The Nigerian media industry would need to evolve a new business model to be sustainable in the digital era, says Frank Aigbogun, publisher of BusinessDay. The reader revenue model and not the ad revenue model, he says, is the best model for the media industry.
A reader revenue describes a business model in which some or all revenue comes from the direct financial support of readers. This may include subscriptions, contributions, memberships, donations, and micro-payments.
Aigbogun was a facilitator at the second edition of the MTN Innovation Programme (MIP) at Pan-African University (PAU). According to him, newspapers in Nigeria and around Africa find themselves at crossroads where they must decide how they must move forward in a sustainable manner. A reader revenue model of at least 40 percent would mean that the media business is stable.
The latest Financial Times Sustainability Report finds that Africa is lagging behind and is facing the greatest risk and threats to its sustainability than anywhere else in the world. Africa failed the most on product scores as well as other rankings.
“If the media knows that it should be running every day it wakes up, we will be at a better place by today,” Aigbogun said.
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In the past Nigerian media was able to determine what their audience should read, hence they wield the power and made money in the process. Print newspaper circulation in the past was as high as over 1 million copies and many readers queued to read the news.
The story is different today with the audience dictating what story they want to read, where they want to read the story, and what time they want to read it. The result has been that the number of print newspapers in circulation has gone down drastically and the number of global digital news subscribers grew by 15 percent in 2019 compared to the previous year.
Aigbogun says the Nigerian media in the past failed to recognise that part of running a successful media company is recognising that it is a business and not merely a service to humanity. While that mindset is changing now, it is not doing so quickly enough. The quality of newsroom managers would need to improve significantly for media companies to accelerate growth of their businesses.
Media companies must continue to ask questions about the business. For example, what is the future of the newspaper? If those people who are still reading the newspapers today die, will they be replaced by new people?
Lisa MacLeod, Principal, Head of EMEA Engagements, Financial Times, adds more questions that are relevant to business sustainability.
“At the core of what we sell is content- videos and everything you put out under the brand. To define content strategy we analyse audience needs, the process for creating premium content and what a premium product looks like. Who is your audience? How are your audience engaging with your content? Which content? Which content does your audience value most and why? What is your audience’s experience of client? What are the drivers of value for your audience? Which content are users willing to pay for and why?” said MacLeod.
Media companies can also look at bring in or recruit more expertise to improve quality of product. The content is the product, Aigbogun says. Quality of the product will also improve the confidence of the readers.
At the same time, the total media marketing spend in Nigeria is so small at $266 million compared to South Africa at $2.1 billion.
“The size of the market is important. You must migrate from ad revenue to reader revenue. If we all depend on advertising and it is so shallow and small, like sharks we are all going to eat ourselves and die. But if we make the switch and turn to the readers for revenue, you will be more sustainable. Reader revenue is king,” Aigbogun said.
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