Media firms turn to online subscription

The value of the traditional business model for media companies is slowly being eroded. Traditional advertising revenue has significantly dropped over the last few years, and as a result media companies are testing different models – be they paywalls or partnerships-- to discover the value of content.
We are seeing organizations across the sector quietly working together in coopetition for survival. ‘YouView’ is a great example. UK terrestrial TV organizations are all working together in a bid to remain viable in this age of digital convergence, where customers can watch one of hundreds of television channels over the internet, on a phone, in a park, at the click of a button.
With so many links in the new media-consumption chain, how can traditional media content providers profitably survive? Media fragmentation and increased availability of content across multiple channels has led to greater consumer choice and higher expectations for personalized content to be delivered over any device at any time.
Media companies are currently experimenting with how to finance and provide such services as, without personal data, there can be no personalized offerings. The debate rages around how to gather this profitably, appropriately and securely, with paywalls being introduced for online newspapers while other media are discussing the benefits of micro-payments as against long-term subscriptions. The chosen system cannot alienate users, and none has yet been found to be superior to another.
Research house Vanson Bourne recently found that nearly half (46%) of Europe-based media companies can’t process straightforward subscription payments easily. Only 16% are able to provide insight into individual customers’ behavior to ensure products and services are targeted effectively. While media firms tackle these challenges, one thing is for sure -- if organizations are not able to collect, process and understand customer data to drive profit, they will not prosper. 
Some companies see the need for a balancing act between user registration, personalized content and partnerships with potential competitors to deliver users what they want.
Twitter is one organization that encompasses the above. it is a place for people to share, redistribute and comment on content from other places. It also gathers user details and locations to drive additional service provision and targeted advertising.
Twitter is in a position of central power as a website driving the flow of traffic and as a place users look to for content and brand recommendations. In effect, Twitter has become the orchestrator of the media dance. However, Twitter is still part of the wider experiment by media organizations as it has yet to find a business model that offers real profit for its investors.
It is such customer insight as that achieved by Twitter which is where the value of the paywall and other online subscription methods for some media companies lie.  aywall allows these firms to record reader data, including interests, preferences and payment card details, while keeping all the revenue for themselves.
However, some media companies working alone struggle to provide what customers are asking for. Imagine a teenage girl using a mobile in London to access news online, and being served an advertisement relevant only to men in their 50’s in Edinburgh. Today, that’s enough to inspire a reputation-damaging Tweet.
And so, many media companies look to partners to gain the expertise that can help avoid such scenarios, providing targeted content where and when it is required.
Without the back-end systems to gather customer intelligence and process complex billing revenues to take advantage of potential partnerships, media companies will find it difficult to profit from targeted and personalized products and services in the future. Many organizations are at risk of falling foul of complex legacy billing systems that are unable to cope with revenue division and modern CRM solutions.
Those media companies lacking the back-end systems to support the targeted front-end service that consumers expect are already lagging behind. Media companies of all shapes and sizes need to prepare now if they are to maintain profitability.
Gordon Rawling is director of EMEA marketing at Oracle Communication