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A study by the consultancy firm goetzpartners reveals how publishers can curb declining revenues and develop a successful strategy in the digital age.
“Publishers have no future without paywall,” emphasised Marcus Worbs, a partner at the consultancy firm goetzpartners, during a presentation of the study “Paywall: Pay up or hit a wall. Strategies for success for publishers in the digital age.” Only one in five daily newspapers in Germany currently uses a paywall. The figure is one in two in the US. However, publishers must provide adequate content before introducing paywalls. “It is not enough to simply attach a price tag to existing content. Publishers have to offer added value,” explained Dr Alexander Henschel, Managing Director at goetzpartners, with reference to a consumer survey conducted as part of the study. The study indicated that consumers are primarily willing to pay for well-researched background articles containing lots of information. Entertaining and exclusive contents are, however, also important criteria for paid content. Consumers attach importance to being able to conveniently access content on all devices, such as smartphones, tablets and PCs.
Market figures also highlight that a rethink is required: The revenues of publishers in Germany have fallen by €85 million to €7,802 million over the past four years; circulation has even dropped much more sharply. The number of newspapers sold per day has declined by 11.3 % over the same period. These constant falls in circulation have caused the situation to deteriorate further, and are resulting in a radical market shakeout. The closure of the “Financial Times Deutschland” and the crisis at the “Frankfurter Rundschau” are examples of how print media have to fight for survival, as more and more content can be accessed free-of-charge online. Publishers have yet to find coherent ways of generating revenues from their digital content. Paid content has therefore become a vitally important issue for publishers.
A digital subscription is only worth 1/9 of a print subscription from consumers’ perspective.
The bad news: According to the goetzpartners study, a digital newspaper subscription is only worth around €5.13 a month in the eyes of consumers compared with €45 a month for the print edition. Consumers currently spend €13.60 per month on average on online journalistic content. However, 31% of Internet users have not yet paid for journalistic content on the web, but are willing to do so in principle. That represents a further potential 12 million consumers of paid content. However, as the advertising revenues from digital media only generate a fraction of the contact prices in the print segment, in most cases they alone will not make up for the threat of declining revenues in print. “In addition to digital advertising revenues, publishers therefore also need to monetise their content and supplementary services through paywalls,” explained Marc Ziegler, Head of Digital Business at goetzpartners. Five hurdles in particular have to be overcome in order to achieve this goal, which goetzpartners identified as part of the study: the free-of-charge culture of consumers online, the lack of added value of digital content, the omnipresence of equivalent free content, excessively high pricing and the publishers’ lack of technological expertise.
However, no blueprint solution for this exists. Various components must be individually combined, depending upon the type of publisher and the existing portfolio, in order to produce a convincing offering for consumers. “There are various elements, such as applications, e-learning, multimedia, social media and personalisation, which vary in importance depending upon the publisher,” remarked Ziegler. “Specialist information depends upon different success factors to regional newspapers. What’s important is developing the appropriate strategy.”
Those interested can download the full study “Paywall: Pay up or hit a wall. Strategies for success for publishers in the digital age” from goetzpartners (German language) HERE
About the study
The study “Paywall: Pay up or hit a wall. Strategies for success for publishers in the digital age” by goetzpartners provides an overview of the paywall models, outlines consumer requirements and desires, and sets out measures and strategies for publishers to generate revenues online with journalist content. 1000 Internet users in Germany were surveyed via an online questionnaire for the representative consumer survey conducted as part of the study.