Select excerpts from Subscribed Podcast with Ken Doctor
Ken Doctor is a writer, analyst, and consultant in the news media industry. His work focuses on the transformation of consumer media in the digital age and connects the dots between the news and entertainment we consume with the changing business of media organizations. He is the author of Newsonomics: Twelve New Trends That Will Shape the News You Get, and he writes a popular weekly column called “Newsonomics Of” for the Nieman Journalism Lab.
We talk to Ken about the impact of COVID-19 on publishing, the balance between advertising and subscriptions, and the path to more sustainable business models.
You coined the term “Newsonomics”, and it’s the name of your website, book, and column. What is “newsonomics” all about?
I spent years in the newsroom as editor and managing editor. By the time 2005 hit, it seemed to me that there were many people at that point doing blogs and Opiney. But there weren’t people taking on the real question, which was money — the money that was needed to sustain and pay journalists. Out of that, I came up with the term “Newsonomics” and it has been the name of my work since then.
We know that advertising has shifted away from traditional broadcast and print to digital. What are your thoughts about the balance between digital advertising and digital subscriptions?
Well, publishers (print and broadcast) had clearly hoped that as people transitioned their reading and watching habits, while they may have lost legacy revenues, they would gain new digital revenues. But Google and Facebook come along and their ad stacks are taking 60 to 70% of all the digital ad spend in the country.
The reward in digital advertising, even for a significant digital reading, isn’t that much. The primary business has become subscriptions, which has flipped the business completely on its head from the way it was in the print era.
But now, the major platforms want to be able to capture even a portion of the subscription revenue by becoming the place from where readers subscribe.
Publishers, especially the major ones, are very wary of any kind of continuing or new disintermediation by the platforms. Google, Apple, Facebook all want to be that intermediary for clear commercial reasons. And while the publishers will play with those and see if they can get some incremental revenue, they know that what works is a direct relationship with a reading customer. If you can get $100 from somebody, it’s better than getting 15% of some kind of revenue pool that isn’t going to pay the journalists in the newsroom.
You wrote an article recently with the headline, “Tomorrow’s life-or-death decisions for newspapers are suddenly today’s, thanks to coronavirus,” discussing how today’s sudden economic and news climate is forcing media companies to face some big decisions a lot sooner than they anticipated. Can you share more about it?
If you’re strong going into a recession, you can probably survive. You’re going to be tattered a little, but you might even gain some market share. If you’re weak, you’re just trying to hold on. And this isn’t just companies that are weak, it’s the entire news industry that’s weak. And the pandemic has caused a lot of damage.
The publishers and CEOs that I talked to might’ve entered the decade thinking they had three to four more years to figure out a new stable business model. But now they’re saying “we don’t have that time.” It’s sped up.
And as they plan for 2021, they’re asking — What’s the nature of our business? Does it really have an office anymore? How much of it is print? How much of it is digital? Do we really need outside salespeople? All of those questions have become immediate questions.
How does the media get on a path to a more sustainable business model?
We have proven models and they are almost all national models. And the model is a business that’s driving a higher percentage of its revenue from digital, as opposed to legacy, whether it’s print or other. And if you look at The New York Times, The Globe and Mail in Toronto, they get two-thirds of their revenue from reader revenue. That’s a very good benchmark for 2020.
Most of the rest comes from advertising. So advertising is still very important, but it’s a secondary source and the kind of advertising, especially branded content advertising, that does what Google and Facebook can’t do.
A third or fourth revenue source could be different cuts of professional services such as events in non-COVID times, or virtual events as we get into 2021. That model is pretty clear. As they go more digital, they cut as many legacy costs as they can and save money. So they are focused on two things: producing great unique content and selling it to their readers, backed up by advertiser sales. That’s the model.
You started a company last year called “Lookout Local” which aims to build a new model for local news in the 2020s. Tell us more about it.
It’s based on a lot of what I’ve learned and what I believe about the business: the appetite for local news has never gone away.
The idea is to create a news company in any local community — a very good platform, centralized technology, state-of-the-art design, mobile-first, digital-only – that offers enough content from experienced reporters that people can say, “I haven’t heard about that news company before, but what they’re writing about makes sense.”
The great market opening in many communities is to become a new primary news source. The difference between Lookout and many local news sites is that they tend to be supplemental. What’s needed are new local news institutions that really operate as businesses. Lookout is for profit, but it’s also a public benefit company.
A lot of ideas in there are borrowed from The New York Times, The Boston Globe, and The Guardian as well as little sites like Charlotte Agenda, etc. We hope to prove our new model and we’ve got to get it right in the first market. And then, we hope to see that model expanded in other places.
For more Subscription Economy insights, check out previous episodes of the Subscribed Podcast here.