CMU Trends Media

Trends: Making money from music media in the digital age

By | Published on Monday 5 June 2017

Magazines

While the challenges faced by the music industry – and especially the record industry – since the mainstream adoption of the internet in the early 2000s have been widely documented, the music media – and especially the music press – has faced many of the same challenges too.

How have music media owners tackled those challenges? Are they, like the record industry, finally starting to turn a corner? Where do the editorial and commercial opportunities now lie? And what do changes in both the music industry and music media mean for the way artists, labels and promoters manage their PR campaigns?

In this CMU Trends article – based on a CMU Insights presentation at The Media Conference at The Great Escape last month – we review recent developments and trends in the music media business, and consider the ongoing challenges faced by media owners.

THE IMPACT OF DIGITAL ON MEDIA
The mainstream adoption of the internet by consumers in the early 2000s caused just as big a revolution in media as it did in music.

As the world wide web and email became viable channels for delivering content, media owners old and new suddenly saw many of the old barriers to market disappear. There was no need to print and distribute physical publications. You no longer needed access to the newsstand or relationships with a retailer to sell your product. For broadcasters, there was no longer any need to acquire a slot on a radio or TV network. And for all media owners, a global audience was now in reach.

Subsequent technological developments during the 2000s made publishing content even easier. Blogging and user-upload platforms meant media owners – especially newer players – had very cost-effective ways of distributing their content. The rise of the search engines and the social networks provided new marketing channels. The web became a massive newsgathering and research tool for journalists. And newspaper and magazine publishers suddenly had access to data about how their readers actually consumed their content, and which content they actually read.

This revolution was also good for the consumer. It meant consumers could now pick and choose content from different titles, and consume articles and programmes from a wider range of sources and countries. It made it easier for consumers to share the content they liked, and to comment on and interact with that content. Also, online media is generally more frequent and more timely, and often free.

So, everyone’s a winner. Traditional media launched online channels that meant they could reach a bigger audience than ever before. And a plethora of new online-only media launched, many of which could never have come to market with the old model.

This is particularly true with music media. Most traditional print titles now publish online, allowing them to produce a wider range of content and to reach a bigger more global audience. Meanwhile there are a plethora of newer online-only music media, including blogs, podcasts, music-centric YouTube channels and fully-fledged music magazines that just happen to only exist online.

COMMERCIAL REALITIES
Despite all these positives, there are also plenty of tricky commercial realities. In the digital age media owners – including music media owners – face more competition than ever before, for both audience and revenue.

This increased competition comes partly from all the new entrants in the market, ie the online-only publications that capitalised on the removal of barriers to entry. But also partly from grassroots content creators like bloggers and YouTubers. And partly from brands who have used the web to become media themselves, in some cases creating their own content instead of paying to appear alongside a magazine or broadcaster’s content. And – perhaps most significantly – from social and search.

When the web first started to go mainstream, some media owners dabbled with charging a subscription to access their online content. Most chose not to go that route though, partly because those who did couldn’t make it work. So media owners generally decided to make their content available for free online.

The logic went like this: If we put our content online for free we should be able to build a massive audience. At some point internet advertising has to take off. And if we have a massive audience when that happens, we’ll be quids in. Plus, if we ultimately shift to an online-only business model, we’ll no longer have the costs of printing and distributing physical publications.

Most of the titles that did make decent quantities of content available for free online did start to see a good uptake for their output. Most traditional newspapers and magazines with prolific online operations are talking to more people today than they ever did before, while some of the newer online-only media also command big audiences. And internet advertising did explode. However, what few media owners foresaw was just how much of the internet advertising dollar would go to search engines and social media, and especially the likes of Google and Facebook.

As the web evolved, a plethora of businesses emerged that provided free services – rather than content – that was paid for by advertising. The nature of those services also meant that ads could be more targeted to the user. And while it is expensive to build and evolve a decent search engine or social network, those businesses don’t have the significant costs associated with generating a whole batch of new content every day. Which meant the big search and social companies came to market with ground breaking and cost effective advertising products.

All media owners – and especially consumer-facing media – have found it hard to compete with the likes of Google and Facebook in their bid to command a decent slice of the internet advertising pie. With search and social – as well as increased competition from newer media – driving advertising rates down, it can be hard to build an online media business on banner ad income alone.

Many of the traditional titles still have their old print businesses of course, which continue to bring in money both from the newsstand and from advertising. Though – in the vast majority of cases – those print businesses are in decline, with circulations down year-on-year, and print advertising sales also facing competition from the online world. So, while print titles may still be viable in the short term, for most media owners the long-term future is online, which means they have to make digital pay.

HOW TO MAKE MONEY OUT OF MEDIA ONLINE

Advertising
One of the media sector’s traditional revenue streams, advertising – mainly banner advertising – was originally seen as the key to the commercialisation of online media. And there are opportunities here and therefore money to be made.

Though media and their advertisers do seem to be in a constant battle to force ads into readers’ line of sight. It’s a battle that has involved pop-ups, pop-unders, ads that suddenly appear in the middle of articles and videos that auto-play as a page loads. This battle can make websites unusable, and means more web-savvy readers employ ad-blocking technology so that no ads load at all.

Even when ads do load – because of the way internet advertising works and the relatively low rates available in an incredibly competitive market place – for banner ads to generate enough money alone websites need to secure massive traffic. That generally requires a certain kind of content: celebrity gossip, outrageous opinions, silly lists, and bold but misleading headlines and stats. For many media brands, that kind of content isn’t viable.

Subscriptions
The media sector’s other traditional way of generating revenue was to charge for access to its content. Early attempts at paywalls were not hugely successful, which meant that most media owners – and most new media launching online-only – initially went the ad-funded free content route. But in doing consumers came to expect content online to always be free.

Which means that when some media owners, disappointed with how banner ad sales were turning out, started dabbling with charging for content again, they often met resistance from even their most loyal readers.

Trade and business media have had more success in this domain, for obvious reasons. And many broadsheet newspapers are now experimenting with one pay-wall method or another. Though few have found a way to successfully charge for celebrity and entertainment editorial online.

Other options
What else can media owners do to generate revenue from their content and from their significant online audiences?

Sponsorship – for example, of a section of a magazine – was always seen as a way of getting more money, or more regular money, out of advertisers. And it can be a good way of engaging brands and generating revenue where a title has prestige but not necessarily a mass market audience.

Branded content is an evolution of sponsorship, and sees brand partners getting more involved in the content they are associated with, rather than simply placing their logo next to an existing section of a magazine. Brands feel they are getting something more bespoke, plus they may be able to repurpose the content created on their own digital channels. Though quite how branded content works varies greatly across the industry, and old school editors and journalists are always nervous when brands start getting involved in editorial.

Donations. This could be seen as a rework of the subscription model – loyal readers may be more willing to spend money if they feel they are supporting editors and journalists they like rather then buying access to content. And the donations model usually allows readers to pick what sum of money they hand over. The challenge with the donations model – whether you ask for donations as a matter of course or run occasional crowd-funding campaigns – is the positioning. Some editors and journalists feel awkward asking readers for money in this way. And, of course, it only really works for independently owned publications where no one is making mega-bucks, it isn’t really an option for a corporate media owner with shareholders.

Affiliate commissions. This is where media include links to websites selling products related to their articles – so in music that would commonly include Amazon, iTunes and the ticketing platforms. Many of those companies offer affiliate programmes, where the media owner earns a small commission if a reader clicks on a link and then buys a product. Though each commission is tiny, so – as with banner ads – this only really works for sites with massive traffic.

Upsell spin-off products or events. Which is to say, media become consumer brands in themselves and build other products around that brand that readers will pay for. Or they become an event promoter and sell tickets to and sponsorship around their events. Many media owners have dabbled in this space, and there are a number of obvious possible spin-off products for music media in particular.

Brand licensing. Where a publication has a strong brand, a media owner may be able to secure licensing deals with third parties who are interested in exploiting that brand. Either to create a new product not currently offered by the media owner itself, or to distribute the media’s content in other markets. There are challenges with licensing of this kind – quality control in particular – though for media with strong brands, deals of this kind can be pretty lucrative.

Become a marketing agency. Some media – and especially music media – have recognised that a key asset is their ability to create content that engages a certain audience, and that’s a talent consumer brands wanting to reach that audience will pay for. That may take the form of sponsorship or branded content within the media owner’s own publications – or it may involve creating something bespoke for the brand, which may or may not appear alongside the media’s own channels. In that way, the media company becomes a marketing agency as well as a publisher.

FINDING A MODEL THAT WORKS
So, lots of possible revenue streams. And – as with labels in the record industry – it seems likely that long-term success for any one media will be about capitalising on a number of those possible revenue streams. Though, while there may be plenty of options to explore, the fact is making money out of online media remains a big challenge.

That is particularly true for music media. Thanks to the blogosphere and online-only titles, there are more people writing about and covering music now than ever before. Yet, pretty much everyone agrees it is harder than ever to make money out music journalism, and therefore it is harder than ever to pursue a full time career writing about music.

Different music media and music journalists are pursuing different approaches in order to ensure their individual businesses and careers are financially viable. It will be interesting to see which approaches are ultimately successful.



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