Serving readers over advertisers

“For the first time in decades, several large news publishers now generate more revenues from readers than from advertisers. It’s hard to overstate this business-model pivot.”

If you’re not paying for the product, then you’re not the customer — you’re the product being sold. The year 2018 will bring this wisdom fully into focus, elevating the news industry as innovators while reducing the giant Silicon Valley technology companies to the status of change-resistant dinosaurs.

As the news industry moves away from primary reliance on advertising as its core revenue model, publishers will focus on serving their readers better instead of how best to sell them to advertisers. For the first time in decades, several large news publishers now generate more revenues from readers than from advertisers. It’s hard to overstate this business-model pivot. Advertising used to deliver 80 percent of revenues for newspapers, with subscriptions accounting for 20 percent. In terms of profit, advertising was an even higher percentage of the total in the pre-digital era because print subscriptions require the expenses of ink, newsprint, printing, and distribution. As news publishers focus on digital subscriptions, the dynamics flip, with a high profit margin on each new digital subscription sold.

The first news publishers to succeed with digital subscriptions were the largest brands such as The Wall Street Journal, The New York Times, and The Washington Post. They now have teams of data scientists mapping which investments in journalism correlate to more digital subscriptions and higher renewal rates. New York Times CEO Mark Thompson says he think the Times can eventually get to 10 million digital subscribers, several times larger than the current level.

Regional and local newspapers are focused on growing digital subscriptions. The editor of the San Jose Mercury News, Neil Chase, in 2017 bought plastic funnels for his journalists marked with reminders of the digital subscription sales funnel: “Awareness, Engagement, Registration, Subscription.” (Neil says the 69-cent funnels can also be used to hold beer). Many digital news publishers have also abandoned the original sin that all information has to be free by launching subscription or membership programs.

News publishers were the original innovators in what’s now called the subscription economy. Newspapers and magazines have sold subscriptions for hundreds of years, making them among the pioneering subscription-based businesses. We can now subscribe to Netflix for video, Spotify for music, and Dollar Shave Club for razors. But news has long been supported by readers, giving some reassurance that the pivot to high-margin digital subscriptions will make a big difference to the sustainability of news publishers.

In contrast, the platform companies continue to focus on how they can monetize their users — with their users understood as their “products to be sold.” eMarketer estimates Google and Facebook alone will account for 63 percent of the digital advertising market in 2017. The tipping point will occur in 2018, as Google and Facebook take over 100 percent of the revenue growth in digital advertising, leaving a small and shrinking pie for everyone else.

Silicon Valley now has a reputation problem with its users, who are wondering if even getting free access to services such as Google search and the Facebook News Feed is such a great bargain. People increasingly understood they “pay” as the products being sold to advertisers. “News” from fake news brands has highlighted worry that the sometimes dubious quality of the information on these platforms means they are not the safe, well-lit environments people expect. In 2018, Silicon Valley will have to do more than fund academic studies to regain the trust of their users if they want to push back against governments around the world now considering regulating them or even breaking them up.

And so a prediction for 2018: The reputation of the news industry will rise (admittedly from a lowly base) as publishers focus more on serving readers, while the reputation of Silicon Valley will continue to erode (from its still high base), at least until the technology companies find ways to improve the experience for their users and no longer focus just on the profitable experience for their advertisers.

Gordon Crovitz is former publisher of The Wall Street Journal and cofounder of the startup NewsGuard.

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Matt Carlson   Attacks on the press will get worse

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Amy King   Let’s amplify visual voice

Pablo Boczkowski   The rise of skeptical reading

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Kyle Ellis   Let’s build our way out of this

Umbreen Bhatti   The trust problem isn’t new

Mi-Ai Parrish   Blockchain and trust

Rubina Madan Fillion   Unlocking the potential of AI

Daniel Trielli   The rich get richer, the poor scramble

Laura E. Davis   Writing answers before you know the question

Eric Nuzum   Beyond the narrative arc

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Nancy Watzman   Know thy TV

Vivian Schiller   Pivot to tomorrow

Jennifer Coogan   The future is female

Kim Fox   Audience teams diversify their approach

Carrie Brown-Smith   Transparency finally takes off

Sue Schardt   Jump the niche

David Skok   Finding an information-life balance

Ernst-Jan Pfauth   Publishing less to give readers more

Will Sommer   The year local media gets conservative

Debra Adams Simmons   And a woman shall lead them

Burt Herman   Things get real

Doris Truong   Computer vision vs. the Internet vigilantes

Julia B. Chan   Looking for loyalty in all the right places

Michael Kuntz   The only pivot that might work

Alice Antheaume   Are you fluent in AI?

Errin Haines Whack   At the ballot, it’s time to count black women

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Kinsey Wilson   Facebook and Google: Help out or pay up

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Michelle Garcia   Navigating journalistic transparency

Jennifer Choi   Standing up for us and for each other

Alfred Hermida   Going beyond mobile-first

Juliette De Maeyer   A responsible press criticism

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Lucas Graves   From algorithms to institutions

Nushin Rashidian   Publishers seek ad dollar alternatives

Sam Ford   The year of investing in processes

Federica Cherubini   The rise of bridge roles in news organizations

Renée Kaplan   The year of quiet adjustments (shhh)

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Tim Carmody   Watch out for Spotify

Vanessa K. DeLuca   Women’s voices take center stage

Evie Nagy   Pivot to mobile video frustration

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Tanya Cordrey   Finally, the seeds of radical reinvention

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Jarrod Dicker   Honesty in advertising

Manoush Zomorodi   Self-help as a publishing strategy

Richard J. Tofel   The platforms’ power demands more reporters’ attention

Bill Keller   A growing turn to philanthropy

Frédéric Filloux   External forces

Ståle Grut   Reclaiming audience interaction from social networks

Trushar Barot   The Jio-fication of India

Ariana Tobin   Too tired to tap

Sarah Marshall   Loyalty as the key performance indicator

Andrew Ramsammy   The year ownership mattered

Pia Frey   Address users as individuals

Lam Thuy Vo   Breaking free from the tyranny of the loudest

Rachel Davis Mersey   AI, with real smarts

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An Xiao Mina   Memes and visuals come to the fore

Andrew Haeg   The year journalists become relationship builders

Craig Newmark   Working together toward sustainable solutions

Francesco Marconi   The year of machine-to-machine journalism

Sally Lehrman   Trust comes first

Nikki Usher   The year of The Washington Post

Jamie Mottram   From pageviews to t-shirts

Nicholas Diakopoulos   Fortifying social media from automated inauthenticity

Tanzina Vega   It’s time for media companies to #PassTheMic

Claire Wardle   Disinformation gets worse

Ruth Palmer   Risks will grow for news subjects — especially minorities

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Mike Caulfield   Refactoring media literacy for the networked age

Damon Krukowski   Reviving the alt-weekly soul

C.W. Anderson   The social media apocalypse

Mario García   Storytelling finally adapts to mobile

Heather Bryant   Building the ecosystems for collaboration

Amie Ferris-Rotman   More female reporters abroad (please)

Valérie Bélair-Gagnon   Seeking trust in fragmented spaces

Brian Lam   Sketchy ethics around product reviews

Alastair Coote   The year of self-improvement

Raney Aronson-Rath   Transparency is the antidote to fake news

Matt Boggie   The intellectual equivalent of the Dead Sea

Dannagal G. Young   Stop covering politics as a game

Lanre Akinola   Making noise is not a strategy

Matt Thompson   Here come the attention managers

Sara M. Watson   Feeds will open up to new user-determined filters

Mariana Moura Santos   Think local, act global

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Jessica Parker Gilbert   Design connects storytelling and strategy

Hannah Cassius   The year of the echo-chamber escapists

Joanne McNeil   Gatekeeping the gatekeepers

Kawandeep Virdee   Zines had it right all along

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Caitria O'Neill   The new court of public opinion

Sydette Harry   Listen to your corner and watch for the hook

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