There’s no such thing as a “news business.” News gathering and presentation is an expense, it is an investment in building an audience from which financial value can be extracted through subscriptions, advertising and other sources. In this sense, the news business is actually the business of audience development. That makes the concept of customer lifetime value critical. So how come many people who work in the media industry don’t know anything about it? 

Of all the unkind things that people say about millennials – they they’re snowflakes, that they have given up on sex, that they would rather rent a motorized scooter than walk, that they have ruined brunch with their ridiculous avocado toast – the fairest is that they have destroyed the dry martini by gussying it up with flavored liquors. This is criminal. My own two millennials would never dream of doing such a thing. It seems to be the one lesson they took on board. That’s okay, ignoring the father is their job.

Messing with the martini is pretty serious, but I get it, I really do. Every generation wants to improve on what came before, and god knows, Boomers have left lots of room for improvement:

But not everything needs fixin.’ Like it or not, Boomers like me have figured out a thing or two. In my particular case, I’ve figured out the fundamentals of a successful media business. So, for this quarterly BoW update, I thought I would help out those millennials kind enough to drop in here from time to time. Here’s just a few fundamentals about the media business that I’ve picked up along the way. Like the ingredients of a classic martini, they require no generational revision.

1. There is no such thing as “a news business.” News is a cost center, a “loss leader” in which a media company invests in an attempt to grow a profitable audience. Under the right conditions, the audience may be charged a subscription fee for consuming the product, or the audience may be packaged up and sold to advertisers. Or both, these are not mutually exclusive sources of revenue. Sounds like a simple, self-evident idea doesn’t it? But many Boomer journalists I know – and evidently many Millennial journalists, too – seem never to have grasped it. They work in a vacuum, motivated by admirable high-mindedness but with not a thought about the market for whom they are writing, how well they understand it, how well they are serving it. Their refusal to adopt and apply the established language of product development and marketing to the delivery of news is self-destructive – it turns a newsroom, ideally the most important asset of any news media company – into little more than a hit-or-miss operation and thus a costly liability.

It has always confounded me that journalists take such perverse pride in their innumeracy. At the very least, they should take it upon themselves to learn the meaning of Lifetime Value (LTV), a concept invented by the direct mail catalog business nearly 50 years ago. The lifetime economic value of a customer should be the motivating engine of any media business, because it is the definitive index of the value consumers place on what you are giving them. It is calculated by multiplying the average monthly revenue per subscriber by the expected lifetime of the digital subscription.  It forces answers to basic questions like “can I charge more? If we lower the subscription price will we get more customers? What do the customers who churn away when their current subscription expires have in common and how can I retain them? What page views yield the highest advertising return and what kinds of customers deliver them? What kind of promotion delivers the best return in terms of customer acquisition? What changes do I need to make in the product to increase its financial performance? Click here to find out more from Matt Skibinski at the Lenfest Institute.  It’s worth it.

2. Consumers like advertising. Oh, I know, to many of you millennials this is heresy. And sure, every piece of research into advertising receptivity that I’ve seen in a 40-year career reports that people hate it. But actually, they don’t. As I’ve said here at BoW before, I know they don’t, because it works. What they hate is crass and repetitive commercial messaging that is not relevant to their current buying intention. If I am not currently in the market for a new car, then I find automotive advertising intrusive and irritating. If I am, I find it interesting and useful.

Those who say advertising is dead can’t be looking at the numbers, for according to the Interactive Advertising Bureau’s latest biannual report on digital advertising, the first half of 2019 saw a 17% growth in digital advertising revenue compared with the same period a year ago, for a total of $57.9 billion. Nor do they understand the profound transformation from mass to class advertising that began in the 1970s and continues apace today. That transformation is driven by advertiser need for advertising efficiency, which is derived from the ability to target an ad message and measure response to it. The fact that newspapers don’t offer ad efficiency but Google does lies at the heart of newspapers’ collapse and Google’s astronomical growth.

The need for targeting and measurement makes the user database at the backend of any media company every bit as important as the product itself at the frontend. Catalog companies became so adept at tracking individual purchases in their marketing databases that they were able to build models that accurately predicted purchase behavior based on specific merchandising display treatments and pricing. This, let me remind you, was 30 years ago. When applied to the media business, understanding the purchase characteristics of segments of your audience can help boost customer LTV by helping you sell more advertising to those segments. The database is also useful in audience promotion of course. Research suggests that about 7% of the users of digital local news products trigger 50% of monthly page views: If you can map the characteristics of your best users, you may be able to build a promotional campaign that finds more of them. Here’s a link to a simple perspective on that:

Yes sir, mass tonnage is a fool’s game, and for the life of me I cannot figure out why so many media companies, old and new, continue to specialize in it. As their numbers head south they say it’s because advertising is dead. It’s not. They are.

3. Differentiate or die. Consumers will pay for news, particularly well distilled news directly relevant to them and their particular interests. They will even pay for general news despite the fact that through the 70s, 80s and 90s newspapers cost them just 50 cents a day and a couple of bucks on Sundays. In this way, consumers were trained in the understanding that such news wasn’t worth much at all. To compound the problem, when the Internet arrived, most newspaper digital editions were made available for free. This was to achieve what back then we called “scale.” If you could scale up your audience, the thinking went, the sheer size of it would make it indispensable to advertisers. But this thinking was inimical to what most advertisers now wanted – they wanted access to relevant segmented audiences, not merely the biggest gross audience in town. Like I just said, mass tonnage is a fool’s game. In a closed newspaper monopoly market, you can get away with publishing general commodity crap. Once the monopoly is broken, and everything is just one click away, you had better offer differentiated value to cherry-picked audiences – in the unremitting battle for the user’s attention, plain-vanilla, newspaper-like, mass reach news simply doesn’t cut it. That’s why McClatchy and its 30 daily newspapers is on the block, and why the new Gannett, now the largest owner of dailies in the country with 260 papers, is planning another set of deep job cuts. You can read more about the need for differentiation in this earlier BoW post:

There are a million ways to differentiate your product from the competition – through the market in which you choose to compete, editorial voice, political position, story selection, design and presentation, updating frequency and other product features – and if you can pull it off, you may even become the perceived expert in your market and that in turn may lead to new potential lines of revenue, like the conferences and exhibitions that newspapers and print magazines used to stage in the 80s and 90s. You may even be able to boost LTV by moving up the subscription pricing ladder if you become truly indispensable to your audience which, incidentally, should be your objective.

But as you think about differentiation, beware the quality argument. One person’s quality is another person’s biased schlock. Is Trump a fighter taking on elites on behalf of those left behind, or a vulgar, narcissistic bullshit artist from Queens with no respect for the rule of law? I know how the New York Times would answer that question. And how Fox News would. Yet they both make pious claims about objectivity and quality. Quality? Be careful. Depends on the market you’ve chosen to serve. And also on how cynical you can be.

So, now you know. If you’re in the media business, you’re actually in the audience development business. Advertising is very much alive. If you want to get into the tricky business of building a successful news property, you had better offer differentiated value, or you won’t last long. And the best way to steer your business is by applying the principles of customer lifetime value.

But there’s one more thing, and it’s as big as each of these.

It’s distribution.

You might have the greatest product in the world, you might have priced it right in the market sweetspot, the promotional plan you have built might position it perfectly, but if you cannot get it cost-efficiently into the hands of your market, all that work amounts to nothing. Distribution is critical. And it is the trickiest part of the business.

In the media business, distribution devolves to what we call around here “eyeball arbitrage.” You are paying – through promotion and distribution deals – for eyeballs to come see what you’ve got. You then sell those eyeballs, or convert them into paying subscribers. The business principle is obvious. You don’t want to pay more for them than they’re worth. In the high-risk game of eyeball arbitrage, you obviously have to risk losing money at first – you can’t make any money from eyeballs until you have enough of them. But over time, the revenue and expense lines need to cross. Right?

And that brings me to Google and Facebook, the two biggest digital distribution platforms of all. This quarter each of them announced important changes in the way they manage news, news audiences and distribution arrangements with publishers.

Facebook’s news feed upended the news industry. Its news feed algorithm, by boosting the posts that stimulated the most likes and shares, encouraged crazed ideologues, hoaxsters and clickbait artists at the expense of news media brands trying as best as they knew how to follow editorial processes intended to achieve reliability and legitimacy. The disastrous impact of the algorithm on election outcomes, social stability and cultural norms has increased support for aggressive regulation of Facebook. This week a couple of presidential candidates have even called for the company to be broken up, citing the Standard Oil of a different era as the model.

So, perhaps unsurprisingly, Facebook has announced a new initiative. Called Facebook News, it will live in a separate tab from the main newsfeed, decoupling the goal of informing people from the goal of triggering viral action in the news feed. It will be curated by both machine learning and a team of human editors, and it will draw from, initially, 200 professional news organizations that will be subjected to certain standards of quality control. Some outlets, big ones like the Wall Street Journal, will be paid directly, some will be paid through revenue sharing and others, the smaller ones, will receive indirect payment in the form of referral traffic from headlines and summaries that link back to publishers’ sites from the stream flowing under the new tab. The service will start by showing users news from local outlets. Just like that, free distribution for struggling local media companies.

If Facebook News manages to regularly reach, say, 5% of U.S. users on a daily basis, that would be 10 million adults. It’s a big number, though it gets small quickly as you think about how it would be dispersed into local markets around the country. But down there, where life is getting desperate, “small” is still beautiful. So it’s odd, but predictable I guess, that many in the media commentariat have questioned the value and seriousness of the initiative. It’s a political tactic, not a real service, one said. The tab will be used only by the sort of people who already seek out real news beyond Facebook, said another, so what’s the point? One claimed it will weaken newspapers as a destination in their own right and make them “too dependent” on Facebook for distribution, as if local news outlets were not staggering around like a pack of zombies. Still another questioned why Facebook would include the conservative rag Breitbart News amongst the list of publishers. Well, this Boomer would like to remind you that the original justification for the First Amendment was to avoid tyranny, and Facebook deciding what is or is not true is exactly that — tyranny. Fake news comes in all shapes and sizes.

If a struggling legacy media brand can get incremental benefit from this new arrangement by getting a few new users to sample their product, then why not? It’s all on them to develop the kind of product that turns samplers into high LTV subscribers. Facebook’s users are Facebook’s users – if you can convert a few of them, great. Doesn’t mean you’re entitled to them. It means you have to compete for their loyalty.

You hear the same sense of entitlement from traditional publishers in the current pay-for-news-summaries brouhaha going on across the pond in France. On October 25, a new French law, (part of an EU directive, actually) came into effect, under which search engines have to compensate publishers when they display content summaries in search results. But Google had already warned publishers that it would never pay for such summaries. The company said it would simply stop displaying them underneath headlines unless publishers explicitly opted-in, which would mean foregoing any compensation.

In Europe, they’ve been down this road before. Five years ago Spanish publishers decided not to allow story snippets to appear in Google search results. Traffic to their websites dropped precipitously, in some cases by more than 40%. Traffic from Google News dropped 80%. They figured it out soon enough.

You can kinda see where the legacy publishers are coming from. Due to Google and Facebook’s power in the advertising marketplace, they are losing millions of euros of ad revenue a year. Google scrapes, mines and monetizes our content, they say, we need to be compensated for our losses. But look at it from Google’s perspective.  Richard Gingras, vice president for news at Google and a colleague of mine for many years, points out that “In Europe alone, people click on the news content Google links to more than 8 billion times a month – that’s more than 3,000 clicks per second we drive to publishers’ own websites.” The accounting company Deloitte estimates the value of that free distribution was €14.5 billion in 2018 alone.

Europe being Europe, the Italians have their own point of view of course. In mid-October Le Figaro quoted Ricardo Puglisi, an economy professor at the University of Pavia, who said:

Italian newspapers have long considered that Google News was first and foremost an ally that brings traffic, visibility, a better knowledge of the readers, and that, in the end, their relationship was based on a mutual exchange of services.

Google has not somehow “stolen away” an audience which newspapers somehow “owned.” Users who come to Google for search are Google’s customers. The best search product on the planet has attracted those customers, and Google has every right to sell advertising to them. The time of the people running French newspapers would be better spent in figuring out how to convert the visitors driven to their news products by Google into high-value customers who return directly and often. You know, customers with a high LTV.

If they can figure that out, I won’t buy them a bottle or two of good French wine to celebrate. I’ll buy them all a dry martini.  A good, old-fashioned, American one to boot.

Posted by Peter M. Winter

Peter is a traditional media veteran and a digital media pioneer. He is an active angel investor and occasional consultant. He advises established companies on cultural regeneration and also consults to digital start-ups, helping them incorporate management process without sacrificing speed. He holds five technology patents. Peter is an award-winning public speaker and writer. His new book, "The Cannibal in the Room," will be published soon — it is the ultimate insider account of the battle to find a digital future for newspapers when the Internet came to town. He blogs on media and leadership here at and publishes his unconventional ideas about management on his LinkedIn page: His collection of short stories can be found at


  1. […] I’ve banged on about differentiation a lot, I know. Here, for example. OK Boomer.  But given the explosion of content options made possible by digital distribution, it’s the […]



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