Contributor payment models: investigating industry averages

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Most editorial, particularly news-driven content, commentary and analysis is a conversation between the author and audience. The publisher could best be described as the conduit that enables the conversation to take place.

If you peer through the clouds of insipid Facebook status updates, utterly banal tweets and the narcissistic rage of the Instagram ‘selfie’, then you begin to see peoples maxims displayed for all to see. To attain traffic, gravitas and influence the writer needs to immerse themselves into the conversation on those platforms and exploit the social graph.

Successful journalism today requires that writers become much more than simply an investigator and wordsmith. The modern content producer needs to become the director of the conversation they have initiated through their storytelling; and partake in audience development activities revolving around the content items they have produced. In my experience, the better writers already do this.

Success ratios for writing demand that the content engages the reader. If the writer suffers from flaccidity in this critical area then they will need to have significant other weapons in their arsenal that can compensate to increase the profitability and therefore viability of their product.

Investigating the industry average numbers

For freelance contributors, it is worth taking the time to investigate the numbers that will more often than not dictate their potential career earnings.

For example, if a mid-sized, established website selling inventory using the CPM sales methodology has an average of three ad slots per page it will be likely be able to sell only one of these ad slots as premium (above the fold), with the other two positions being classed as non-premium and therefore less valuable.

According to research from Zenith, the median average premium display unit achieves a CPM (cost per mille) yield of $10.40, whilst the other ad units achieve about $1.90. Average the ad positions out and you have a CPM of $4.73.

Combined, the gross CPM of the page is $14.20, or about $0.01 per each page view. Now we have the gross number, let’s use the amount of this available advertising inventory we would expect sold.

A sales team needs to be selling 70 per cent of its inventory in-house, hopefully all of it. Now let’s use the average commission paid to the sales team of 12 per cent of gross. In order to break-even on an article that cost a paltry $100 to produce the publisher would need to serve nearly 11,500 page views over the content items usable life-cycle, which in the business of news is perhaps a mere 72 hours.

Caveat: the figures mentioned obviously change depending upon the subject matter, or vertical operating in; with the kind of content produced with B2B verticals securing significantly higher CPM’s than mass-market content. Also, the numbers quoted are based on US averages across the entirety of the digital landscape, so not quite the same as the local numbers as say in Australia, or the UK.

Taking into account that the costs included in this calculation exclude absolutely all back office, sales and management support; the commissioning of the content item; the content items sub-editing should it be needed; and the loading of both the article and display ad’s to their relevant platforms, you start to see a troubling story emerge.

If, upon doing these sums a contributor realises that the maximum publishers in their niche can pay them is $XYZ per article then that writer can then make an informed judgement call as to whether the subject area they are currently writing in is viable for them.

If writers decide the monetary value of the content in the marketplace means they cannot make enough money from it then they could look to move into areas where the over-supply of content either does not exist, or is significantly less pronounced.

The market decides the price of content.

Continue reading other articles in this series:

  • The problem with existing models
  • The need to diversify revenues
  • Better visualisations and immersive content
  • Investigating industry average numbers
  • Introducing a new contributor payment model
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