Promising new revenue streams include eCommerce (spending to reach $7T in four years) and podcasts ($3.3B by 2025)
Reuters Institute for the Study of Journalism has published a new report which looks into how publishers responded to Covid-19 and what that means for 2021 and beyond.
“2021 will be a year of profound and rapid digital change following the shock delivered by Covid-19,” writes Nic Newman, Senior Research Associate, RISJ. “Lockdowns and other restrictions have broken old habits and created new ones, but it is only this year that we’ll discover how fundamental those changes have been.”
“Revenue diversification is set to be a key theme”
The report, Journalism, Media, and Technology Trends and Predictions 2021, is based on a December 2020 survey of 234 publishing industry representatives from traditional and digital-born media companies across 43 countries. They include 52 Editors-in-chief, 45 CEOs or Managing Directors, and 29 Heads of Digital.
It has become something of a cliché to talk about Covid-19 as an accelerator, but in this year’s survey, editors, CEOs, and other senior leaders have given us a practical insight into what this has meant for them.Nic Newman, Senior Research Associate, RISJ
76% of the respondents said that Covid-19 has accelerated their plans for digital transition. Business strategies will include changes to working practices, journalism and formats, business models and the way media companies think about innovation.
Driving digital subscriptions was rated an important or very important revenue focus by 76% of the respondents, ahead of both display and native advertising. eCommerce and events were the next most important priorities.
“We’re very confident of the year ahead”
While digital subscriptions lead the pack, they’re just one of the multiple revenue streams publishers are using to ensure a sustainable future and reduce reliance on advertising. “Revenue diversification is set to be a key theme” with publishers saying that, on average, four different revenue streams will be important or very important this year.
Among them is The Independent (UK), which discontinued its print edition more than four years ago. The publisher now relies on a combination of revenues from digital advertising, eCommerce, affiliate revenue, premium subscription, and a contributions model. It has also been expanding into other languages such as Spanish.
“We have come through the year with record profit and record revenue, so we’re very confident of the year ahead,” says its MD Christian Broughton. The publisher is planning to accelerate new initiatives this year. These include a new video/TV project and more international expansion.
eCommerce spending to double to $7T in four years
eCommerce is another promising revenue source for publishers with spending predicted to double over the next four years to $7T, according to GroupM. Brands like BuzzFeed, The New York Times, and New York Magazine/Vox Media have already made significant inroads in this area.
Generally, publishers build their eCommerce initiatives around curating content that leads to purchases from which they get a commission. They include Wirecutter from The New York Times, The Strategist from New York Magazine/Vox Media, and IndyBest from The Independent. Some like BuzzFeed have gone ahead and created their own product verticals (Tasty).
Other promising revenue streams include events and subscription bundling. “Apple and other tech companies have been taking a cut of ongoing subscriptions for years but news organisations with scale and good data targeting may also be in a position to help retailers find the right customers,” suggests Newman.
The events business came to a standstill due to lockdowns and social distancing measures enforced to counter the pandemic. However, people soon shifted to working from homes and became comfortable with online tools like Zoom, Houseparty and Google Meet.
This created an opportunity for virtual events which many publishers utilized. They found that virtual events can be spun-up more quickly, with a lower cost base, higher profile guests, and a bigger audience than a physical event.
Many publishers are betting that bundling paid events with existing subscriptions will be a good way to drive loyalty and reduce churn. Others see virtual events as a source of valuable data and a way of starting a relationship with new users.Nic Newman, Senior Research Associate, RISJ
74% credit audience and data insights for their best ideas
The challenges thrown by Covid-19 required publishers to innovate quickly to adapt to the changed environment. CNN launched its coronavirus podcast in just a few days – a process that might previously have required months of analysis and a long series of meetings, the report states.
74% of the survey participants said that their best innovation ideas come from audience and data insights followed by multi-disciplinary teams (68%) and other media companies (48%). Senior leaders said that their contribution is now less about generating new ideas (26%) and more about facilitating others with the help of data.
“The pace of innovation will remain strong this year as media companies accelerate their digital plans,” says Newman. “But with little money available for big new investments, companies are likely to focus on improvements to existing products and brands (70%) rather than developing ‘moonshots’ or creating entirely new products (28%).”
Many of the respondents said they’d like to improve the core experience of their websites and apps. “Publishing in general has a lot of basic catching up to do on ease of use, customer service, etc,” said one of the respondents. “The benchmark is Amazon and Netflix. It’s no use having AI recommendations if people can’t easily log in, pause subscriptions, or change billing details.”
We believe that design has great potential to improve user experience, engagement, and subscriber lifecycle. News organisations have to learn from digital pure plays and the consumer industry how to add value through design.Goetz Hamann, Head of Digital Editions, Die Zeit
Podcast market could exceed $3.3B globally by 2025
All innovation would come to nought if the end result does not engage readers. Two formats that publishers relied upon greatly to attract, engage and retain audiences in 2020 were email newsletters and podcasts.
Like the aforementioned CNN, many publishers came out with email newsletters and podcasts to provide readers with information that would help them navigate their pandemic-struck lives better. Some of them, like The New York Times, created journalist-led email newsletters. The publisher appointed senior journalist David Leonhardt as anchor of its morning briefing newsletter which has more than 17M subscribers.
It is not only mainstream media that is increasingly using email to support their engagement strategies. 2020 saw many high-profile writers leave traditional jobs to set up their own businesses, mostly based on email.
Podcasts have also grown from strength to strength through the last year despite the loss of commute time (due to lockdowns) when most of the consumption traditionally happened. Pop-up podcasts around the pandemic like Coronavirus Fact vs Fiction (CNN) and Coronavirus Update (NDR, Germany) among others were very successful with audiences around the world.
The year saw significant investments in the format. Spotify continued its acquisition spree with The Ringer (sports) and Megaphone after having acquired Gimlet Media, Anchor, and Parcast. Amazon also signalled its intent to push further into podcasts after recently acquiring Wondery.
Audio offers significant growth opportunities for publishers. Deloitte estimates that the podcast market could exceed $3.3B globally by 2025. That’s about 3x its current size. “Much of this will continue to come via advertising but we’ll also see a significant shift to paid models in 2021,” says Newman.
Podcasting is starting to look like a version of the video-on-demand streaming wars with similar dynamics at play.Nic Newman, Senior Research Associate, RISJ
69% name AI as the biggest enabler for journalism
Much of the above growth initiatives are powered by technology. The report looks into some of the technologies that are likely to be influential over the next decade. They include artificial intelligence (AI), augmented reality (AR), 5G connectivity, and smart devices.
Majority of the respondents (69%) named AI as the biggest enabler for journalism over the next few years. It was followed by 5G (18%) and new devices (9%).
Many publishers are already using AI technologies such as machine learning (ML), natural language generation (NLG), and speech recognition to help find new stories and customers, speed up production, and improve distribution.
The Globe and Mail, Canada uses an AI-based tool called Sophi to select stories for its homepage and other landing pages. The BBC has been testing an AI powered chatbot tool that uses its reportage and information summarised from official sources to answer questions about coronavirus.
“One of the most interesting areas to watch this year,” according to Newman, “could be the automation or semi-automation of new formats from text.” The BBC is experimenting with tools that convert a text news story into a ‘visual story’ suitable for mobile phones. A tool like this can help media companies serve the different format preferences of its audiences without spending significant resources.
“Journalism as a business will need to embrace this moment”
“The combination of new devices, better connectivity, and increasingly powerful technology holds out the promise of a smarter world where human intelligence is augmented and supported by machines,” writes Newman. “But it also marks another wave of rapid disruption with potential downsides for many.”
He adds, “journalism as a business will need to embrace this moment to complete its own transformation.”
2021 will not be an end-point in that journey but a year when more of the building blocks fall into place. Journalism’s job – as with the coronavirus crisis – will be to explain the implications for ordinary people, but also to ask searching questions about transparency, control, and how equally the spoils are being shared.Nic Newman, Senior Research Associate at RISJ
The full report can be downloaded from Reuters Institute:
Journalism, media, and technology trends and predictions 2021