In our previous article, we introduced 7 issues that publishers need to address in order to promote their digital strategies. One of the issues is monetizing digital media, which is an urgent issue for publishers to take up. As more and more publishers focus on their digital strategies, their revenue streams need to change and innovate accordingly. In this article, we will introduce the various ways to monetize digital media with some case studies.
Have multiple monetization structures
In the current “publishing recession,” publishers are being forced to shift their business model from relying solely on print, and to seek ways to monetize their digital assets.
Many digital media use ad networks and sales of their own advertising products (=Reservation Ads) as their main source of monetization.
In addition to that, subscriptions for contents, which have been gaining attention in recent years, will also become a major source of revenue for digital media.
However, in order to monetize digital media in a stable manner, it is important to develop a multiple structure of monetization sources without relying on existing sources of revenue or specific methods.
In this article, we will discuss the following 7 monetization methods, along with successful examples.
- Content Monetization
- Commerce, Affiliate
- Online Events
- Donation and Support Programs
- Advertising Revenue
Digital media subscriptions are increasingly becoming the focus of attention as a source of revenue. According to the “Journalism, Media, and Technology Trends and Predictions 2021,” an industry report compiled by the Reuters Institute Study of Journalism at Oxford University, 76% of media executives in 43 countries said that “subscriptions will be an important source of revenue.”
The New York Times has more than 7 million subscribers and added more than 1 million net digital subscribers in 2020 alone. Q2 2021 results far exceeded expectations with revenue of $499 million (+23% YoY) and operating income of $93 million (+78% YoY). The results were driven by a 16% increase in digital subscription revenue and a 66% increase in digital advertising revenue.
Our strategy of focusing on digital subscriptions is proving to be successful,” said Meredith Kopit Levie, the company’s CEO, in a statement about the second quarter results.Source: New York Times Hits 7 Million Subscribers as Digital Revenue Rises – The New York Times
An important part of digital media subscriptions is where to set up paywalls (barriers to billing) to encourage readers to pay, and with what criteria.
So far, the following 5 patterns of paywall are most common.
- Freemium: The basic service is free, but additional features and special content are offered for a fee.
- Membership: Requires registration to view content.
- Metered: Offers a paid subscription when the number of contents that can be viewed for free is exceeded.
- Timer type: A paid subscription is required to view an article after a certain amount of time has passed since it was published.
- Hybrid type: A combination of the above to appeal for paid subscriptions
Many digital media use one of the above logics to display a paywall. We will explain the details in the next article.
2. Content Monetization
Many people might think that “content sales = subscriptions,” but subscriptions to article content are not the only way to monetize content.
- Selling a single article
- Selling articles as e-books
- Selling archives
There are ways to create a connection with readers through content other than articles.
- Video content
- Audio content
Video and audio content is beginning to be a success story. “The Guardian and CNBC have their own YouTube channels that deliver programs longer than 10 minutes, with more than 1 million subscribers and the potential for advertising revenue. Nevertheless, there are reports that the price of advertising from the platform is on the decline. When considering entering the video/audio market, “where to distribute” will become an increasingly important perspective.
The advantage of email newsletters is the low-cost approach compared to video and audio. Many publishers tend to use them as an “add-on” to paid subscriptions to articles, but they have great potential. Aside from Quartz, which offers subscriptions with newsletters as the mainstay, Substack, a platform specializing in paid subscriptions to newsletters, is growing rapidly in the United States.
If the media deals with highly specialized information or has a network of knowledgeable people, there may be a demand for education or business-specific content.
- E-learning content
- Educational content
- Selling research reports
For example, the U.S. news portal ZDnet sells e-learning content on a variety of topics. “The FT Secondary School, an educational content offered by the Financial Times to its paying subscribers, has successfully branded itself to the younger generation by offering its content for free to students.
Some companies, such as The Economics and Business Insider (US edition), are working to monetize their corporate clients by selling research reports and consulting.
3. Commerce and Affiliate
This is an example of leveraging the influence and credibility of the media to monetize through product sales. Many publishers see the growing e-commerce market as an important opportunity.
- License provision
- Affiliate income from product listings
Buzzfeed generates revenue by licensing its products, especially its Tasty food brand, and it is reported that BuzzFeed-branded products generated $260 million in retail sales in FY 2019.
Most recently, the U.S. business newspaper Forbes announced the launch of the Forbes Store, an online store that sells original apparel and general merchandise. As a media company, the Forbes Group has been strengthening its e-commerce business since early 2020 through “Forbes Vetted” and “Forbes Coupons,” which generated affiliate income.
MediaGene, the Japanese versions of Lifehacker and GIZMODO, is also a strong affiliate player, achieving millions of dollars in sales and tens of thousands of orders through its articles on Amazon Prime Day in July 2019.
4. Online Events
As real events are hit hard by the pandemic, many publishers are looking for ways to generate revenue from online events. There are a variety of ways to monetize from events.
- Paid tickets
- Sponsor acquisition
- Lead generation
- Linkage with commerce
VentureBeat, a technology media company in the U.S., has moved its events online. Not only they were able to reduce the cost of the venue and other expenses, but they were also able to continue to attract more participants and sponsors, resulting in higher revenue than they would have had with a real event.
There is also a way to create communities and monetize it by utilizing the media’s network and ability to attract customers.
- Recruiting services
- Matching service
- Sending customers to other companies’ services
- Online community
NewsPicks, a social economic media for business persons in Japan, is a good example of media that has succeeded in creating a community of readers. Starting with the commenting function and the “pro-picker” system, the community was strengthened with the “NewsPicks Academia” in 2017, and in 2020, “NewsPicks Expert”, a human resource matching platform specializing in the economic domain, was launched. They are expanding their business domains by utilizing the media’s network of experts and customer attraction functions.
There are also examples of monetizing small communities. The U.S. media company “Patch” deals with local information that the major media do not, such as accidents, incidents, and store openings. The main source of revenue is advertising, but the advertisers are mainly small businesses and individuals. As a result, the number of users is 32 million, and the estimated annual sales are over 20 million dollars. This is a case that reminds us of the potential of hyperlocal media.
6. Donations and support programs
This is a method of asking readers who are sympathetic to the media to make a voluntary donation or join a monthly or annual support program. A global example is the UK’s “The Guardian,” which was introduced in the video case study. It has been revealed that the number of people who provided financial support on a regular basis has reached 650,000 and the number of people who have provided support at least once in the past year is about 300,000.
The content platform “note,” where creators can post their writings, comics and other content, has a “support” function that allows users to financially support the activities of creators. Readers can pay any amount up to about $1~100 for an article.
7. Advertising Revenue
Advertising revenue is still an important part of media monetization, and it is not feasible to monetize media without completely cutting out advertising.
While the recent restrictions on the use of third party cookies will make targeting and optimization using audience data more difficult, this situation presents an opportunity for publishers who have acquired and are using first party data.
Also, by supporting programmatic media buying, it will be possible to achieve advanced ad serving optimization.
- Programmatic advertising
- Reservation ads, ad networks
- Sponsored contents
Bloomberg Media’s total revenue for the first half of 2021 grew 53% YoY (79% YoY in the second quarter), well ahead of its target of 34% growth. Each division saw significant growth compared to the previous year, which was impacted by the pandemic. In particular, the number of viewers of Quicktake, a video streaming service that operates on an advertising revenue model, increased by 50% from June to July. Quicktake is planning to invest further by launching new original programs.
Monetization is all about planning.
We have introduced 7 ways to generate revenue from digital media. Digital monetization methods vary widely and require a certain amount of initial investment.
Even if you are in a hurry to implement this and that, without an axis and an objective, your efforts will end up not being worth the investment. Design an optimal business plan for your media and then consider the measures to be taken.
First, start by analyzing the following current situation.
- What are the reasons (=strengths and values) that attract readers to your media in the first place?
- Where are the “seeds of business” that would allow you to provide content worth paying for?
- What do you already have and what do you lack in terms of structure and know-how?
In parallel, it is a good idea to talk to companies and experts to gather case studies and their know-how.
The FreakOut Group also provides support for publishers, including consultation on the implementation of our advertising platforms and optimization of monetization including third-party platforms. Let us help you build your digital assets, leverage them effectively, and turn them into new sources of revenue. If you are considering monetizing your digital media or would like to know more, please feel free to contact us.
- New York Times Hits 7 Million Subscribers as Digital Revenue Rises – The New York Times
- Journalism, media, and technology trends and predictions 2021 | Reuters Institute for the Study of Journalism
- Forbes e-commerce expansion: Why Forbes has launched a store
- Bloomberg Media CEO Justin B. Smith on 2020 growth and 2021 Outlook | Bloomberg Media
- Bloomberg Media CEO Justin B. Smith on 2021 First Half Performance | Bloomberg Media
- Bloomberg Media is going deeper into OTT by expanding its social-first video brand QuickTake – Digiday