Every newsroom needs a way to keep its doors open and make sure the bills paid. Events, subscriptions and merchandise are just some of the ways to earn revenue today. But how do you decide on a price point and what sort of challenges are lying in wait?
As Newsrewired this week (27 November), we held an AMA (ask me anything) with one of the top brains in the industry, Chris Dicker, CEO of Candr Media Group. Dicker has two decades of experience in the meda indusrty, specialising in leading and creating commercial teams and new revenue streams. More recently, he led the management buyout of Trusted Reviews away from TI-Media to Candr.
Q: What goes into costing up a product?
It depends on the product and who you are aiming at, and to a degree, it is worth what someone is willing to pay.
Think of the super expensive Richard Mille watches, as an example. They wanted to produce a watch around the £20,000 mark. So the rumour goes that there was a bit of a marketing mess up and someone put a decimal point in the wrong way and ended up saying that their watches were actually £200,000. And someone bought one.
There is no clear way to know how much to charge for new products. You just need to get closer to your customer base.
Q: What lessons can we learn now - in the era of AI and social media essentially eating news companies' lunches - looking back 20 years having not introduced paywalls at scale back then?
Do not do a deal with the devil. Or at least be very, very careful in regards to who you do deals with. You have got to look at the value of the content you are producing, and if someone is not willing to part with the value that you are putting on your content, do not give it away just because someone thinks you may make some money in the future.
Q: Many US news companies in particular offer cheap trials, like $1 a week for six months to a year, to try and build habits. Can we do this in a way that does not devalue the journalism behind it? And how do we put the prices up at the end of the trial?
Let's face it, we have got players that are ultimately repackaging our content and giving away for free, not even for $1.
Try to create habits with your audience in the environments that you want and that you control. The problem we have is that our content is so spread out and across so many different platforms, we do not own those relationships as such.
- Read more: How The Times attracts and retains digital subscribers
Q: If publishers ‘shouldn’t do a deal with the devil’, how do they then protect themselves against AI?
First, update your own terms and conditions so that AI bots are not allowed to come along and take your content. Consider getting a bot blocker in place. Yes, they have taken a load of the content already, but that does not mean we should allow them to carry on taking it.
Then there are tools like TolBit, which can identify which bots come to your site, when, how often and what content they are looking at. It can also give you the ability to push them into a subdomain specifically to create a paywall for bots.
From a US law perspective, this matters because there are higher damages for hacking a paywall to get around it, than copyright theft and infringement.
Q: Can AI replicate the intrinsic value of journalism, and can we charge for it?
Not really, there is no original value in what AI produces. But regardless, a payment should be made to a publisher if it is using its valuable journalistic content.
Q: Are micropayments a sustainable model for regional local news publishers, for example?
If the micropayment prompt is coming from the big tech companies, then yes, that could be a sustainable model. Because most consumers place more value on the technology than the news content.
It is needed as disruption is coming from a rise of user agents - software which acts as a virtual identity of a user when accessing a website - because currently, there is no technology able to differentiate between user agents and genuine users.
User agents do not click ads or buy products through affiliate links, and the minute the ad industry catches on, ad and affiliate revenue is under threat.
Q: How should smaller- and medium-sized publishers diversify their revenue streams?
If you are not looking at diversifying your revenue stream right now, you are nuts, given the pressure on businesses and the threats posed against them, notably from AI companies.
It is a case of looking at the audience you have got and potentially where they are at and how you can engage them.
Podcasting might not be right for you, but actually for a lot of your audience, it may be. Newsletters, like Substack, are getting some criticism, but it is a good place to start for independent publishers.
- Read more: How The Financial Times is broadening its portfolio
Q: What are the other opportunities going unnoticed for independent publishers?
Video is probably going to be a lot safer than pictures and words. It is going to pick up at some point, but you have probably got a few more years until then. Google and YouTube might be different platforms and products altogether.
Q: how do we evaluate if we are charging enough for our products, and should be charging more or less?
You need to be careful about mixing up value and worth. Small changes can make a massive difference.
Volkswagen ran a campaign in Germany a few years ago around giving £4,000 off price of a new car. That is about 15-to-20 percent of the value of the car. And obviously, they shipped a lot of cars.
But then six months later, it flipped the deal to give £4,000 trading value for any car you bought in. They saw five times more the return on that deal than the other deal they did. Even though if anything, it is a worse deal because you are having to part with your car to get four grand.
The point is: have a play around with the marketing and offering of your products, rather than the strict price.
- Read more: How to nail your subscription pitch
Q: Mission- and identity-driven purpose is often used in news to sell subscriptions, think The Guardian in the UK, The Washington Post in the US, succeeding with this kind of messaging. There are academic studies showing that the highest willingness to pay is when you tell people you are going to support independent watchdog journalism when the industry is at the crisis. Are there particular risks with this strategy?
Yes, so try it with a fraction of your audience before committing to it. When was the last time you got a focus room together and asked them what they thought about it? This was part and parcel of magazine media back in the day.
Look beyond the data on a spreadsheet and float your ideas past your audience if there's a nervousness risk in how your ideas will be perceived.
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