March 16, 2021

Tying Journalist Pay To Performance Is a Recipe for Bad Reporting

Every once in a while, a debate starts over whether financially incentivizing journalists depending on whether their content drives subscriptions is a smart approach. Prior to the subscription craze, it was a strategy deployed by many of the big digital media companies. If a journalist could drive a disproportionate amount of traffic, they should be compensated for it.

Or, said another way, if a journalist didn’t drive traffic or generate new subscriptions, they should not receive as much pay as other reporters on the team.

According to an email obtained by The Guardian, The Daily Telegraph is looking to incorporate such a system.

An email sent by the editor, Chris Evans, last Thursday told staff that “in due course” the outlet wants to use the “Stars” system, which scores stories published online according to factors such as how many subscriptions they drive and how many clicks they get, “to link performance to reward” using subscription data.

Evans said: “It seems only right that those who attract and retain the most subscribers should be the most handsomely paid,” and noted that working out the details would be “complicated” so that “we’re not ready to do that … yet”.

On the surface, I understand the argument. If certain reporters’ stories are resulting in an increase in subscriptions then why shouldn’t they receive the most compensation?

The problem is this incentive creates a scenario that is the exact opposite of what a legitimate news organization should want to exist. Publishers should be covering the most important stories out there, not simply ones that are going to get the most clicks.

And there is a difference.

One of the risks of a subscription business is that it incentivizes the creation of content that reaffirms a subscriber’s belief about something. This is why many of the largest Substacks are political in nature. People want to read things that enforce their beliefs. These opinion-driven publications are perfect for a subscription business.

A news organization, on the other hand, has the mandate to report on the breadth of its focus. That’s true in newspapers, b2b, and any other news-oriented topic. We have to deliver information, both positive and negative, irrespective of the per-story subscription numbers. If you find a group of people with money that wants content that informs their biases and you fill that gap, you’ll make money.

Even if we remove the ethical debate around what a news organization is supposed to do, the other issue is that the data doesn’t tell the full story of the individual user. Here are a bunch of things that I’d be curious to know:

  • What articles were they reading before they landed on the one that converted?
  • Did they come in from a newsletter or was it the reporter driving the user?
  • Did that story just happen to be the last before a metered paywall?
  • Were they already registered and finally converting to a paid sub after reading for days or months?

There are a ton of questions that are more important than just which story actually converted a paid sub. Any sort of subscription business is a journey. It’s unlikely that most users land on a piece of content and instantly subscribe. There’s a nurturing process.

By rewarding the person who creates an article that results in a subscription, you’re effectively forgetting the entire team that goes into the creation of all the content that might have contributed to that user’s decision.

This does bring up an important point, though. At most companies, the product department is paid very fairly with equity, profit sharing, bonuses, etc. At a media company, the content team (which is the product department) is often the lowest paid.

We need to stop looking at reporters and writers as simple cogs in a machine and understand that it is because of their reporting that people are subscribing, not in spite of it.

Now… I can speculate a little as to why The Telegraph might want to do something like this. Big-name reporters are realizing that they might be able to make more money by going out on their own. By giving them upside tied to their immediate performance, The Telegraph could be fighting to keep its biggest names.

However, this is the wrong way to look at it. Rather than creating these organization-wide financial incentives simply to keep a few people from leaving, focus on partnering with those people in interesting ways. If they want to launch a paid newsletter, why not support them? Either put them on a contract or set up a mini-JV where both sides can benefit from the growth of the product.

As I’ve written multiple times, going solo is an exhausting venture. For many people, they just want to write without their upside being limited. If you’ve got someone who really is a star, work one-on-one to come up with something. But don’t pervert the entire business.

Eat your cake and have it too

You’ll be shocked to know, I want to talk about ads and subscriptions.

Too often—and I am sometimes to blame for this—I see companies categorizing themselves as either subscription-based or advertising-based. They put their flag in the ground and stake a claim to a business model, espousing that as the end all be all.

And I find it quite disheartening because it fails to take into consideration the fundamental truth of media, which is that diversification is the only way you truly survive. You can be both ad and subscription-driven.

I’m reminded of this because of something that John Ridding, CEO of Financial Times, said at a conference last week:

I don’t quote Boris [Johnson] often, but you can have your cake and eat it. Crucially, though, only if you have a robust reader revenue foundation.

Rather it’s the result of deeper audience data and, as a result, an increasingly effective marketing proposition. So it isn’t ads versus subs – there is strong growth to be had in both.

Now, I don’t agree that it requires a reader revenue foundation, but the spirit of his point is sound. Too often, we think that we need to choose between being a subscription product or an advertising product and that’s simply not true. The business model shouldn’t be advertised as a feature of a media company. The content is the feature.

Ironically, some of the same best practices that go into building a great subscription business are ones that could contribute to smart targeting for directly sold advertising.

At the end of the day, if you have a highly engaged audience that you own the means of communication for, you will be able to build a business. Whether it’s ad-driven or reader revenue, none of it matters without that engaged audience. And in almost every respect, it’s not an either-or conversation.

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