Media paywalls & micropayments, Patreon loans & RIAA profits

Today’s newsletter has a revenue focus. Here’s the latest news on how cultural organisations are making money in the digital era, or are trying to at least.

What You Need To Know 👀

  1. The Atlantic (re)joins the metered paywall club 💵

Nieman Lab reports:

“More than a decade after it dropped its paywall, The Atlantic has joined the growing group of magazine publishers with a meter: Like New York and Wired in 2018, the 162-year-old publisher on Thursday announced that it’s enacting a subscription plan across its site. Users will be able to access five articles each month for free before being required to pay annual fees [starting at $49.99/year]…”

My take: The problem online magazines and small-medium news organisations face is subscription fatigue. Consumers may be willing to pay for The New York Times or The Washington Post, but even at the comparatively low price of $50 per year (about the same as many semi-pro Substack newsletters charge), it will be hard for The Atlantic to make meaningful money. But in the current dire ad market for online media, they have to try. See the next story for more experimentation…

  1. UK’s Reach is testing micropayments on one regional website 👛

Via Mediagazer comes this story from Press Gazette:

“Reach, which owns the Mirror, Express and Star national papers and more than 150 regional titles, has begun trialing a micro-paywall on Examiner Live, the website of the Huddersfield Daily Examiner.

The website is using payments platform Axate, formerly Agate, which allows readers to put money into a digital “wallet” and pay a small fee per article.”

My take: Reach will charge 25p for some articles, with a cap of £1 per week. It’s a fascinating experiment, because even though the monetary amounts are low it will give excellent data about what people are willing to pay for. I’ve seen several micropayment solutions in the crypto market – e.g. Brave browser and Unlocked – but cryptocurrencies still haven’t solved their user experience issues (buying and using crypto can be difficult). Axate operates on a prepaid basis, with British pounds as the currency. One to watch.

  1. Patreon may start providing loans to creators 💰

Variety reports:

“Patreon, the subscription-based fan platform, is eyeing a range of new services to support creators — including potentially providing loans at some point, CEO Jack Conte said.

Conte, speaking at Variety’s Entertainment & Technology Summit in L.A., said Patreon is considering ways to provide capital funding and other financial services to artists, as well as services like health insurance and HR support.”

My take: It’s hard to build an indie business as a creator these days, whether you’re doing music, video or any other type of creative endeavour. So I see this as a positive step from Patreon, particularly given the amount of VC money it has raised. According to Crunchbase, Patreon has raised a total of US$165.9M in funding over 5 rounds – the latest a $60M round in July of this year. Distributing even a small portion of that money to creators would, in effect, be kind of like angel investing in creators. Although structuring it as a “loan” instead of an investment would allow the creators to stay independent, and self-owned. But of course the attractiveness of a loan would depend on the terms.

  1. RIAA revenues grew 18% to $5.4 billion in first half of 2019 🎹

The RIAA released this statement:

“The Recording Industry Association of America (RIAA) today released a report that shows that in the first half of 2019, the U.S. recorded music market continued the overall trends and double digit growth rates of 2018. Revenue increases were driven by the number of paid subscriptions exceeding 60 million for the first time. Total revenues grew 18% to $5.4 billion at retail in the first half of 2019. Streaming music accounted for 80% of industry revenues. At wholesale value, revenues rose 16% to $3.5 billion.”

Image from an RIAA blog post.

My take: Music is one cultural industry that has largely figured out how to make money in the digital era. The key stat in this report is that streaming now makes up 80% of industry revenues. That’s staggering when you consider that just twenty years ago, consumers were effectively stealing digital music on p2p services like Napster. How much of today’s streaming income is flowing back to musicians is still a contentious issue, but even so it’s good to see the music industry thriving again.

Data Points 📊

  • B&C: tv advertising spending in the second quarter of 2019 was up 11%; digital advertising was up nearly 20%, while traditional advertising was flat. 📺

  • Hypebot: 1 In 4 Albums Sold In US Last Week Were Taylor Swift’s Lover. 🎸

  • Nieman Lab: Young people may download news apps, but they spend very little time with them. 🗞️

  • Pew Research Center: almost 3 in 10 (28%) US adults say they go online “almost constantly”, up a third from 21% in 2015. 📱

  • Nielsen: the typical U.S. adult streamer spends an average of 57 minutes streaming non-linear content to their TVs in a regular day, compared to two hours 42 minutes watching linear TV (e.g. cable). 📺

Tweet of the day 🐦

Here’s what The Atlantic is up against:

That’s the Friday update, hope you found it useful. See you next week! Your early support of Cybercultural is much appreciated. 🙏