The business model is still the elephant in the room

As much fun as it is for me to make clever lists and shout from the hilltops about what I think your news organization should be doing, how they should be doing it, and why they should be doing it, no matter what argument I (or anyone else) has in favor of a certain technology or against a certain methodology, the broken business model of newspapers remains the giant elephant in the room.

Big 5 - Elephant by TheLizardQueen on Flickr
Big 5 – Elephant by TheLizardQueen on Flickr

Let’s start with a few different angles on the state of the news business.  I’m not saying that all of these are absolute truths, but I am saying that all of these angles lead to the same conclusion.

  • Print circulation is dropping, online readership is climbing.  We don’t yet know how best to turn online eyeballs into income.
  • Print advertising revenue is falling, online ad revenue is climbing, but the former is happening at a much faster pace than the latter.  We don’t yet know how best to turn online eyeballs (or community, or participation, for that matter) into income.
  • Regardless of what else we change about our print edition, or how we present information online, or how we reorganize our newsrooms, funding investigative and enterprise reporting must be part of the core mission of the industry.
  • The Web has disrupted the traditional relationships between print advertisers and their customers (and between print advertisers and newspapers) more than it has disrupted traditional relationships based on print newspaper content.  We need to find new ways to connect advertisers to consumers in a way that leads to profits for our organizations.

If you accept any of those points as a given, you come to the natural conclusion that the problem of working out new business models for news organizations needs our attention, and not just as an aside.

An Aside: I’m going to assume that it’s necessary for major metro newspapers to survive and thrive as news producers.  I don’t always believe that’s true, frankly, and there are any number of organizations getting started online, including folks doing critical investigative reporting, that could be part of the proof that this society has outgrown its need for newspapers as the “lifeblood of our democracy.”  That said, again, I’m going to assume — for now — that we need to save newspapers.

All this is just a fancy way to lay out a little plan I’ve been thinking about lately:

I’m not going to write any manifestology here for a while.  Instead, starting with my next post, I’ll explore some online news business model questions — and opportunities — for, say, ten posts or until I get bored with it.

Things I might write about:

  • News organizations as Web development shops
  • Building a better business directory
  • Relevant text link ads based on that better business directory
  • How to hire and train advertising salespeople who can produce content
  • Basic, incremental changes you can make today to start bringing in extra pennies

Please do add your suggestions in the comments, or use the Skribit suggestion box in the sidebar of my blog to vote on these first five bullet points.

17 thoughts on “The business model is still the elephant in the room”

  1. I’m glad you wrote this. Just like you said we were past curmudgeons, I think we are past the “we’ll figure out the money part later”. Until we can prove that new media is a sustainable business model, this will be an uphill battle.


  2. Shouldn’t major metros look at using google or yahoo or some successful online advertisers for a model to sell targeted ads. They should be focusing their training of the ad dept. on online and how it is different. Maybe even dedicated online ad sales team too.


  3. YES!!!

    This is the kind of stuff that will save our industry. These are the kinds of topics that are being explored by people on our behalf — and we newsfolk need to be in on it. If we can make a go at entering this conversation with as much gusto as we use to write about how journalism should adapt to the Web, well then we might just find something that sticks.

    In short: *applause*


  4. @TeachJ

    Google/Yahoo text ads are great for Google/Yahoo but bad for newspapers or anyone in general that uses them. They’re really the bottom of the barrel in Internet advertising. If Adsense is your revenue strategy for your site, then you probably don’t have a very good business model.

    I know some people will say, “But it’s good enough for Google!” to which I reply, “Yeah, but their business model is based around search, your newspaper isn’t.”

    Contextual advertising isn’t always the best solution, just the most readily available. Google’s “sales force” doesn’t know your readers, it’s just looking to take advantage of the long tail and place itself everywhere.

    Plus, the money made from Adsense is very small. And if you’re making a decent amount of money off Adsense, then you could be making a LOT more going with better display advertising or sponsorships of your site.

    Plus, I’m of the opinion that text ads look terrible, but that’s just me.


  5. Maybe newspapers just need to basically die out, or are on an inevitable course to do so.

    The new business model may mean not depending on “bigness” (big staff, big corporate ownership, big ad dollars, dependent on mass audiences, etc.) but a whole lot of niche smallness.

    None of us may be able to “save” newspapers, but we sure can help shape their successors, whatever that will mean.

    Could the new Major Metro Paper become an association of niche blog-like sites, covering suburbs or individual beats? Like if I were in southern California, maybe my online news organization would have various microsites for cities and suburbs, and a sports one and maybe ones for Silicon Valley, Hollywood, etc., although I may not bother, considering the increasing amount of blogs/news sources about such things.


  6. I’m so glad someone is saying this in such clear terms. If our industry were powered by hope then we’d be fine.

    Is anyone even working on a viable business model?


  7. Print advertising revenue is falling, online ad revenue is climbing, but the former is happening at a much faster pace than the latter.

    I don’t think the problem is that print is falling faster than online is rising, but that the revenue generated by online will NEVER be as high as the traditional print ad revenue, unless and until someone figures out a way to make Internet ad space as limited as print space.


  8. Ryan:

    Good post, as I think this is the real issue we face. And I think it’s essential that journos take the lead because there’s way too much caution on the business side.

    Also, as Bryan, implies above, the ad-driven model is problematic in the long run. Everyone is having problems monetizing online content (TV, movies, music). Not just newspapers. And more than the infinite space that Bryan observers, there is seemingly infinite competition for those ad dollars.

    In my Merc column over the weekend I looked at the fact that almost every Web start-up these days by defaults claims it will eventually be supported by ads: There simply isn’t enough to go around. My hope is that somehow we can move the conversation past ads to find other sustainable business and non-profit models.


  9. […] It’s Time for a Revenue Revolution. Dan Pacheco’s essay at the Idea Lab is one of a number of recent indications that the media blogosphere is getting beyond the “model is broken” message to plumb ideas for replacing it. Journalists really need to read this type of stuff, but I wonder if the idea that there’s a single, industry-wide solution is the right one. Related: Write elephants and the Ryan Sholin piece it riffs on, The business model is still the elephant in the room. […]


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