As Facebook and Google continue to suck up digital ad dollars, publishers are paying more attention to diversifying their revenue portfolios, particularly with an eye toward direct consumer revenue.
New York Media and The Daily Beast are exploring consumer revenue programs, top executives at those companies said, speaking at the Digiday Publishing Summit in Vail, Colorado. New York Media, which owns New York magazine as well as sites such as Vulture and Grub Street, is evaluating a paywall for some of its digital properties, said Avi Zimak, New York Media CRO. The Daily Beast, meanwhile, is planning to launch an added-value membership program sometime this year, said CEO Heather Dietrick.
Advertising accounts for roughly 70 percent of New York Media’s print and digital revenue, Zimak said. While the company isn’t looking at a blanket paywall, it’s examining where subscriptions make sense within its digital portfolio.
“A diverse portfolio of revenue is important,” said Zimak. “A paywall is not right for everyone, but for news-focused media, it makes a lot of sense. We have that through New York magazine and Daily Intelligencer.”
For The Daily Beast, the approach will be to offer a new product aimed at its most avid users rather than gating existing content, which could take the form of exclusive events or gatherings hosted by Daily Beast journalists, Dietrick said. Over half of The Daily Beast’s revenues are from advertising, she said.
The membership model is one that USA Today Network, which comprises USA Today and 109 other local news outlets, has been investing in. USA Today Network offers a free membership program in all its markets, with benefits ranging from curated food festivals to private dinners and movie clubs. The idea, according to Andy Yost, USA Today Network CMO, is less about growing additional revenue than offering unique content and experiences that would help retain subscribers.
Yost said retention with registered members is three to four times higher than subscribers that haven’t enlisted in the program. Subscription revenue accounts for about a third of Gannett’s overall revenue, he added.
“A percentage-point improvement in retention is huge — for us, that’s big money,” Yost said.
Beyond paywalls and memberships, some publishers are launching new products to drive consumer revenue. TheSkimm, for instance, has a calendar app that costs $3 per month. The idea of the app is to go deeper into topics that are not covered by the main newsletter. A big area of focus for the company is to get people, especially its most engaged users, to download and subscribe to the app.
“We have 10 million-plus people engaged with our platforms,” said Brandon Berger, chief business officer for theSkimm. “If we can convert 1 million, 2 million, 3 million people, that’s a pretty strong business, and that’s what we are focusing on.”
Commerce was another big topic of discussion for publishers trying to create new revenue streams. TheSkimm, for instance, wants to figure out more ways to grow commerce, including by building products that cater to its core 30,000 “Skim’bassadors,” Berger said.
Pete Spande, CRO of Insider Inc., said the publisher is focused on building out a revenue model that would ideally be one-third ads, one-third subscriptions and one-third commerce and content licensing. Today, advertising accounts for between 60 and 70 percent of Insider Inc.’s revenues.
Commerce is already a multimillion-dollar annual business for New York Media, said Zimak. The publisher’s e-commerce site the Strategist offers links to all sorts of products, from vacuum cleaners to overalls worn by stars from popular TV shows, and includes articles highlighting different products. Zimak said the Strategist continues to grow, with users growing 200 percent and revenue quadrupling from when it launched last year.
Ultimately, as important as it is to have a diversified revenue portfolio, with commerce, publishers should approach the business from a user-first perspective rather than a business-first perspective, said Dietrick.
“Commerce should not be a revenue play, first and foremost,” she said. “It should be a service for the readership.”