Is the reader revenue revolution really here?

Abstract

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.