How To Make Money From Live Online Newscasts

A handful of major news companies are trying to figure out how live news broadcasts fit in digital media.
The challenges are steep. Streaming live news requires large, ongoing investments, and it’s difficult to monetize audiences, as live news can be a hotbed of brand safety concerns.

Plus, Facebook’s recent algorithm shift lowered the ratio of news content on the platform. Co-founder and CEO Mark Zuckerberg said at the time the change was meant to elevate content that drives positive sentiment.

“If you think about the mission of a news reporting company, sometimes the news isn’t going to entertain people or make them happy,” said Yaser Bishr, executive VP of digital media at Al Jazeera Networks.

Can it pay?

Late last year, Bloomberg unveiled its Twitter-based news channel TicToc, which is the only social news network that broadcasts 24 hours a day.

But TicToc is nothing like a linear, 24-hour news network. It’s built more as a repository for video packages shown throughout the day. When news breaks, the newsroom jumps into action.

For Bloomberg, the goal is to win early mind share among online news consumers and to use it to pull viewers into owned-and-operated sites or apps, where there’s packaged video content and video ads.

But monetizing live news itself can be difficult or downright counterproductive.

TicToc gets large live audiences when big news breaks, but it gets more bang for the buck with on-demand clips and short packages that people can watch asynchronously during the day, said M. Scott Havens, Bloomberg’s global head of digital.

TicToc’s live coverage of breaking news is often related to natural disasters, terrorist attacks or general tragedy, which is unappealing to advertisers, Havens said.

Linear broadcasters have an easier time anticipating potential brand safety issues, like pulling an airline commercial if they know it’s going to follow a segment on a plane crash.

And viewers who are watching on their phones, tablets or laptops are turned off by ads in a way that linear TV news channels aren’t. Plus, digital viewers might be using ad blockers.

But Bloomberg is still committed to live news online because of the gigantic opportunity to cement itself as the go-to online source when news breaks, Havens said.

Online audiences accumulate extremely quickly compared to linear.

In linear TV, conventional wisdom suggests that it takes about 25 minutes for a big audience to show up for breaking news events, said Dan Colarusso, Reuters’ executive editor and digital head of global programming.

For live mobile coverage, especially after the explosion of news notifications, scaled audiences can be aggregated in a minute or two.

Platform partners … or prisoners

When advertisers can plan for positive breaking news and partner with YouTube, Facebook or Twitter, digital streams can pull in live audiences that match top linear news programs. The lack of ad inventory can be supplemented with a presenting sponsor, as CNN did with Volvo during its eclipse coverage.

But live news can’t be seen without a place to host it – and often that means working with the social media platforms, where ensuring discoverability can be expensive.

Competing live news streams and on-demand videos often end up “mixed up and pushed to the feed,” Bishr said.

So without a pre-planned promotional campaign orchestrated with the social media platform and day-of ad spend to drive traffic, live news is easily buried or swamped by topical on-demand content.

Also, social media platforms don’t always present the most seamless interface for live news. Facebook is building news content in Facebook Watch, the platform’s video hub, but Bishr said it’s a big change in habit to get people accustomed to scrolling through their news feeds to click on the Watch section, then to a news section and then to a media company’s page.

The ideal situation is for publishers to own their own live news platform rather than rely on Twitter or Facebook.

Reuters prioritizes driving viewers from social or search channels to Reuters TV, its OTT app with live broadcast, Colarusso said. Social platforms may generate more ad revenue per view and high raw viewership numbers, he said, but viewers of Reuters TV are higher-value: They tend to watch for longer periods of time and become return viewers, while social platforms may include tens of thousands who merely zipped past in their feed.

The Reuters TV app’s superior engagement and attention metrics “are what we hope to monetize when the platform has a little more scale to it,” Colarusso said.

So publishers like Reuters and Bloomberg know that while their investments might not pay dividends today their learnings could advantage them in the future, especially when platforms start to aggressively compete for exclusive content.

Exclusive distribution rights are becoming a more common feature in platform distribution deals or content partnerships, Havens said, and “usually come with better terms than the platform’s undifferentiated content.”

But exclusivity can also box in media companies. Snapchat attaches exclusive rights to many media partner programs in the app, for example, but it’s hard to promote content and build an audience if you can’t feature the shows elsewhere.

And Bloomberg’s TicToc could theoretically be distributed on a platform other than Twitter, but a big part of TicToc’s value is derived from Twitter, which often autoplays TicToc in desktop sidebars or promotes the stream atop user feeds.

BuzzFeed produces a daily live news program on Twitter called “AM to DM,” and the social platform “provides tremendous support and investment,” said Cindy Vanegas-Gesuale, the publisher’s head of programming.

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How an Hit TV Program Contributes to Amazon’s Profitability

Last week Reuters reported data from internal Amazon documents that for the first time provided insights into viewership of the company’s original TV programs and their contribution to creating new Prime subscriptions. Below I’ve done some additonal math using separately reported information to calculate how profitable at least one of Amazon’s original programs could be.

Last October, Fortune reported research from Consumer Intelligence Research Partners indicating that Amazon Prime subscribers spend an average of $1,300 per year compared to an average of $700 per year that non-Prime subscribers spend. (Note, back in Fall, 2016, Morgan Stanley said that according to its survey, Prime subscribers spend nearly $2,500 per year, vs. $544 for non-subscribers). For the purpose of my calculations, I just used the CIRP estimate of $600 incremental spending per year by subscribers.

The Reuters article notes that the Amazon program “The Man in the High Castle” delivered 1.15 million new Prime subscribers worldwide. So, multiplying this by the incremental annual spend of $600 yields $690 million in incremental revenue from these new subscribers. Amazon’s North American e-commerce operating margin in 2017 was approximately 2.7%, so the operating profit on the incremental revenue would have been around $18.6 million (this is rough, because some of the incremental subscriber spend came from international where it is undoubtedly lower and also where Amazon actually still loses money on an operating basis).

In addition to the annual incremental spending benefit, those 1.15 million new subscribers also spent $99 to belong to Prime, which would be another $114 million in annual revenue. The operating profitability of the membership fee is hard to calculate given all the different benefits and their costs, but assume it’s 50%, so the profit would be around $57 million. In total that would mean “The Man in the High Castle” delivered year one profits of $75.6 million vs. its cost of $72 million, or $3.6 million net profit, a 5% margin. But keep in mind this is only year one; as long as Amazon retains these 1.15 million subscribers, the profitability multiplies. In addition, there are further revenue streams derived from Prime members such as add-on subscriptions to video services through Amazon Channels.

Admittedly, the above math is a little rough, and it should also be noted that Reuters’s own reporting hasn’t been independently verified. Still, Amazon CEO Jeff Bezos has been extremely candid about the benefits of video to Prime. In an interview with Recode in mid-2016 (see 37:32 cue point), Bezos said that “When we win a Golden Globe, it helps us sell more shoes,” adding that both Prime’s free trial conversion and annual renewal rates increase when subscribers watch video. He actually cited “The Man in the High Castle” as an example of programming that works really well, no surprise.

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Mobile most important news carrier

This year Reuters Digital News Report 2017 arrives amid intense soul-searching in the news industry about fake news, failing business models, and the power of platforms. Reuters Institute’s highly anticipated annual research report casts new and surprising light on some of the prevailing narratives around these issues.

With data covering over 30 countries and five continents, this research is a reminder that the digital revolution is full of contradictions and exceptions.

Findings include:

Only 24% of respondents think social media do a good job in separating fact from fiction, compared to 40% for the news media.
In most countries, we find a strong connection between distrust in the media and perceived political bias.

Online news subscriptions in the US have received a very substantial ‘Trump bump’ (from 9 to 16%) along with a tripling of news donations. Most of those new payments have come from the young.

Ad-blocking growth has stalled on desktop (21%) and remains low on smartphones (7%).

Is the crisis of confidence in journalism, in fact, focusing minds and wallets? How polarised is trust in media across countries? What happened to video? And, are voice-activated devices really growing at apace with the hype? Read this report to discover key trends in the digital media revolution.

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Facebook Tunes Into Television’s Market

The social network is developing a video-centric app for television set-top boxes, including Apple Inc.’s Apple TV, people familiar with the matter said, giving it a home for video content—as well as a new vehicle for video advertising.

The app is one of several Facebook projects aimed at making it a “video-first” company that can compete for television ad dollars. The social giant has been marketing its live-streaming capabilities, testing a new video ad product and integrating more videos into Instagram, its photo-sharing app.

Facebook is also in discussions with media companies to license long-form, TV-quality programming, people familiar with the situation said. A set-top box app would be a natural way to distribute that “premium” content and make it accessible on TV sets.
Facebook is already the second-biggest player in digital advertising, after Alphabet Inc.’s Google. But the social-media giant said last November that its main source of revenue, the news feed, was running out of room for more ads.

As a result, executives warned that revenue growth would “come down meaningfully” starting in the middle of this year. Facebook is due to report its fourth-quarter earnings on Wednesday, and analysts expect revenue to have increased 46%—the slowest rate of growth in five quarters—to $8.5 billion, according to Thomson Reuters.

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