How Mobile Payments Can Prevent Publishing from Being Yesterday’s News
Across both digital and print publishers, a familiar ‘story of doom’ is playing out in annual reports, and it seems no one is immune. In September, The Economist announced an 11% fall in profits due to declining ad revenues. In doing so it joined many other publications posting poor results including Time Magazine, which saw overall revenue drop 10%, while ad revenue declined 12%. Globally, newspapers also continue to see advertising revenue fall. In August, Australia saw a 32.7% year-on-year drop across its national newspapers, while the Indian Newspaper Society reported worsened financial situations across all members due to declining ad revenue. In this difficult environment, this year saw the The Wall Street Journal abandoned its European print business and scale back its Asian print edition to focus on digital subscriptions. The Guardian has also announced a complete overhaul if its ad and subscriptions strategy.
Publishers are facing a perfect storm of behavioural and technological factors, which are driving increasing redundancy within their traditional business model. Consumers are increasingly ‘snacking’ on syndicated or aggregated, unbundled, digital content, meaning that publishers can no longer view themselves as ‘destinations’. This, along with the ever-increasing rate of adblocking, has significantly reduced advertising revenues. The industry has seen digital subscription growth - including The New York Times - which has seen subscriptions rise 13.9%, and digital-only subscriptions increase by 46.4%. However, this has not offset the declining advertising revenues; meaning that most publishers are replacing the pounds they once made through physical channels with digital pennies.
To monetise in the most effective way possible publishers need to understand and react to changing reader behaviour. What the NYT example shows is that paywalls can work - but publishers will need to look beyond long term subscription models to counteract the loss of advertising. In the US, the number of people paying for news subscriptions increased last year from 9% to 16% and globally, 13% of consumers have paid for news. However, in many markets, including Hong Kong, Korea, Malaysia and Taiwan, as well as Poland, France and the Netherlands, alternatives such as one-off purchases are proving more popular. Globally, readers are willing to pay for content they value but publishers need to ensure they have access to the content in the format and on the device, they prefer. However, with transaction fees and minimum prices, card-based payments and mobile wallets are not able to support this type of consumer behaviour. Publishers would potentially stand to lose money per transaction if content is sold in this way.
Publications have started to recognise this drive towards social and mobile content but have yet to reflect this in their monetisation models. Facebook and Snapchat are developing formal relationships with publishers as are many other social media platforms globally. Globally, in 2017, the average use worldwide of social media as a source for news is 54%. In Latin America, these numbers rise to around 75%. In fact, the beleaguered Economist has been using Asia’s popular Line app since January 2016, and now has nearly 1 million readers in the region. What is surprising however is that their payment portal still demands card details. By doing so the publication runs the risk of alienating readers in a region where alternative payment methods are now the mainstream, as shown by the rise of WeChat and AliPay from China and direct carrier billing (DCB) accounting for 50% of all ‘online’ transactions in Japan.
It is time publishers recognised, as huge brands including Amazon, Spotify, Apple have already, that in order to be able to reach a global mobile audience, payment methods need to adapt. This is a critical lesson for publications like the Guardian, which has 62% of its audience outside of the UK and US and 73% of the global audience accessing content via mobile. Part of this is understanding that despite there being five billion phone owners globally, there are only 1.5 billion credit card owners. As well as low card penetration globally, in the US and Europe, mobile as a platform has historically driven the highest engagement but experienced the lowest conversion rates. With publisher audiences increasingly accessing content via mobile, their payment processes need to be faster or consumers will abandon them. For subscriptions and content that consumers want to access on an ad hoc basis, this could be achieved by offering DCB payments via a mobile operator which delivers a truly mobile-first solution with low friction and conversion rates that are up to ten times higher than credit cards.
The hunt for alternative monetisation models is spreading internationally as major publishers realise that simply translating the traditional print publishing business model to digital channels is not working. By acknowledging that consumers want the quickest and easiest access to the content they love, publishers can deliver an experience that is frictionless and encourages both subscriptions and one-off access to content. If executed and implemented correctly, paywalls and subscriptions offer an alternative to the lost advertising revenue and a growth opportunity in their own right. However, to maximise on the opportunity publishers need to deliver a mobile-first experience across content and payments.