ANTON HARBER: Subscriber-based newsrooms signal industry turnaround

The news media might — at last — have turned the corner in finding a new business model that could help restore the sector to financial health.

It has been a long haul of more than two decades of revenue collapse as the old advertising-based model failed in the face of the rise of the internet and social media. While readers moved increasingly online, the advertising moved to the big tech platforms like Google and Facebook, leaving the news media short.

It looks now like the advertising model is being replaced by a subscription/membership model where the bulk of revenue will come from readers paying for access to news or premium services.

Around the world, it is those newspapers that are successfully converting readers into online payers that are thriving again. The New York Times has over 7,6-million online subscribers (compared to 800,000 in print). At $17 a month, that is a lot of revenue, which has allowed it to grow its staff and offerings, which in turn sells more subscriptions. The Financial Times was an early mover and now has 1,1-million online subscribers, providing the bulk of its readers and revenue.

The Guardian of London followed a different membership model, keeping most of its site open but appealing for voluntary contributions, for which members received extra services. They have declared it “a brilliant success”, with more than 1-million people making regular payments, turning around the paper’s fortunes.

Other success stories have been Jeff Bezos’s Washington Post and the Economist. Yes, I know these are rare international brands appealing to well-off markets in major metropolitan areas, but they have pointed to a way forward for other media. Many local media have seen this and shifted to some variation of the subscription/membership model. It has enabled at least some to stem the flood of retrenchments of the past decade, and even start some new hiring.

Media24, the dominant local player, moved 18 months ago to a “freemium” model — basic news free but more and more of their best stuff for subscribers only. According to editor-in-chief Adriaan Basson, it has hit a healthy 47,000 subscribers, just a fraction of the 15-million monthly users but enough, he says, to have hired some big names to bolster the editorial offering.

“It was a game changer ... the introduction of our subscription service definitely upped the quality of our journalism,” he told me this week. His target is 100,000 subscribers, and at R75 a month this will be good revenue.

Daily Maverick CEO Styli Charalambous echoes this. His membership model (voluntary payment with benefits) “has been life-changing”, allowing the publication to double the size of its newsroom. Also, boosted by philanthropic contributions after its role in exposing state capture, it invested aggressively in new elements, such as Maverick Citizen, Maverick Business, Maverick Life, book publishing, film-making, an online store and — most surprising in this age — DM168, a weekly print newspaper.

The Daily Maverick’s aim is a mixed revenue model: membership contributions, “commercial money” (such as sponsorships, adverts and the online shop) and philanthropy. My guess is that philanthropy will be seasonal, profits from things like the shop limited, and reader payments will dominate.

Charalambous points to the value of this model making publications focus more on the reader. “Publishers are forced to ask: ‘Is our journalism worth paying for?’ ... so it can have a very positive impact on better understanding the needs of audiences.” This is a shift in an industry that has often had to pander to advertisers.

Also, this model “recognises the newsroom as the revenue engine and not a cost centre”. This should shift the emphasis from cost-cutting to investing in content that is worth paying for — a crucial element in a country where newsrooms have shrunk to a fraction of their sizes in recent years.

There are downsides though. There is a limit to the number of subscriptions people can afford, particularly if they are also paying for streaming and other media services. This will favour the development of a few general, middle-of-the-road operations rather than a diverse range.

This is a bit like the return to the golden age of print newspapers, which was dominated by a few companies and reached only about 25% of the population at its peak. The reader-pays model also completely excludes the many who cannot afford data or subs. They are left with the bits and pieces of often unfiltered news available for free, likely mixed in with a potpourri of false and dangerous disinformation.

Of course, information should be free. But it costs to filter, edit, select, fact-check, package, distribute and the other tasks of journalism and publishing. Increasingly readers will have to pay for it.

• Harber is executive director of the Campaign for Free Expression and Caxton professor of journalism at Wits University.