21st century media. Part 5. How to make money on journalism? Business Models for New Media

Original author: Paul Bradshaw
  • Transfer
In this part of the article, I look at how new media deal with the business problems of classic news media, and what new business models they could start to apply.

Let's look at the classic business model of the newspaper. If significantly simplified, then it is based on the sale of three things:
  • advertising (even easier: selling readers to advertisers);
  • selling content to readers (i.e., the content of the newspaper itself - articles and photos);
  • selling a channel (i.e. media) to readers.

Over the past decades, important changes have occurred:
  • The development of alternative channels (radio, TV, mailing list, web, mobile communication devices) has reduced the share of newspapers in the advertising market. This was also facilitated by a decrease in readability, the ability of new media to gather narrow target audiences, to measure them more accurately.
  • Development of content sources . Again, radio and TV, plus competition, intensified sharply with all available computer technologies for publishing and distributing content. This resulted in a superior supply , where people are less and less willing to pay for regular content, which is already everywhere in bulk.
  • Finally, a change in society. Especially the massive increase in the number of office employment and the use of computers as the main means of production. Fewer people began to go to work "to the center" by public transport. Therefore, the value of the newspaper as a channel for disseminating information has fallen . (The author of this article is an Englishman. Historically in England, newspapers were read not by one, but by several people, they were usually passed from hand to hand. In addition, it is still customary to leave them after reading them in public transport, where other passengers read them. - comment of the translator). Other channels have developed in the familiar environment of newspaper consumption: the web (both at work and at home), mobile phones, free newspapers, and TV screens in public transport. This increased competition even further.

In general, newspapers very successfully defended their main sources of income despite the emergence of new media and a decrease in readability. But the changes in media consumption patterns made possible by the Web, as well as the migration of advertisers to the Internet, have put classic business models at risk. How to make money on content if fewer people are willing to pay for it? Why pay for printing and distribution if online distribution is not only much cheaper, but also more efficient? How to sell an audience to advertisers when it decreases, and you know less about it than your online competitors?

Give online

The most obvious answer to the challenge of the time was simply to start conquering a new media environment and transfer your business model there. But there are problems:
  • Advertising here is cheaper, or, to put it another way, readers here are less expensive . Last year's research showed that readers of online newspapers cost only 36-55% of the cost of readers of the print version. Well, let their price go up, but nevertheless, how to justify the previous price for advertising if the advertiser knows that publishing online is cheaper? And besides, it turns out that the competition here is even tougher - prices need to be reduced. And advertisers can use you for free through viral marketing. Another problem is that 40% of all advertising money on the Internet goes to search engines . This is a completely different market. For newsletters, one might not dream of taking dominant positions here.
  • Content is free. Paid access to content does not work . Or, more precisely, it works against your main source of income - advertising. The damage from reducing the audience due to paid access will be greater than any income from a paid subscription. And all because
  • The channel does not belong to you. You own only a small part of it - your own website. The reader goes to the competitor with one easy click, or by using a search engine, which in general can exclude you from the search results. Well, if you write about a football club, music group or some kind of factory, then why go to you? All this can be read on their own sites.

And now what i can do?

Attract readers

Easy to say, huh? Newspapers have always chased the audience, but what kind of audience? Newspapers and broadcast media have always had a limited distribution area and have always responded to the needs of residents of this area. Now they are wondering: “Why are we spending money on a website that our locals don’t read?” We will have to seriously review our views on the audience - who would we be interested in?
Your marketing is changing online too. You can attract readers from another city, another country (the sites of the United Kingdom seem to do pretty well). You can attract readers who would not buy a newspaper because of its too general subject matter, but they will come to a free site. And once they enter, then there will be advertisers for such an audience.
If every online reader is 60% cheaper than printed, then why not solve the issue of quantity? Let them make up 80% of your audience. For example, 18 million online readers in addition to 10 million of your print readers;
In other words, working online means being very, very large (international) and, at the same time, very, very small (personal). The old approach to increasing efficiency from growing production does not work here. You can run hyperlocal or highly specialized sites. You can start incredibly popular bloggers, organize some kind of interactive , separate column, or useful service that everyone will talk about.

Create content that people want to pay for

This is incredibly difficult. Financial information is a rare example of journalistic work that has clear commercial value, but even it is at risk. Content is so easy to copy on the network that the only reason for demanding a fee for the content is the speed of its delivery. (Mobile technology is a separate issue, we will consider it below.) Maybe it is possible to sell reports with some commercially valuable information, but this is unrealistic for most simple news.
Most media are not of commercial value, but of public. It's hard to believe, but on the net, public trust capital is a very powerful currency. How to use it? Ask readers to make donations. True, they would rather support a specific investigation or coverage of a particular event than give money to the site in general.
If accusations of paying for materials begin, ask yourself why we are making commercial applications for the newspaper, for example, about real estate. Why don't they blame us for them?
And if readers publish their materials, how can they be of value to the advertiser? And you can bite the bit and become a non-profit organization, as many did.
And finally, another option: sell your content to other companies. Content was king until the dot-com crash happened, but there are still sites that are willing to pay for it.

Create new platforms

Now money is being made precisely on this, but they still need to be able to be made. Web 2.0 is built on the basis of the web, which, in turn, is itself built on the basis of the Internet. A good example of this is Facebook, which has created a platform that people willingly subscribe to. Other good examples are Flickr and YouTube. These companies understand that the web is a means, not an outcome . If your business model is based on selling ads, think about how to attract and retain users on the site. On the Internet, newspaper buyers do not crowd around a newsstand. But if you make a successful platform, you can sell it to others.

I will explain these three examples in another language ...

News is a service, not a product

The most successful news makers understand that news is a service, not a product. The success of the BBC is not in what resources it possesses, but in how it managed to put itself in the service of society. Teesside Gazette hyperlocal sites serve the immediate interests of the local community. Cory Doctorow from Boing Boing spends the first half of the day writing to readers. Facebook is an absolutely hyperlocal site. He tells you what your friends are doing. Twitter does the same.
Online success is based on communication with customers, anticipation and formation of their needs. Just writing articles is not enough. Articles were an effective means of serving the needs of readers only as long as the platform was paper. Online answers to the same questions (who, what, where, when, how, why) can be given differently and more effectively. Databases, tags, geo-tags, maps, multimedia, interactivity, personalization and so on offer new opportunities for this.
Moreover, since we are now working in the service sector, relationships with the reader become even more important. We need to respond to their comments, follow the information that they tell us, engage them in every possible way. You will become even more aware of the importance of these actions when you realize that ...

You won’t be full of advertising alone

Let me remind you once again that 40% of all advertising money on the Internet goes to search engines. For newsletters, one might not dream of taking dominant positions here. It is naive to believe that advertising revenue will be the same here as in print. Nevertheless, every day players appear on the network hoping that advertising will cover their expenses.
We live in an age of convergence, not only technological, but also commercial. Amazon makes money to organize sales, but at the same time uses content (reviews). Lastminute.com does the same. At the same time, neither one nor the other produces goods that it trades. Their business model is based on partnerships, efficient production relationships and service.
So why don't the content-based industry do the same, start selling? In some places this is already practiced. Examples: Mixmag download rating and NME ticket office . If you find it too difficult to build your own affiliate network, you can join existing programs .
However, keep in mind that you must match the level of service that the most successful players on the market offer. Tim O'Reilly writes :
“Amazon sells the same products as its competitors, such as Barnesandnoble.com. They get exactly the same product description from the manufacturers, the same photo. But Amazon skillfully uses its customers. They have the flow of receiving product ratings from users, an invitation to do something on almost every page, and, most importantly, they use the data to make a better search on their products. Barnesandnoble.com gives its products or products of advertisers in the first lines of the search result, and Amazon first shows the “Most Popular”, which is calculated in real time based on not only sales volume, but also other factors that the Amazonians themselves call the “flow” around goods. It’s not surprising that with this approach they overtake their competitors. ”

Another earning opportunity is merchandising . Here you have to think carefully. Just blotting out the logo on a T-shirt or mug will not help. But journalists are creative people, even if they scratch their minds. The first thing that comes to mind is the catch phrase of your columnist or even an interview. What about photographers, cartoonists and illustrators? In addition, there are many companies on the network that will make goods for you, and they will also sell them. Therefore, you should not limit yourself to the scope of your own production capabilities. Brokers, such as iStockphoto or Threadless , will help the media find buyers and sell content for a small percentage. What about custom content? Yes, you and half do not know about him!

Sales services

An excellent audience is concentrated on news sites, which will help you not only deal with your content, but also bring other benefits. There is nothing particularly new here. Newspapers have long been publishing ads about services and dating, but they charge money for online crosswords. Check out the Sun newspaper website . This is just an example in the search for possible earnings. Here and rates, and diet, and games. Here you can download "Strategies for earning news sites" (PDF) . But most news media rivals like Craiglist and eBay are far behind.

To catch up with them, you need to look at the basic tenets of web 2.0 companies , about which Tim O'Reilly writes:
  • Provide services, not finished products. Services must be scalable. That is, to expand the service does not make it unprofitable.
  • Control unique data sources that are difficult to reproduce and that are becoming richer with the increasing number of people using them.
  • Consider users your developers.
  • Foster a collective mind.
  • Let the long tail law work for you through user self-care. Concentrate more on popular products.
  • If you make software, then do not do it for the sake of one device.
  • Easy interfaces, development models, and business models.

Where to start the media? Think about how you can provide your service in the era of web 2.0, or take a break from what content you produce. Give people a website where they can advertise, just like Horse and Hound does . What about geo-tagged ads? Or real estate listings ? Or dating services ?

But this is only the first step. Next, you need to think about the news industry in general, and think of it as a web business model, and not in terms of physical infrastructure. The most common solution is to give basic content for free, and charge for additional services or personalization. Disney calls it “soft leash,” and Jared Lukin calls Freemium.(from the English. Free - free - and premium - the highest category. - approx. translator) .
Full of examples. Flickr is free, but if you want to keep more than 200 photos there, pay. LibraryThing does the same, only for book lists. PBwiki provides free hosting for the wiki, but you pay for additional options. SurveyMonkey allows you to interview 100 people, but asks for money for access to raw data or larger samples. Wordpress provides a free blog, but you have to pay for advanced features. And besides them there are also those who simply charge for the lack of advertising (as an option, you can provide the service for free to build an audience, and then start selling it to advertisers a la Facebook).
News media can choose what they like best. To offer paid services on the basis of the existing one, to create a completely new business, to make a highly specialized product, to become a seller of someone else's product, finally. I repeat, the main question is what do readers need? What are the problems, topics, interests in our region? What attracts people's attention? Communication between journalists and the editor is of great importance.
Gather information for the good ideas from the 43 pages of the book Yoka Benkler 'networks Wealth »( Yochai Benkler" of The Wealth of Networks' » ), as well as the final chapter of" Wikinomics »( Wikinomics ).

Mobile technology, we are still waiting for you

The hope that mobile technology will generate revenue is visible to the naked eye. Everyone just says that if on the Internet everyone is used to getting everything for free, then everyone is used to paying for mobile content. If people are willing to pay one and a half pounds for a ringtone or a soap picture, then the media content will definitely not disappear here?
Moreover, mobile technologies promise new opportunities for advertising sales.

But here we risk making the same mistakes that we once made with the advent of the Internet. Mobile technology is a media of a different nature, and not just a new channel on which you can cut money. Here people want special things. Ongoing research suggests topping the list of maps and locating. In this situation, if you want to prepare for the transition to this platform, implement geo-tags . To quickly then offer your content based on these tags - ads? restaurant ratings for the nearest 500 meters? crime rate in the area? something else?
Twitter clearly demonstrates the value of SMS alerts . On the one hand, they are just useful for attracting visitors to your site, on the other hand (again this “soft leash”) for some special sms you can start to charge. Those lucky ones whose content is already suitable for mobile phones (wallpaper images, short video clips) can sell it on new media. If you are not one of these, it's time to think about what your readers want to see on the screens of their mobile devices.
Do not forget about other platforms: DAB radio, digital and IP-TV.

Finally, I propose a scheme and a list of questions that the news media should answer, trying to determine a new business model for themselves.


List of questions to answer in search of a new business model

  • What data / information do we have access in its purest form? What can we get the easiest? (Data of sports competitions, criminal statistics, contact information, orders of village councils, biographies, etc.)
  • Who could be interested in this?
  • Where are they online and in real life?
  • In what form is it more convenient for them to receive this information?
  • How to convey it to them?
  • Why would they want to use this?
  • How will they use the data? (compare, translate to another format, forward, build something based on them, etc.)
  • Who is using our information now?
  • What would they add to our data or service?
  • Why would they do that? What would inspire them to do this?
  • What is interesting with us? (Local business, popular activities, events, attractions, personalities, etc.)
  • What service would satisfy these needs?

Of course, the main problem will not be to answer these questions, but to determine the most important areas of development, what to spend time and money on, but it depends on the particular company, its content and employees. This part of the article cannot be considered finished either; send your criticism.

Paul Bradshaw ( Paul Bradshaw )
January 28, 2008.

From a translator: The
article was translated with the personal permission of the author. At his request, I indicate the address of the article directly in the text:
http://onlinejournalismblog.com/2008/01/28/making-money-from-journalism-new-media-business-models-a-model-for-the-21st- century-newsroom-pt5 /
I hope the Habr administration will take into account the author’s request and forgive me for the forced violation of the format.

Other parts of this article:
Part 1. Diamond news.
Part 2. Distributed journalism.
Part 3. Six questions after.
Part 4. Distribution of content in the new media environment.
Part 6. New journalists for new information flows.

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