By James Breiner
So much innovation is occurring on the revenue side of new digital media that it’s time to review, update and aggregate. Let’s start with the basics.
An audience is just a group of observers. A community shares values and a deep interest in a topic or geographic area. It often has a bias toward action. That is where value comes in. Connecting these people and creating value for them is the beginning of a community. Only when you have connected them can you begin to get their financial support.
As Michael Skoler suggested a couple of years ago in Nieman Reports, when paywall thinking gives way to membership thinking, the business model becomes community rather than audience. “To harness this model,” Skoler wrote, “news organizations need to think of themselves first as gathering, supporting, and empowering people to be active in a community with shared values, and not primarily as creators of news that people will consume.”
Texas Tribune, a digital news organization focused on government and education, embodies this way of thinking. It offers six levels of membership and a sliding scale of benefits, from $10 to $500 a year.
Think about that. By offering not just a product but access, privileges and opportunities to mix with the community, Texas Tribune is able to charge far more for a membership than it might get from a subscription.
MinnPost does the same. On its membership page, we learn that “membership means that you are part of the MinnPost family, helping us achieve our mission through ongoing financial support.” Membership brings privileges, discounts and networking opportunities. The asking price is higher than most paywall subscriptions, $120 to $600 a year.
LaSillaVacia, a Colombian website focused on investigative journalism about power and politics, has a membership group of 550 “Super Amigos” that in 2013 contributed US $32,000. Their appeal is to people who want to support independent journalism. That is almost enough money to finance their operations for a month.
Premium pricing for sponsorships: Texas Tribune offers three sponsorship levels that run from $1,000 to $5,000 a year. Sponsorship benefits include more than just the opportunity to put a message on the website. They include a more intimate relationship with the brand at events.
Leo Prieto, the co-founder of BetaZetain Chile, which has a monthly audience of 10 million users, is turning away from traditional advertising toward sponsorships, which now make up 40 percent of its revenues.
Prieto prefers sponsor relationships with brands as opposed to the highly cyclical business of selling impressions and clicks to digital advertisers. Among other reasons, the price Betazeta can charge for traditional advertising continues to fall because of increasingly sophisticated ad-targeting software and automated ad buying. In addition, web titans like Google, Amazon, Microsoft, Apple and Facebook are gobbling up all this advertising.
“The advertising business model is dead for everybody,” Prieto said. “For television, for magazines, for radio, for everybody. We’ve started approaching brands about aligning our audience with the audience they want to reach. It continues to be an advertising relationship but a different kind of advertising.”
“A sponsor is a brand that stays with you in a longer-term relationship and is a close partner.” He emphasizes that the partner has no say over editorial content but can have a space on Betazeta’s site to tell its own story.
Takeaway: A digital media outlet that has a reputation for credibility, strong ethical standards and community service will appeal to many advertisers who want to align their brands with those values. You can still sell the magic of the relationship. This is old-fashioned brand-based advertising. It still works on a community level, despite all the naysaying by data-driven sales organizations.
When you think of community rather than audience, you no longer have to fall into the pricing trap of advertising contracts based on CPMs (rapidly falling, by the way), page views, unique users or clicks.
Betazeta, mentioned above, is generating about 10 percent of its revenue from content marketing, which means creating editorial content for brands to use on their own sites. It is like the service of an advertising or public relations agency.
Brands have suddenly discovered the value of blogs, Prieto says, and are now clamoring for experienced editors and writers to create content for them.
The content is not a direct sales pitch but shows the audience useful information, such as how to get the most out of a manufacturer’s smartphone, how to strap a child into a car seat properly, how to recycle a company’s product and so on. Prieto sees this trend as a growth opportunity for his business.
A similar revenue strategy is also being used by MedCity News, a U.S. site with 10 employees that focuses on innovation and research in health care. Founder Chris Seper uses dozens of contractors to produce content not only for its own website but for websites of third parties. They also do contracted research — white papers.
Is all of this talk about offering services like an advertising or PR agency making you uncomfortable? Are you wondering about the ethics of it all? Maybe you should take time out right now and read these posts:
I’ll share even more alternative revenue streams in my next post.
This post is an excerpt from the original which appeared on the blog News Entrepreneurs. It is published on IJNet with the author’s permission.
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