Dipping through my morning digital media reading on Zite, I found a piece that put digital media success simply, though I’d argue overly simplistically. Josh Sternberg writing at Digiday, wrote:
Winning in digital media now boils down to a simple equation: figure out a way to produce the most content at as low a cost as possible.
Volume as a winning strategy is then taken as on faith throughout the rest of the piece. Sternberg goes on to say that publishers are turning to volume to “combat low ad prices”. But ad inventory oversupply has been one thing driving down digital ad rates, and pumping out more content exacerbates rather than solves that problem. As Justin Lewis said on Twitter:
@jeffjarvis thought from the piece – Combating low ad prices with more inventory is like combating low gold prices by opening a gold mine.
— Justin Lewis (@Yoostin) July 1, 2013
I think that high content volume at low cost can be a good strategy for start-ups and some established brands: It has worked well for the Huffington Post and Forbes. But in the volume game, we’re going to see a few big winners and a lot of sites swimming in the deadpool. Consolidation will happen, although the lure of the media is so great that I’m sure that we’ll have quite a bit of churn with new content sites and apps being launched all the time despite a few big players owning most of the space. This is why the Daily Mail isn’t comparing itself to other newspaper sites but to internet giants like Yahoo and MSN, even if it has a way to go to get into that league. It’s a bold statement of how aggressively they are going to push the volume model. They started with a large base of readers and have simply adapted the skin-and-celeb model of tabloid journalism to the digital world, which isn’t that difficult to do.
However, it’s important to remember that volume of content is not the same as commercial success. The figures are a couple of years out-of-date (2010 data), but Ken Doctor looked at the average revenue per user (ARPU) of the New York Times and the Huffington Post. In it, he found that each of the 48 m global unique users at the New York Times was worth $3.54 versus 96 cents for each of the Huffington Post’s 31 m users. It would be very interesting to see the ARPU for the New York Times with its paid content strategy now firmly in place. The New York Times has struggled like most newspapers in developed markets over the last few years, but their paid content strategy is successful. As Ken says, a premium brands get higher returns than non-premium ones.
Digital paid content is also becoming a source of serious revenue for early paid content pioneers. In February of this year, the Financial Times announced that it has more digital subscribers than print subscribers, 316,000 versus 286,000. Jeff John Roberts at paidContent says, “But it’s hard to see how the FT case study can apply to anyone other than the FT.”
The FT has always been held up as an exception not an example for other, largely general interest, news publications, but dismissing its lessons out of hand is a mistake. However, the FT shows the counter-example to the volume strategy: 316,000 digital subs is peanuts compared to the millions of pay views, but it is proving to be a financially sustainable strategy.
More than that, publishers are moving beyond a two-pronged revenue strategy of ads or paid content. Most publishers, even the Daily Mail’s parent company, are developing multiple revenue streams to create a sustainable business, including events, digital marketing and development services and e-books just to name a few. There are other publications, such as The Atlantic, doing quite well that are pursuing different strategies.
And that’s only big traditional publishers. My former Guardian colleague Bobbie Johnson launched low-volume, high-quality science and tech publisher Read Matter after a hugely successful Kickstarter campaign. They must be doing something right. They were acquired by Ev Williams’ newest project, the blogging platform Medium, in April of this year.
You don’t have to play the volume strategy to win in digital, but you do have to find a way to translate your digital audience to revenue. That’s the big challenge, and thankfully, big numbers aren’t the only way to do that.