What compels Australians to pay for news?

Welcome to Tuesdata, our weekly analysis for Unmade’s paying members.

Below, we explore the findings of a comprehensive global study from Reuters Institute, which includes Australian results, exploring motivations for paying for news subscriptions. We talk to executives from Nine News, The Guardian and Crikey about the findings.

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Has the news industry turned the corner on subscriptions?

More Australians are taking out news subscriptions, and more are reporting feeling a greater sense of trust in the news. Those are the key findings from this year’s Reuters Institute Digital News Report, produced by The University of Canberra.

The study spoke to 93,000 consumers globally, including 2,025 in Australia.

The most remarkable number from the study is that more than one in five Australian consumers (22%) are now paying for news. That’s the third biggest of the 46 countries studied, behind only Norway (39%) and Sweden (33%).

To get a better understanding of what that means to local news business models, we spoke to news executives leading some of the country’s most prominent mastheads – Nine’s managing director of publishing James Chessell, Private Media CEO Will Hayward and The Guardian managing director Dan Stinton.

Quality is the key reason people are subscribing to news. “Better quality than I can get from free sources” was the most common answer, with 44% of those subscribing doing so for that reason.

According to Crikey’s Hayward: “If you’re going to charge people for content, it’s important that it’s distinctive and clearly valuable to them. So you can do that through addressing a particular niche and offering information that’s not available elsewhere, as we do with the Mandarin and Smart Company.”

Nine’s Chessell agrees with Hayward that not only does the content need to be high quality but it also needs to be distinctive. In the case of Nine’s newspaper mastheads, that means investigative journalism. Earlier this month, the company won a famous defamation victory defending its work on former SAS soldier Ben Roberts-Smith.

“How do you differentiate yourself from your competitors? It becomes even more critical now in a cost constrained environment,” Chessell says. “The way we try and differentiate ourselves is by doing journalism that others that others won’t do. And so that does come back to some of that investigative journalism, public interest journalism, that notion of holding the powerful to account.”

Then comes a greater range of content. Says Chessell: “The second really critical part of it is offering a breadth of experiences so people do see value. We’ve invested a lot in our Good Food brand recently. We think that people expect us to have a breadth of content available to them.” He points to The New York Times, which pairs its serious investigative journalism with lighter content like crosswords and recipes.

“When you look at audiences, they want a bit more light with the shade.”

This comes at a cost though. “Public interest journalism tends to be the most expensive type of journalism,” says Chessell. “There are only one or possibly two news organisations that take the kind of risks that we do. To use Ben Roberts-Smith as an example, that’s a story the ABC ran away from, it’s a story The Guardian wouldn’t touch. Newsrooms such as ourselves take on risky stories.”

Ethics of paying for news

The softening of the advertising market means that mastheads don’t have the luxury of relying on a single revenue stream. In the lead-up to a possible recession, advertising revenues are even less reliable for publishers.

But in an environment where consumers’ discretionary budgets are shrinking and inflation keeps rising, the case could be made that keeping news, particularly public interest news, behind a paywall is an ethical quagmire as well as a necessary business model. After all, 22% of non-payers in the report said they would pay if subscriptions were cheaper.

The Guardian, which remains free for all readers, has been unusually successful in persuading its supporters to pay for its work nonetheless.

Wanting to help fund journalism was the third most common motivation for paying.

“I would love to be in a circumstance which we were in maybe a decade ago, where we thought that advertising would be enough to pay for journalism,” Stinton says.

“I’m encouraged by the fact that so many consumers have been willing to pay for news. That’s ultimately meant that the long term security of the industry is far more assured.”

Not that Stinton has a problem with his rivals having paywalls. “I have no problem with charging for news and I actually think it’s one of the one of the best things that’s happened to our industry.”

Reader revenues have increased in 2023 according to the report, with a 9% hike in Australians paying for online news since 2021. That bucks the global trend of stagnating growth in news subscriptions. Chessell says that despite macroeconomic headwinds, there’s still stability in the advertising market, but subscriptions are projected to be the more critical contributor to revenues into the future.

“I think the subscription side of the business needs to continue to be a significant, bigger contributor. We need to continue to grow our subscriber base. So, in terms of what I think the bigger contributor will be in the future, I think it will be on that subscription side,” Chessell says.

According to Stinton: “Reader revenue is just marginally ahead of advertising in terms of total revenue for us. But they’re both really important streams.”

Australia benefits from public interest journalism, says Hayward. “Society needs strong public interest journalism in a free market. The current advertising market does not support that kind of reporting. So in absence of advertising dollars or some other business models, subscriptions are the strongest and most sustainable way of investing in public interest journalism.

“Advertising is not enough to support a proper newsroom.”

Political bias

The Australian was the publication that had the most paying readers in this year’s survey. On the other end of the political spectrum was The Guardian, which came in second. Nine and News Corp papers dominated the remainder of the top ten. News Corp was also invited to participate in this feature, but said it needed time to digest the report’s findings.

Publications with conspicuous political leanings contributed to consumers’ disillusionment with news. Political bias was pegged as one of the reasons consumers opt-out of paying for news.

Guardian Australia recorded the largest increase in reader trust this year – up six percentage points to 52%.

“Obviously, we’re a proudly progressive paper, and I think what was identified in that report was that a greater proportion of our readers and supporters identify as being on the left side of politics. But we’re not partisan. I guess people that share that worldview are typically going to be more inclined to support The Guardian,” Stinton says.

“Our readers are smart enough to make up their own minds, so we’re not going to try and do it for them. I think a much better place is to be in the middle,” Chessell argues.

Hayward was firm that ”this is probably one of those instances where reported behaviour and actual behaviour deviate from each other.”

“The idea that consumers only want straight news is something that when you survey the general public, they often say to be the case, and yet The Economist continues to thrive, Crikey continues to thrive, as do The Australian and the Herald Sun.”

Attention economy

Australian use of TikTok for news has increased by three percentage points, reaching close to the global average. It highlights a wider trend in Australians turning to social media to get their news.

“We spend a lot of time talking about competition with other media outlets. But at the same time, consumers have YouTube in their lives, they have Netflix, they have all sorts of other digital distractions that compete for their time. So we need to remain relevant so we’re not losing out to non-news competition as well,” Chessell says.

The pendulum may also be swinging back towards advertisers supporting quality news. Yesterday GroupM said that it had signed up for the Back to News initiative – a program to help brands support quality journalism by re-investing media budgets in credible news publishers.

GroupM CEO Aimee Buchanan said: “It’s critical that we support a balanced local ecosystem, where Australians have access to credible, fact-based and vetted news sources to minimise harmful disinformation circulating.

“Advertising plays a key role in supporting credible journalism by funding high quality news environments and in turn these environments are good for advertisers, providing access to brand-safe, high quality content environments.”

The Unmade Index inches up

The Unmade Index, our measurement of the performance of ASX-listed media and marketing stocks, crept upwards on Monday, rising by 0.18% to land at 633 points.

The two biggest stocks on the Index, Nine and Domain, posted 0.51% and 0.57% lifts in their share price, respectively. Seven West Media scored a 1.25% lift in its share price.

Ooh Media had the worst day with its share price dropping 2.99%, while communications agency holding group Enero fell 2.51%. ARN Media saw a similar drop of 1.89%.

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