News Flash: Why Pay-to-Play Won’t Save News DesksOctober 23rd, 2020
The New York Times’ investigative team recently broke a story revealing 1,300 local new websites have been bought out by conservative media and PR groups. In a world where local publications struggle to keep their doors open, many have turned to pay-to-play products.
As we read the Times’ investigation, we took time to think about the business models at play that could cause 1,300 local-news organizations to be bought out. Rather than focus on the Times’ scoop, the aim of this article is to analyze and critique the business models of news outlets, from local newspapers to institutions with global distribution like the Times, Washington Post, and Wall Street Journal.
There are two main ways pay-to-play has materialized so far. First, writers can now be paid for how many clicks they generate for a given article as opposed to operating as salaried staff. Second, advertisers have the opportunity to purchase “adver-torials” but, by law, these must clearly be marked as paid content. For example: On Marie Claire’s digital properties, you might see a paid content article for a L’Oreal mascara. To a consumer, it should be clear: L’Oreal wants me to see this article alongside some ads. Advertorials became extremely popular with both advertisers and publishers alike.
Local news affiliates offered local advertisers a home for ads to run in front of people that were more likely to be customers of their business. With the proliferation of location-based ad targeting from the likes of Google, Facebook, and Amazon, which combined claim almost 70% of all digital ad dollars, many local news desks have seen unsustainable declines in revenue and audience. Local news organizations downsized, trimmed the fat, and sensationalized headlines – effectively kicking the can of business problems down the road.
What might have felt like a ‘tomorrow problem’ became today’s problem. As digital-first platforms deliver news faster than nightly news desks can, the news – and the information itself – has become commoditized. Information isi ubiquitous. It may be a question of the chicken or the egg, but the market bears out that consumer willingness-to-pay for most news remains low, if not nonexistent.
There are a couple of exceptions to the trend at large. This year the New York Times’ digital revenue exceeded print revenue for the first time in the company’s history. The NYT and other major publications such as The Washington Post, The Wall Street Journal, and the Harvard Business Review have adopted digital and app-first freemium subscription models.
But digital ad dollars continue to flow to the major platforms. If audiences get their news elsewhere and, as a result, advertisers cannot access their audiences, who is local news serving well?
As local news publishers are scrambling to find new ways to earn revenue, is incentivizing writers to produce click bait an effective tactic to address why viewership has eroded? Are local news organizations just putting skates on a horse and buggy?
It is difficult to say whether local news desks really stood a chance against editorialized platforms. “Publishing” used to be as simple as putting ink to paper and getting it to (a literal) press. But publishing is much broader now, and local news outlets have struggled to keep up, either by willful ignorance and clinging to the golden days of publishing, a lack of resources, or–more likely–a combination of both. Those who have simply “copy and pasted” material to a digital medium are likely some of those 1,300 publications the Times’ article mentions. Moving words from paper to screen and flooding the page with ad units did not satisfy either readers or advertisers.
Successful digital transformation stories like The New York Times require a keen understanding of the players in your ecosystem and the new tools available to your business. Digital transformation asks us to think deeply about how the game has changed and how your business adds value under the new circumstances.