As the U.S. enters the second year of a deadly pandemic, newsrooms across the country are forced to reflect on their revenue strategies following the bloodbath of layoffs in 2020. Publishers will have to abandon old ways of thinking — even though there isn’t a single, magical solution to the industry’s financial struggles.
“It’s not going to get worse before it gets better,” Elizabeth Osder, principal of the media consulting firm The Osder Group, told TheWrap. “It’s going to continue to get worse until it gets to be something else.”
The news industry is not a monolith, with each publication — from local newspapers to national media outlets — having its own distinct set of challenges. But as the pandemic has only accelerated the urgency with which publications need to adjust course, a few lessons have become abundantly clear: Revenue cannot be dependent on a single source, whether that be advertisers, hedge funds and venture capital, or reader subscriptions. A strong future for news organizations involves both editorial and business-model changes.
Implementing these changes will look different for every news organization. For local newsrooms, many of which have struggled to stay afloat even before the pandemic, building a direct relationship with their communities is essential, according to Vivian Schiller, the former president and CEO of NPR and former global chair of news at Twitter.
“Listen to your audience; listen to their needs. Give them something they need, and make yourself worthy of a share of the limited pocketbook that consumers have for news. Make yourself present in the community in a way that is not just the old newspaper building across town, but to be visible and present in the community in a very tangible way,” Schiller said in an interview with TheWrap. “That is not an easy thing to do … but all of those things are a precondition to having a shot at success.”
1. Find niche value in a crowded news industry
On the editorial side, proving a publication’s value to readers means consistently delivering coverage that directly impacts their everyday lives. On a tangible level, that means content — whether it’s an article, a newsletter, a podcast or some other medium — that resonates with a specific and niche audience in ways that those readers cannot find elsewhere in a crowded news industry.
“I don’t need my local paper to tell me what the White House has done this week. They can point me to the national media for that. I want to know how what the White House did this week will manifest in my community in measurable ways,” Osder said. “The reason why you subscribe to Disney+ is because you want ‘The Mandalorian.’ The reason why you want to subscribe to Netflix is because you want ‘The Crown.’ There is a very clear reason for somebody to become a subscriber to you that has to do with something that you care deeply about as an audience.”
There have been local news publications that have found financial success despite the pandemic by focusing on service journalism that provides readers with useful and easily digestible information about matters impacting their day-to-day lives. The Charlotte Agenda, which was recently bought by Axios for nearly $5 million, has been able to remain profitable since 2017, according to the New York Times.
2. Build trust with readers through diversity
Local newsrooms — many of whom have already begun publiclyreckoning with their past coverage of communities of color — must also rebuild trust with the communities they seek to serve. And part of rebuilding that trust includes confronting a newsroom’s lack of diversity and employing journalists who understand the needs of their readers on a deeper level, according to Jeremy Gilbert, the former director of strategic initiatives at The Washington Post.
“If all of the journalists producing the news go to high-end universities to study journalism directly, then are they going to create news that appeals to all the people in the United States who don’t go to high-end universities but want to consume news about their community and their problems?” Gilbert said. “We need to find ways to make sure that the journalists covering communities reflect the people in the community, and I think that will help build a bridge that makes people want to pay for news coverage.”
Courtesy of the Reuters Institute for the Study of Journalism3. Move beyond advertising
On the business side of the equation for for-profit newsrooms, executives and marketers must also think more creatively about boosting revenue in ways that go beyond an advertising-driven model.
“If you’re competing for customers and advertising dollars with Google and Facebook as a small local news publisher, it’s not going to work,” Gilbert cautioned. “Trying to play a game where you wring a little bit more revenue out of Facebook, or out of Google, or try to manipulate Facebook and Google traffic to your benefit, we’ve come to the end of that. That path just isn’t successful.”
Indeed, publishers have learned the hard way that becoming overly reliant on tech giants like Facebook and Google for revenue can be deadly. Beginning in 2016, when Facebook began encouraging news publishers to focus their efforts on video content, media companies that chose to cater to Facebook were soon left instituting mass layoffs or shuttering entirely when the “pivot to video” failed. And in 2018, when Facebook adjusted its algorithm to reduce the priority of news publishers’ posts, media outlets again faced a sharp decline in traffic.
Five years later, publishers know they must not fall into the same trap.
A study from the Reuters Institute for the Study of Journalism, which surveyed 234 media executives and leaders across 43 countries, found that the publishers cited an average of four different revenue streams as being “important” or “very important” to them. Though display and native advertising were still highly ranked on the list of priorities among those surveyed, subscriptions emerged as the most important revenue stream, with events and e-commerce following advertising in importance.
For smaller news publishers trying to make a profitable future through subscriptions, Gilbert said that a subscription bundle — in which access to a news outlet is paired with another desirable subscription — could emerge as another trend, similarly to how Disney offers ESPN+, Hulu and Disney+ as a bundle under one subscription price.
But there is no one-size-fits-all solution that will solve every news organization’s problems. And as the pandemic continues, the ability for publishers and journalists to respond and adapt will only continue to be urgent.
“I’m not full of hope because, the truth is, I think we’re still going to see a lot of really brutal layoffs in the local news business. But I do think that there are some examples out there of things that can be done that work. It’s just, unfortunately, there’s not a singular solution that works for everybody,” Gilbert said. “It’s going to have to be a combination of different things.”
