The monetization dilemma for media: Paywalls on one side, advertising on the other

In its recent analysis of the state of the media industry, the Pew Center noted how large numbers of newspaper publishers had put up paywalls or subscription barriers around their content — a group that will soon include one prominent former holdout, the Washington Post, which announced that it is launching a paywall this year. At the same time, the report also described how many publishers are experimenting with new forms of advertising such as sponsored content and “native” advertising.

The driving force behind both of these phenomena should be fairly obvious: the media industry is desperate to find new sources of revenue.

That the Washington Post has finally seen fit to erect a paywall — albeit a very leaky one, as my colleague Jeff Roberts has pointed out — makes this point better than almost any other, since the newspaper’s chairman and CEO Don Graham has been vocal in the past about his opposition to such an idea, and so has the paper’s publisher, his niece Katharine Weymouth. As the Columbia Journalism Review has noted, however, the Post’s business is disintegrating fairly rapidly, giving it relatively few options.

Everyone is searching for new revenue options

This isn’t unique to the Washington Post, by any means. It’s a dilemma that almost every media entity, large or small — both digital and non-digital — is struggling with, as advertising continues to decline and no new source of revenue has emerged to take its place. And that’s one of the key questions were are going to be discussing at paidContent Live in New York on April 17, through a variety of panels. What is the best way (if there is a single best way) for publishers to monetize their content?

Is it better to erect a paywall and base your future on a reader-driven subscription model, as many newspapers are doing — and as some individuals such as Andrew Sullivan are also doing? Or should publishers rely on what has always been the core of their business model, namely advertising, and find new ways of delivering that value to brands?

Newer digital-native publishers such as BuzzFeed are pinning their revenue hopes on sponsored content and other forms of “native” advertising, in which the site creates content that is indistinguishable from its regular content (apart from the name of the brand sponsoring it). While this seems to work well for an entertainment-focused site like BuzzFeed — which is introducing its own sponsored-content advertising network for other sites, according to a report in Ad Week — it has been a somewhat rockier road for more traditional publishers such as The Atlantic.

On one of our panels at paidContent Live, we have News Corp. executive Raju Narisetti — who not only works for the owner of one of the premier examples of a paywall in action, the Wall Street Journal, but previously worked for the Washington Post, and has also spoken in the past about his enthusiasm for what he calls a “reverse paywall” approach, in which loyal readers are given rewards for their loyalty instead of being asked to pay more for the privilege, which is the way that most paywalls typically work.

What is the best monetization method?

We also have Justin Smith, president of Atlantic Media, which publishes a magazine with a 160-year history, but has also been at the forefront of experimentation with new revenue models online — including real-world events, as well as sponsored content. A recent episode involving a sponsored piece about Scientology, however, led to a firestorm of criticism, including a comment from widely-followed media theorist Clay Shirky that “we don’t trust The Atlantic as much as we used to.” The company later changed its policies around how it handles such content as a result of the uproar.

Major League Baseball CEO Bob Bowman will also be joining us, since the MLB is a company that has become a powerful content producer in its own right — and in fact was earlier to the digital evolution of content than many content companies — and has used a paywall and mobile apps to great success as a way of monetizing that content. Are there lessons baseball can teach other content companies? We’re going to find out.

No one can claim to have all the answers to the future of the media business — not the largest traditional media player, nor the smallest and most innovative startup. All we really have are some very interesting questions, and we hope some of you can join us in that discussion on April 17 in New York. You can find more details about paidContent Live, including a link to register, on our event page.

Images courtesy of Shutterstock / Eldorado3D