors in newsrooms who are trying to connect with readers, and the audience growth and monetization teams that need to raise revenue. In these kinds of organizational structures, product teams can struggle to connect with both editorial and business needs, and can sometimes make important user experience decisions that don’t match up with local needs. This push and pull, between customization and scalability, between centralization and decentralization, determines the outer limits of the strategic flexibility of conglomerate publishers to pursue a successful reader revenue program.
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And the organizational location of product teams is just one dimension of difficulty. Our data also suggest that conglomerate publishers are doubly disadvantaged when pivoting to reader revenue because of where their social media teams sit in their newsrooms’ workflow. We observed in our Tow study that social media teams fit into two types of workflows: “promotional” or “integral.” (These are both our analytic terms, constructed for coding and analyzing the data and are not used inside newsrooms to our knowledge.) Many of the digital-only newsrooms we studied adopted an integrated approach to social media: the social media team was deeply involved in story creation from the beginning of the story cycle, often working closely with both assignment editors and reporters.
Conversely, we found that social media teams devoted entirely to story promotion were more common in the consolidated publishers we studied. Their social media leads tended to be brought in at the end of a story production cycle to post and promote already-written stories. For these kinds of newsrooms, social media platforms functioned as just one more distribution channel. This was often a source of frustration for social media managers, who could see the potential of social media tools and norms for new types of storytelling, engagement, and audience growth but had trouble getting further upstream in the story development process.
These differences in structure and workflow can add up to significant barriers to a consolidated publisher executing a successful reader revenue strategy, and not just on the web and social media. For example, consider the case of email newsletters. Many publishers are finding that newsletters are better than paywalls and better than pop-ups at convincing readers to subscribe or donate. But making a good email newsletter is a complex, collaborative process. Data from our Single Subject Newsroom study at the Shorenstein Center, which focuses on email newsletters as a tool for audience growth, suggests that some organizations are spending up to 40 hours per week producing an array of newsletter products, with multiple handoffs between different teams. Newsletters that go beyond a simple collection of links require not just editorial care and feeding but synchronized production, testing, and analytics work to be useful for converting casual readers to paying readers. A small digital organization can rely on a single employee to work closely with an editor or journalist on the product. In a larger organization, pulling off such collaboration when some of the teams serve many parts of the organization is much more difficult.
So what can legacy publishers to do to create structures that drive reader revenue? Structure doesn’t have to mean just relationships on an org chart. Sometimes rethinking existing roles and workflows can be a solid first step towards larger structure changes. For example, we were impressed by the work the Miami Herald did to redefine its “online producer” role into a “growth editor” role. Not only were their set of new responsibilities more audience-focused, but the Herald’s growth editors became new leaders in a redesigned story workflow that helped ensure that the content coming out of the newsroom was used to build audiences in line with the paper’s mission.
This kind of change lines up with what we saw among the (more nimble) digital-first publishers we spoke with, whose editorial workflows integrated other disciplines like product, social media, and audience growth. For large legacy publishers, while decentralizing functions can be a daunting and long-term endeavor, shifting the existing set of roles and routines in the newsroom can lay the groundwork for long-term success.Elizabeth Hansen and Elizabeth Anne Watkins are researchers on the Tow Center’s Platforms and Publishers project. Hansen leads the Business Models for Local News research at the Shorenstein Center for Media, Politics and Public Policy. She directs the Single Subject News study, funded by the Knight Foundation, which examines the potential for revenue sustainability in a set of topically-focused, nonprofit digital newsrooms. Watkins is a doctoral student in Communications at Columbia University, a member of the Center on Organizational Innovation, and a research analyst at Data & Society. She studies how work changes in the integration of new technologies.