By Tony Silber
Over the last two years, I’ve had dozens of conversations with media CEOs. When asked what their number-one priority is—and sometimes without even being asked—the answer is unanimously consistent: Revenue.
That may sound somewhat reductive, but it’s not, because the word “priority” itself is defined as a preeminent concern among others. Anyway, that’s what I’ve found. If you get to be a CEO of a media company, you’re used to juggling many different agenda items, including training revenue producers so they’re best equipped to hit their budgets.
As an observer of media over the years, I’ve seen the formula for revenue development and revenue streams ebb and flow from one source to others, some rising in importance and some fading—usually after it’s proven they don’t work.
Historically, media businesses have relied on advertising and circulation revenue. Consumer brands would often buy subscriptions at a loss, just to bolster their advertising revenue. Fundamentally, it used to mean that more readers means higher ad rates. B2B brands have often foregone reader-side revenue for ad revenue in their core product: Magazines and websites.
Over the last 20 years, all of this has changed. Advertising remains the number-one source of media revenue, and in general, combining print and digital, it’s about 75%, according to a recent SIIA Media benchmark report. Of those two sources, digital advertising is the workhorse, with more than half of all ad revenue.
But now, on both the B2B and B2C sides, media brands surround their markets with products, drawing revenue from all of them. These include events, subscriptions, data, e-commerce, affiliate revenue, and more.
With all these things in mind, I recently saw a story from Media Makers Meet, or M3, counseling media companies to diversify their revenue sources. “Publishers must expand their revenue streams beyond the paywall,” the article, published earlier this month, urged.
The primary reason, according to the report? Subscriptions have shown signs of peaking. Indeed, M3 cited the Reuters Institute Digital News Report 2023, which said that its research shows the average proportion of people making payments to any online news service remained strikingly low—at 17%—for the second year in a row. It also indicated that around 23% of subscribers included in the Reuters cohort are either canceling subscriptions or negotiating lower prices. “This inevitably raises questions about whether we may have reached the peak of the subscription trend,” M3 concluded.
It offered six strategies for diversification, some well-known and widely used, and others that are niche sources. They include:
Advertising and sponsorships. These areas continue to grow, especially in events, which have rebounded spectacularly from the pandemic.
Commerce and affiliate marketing. The potential is huge—if you have products to sell. A brand like Consumer Reports, which reviews hundreds of products, is perfectly suited to affiliate marketing. A company like Hearst, which has many spinoff products from its magazine brands, would do well with e-commerce.
Events, conferences and webinars. See bullet 1, above.
Voluntary donations and crowdfunding. I suppose it could work for some, but generally speaking, if you have to ask for voluntary donations (not subscriptions), chances are your product isn’t gaining enough traction in the market.
Leveraging digital content. There’s plenty of revenue potential here, a lot of it already tapped, such as content marketing, white papers, research and the like.
Data monetization. This one overlaps with the bullet directly above, in the sense that media brands can sell custom research and use audience intelligence to generate and sell leads to marketers.
The big takeaway: Subscription potential may have hit a plateau, but there are plenty of revenue opportunities for media brands that surround their markets with products.