Friday, June 19, 2015
One of the challenges facing the media industry is converting free web readers to a paid one. This is a near impossible task if you start out giving it away for free. Some have tried and failed and went back to free. In the early years of the Internet it had to be free to get a trial so it was good strategy at that time. But, if you give it away for free the writer suffers in this industry model, as there is less money to pay them.

Companies like Google have benefited from this access to this free content for their search engines and Ad Sense program. This causes publishers to pay less for this content to make ends meet. I call this a “wage theft” strategy on an industry level that has broken the system. Writers use to get paid $1 per word in print, now if the're lucky, they get 10 cents per word. So who is going to write all this content? Writers are now forced to live on lower fees for their work and some even work for free, just for the exposure, and the hope that it might lead to some paid gigs.

 

As publishers we need to look for ways to make the content pay so we can pay a living wage to our writers. While web display ads is one way, it cannot be the only way. For example if a website that has 50,000 visitors and is generating say 200,000 page impressions, the potential value is $3,000 per ad spot based on a $15 CPM if they can get it. So if you have three ad spots the value of the inventory is $9,000 per month or $108,000 per year. Assume that 50% of the inventory will be sold and the revenue is $54,000.

But the reality of this scenario of getting a $15 CPM will be a challenge in the consumer space. The Google ad sense program pays by the click model so that publishers get a very small CPM for their ad impressions. Ad networks take a 40% commission on ad sales and sell inventory at $3-5 CPM. For a publisher that only has a website they will be out of business if they do not have other sources of revenue like a print version or email newsletter to sell to amortize content costs.

In this market scenario Google gets our content for free for the Search Engine advertising and then undercuts publishers with low rates with the Ad Sense program to get all the advertising dollars and depress rates. This system is broken as you can see. One side provides the content for free and the other gets all money. Nobody will want to be a writer under these conditions and the system will collapse in the long term as their will be no next generation of writers.

To get some ideas on how to fix the system I had an interview with Ryan Wilock. Wilock is a content creator in the radio industry, who is also a syndicated DJ with a hit show distributed nationally on radio stations across Canada with the same music format. He gets a fee based on the ad sales of his program. This model links the success of the content to ad sales and the creator gets to share in the proceeds. That is a true partnership, not what we have in the online world! Now if we can get publishers to do that  it would be great start, but there has to be sufficient ad sales to make this work profitably.

 

Another interesting idea I found was a company Legacy.com that is an obituary service for daily newspapers that provides an online announcement, a chance to leave comments to pay your respects and register in a guestbook as part of the service. The newspapers pay a fee for each listing, but can reap the rewards of related sales of flowers that the visitor can purchase while visiting the obituary. Legacy provides a flower ecommerce service where a share of the proceeds will go back to the publisher. Over 1,700 newspapers use this service. In this model the advertiser pays for the listing and then the publisher get a cut of the sales of the products too. This is a great model as it provides two sources of revenue for the content.

 

There is another approach to look at that does a great job using the content marketing model. Dr. Mercola has a website that provides articles on natural health and living and has over 1 million subscribers to their email newsletter. The branded media site takes no advertising and pitches no products but their own branded ones that are available for sale on the site. This approach, like the Leagacy.com idea links the content with actual product sales versus leads and awareness for advertisers.

The new media companies like search engines; social media and blogging sites rely on free content for them to make their profits. It is a model that does not benefit all the stakeholders in the ecosystem and must be addressed by the industry for long-tern sustainability. In a world where content is “King” we need a better support system for writers so they can share the benefits in the growing share of digital advertising. How about this radical idea that all the search engines give back 25% of sales to a journalists fund through a country tax that is distributed by the government to the industry as grants. The search engines must comply or each country web filters through the ISP providers will block them from market access. Now lets see if any politicians or the CRTC take the ball on this one.
About Me
Martin Seto

 
Martin Seto is the principal of Reflex Media, a media consultancy practice offering media owners digital publishing, event management and ad sales help. His media expertise also include working with ad agencies as a media buyer/planner for tv, radio, print, outdoor, magazine and online. He has been in the advertising and media industry for 25+ years and he has been an instructor/speaker with Centennial College and at magazine conferences across Canada. He can be reached at marty(dot)seto(at)
reflexmediasales.com or 416-907-6562, and on LinkedIn.

Most Recent Blog Comment
Marty Seto says:
Hi Steven, these are created by the client directly and booked like they would an ad. The new copywr...
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