How Will Gen Z Pay for The Content They Consume?

They never had to directly pay for the news, but Gen Z won’t kill off the digital publisher. Technology is giving publishers the tools to engage the ‘lost’ generation. 

Casual dining, Department stores, Luxury goods, Cable TV, American cheese, Beer, and Golf. These were all things Millenials were expected to kill off, like a plague of locusts.

The idea that the rise of a new generation is the start of a grinding decline of the economy and the start of a new cultural low-point and is a persuasive one. The only problem is, it’s almost always wrong. Generations don’t turn on industries, industries fall apart because they fail to adapt.

But, with Gen Z, (those born after the mid-1990s and aged 18–24) set to make up 40% of consumers by 2020, should publishers be worried that their biggest audience has never known a world where you have to pay for the news?

The medium changed, not the message

Gen-Z might be digital natives with no expectation of paying for content, but, the need for news, opinion, entertainment, and diversion is as strong as ever.

Yet we’ve proved that if we don’t have to pay for content, we won't. Currently, fewer than 1 in 5 younger millennials regularly use paid access to a digital news app (19%), a digital newspaper (15%), a digital magazine (15%), or an email newsletter (15%).

The news no longer comes from a single source. It comes from aggregated platforms. A Ripon report revealed that a stunning ‘82% of Gen Z and younger Millennials include among their primary news sources Reddit, Twitter, Facebook, YouTube, BuzzFeed, Instagram, Snapchat and their desktop newsfeed.’

We know Gen Z consumes a scattergun of different stories, from different sources, are almost entirely mobile consumers. The more difficult step is identifying what they are willing to pay for, and how they plan on doing it.

Is this the end of publisher loyalty?

Publishers concerns about the ability to connect with a Gen Z audience is fueled in part by this fickle approach to picking news brands. The news you read used to define who you were.

Younger generations aren’t limited to the one New York Times in their household or forced to gather around the news on a single screen. If the moon landing happened today, each member of a household would experience it differently, on a different screen.

Speaking in Merchants of Truth, Jill Abramson says, “Each individual article now lives on its own page, where it has a unique URL and could be shared, and spread virally,” Abramson observes. “This put stories, rather than papers, in competition with one another.’’

The democratization of content production has had the effect of shattering ‘targeted buyer demographics into cult-like gatherings that fit into larger frameworks that are brand-independent, brand agnostic, brand loyal, or brand repulsed.’’ As Adweek explains, ‘52 percent of Gen Z consumers will transfer loyalty from brand to brand if they find product quality to be subpar.’

The breakdown of loyal news tribes and the level playing-field of online content means that it’s every story for itself.

This should mean that publishers can just rely on programmatic advertising to maximize the revenue from their high-volume but ultimately, uninvested Gen-Z audience. They’ll tolerate the ads because the content is free and they won’t turn against your brand because they have no expectations of it.

But the fight for attention gives precedence to the ‘sensational, exceptional, negative, recent, and incidental, thereby losing sight of the ordinary, usual, positive, historical, and systematic.’Like junk food, whilst tempting and comforting at first, users start to search for something more nourishing. Gen Z is learning the lesson that “chaotic information’’ is free; good information is expensive. 

Pay or be the product

Gen Z has been conditioned to accept advertising as a tradeoff for consuming online content that is free at the point of purchase—more than any other generation.

The American Press Institute explains, ‘Older Millennials — that is those over age 21 — are about twice as likely as those age 18-21 to pay for news personally with 44% willing pay for news out of their own pocket, compared to 23% of those 18-21 years old.’

This trade-off comes with a rational view on privacy: ‘When it comes to sharing their data online, only 42% of Gen Z respondents called privacy “very important,” compared to 54% of Millennials.’ 38% said they would even sacrifice privacy concerns and provide data if it meant it creating a more personalized experience.

This enables publishers, but also adds pressure. ‘If they [Gen Z] are skeptical towards the advertising message or medium, they will actively avoid the advertising in a social media context and could even become ‘brand repulsed’.

For advertising-based business models to work, they have to be seamless. An increasing skepticism of the news and the invasion of news-disguised native advertising has given Gen Z a set of critical faculties to dissect the advertising before them.

A mispositioned ad, before causing a passive reaction, now creates genuine friction, bristling against the reader. The result? Brand repulsion for both publisher and advertiser. The new mindset is if you’re going to track us, at least have the decency to do it well.

A shifting appetite for quality content

This information all points to the idea that targetted programmatic ads on free content is the way for publishers to reach Gen Z. But Gen Z is becoming more aware of what they are losing in the transaction for free information.

Publishers also still have the chance to establish their brand with this generation. Rather than flooding aggregated platforms with high-reach content and skimming the revenue from it, publishers need to be a brand that people can be proud to associate with.

According to Christopher Wolf, a Goldman Sachs Research analyst, ‘Unlike their Millennial predecessors, Gen-Zers appear more conscious of protecting their reputations online. As members of this generation mature, their views and preferences on social media are evolving, and no platform is insulated from that reality.’

This requires investing in content that might not have mass appeal but does more work to establish their brand credentials as trustworthy, reliable, and unique sources of content. But, what advertiser wants to spend its budget on a 3000-word investigation into river pollution that will get a fraction of the readers as a listicle puff-piece?

Diversified content styles call for a diversified strategy

The Buzzfeed Model

Gen Z signals the start of the eras where news brands can be multiple things to multiple people, that targets multiple moments in the day. Populist and mass-appeal, investigatory and hard-hitting. It all depends on the story, not the publication. No publisher has encapsulated this duality better than Buzzfeed.

The ‘candy-floss’ content BuzzFeed once relied on began to turn away a maturing audience. But, the popularity meant it was now able to fund the more serious reporting that their audience was starting to lean toward.

BuzzFeed News then started to look more like The Times while The Times had to look more like BuzzFeed. Readers wanted lists, and luxury porn, celebrity gloss, and people to hate, but they also wanted to access the truth and diligence of the older, established news brands.

This lead to a model where publishers can effectively split their loyalties. Writing in The New Yorker, Bill Keller, once editor of The Times explained the paradox publishers were embracing:

“If luxury porn is what saves the Baghdad bureau, so be it.”

Diversified monetization for diversified content

This all points to the idea that Gen Z cannot be distilled into a persona but a series of moments, dispersed throughout a varied day, in which we have constant access to news and entertainment.

You’re not targeting a person in an attempt to win their loyalty to your brand, you’re filling their moments and time. And, you still have to make the experiences in these moments hyper-focused and relevant. 

When we’re hunting for distraction on a commuter train, flashy diversions can be welcome. We don’t know exactly what we want to consume, we just want some entertainment in this ‘dead’ moment. This all points towards low-effort, entertainment-based content that relies on programmatic to fund it. We don’t object to the distrraction of ads, because distraction is the goal. A flashy headline caught their eye, no they’re sneaker shopping and not thinking about how many more stops there are to go on the metro before home.

A different point in the same day the same reader might access a long-form story about a topic that interests them, bookmark the page, and share the article. Gen Z-ers expect experiences to be both experiential and rewarding—they’re not wooed or easily impressed by extravagant or intrusive content.

While reading a long-form article about a refugee crisis, distracting advertising is going to devalue the experience, running the risk of turning away the small loyalty it is possible to capture. When time is set aside to read really good storytelling, the adverts have to fall away to a basic minimum or use a new revenue strategy.

This is the content that builds relationships with the readers. These relationships then bring readers to the homepage to view multiple stories, multiple ads, knowingly enabling tracking, and eventually, joining membership programs. In general it takes months to convince readers to become a paid subscriber.

A micro-moment generation

Gen-Z will not be the generation to kill off the publisher, they will be the generation that pays the same publisher in multiple ways. Through programmatic advertising, subscriptions, paywalls, and voluntary donations. Brands will have to offer a spectrum of content for the ‘micro-moments’ in the day and content that reinforces their brand uniqueness, all with an appropriate monetization strategy.

The Reuters Institute Digital News Report identified four distinctive moments for news consumption among young people:

(i) dedicated moments where they give time to news (usually on evenings and weekends),

(ii) a moment of update (usually in the mornings),

(iii) time fillers (commuting or in a queue), and

(iv) intercepted moments where they receive alerts from news organisations or messages from friends with news.

The challenge will be in making each experience seamless and monetizable. Unfortunately, none of this makes it easy for publishers to apply these strategies and at the same time satisfy more traditional audiences with stronger allegiances.

This entails choice over the payment model they choose per story. More targeted and nuanced advertising for the widest-cross section of readers with explicit tracking and advertising customization at the entry point. Paywalls and voluntary memberships for hyper-engaged users; microtransactions per story for one-off readers.

But as technology becomes more sophisticated, the cost and the barrier to entry starts to reduce. Diversified revenue generation models, segregated by audience, content types, and demographics become possible.

It seems unlikely that younger users will ever be persuaded to pursue an entirely monogamous relationship with a single media brand. For Gen Z, every story can start life on an equal footing, but publishers will need to adapt both their content and monetization to ensure they survive.