Dominic Young

by Dominic Young, Originally posted on Linkedin

News publishers are in a panic about AI.

It’s because AIs are answering people’s questions, which means they don’t need to visit publishers’ websites and apps to get answers. Search traffic and ad revenue, never a particularly reliable source of revenue, are cratering.

What can publishers do? The other revenue option that works is subscription, so lots of publishers are doubling down (or getting started) on that option. Much more reliable, if you can get enough subscribers. Just look at the New York Times, and a few others, riding high.

Which means last week’s news wasn’t great. Two of the giants of the news subscription business, the New York Times and the Washington Post, stumbled.

The Post’s layoffs, followed by the exit of their controversial CEO Will Lewis, tell the story of a relentlessly loss-making business which has not managed to reverse its trajectory – even while publishing from the epicentre of the Trump presidency, the most consequential and active news story in modern history.

The NYT, by comparison, is doing much better. Revenue up. Profits up. Subscriptions up. Yet, despite that, share price down. Bron Maher did a great analysis over at A Media Operator.

What’s going on? If AI has destroyed the traffic-and-advertising business model, and even the biggest players can’t make subscription work, what is everyone else supposed to do? More subscription paywalls are coming, but can they fix everything?

The brutal truth

Here’s the brutal truth of why news media is failing: not enough people want what news publishers are offering.

The internet has moved on, again and again, and succeeded in persuading everybody to spend ever-increasing hours of every day interacting with their devices.

Old-school news publishers have carried on producing essentially the same things they were doing decades ago. The same people, by and large, are engaging with it – they’re just decades older now.

What AI has brought into sharp focus is the reality that the news industry needs independence from the platform-controlled advertising-and-traffic business model which has held them in a state of suspended evolution.

The slow, relentless, decline of the news industry over the last couple of decades is accelerating fast. Doing nothing isn’t an option. The pivot away from this decline will need to be about one simple thing for news publishers:

More people wanting their products more often.

If publishers want users to pay, as well, then they’ll have to want what’s on offer enough to cover the cost of what is being asked in return.

Desire vs cost: a simple equation

But only a minority pay for news – in most countries, a very small minority. Why?

It’s obvious: when peoples’ desire for something exceeds the cost of having it, they buy. When it doesn’t, they don’t. Simple.

News subscriptions don’t score well against this formula. That’s why so few people subscribe.

Buying a subscription is a massive hassle. Sign-up. Add payment details. Commit to monthly payments, even for something you might only want every now and then. Remember to cancel, often a tortuous and time-consuming process, before the price goes up by 20x or more. It all adds to the cost, even before you get to the actual price. If you want something else, go through it all again.

The huge majority of people can’t be bothered, even when discounts of 90%+ (or even 100%+) are on offer. The cost is still too high, even when the price is near zero.

Reduce hassle and commitment, not price

So, if you want more customers, reducing cost starts with reducing the commitment, the hassle – not the price. People want news impulsively, they want to be able to read laterally from one source to another as feeds and friends suggest, as well as their regular go-to publications. They rarely want to make ongoing commitments to multiple publications.

Which means that refusing to sell to anyone who won’t meet your demand for commitment locks out the huge majority. Even coffee shops which sell subscriptions allow everyone else to buy single coffees when they want one.

Near-zero pricing won’t fix it. Frictionless access in response to impulsive desire will do much better.

It still leaves a challenge, though. You’ll only make decent money if people come back and spend their money often. They need to get in the habit.

Most news publishers, looking at their engagement statistics, see a depressing picture. Typically even subscribers don’t come every day. When they do visit, people often only read one or two articles. A scary proportion hardly come at all, paying for a subscription they have forgotten they have.

That explains why publishers are so scared of losing them, but with no new subscribers in the offing, relying on zombies is hardly a survival strategy which will last long.

Making better products

If the best way to gain more customers is to remove the pointless barriers locking them out, then the best way to gain more transactions will be to make products they want more, and choose to buy more often, driven by desire.

Given the enormous number of hours the average person spends with their devices every day, there’s plenty of attention there to compete for. Looking at what they’re spending their time doing, we can get a plethora of clues about how to do so.

One thing we can see over the shoulder of anyone on the tube: all-or-nothing, 400+ stories per day, mega-products aren’t winning enough attention.

Beyond the mega-product: making something better

Better products and real innovation, priced to sell, will be needed for everyone else. There’s a real mass market out there if we get it right.

Luckily, there are enough frustrated non-subscribers and ex-subscribers to make getting started easy. Reduce costs (but not your price) and watch your customer numbers surge even without touching your existing product.

Then it’s time to ride that wave with new products designed to appeal to new customers, new incentives and competition driving innovation, investment and – dare we say it, growth.

That will lead the way up and out of the spiral of decline.

AI, by polluting the internet and destroying trust, might actually help as more people seek safe havens from disinformation and lies.

How far, and how fast, we can reverse decades of decline is surely the adventure we all want to go on. First we have to believe it’s possible.