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Is the reader revenue revolution really here?



Is reader-revenue revolution really here? A comparative analysis of newspapers reader payments in an attention economy The dominance of Google and Facebook in the major Western digital advertising markets has forced news companies to increase their investments on audience monetisation (ACCC, 2019; Hindman, 2018; Author, 2018a; Winseck, 2018). In the context of the political economy of attention, this paper investigates whether news publishers income models have been revolutionised from advertising to reader-supported model. Houston believes that “the reader-revenue revolution is a reality” and suggests that readers have aided news companies to overthrow “tyranny of old ad-only business models” (Houston, 2018). Similarly, the International News Media Association (INMA) observes that disruption in the digital advertising markets has changed the “revenue mix in our industry from its historical equilibrium to one where audience revenue plays a larger role” (Lindsay, 2017, p.9). Additionally, Newman reports that focus on reader revenue means “a huge change of focus for the industry” (Newman, 2019, p.5). However, some recent studies contradict the reader-revenue revolution rhetoric by showing that advertising has remained a “critical part of online revenue” (Nicholls et al., 2018). This paper examines to which extent reader-revenue revolution is happening. In political science, revolution proposes a sudden change from one constitution to another and this paper investigates to which extent the claim of reader-revenue revolution is valid (Houston, 2018). The paper utilises quantitative data from media companies financial documents and announcements as well as from the relevant previous studies (Author, 2014). First, the paper compares digital subscriptions numbers of the Wall Street Journal, The New York Times, the Financial Times, The Times and The Australian in a six year period from 2012 to 2018 to assess revenue from implemented reader payments as well as digital advertising. Secondly, the paper examines voluntary reader memberships and donations to explore if these are aiding news publishers such as The Guardian to move into audience-supported model. Preliminary findings of the paper propose that newspapers digital subscriptions have substantially increased in a six-year period from 2012 to 2018, and their digital earnings have grown accordingly. The paper offers some evidence that news publishers are moving away from advertising based to reader based revenue model, but it contests the view of the emergence of the reader-revenue revolution. News companies reliance of monetisation of readers attention has benefits and pitfalls. Benson believes that the “upside” of digital subscriptions is that readers pay money “for something they really want or need”, but the downside is that “subscriber funded news caters to relatively high-income, high-education elites” (2019, p.146). Newman agrees that “the rise of paywalls is shutting more people off from quality news and making the internet harder to navigate” which can lead to news avoidance (Newman, 2019, p.6). As Hindman asserts in his book “the digital attention economy increasingly shapes public life… and ultimately which news and democratic information citizens see” (Hindman, 2018, p.5). Earlier academic studies have found that digital subscriptions, paywalls, may restrict the public’s access to certain news and information whereas voluntary reader payments are normally supporting non-profit or digital media outlets which offer content for free to the public (Author, 2018b). Increases in reader payments, both in involuntary or voluntary, have societal consequences which require further investigation.
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This exploratory study examines digital subscription services offered to news publishers by prominent platform companies. The paper explores to what extent platform subscriptions may empower news companies and aid their revenue building. Additionally, in the context of platform capitalism and platform power, the paper debates whether the reliance on platform subscriptions increases news companies dependency on them, adding to their problems with digital revenue building. The paper examines digital subscription models offered by Google, Facebook, Apple and Amazon, and attempts to assess what kind of monetary benefits these models deliver for news publishers. The paper is based on a document analysis method and utilises corporate documents, academic articles, industry and media reports to map the field and to investigate the issue. The paper aims to identify core issues related to platform subscriptions and to offer some findings related to news publishers revenues from platform subscription acquisition. The author notes that research in this field is challenging as the platform subscriptions are currently being developed and tested. Additionally, news companies don’t disclose any specific data about their digital subscriptions from platforms and related revenue. These are limiting the scope of the study affecting its findings. Earlier academic studies have warned about news publishers increasing dependency on platform companies as well as of their monopolistic powers (Bell & Owen, 2017; Pickard, 2017; Nielsen & Ganter, 2018; Author, 2018a). Srnicek suggests that in the platform capitalism the companies such as Facebook hold all the power over audience, data and monetisation making subscription acquisitions from the platforms problematic (Srnicek, 2017). In his book The Internet Trap, Matthew Hindman cautions that news companies have not been able to move to ‘post-industrial era’ because they depend “critically on the industrial plants” of platform companies for their audience attention (Hindman, 2018, p.179). He also argues that Facebook’s and Apple’s subscription platforms “are particularly damaging to the autonomy of news outlets” because they only work within these platforms, making monetising outside the platforms problematic (Hindman, 2018, p.179). Some of the news companies have abandoned distribution on social media platforms to avoid this problem and because of poor monetisation opportunities. To exemplify, in 2017 the Guardian pulled out of Facebook’s Instant Articles and Apple News stating its desire to build deeper relations with its readers to grow its memberships (Davies, 2017). Platform companies are increasingly pressured by governments, politicians, news industry and regulators to share their revenue with news media. To compact this increasing pressure from the regulators in the US, Australia and Europe, they have launched digital subscription services which are aimed to aid publishers content monetisation. Google’s head of partnerships, Luca Forlin, comments that “the context behind our subscription initiative is that we do care… we care about news” (“Google, Facebook: different platforms, different acquisition and retention strategies”, 2018). He says that its digital subscription service helps publishers to convert users attention into subscription and works as a retention tool as well. Facebook has stated that it will “continue investing in new ways to enable publishers’ subscriptions business, and improving our marketing tools to make them better suited for publishers needs” (Brown et al., 2017). Based on the preliminary analysis of platform subscription models offered by Facebook, Google, Apple and Amazon, the paper finds that the monetary benefits of digital subscription services offered via platforms are still unproven, and there is not enough empirical evidence to draw any far-reaching conclusions about these benefits. Platforms have promised to share 70-100 percent of the subscription revenue news publishers make via their platforms, but there is currently no data to assess how much revenue news companies make from platform subscriptions. Some of the earlier industry and academic reports offer some guidance related to platform revenue. A 2017 report by the World Association of Newspapers and News Publishers suggests that Facebook made only seven percent of the news publishers digital revenue with most of the revenue coming from advertising (WAN-IFRA, 2017, p.48). Recent academic studies suggest that news publishers rely heavily on Facebook for traffic and user attention as they attempt to turn ‘eyeballs’ into subscription revenue (Author, 2018a; Cornia et al., 2018). A 2018 study found that Facebook offers news publishers insignificant revenue: for the companies studies, less than one percent of their total revenue came from Facebook traffic and social shares (Author, 2018b). Additionally, a report by Cornia et al. (2018) observed that news organisations continue to invest in social media distribution despite the fact that monetisation on these platforms remains challenging. Preliminary investigations for this paper suggest that Facebook drives news publishers traffic, brings more people to their ‘conversation tunnel’, and in some cases converts audiences to subscribers. Additionally, Google subscriptions have been found beneficial because it “simplifies subscription processes” (McClatchy, 2018). However, converting users’ attention from platforms may come with an additional cost. Polish Gazeta Wyborcza, for example, has admitted that it using paid campaigns on Facebook for acquisitions, denting its revenue from platform subscriptions (Cornia et al., 2018). Other problems reported by news companies include lower conversion rates.
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