[Update 8/16/17: A newer post, The Missing Piece of the Membership Puzzle -- Agreeing on Value for Each Member, updates some aspects of this, but this post remains highly relevant.]
Who will pay for journalism? The turbulent first decades of our new digital era suggest no one -- or at least too few. Commodity news is free and advertising values are collapsing. Those who seek to preserve serious journalism, who believe we need more than clickbait and the uncritical crowdsourcing of news, have been scrambling -- and they are actually finding many ways to get revenue (as summarized below). Nevertheless, it is hard to have conviction that even the best of them can be sufficient.
Customer or patron?
Why be a customer? Why pay? The only way for journalism to survive in this new century is to refocus on a new logic for patronship -- getting readers to patronize content providers in the fullest sense: "to give money or support to." To find sustainable business models for journalism in a digital world, me must figure out how to find patrons (in this broad sense), and how to work with them so they are happy to contribute at sustainable levels.
Newspapers, magazines, and news video services are struggling to find a logic that works. Paywalls, "soft" "metered" paywalls (a form of freemium), have been adopted by many publishers as a primary model (but avoided by many others). They seem to be just marginally working, even in the best of cases. But we have been looking at the trees, not seeing that there can be a new kind of forest.
- Paywalls (soft or not) treat customers as faceless, undifferentiated cattle to be herded and milked. There is no invitation to be a patron, no personalization of the value proposition, even though individuals vary immensely in how they value and consume journalism. How can a single price possibly be right for all subscribers?
- Premium level subscriptions (such as Times Premier) have emerged as a supplementary strategy to try to get the most loyal patrons to pay more, based on the realization that some of them can be enticed to pay more. But here too, value propositions are not customized,
- Patronship at the high-end has always been a key support for journalism, from the rich owners of times past, to Bezos, Henry, and Omidyar today. That is a nice contribution but it seems a shaky foundation for something so important to the public -- something that should be answerable only to its public.
- Crowdfunding seeks to move patronship to a wider base, but that seems fragmented and very limited as well.
- Membership has become the latest hot topic (subject of a CUNY / Tow-Knight conference led by Jeff Jarvis on August 26 that I attended). This gets much closer to the core ideas of patronship. These efforts are a big step toward recognizing the need for more flexible targeting of value propositions, and addressing the many different kinds of value can be exchanged. This can include a very wide spectrum of offers to the audience(s) -- from added features, access to journalists, events, and bling, to pure contribution (drawing on the model of public radio and TV memberships). It also begins to recognize that value also flows from consumers to providers of journalism, the "reverse meter" suggested by Jeff Jarvis in 2011. It was evident at the conference that membership is a rich and promising area, already generating some success, but how to manage this almost too-rich variety of value propositions is a challenge.
- This is not to forget that advertising remains an important source of revenue, even if increasingly limited. Many of the audience would pay to reduce that burden -- and some might accept more (to get more value, another reverse meter) -- but, again, there is little customization of such value propositions.
We have a growing variety of revenue sources, but none a silver bullet. Where is the overarching synergy? What is tomorrow's logic?
That can be done in many ways, and many are being tried and improved on, but I suggest the most effective way to apply the best methods in concert will be by drawing them into the FairPay architecture. This is touched on on the HBR Blog, and in more detail in this blog's Overview page. This architecture shapes a platform for applying all of the best methods in unison, to cooperatively find the right value proposition (and the right price) for each patron.
Since I am co-organizer of an event on The Future of Journalism: “Why Should I Pay for Quality Content?” for MIT Enterprise Forum of NYC (October 27), this seems a good time to revisit my perspective on these issues, and to summarize how FairPay points the way to win-win solutions.
Re-engineering the value proposition of journalism for the digital era
The big picture idea is that FairPay refocuses journalism businesses on their relationship with their individual audience members -- with all the tools of the digital era -- to center on personalized, win-win value propositions. It builds this relationship on a cooperative understanding of individualized value that integrates all of the relevant elements on both sides of the value exchange. It seeks to enable a holistic view of value (and revenue) related to all aspects of the service that journalism provides -- basic subscriptions, premiums, membership options, perks, and any other kinds of offers, over all aspects of the value exchange.
From the provider to the consumer, FairPay focuses on the total value of all kinds, as actually delivered to each particular consumer -- the value-in-use for exactly what is consumed and how (what items, how many, how intensely), including content, membership perks, etc. -- the value of that experience and potentially even the outcomes that result (enjoyment, appreciation, and even the results enabled -- did our advice improve your health or you stock market returns?). This can also include "soft" values, such as
- service and support
- participation, listening, and responsiveness (comments, access to the journalists)
- events and merchandise
- the social value of investigative journalism, community services, and good corporate citizenship.
- attention to advertising (including the possibility of customized levels of ad loads) and
- personal data that can be used or sold (again with possible customization)
- the value of user-generated content
- the value of viral promotion and leads
- up-sell/cross-sell revenue potential
- volunteer-provided services to the provider
FairPay re-engineers how the providers of journalism interact with their audience members to deal with value, compensation, and sustainability, and creates a new balance of power. It recognizes that journalism co-creates value with its audience(s), and applies an adaptive method of co-pricing that (1) gives audience members the power to pay commensurate the value they perceive and can afford, while (2) retaining the power for providers to demand that be done fairly and sustainably.
This approach draws support from
- The latest thinking in marketing theory, in which journalism is recognized as being not a product but a service -- and in which services involve not a unidirectional transfer of value from a producer to a consumer, but a joint co-creation of value.
- Recent behavioral economics findings on how people will pay voluntarily for services, if asked in the right way.
- The success of "value-based" pricing (or "performance-based" or "outcomes-based" models) for pricing industrial equipment used by companies like GE -- where a cooperative team of both producer and customer negotiate not a specific price, but a method for analyzing value as actually achieved by the customer in use, and then basing the price on that after the data is known. Just as the Internet of Things is making that more widely applicable, FairPay points to how a lightweight, heuristic variation on that theme can work for computer-mediated mass consumer markets.
This may seem very abstract and impractical, but the Overview page and the How FairPay Works box in the sidebar (at FairPayZone.com) explain more of how this can actually work, building on a simple balance of powers. Other posts on this blog explain the mechanics in detail, and how it can apply to journalism and similar content businesses.
A guide to further details is in the companion post just below.
- For the long tail of pricing, FairPay promises to make it more affordable for the huge population of people who might pay something, but do not pay at all now because they will not pay as much as paywalls demand. FairPay's customized pricing can adapt to the lower, but still profitable, payments of the large population who consume lightly.
- For the fat head of pricing, FairPay also promises to capture a larger "share of wallet" of those who are already paying. Unlike the complex and confusing value propositions of membership and other set-price premium subscriptions, FairPay can tailor rich value propositions to the desires of each patron, especially those willing to pay to get what they really want, not just some arbitrary, standard bundle.
(Blendle does take one smart step in the direction of the participative nature of FairPay, by making it easy to demand an instant refund if not satisfied with an article.)
Additional posts relevant to journalism include:
- Panic in the Streets! Now People are Ready to Patron-ize Journalism!
- Finding Value in The Subscription Economy
- What Lies Beyond Paywalls -- A Better Way
- "Why should I pay you?" - Bezos' Washington Post - a New Business Model for Journalism
- Pierre Omidyar: Adventures in New Business Models for Journalism
- Times Premier? [/Insider?] -- What is it really worth? ...FairPay can tell
- How Blendle Could Do Much Better with FairPay
- Finding Good and Fair Customers -- Where Are the Sweet Spots?
- Profiting from Habit -- Seamless Monetization