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.

Debunking the coulda-shoulda-woulda myth of online news

I’m trying quite hard to stay out of the business of chasing after curmudgeons with a laptop in my hand, shouting “But you got it all wrong!”

Trying. Quite. Hard.

So let this be just a generic blanket response to a common misconception about the business of online news.

The premise, as laid out in hand-wringers running in handsome op-ed columns in handsome print editions all over the world, periodically:

If only newspapers had charged for online access to the news when this whole Interweb thing got started, they wouldn’t be in such a mess right now.

This, my friends, is a false assumption.

So here’s the deal: Putting the news behind a paywall as early as, say, AOL’s heyday – or earlier if you prefer – would have actually served to accelerate the rise of blogs, citizen media, and flight away from news-on-paper.

Why?

Because pulling your content out of the stream of connections that is the Web would have led to members of your community making even more connections themselves, without your help.

Newspapers would have essentially ceded the public forum to the public, an admirable and honorable move, but not a profitable one.

Make it harder for a person to get informed about their surroundings through your product all you want, but please don’t walk around assuming you’re The Only Game In Town.

That’s a topic for a different post, but rest assured that your readers know how to communicate with each other without your help.

They’re not as dumb as you think.

Smart single-copy sales

In the IHT, via Romenesko:

“Now The Standard is fighting back, using a new, cashless payment system to try to make it easier for Londoners to buy the paper, even if they do not have the necessary 50 pence, or $1, in their pockets. Instead of handing over a coin or two, readers touch a card, called Eros, onto specially equipped devices at more than half of its 300 vendors around London.”

That’s what I’m talking about: Modernize the experience of buying the print edition if you want anyone to even think about doing it.

Wait, it gets better, I love this part:

“The Eros cards, which can be bought via the Internet, offer a discount on the price of the paper. The discount increases with the frequency of purchases.”

Now we’re talking: Buy the card online (or at a kiosk on the street, I’m hoping) and you actually get a better deal than you would with your quarters, er, pence, and the deal gets better the more often you buy the paper.

So not only are you now modernizing the purchase experience, but you’re building brand loyalty and putting a piece of marketing for your paper in the pocket of the consumer.

Yes to all of that, and yes again.

Modernize everything.

The one dollar newspaper

Call me some sort of radical, but here’s a simple proposal that I think could provide newspapers with a big boost in single copy sales, and profits, too:

  1. On the rack or in the box, your newspaper now costs one dollar. When was the last time you paid less than a dollar for a bottle of water? When was the last time you paid less than a dollar for a cup of coffee? Do you really think the majority of readers who buy single copies are going to stop buying them because now they don’t have to figure out how many nickels they need? Which brings me to…
  2. Your boxes now accept dollar bills. Again, when was the last time you worried about whether or not you had exact change for a soda machine? Don’t make me think about having quarters in my pocket (I never do) or where I can get change. Modernize those boxes so they actually look like machines anyone under the age of 65 might interact with on a regular basis.

That’s it, just two steps to better sales. Add a credit card swiper to the boxes if you really want to get wild.

(This idea came to me while posting a comment on John Hassell’s Exploding Newsroom blog – check it out.)

[UPDATE: Yoni Greenbaum posts a comment with a link to the best newspaper boxes I’ve ever seen.]

If you can’t beat ’em, or buy ’em, use the API

Newspapers should produce amazing local databases with great maps, ratings and reviews.

A newspaper company should buy Yelp.

Yelp now has an open API. Newspapers should stop trying to develop something better, and use the API to provide users with Yelp’s functionality on their own sites, applied to their local businesses.

Apply that logic everywhere it makes sense. No need to re-invent the wheel if you can tap into a massive database for free using an API, a la Google Maps mashups.

Do it this week.

The innovation gap: Your advertising department could use a hand

So here we all are.

In the newsroom, in j-school, in our little corner of the blogosphere, producing great journalism, training great journalism students, and pointing out fantastic examples of both to each other and our peers, doing our best to make the transition to online news.

One problem.

We forgot to bring the advertising department to the party.

Yeah, sure, as journalists, it’s not really our job to figure out how to monetize this stuff.

That’s what we tell ourselves as we post our multimedia projects without templates that include ad positions. That’s what we tell ourselves while print revenue declines — and online doesn’t grow anywhere near fast enough to make up for it.

Alright, so without going too far into whether journalists are supposed to be thinking about this or not, here are five ways to improve online advertising revenue at your newspapaper.com. (How’s that for burying the lede?)

  1. Embrace contextual advertising: Make AdSense your friend. Spread a little around your article pages: It’s like free money falling from the sky and not nearly as annoying to your users as giant Flash banners. And it loads faster.
  2. Go big, cut down on ad positions, and charge more for display ads: Let advertisers feel like they are buying a full page print ad opposite your content. Use giant 300xwhatever skyscrapers that are practically like a sponsorship for the page, and let that be the only display ad on the page. Charge far more for that exclusive spot, and sell it to your big full-page type clients.
  3. Target affiliate programs to relevant pages: Do I want to sign up for Netflix while I’m reading a crime story? Maybe not, but sell me on iTunes and Netflix from your music and movie review pages, and maybe I’ll bite. That goes double for travel site ads on your travel pages. The near future of affiliate ads is widget-based ads where your users will be able to sign up for a service or buy a product without leaving your page. Keep it relevant and your conversion rate should only go up.
  4. Sell more than eyeballs: The page view is dead, but the CPM model of online ad sells lives. That can’t be right, right? Find something to sell to your clients: Relevance, demographics, most popular stories and sections, a chunk of syndicated/wire content that is a huge hit in your town. Dig into the numbers and make something work.
  5. Party together: If your ad sales staff doesn’t know what ad positions are available online, or doesn’t pay enough attention to the news site to know what lots of people are looking at without seeing local advertising, you need to get together, form a committee, have some meetings, and just generally talk to each other. Even if your desk is in the newsroom. Seriously, this isn’t going to work unless the smartest people in the building sit down together and make it happen. If you really think your journalism is going to be affected by letting the ad department know there’s room for a 5-second preroll ad position on all that video you’re shooting, you might be in the wrong business.

So now it’s your turn, of course. What’s the smartest bit of online advertising you’ve seen at a newspaper.com lately — or better yet — what’s the smartest thing going on in online ads anywhere right now that you think we should let our sales staffs know about?

Further reading: Scott Karp’s been all over this territory recently. Start here, and work your way into it.

Hope for mobile news

I’ve gotta admit, when it comes to the question of newspapers adopting new delivery systems, I’m usually the one wagging my finger and saying “You better…”

But John Duncan over at The Inksniffer has a far more hopeful approach when it comes to the prospects for cutting deals with cell phone carriers and getting headlines from newspapers to mobile phones:

“There will, I’m sure, be Powerpoints. I think big cellphone operators, who like to do business with big brands and who can tailor their products by geography, will seek out local newspapers as partners very quickly. Readers may tell researchers about how little they trust newspapers but big telecoms trust us a lot. They advertise with us already. Newspapers know them. Newspapers play golf with them. Newspapers used to carry their books to school for them when they were young.”

He’s probably thinking of larger papers and larger newspaper companies, but the message is clear — this is one area where newspapers can play a few pieces of capital they’ve built up over the years.

As an added bonus, it’s not rocket science. Get your text headlines out on a mobile screen. It’s not difficult. After that, move on to pushing your video content out to iPods. Plenty of instruction booklets sitting around about how to do that. (Note to self: Do that.)

Flickr Pro and the freemium business model for newspapers

Given the recent developments around our house and the logical uptick in uploading to Flickr, I went ahead and took the $24.95/yr plunge.

What I get for my money: Unlimited uploading, unlimited image storage, unlimited bundling and feeding of images, and all the old stuff that had been pushed out of my top 200 by the new stuff has come back to life, which means you can once again see any and all of my vacation pictures from the last few years. I know, it’s ahrd to contain your excitement.

But the fact that I finally laid down some cash for a service I had used for free for a few years started the wheels turning in my head.

The question, as always: What are your online newspaper readers willing to pay for?

I’ve bitched and moaned about TimesSelect being a backwards way to pull your opinion leaders out of the public forum and hide them behind a paywall, but I’m starting to get over it. After all, it’s the News that Everyman needs, and that stays out in public where he can get at it.

But when we want just a little bit more, there it is, available for a price.

Freemium.

It’s the business model that makes Flickr and Feedburner and WordPress.com viable and perhaps profitable.

Create a tool that millions of users can play with for free, but make sure there are premium features they can pay just a little bit more to access. Make them look cool. Call them “Pros.”

Sooooooo if you’re not a big regional paper with a stable of columnists you can pull behind a paywall, what are the features that can get readers to shell out that little bit of cash?

It’s a damn fine question. There might be easy answers when it comes to classified advertising, but not news content. What exclusive content are you willing to pull out of the hands of the masses?

Will the real online news business model please stand up?

Terry Heaton’s take on the Yahoo/Amigos deal and other attempts to make up for lost print revenue with online advertising dollars turns on this point:

“…the essential problem for all local media companies is their insistence in the belief that a model of scarcity online will generate the kinds of revenue needed to offset losses to legacy platforms.”

For as long as I’ve been interested in this business, I’ve thought local advertising is the way to go at local online news organizations, but Terry’s counting out even that seemingly-obvious model, taking fragmentation and the unbundling of news as a given. Which I do. But I still think branding is a big part of unbundled content, feeds, and widgets.

We give away information so that we can increase the presence and prominence of our brand, get the newspaper’s name out in front of more eyeballs, and draw attention to any and all baby-step innovations we have to offer.

Making money off that is, of course, a long-term proposition.

Some more from Terry: “The longer we wait to aggregate the local web, the more we accelerate our own demise.”

“…aggregate the local web…” Now we’re on to something here.

Why are online journalists asked to monetize everything they do?

Rob Curley raises the above question in a comment thread on Melissa Worden’s post about onBeing, the new Washington Post project Curley’s involved in.

Curley says:

Why are online journalists treated so differently at most newspapers than the print journalists are? I mean, if a print editor was planning a huge enterprise project that was going to be really special for the newspaper (and would take some resources to do successfully), would people ask that print editor how he or she was going to monetize it? Never.

There’s more, and it’s all worth reading, as are Rob’s answers to the questions Howard Owens asked about onBeing.

I’ll say this:

When it comes to monetizing online news, the process of figuring out what works and what doesn’t is ongoing, and there are few experts. Staying on top of how an audience behaves in an evolving medium is not as simple as market research. By the time you finish surveying one self-selected group, a MySpace or YouTube has come along to tilt the playing field.

So, I’m happy to spout off a few ideas of how to roll some sort of advertising into content that I create, handle, or edit. If nothing else, I want a say in how it all turns out.