In addition to the podcast (below), the New Business Models for News Project is the subject of my column in the Guardian’s media section. Here’s the full text:
There is a future for news – a sustainable and once-again profitable future with the prospect of expanding and improving journalism by taking it deeper into our communities with increased relevance, engagement, accountability and efficiency.
A team of business analysts and journalists in the City University of New York Graduate School of Journalism’s New Business Models for News Project, which I direct, tried to answer the hard questions that have been asked since news organisations began suffering business challenges – and more recently, bankruptcy. Namely: what happens to journalism in a city when its last daily newspaper dies?
Or to put it another way: will there be a market demand for journalism? Can the market meet this demand? And who will pay for the journalism we need? These are business questions and so we sought business answers in research with a wide range of news companies.
The most startling and hopeful number we found is this: some hyperlocal bloggers, serving markets of about 50,000 people, are bringing in up to $200,000 a year in advertising. These are sustainable businesses and we believe they are critical elements of the future of local news – a future no longer controlled by a single newspaper but instead by an ecosystem made up of many players with varying motives, means and models, working collaboratively in networks.
We see the faint beginnings of this ecosystem today in the 10,000 hyperlocal bloggers who operate in the US, according to the hyperlocal network outside.in. They are being joined, almost daily it seems, by unemployed professional journalists intent on continuing to report and eating while doing so – for example the New Jersey Newsroom, the Ann Arbor Chronicle, and My Football Writer in Norwich. At CUNY, we surveyed more than 100 of these local-site proprietors and some are becoming profitable.
Keep in mind that few, if any, of these bloggers and journalists have experience in business, advertising or sales. So in our project, we suggest that there are many ways to optimise their businesses. Start by improving the products and services they offer to local traders. Then add the potential of regional advertising that will need outlets when the metro paper dies, as well as smaller networks made up of a few towns or built around interests such as parenting or sports. We even see potential for e-commerce revenue, following the example of the Telegraph, which sells hangers and hats, and now Utah’s Salt Lake Tribune, which has begun selling homes.
Bottom line: after three years, we project that a blogger could hire editorial staff and advertising help – citizen salespeople who help support the citizen journalists – and net $148,000 out of $332,000 revenue. That’s a conservative estimate when you consider that a community weekly paper in such a town probably earns between $2m-$5m.
We still see a role for a news organisation – the successor to the newspaper newsroom – that covers city-wide stories, provides the best reporting that will remain the lifeblood of local journalism, and works collaboratively with many in the community. It is the largest member of the ecosystem but with a staff of 100 instead of 1,000 – and without the cost of printing and distribution – it is much smaller than the old newspaper and that is what makes it profitable. In the US, we have seen not-for-profit versions of this new news organisation rise in San Diego, Minneapolis and New Haven.
There are more contributors to the metro news ecosystem: technology and sales support organisations that enable these players to operate as part of ad and content networks; publicly supported and not-for-profit entities (public media, an individual reporter supported by pledges using services such as spot.us, or a foundation-supported organisation); transparency of government actions and information (which we believe is critical to enabling any citizen to become a watchdog); national networks and the immeasurable but invaluable force of volunteers who contribute to public knowledge, because they care.
Adding this all together, our models projected editorial staff of 277, equivalent to a current newsroom in our hypothetical city of 5 million but now highly distributed among many new entities. We forecast total revenue totalling 10%-15% of that of the newspaper – which is about what most papers earn online today. At that level, we see sustainable journalism of scale but we also see great potential for growth, especially if journalists learn to take advantage of the social engagement the internet enables.
Ours is only one optimistic vision. There is no way to tell if we are right until journalists, business people, advertisers, technologists and citizens invest in the future instead of merely trying to protect their past. The incumbents are talking about building pay walls. Google has just offered its Checkout payment system to enable micropayments – which may be less of a rescue for papers than for the rare unpopular Google feature. Meanwhile, the entrepreneurs we interviewed are building new news companies for the new ecosystem.
All the business models will not sustain any business that does not provide value to the customer. The type of business is irrelevant if they lack value for the time a customer spends.
Mighty Google will ultimately fail when people tire of their manipulations. Right now they are a habit. Their perceived value is limited because of their basic design. Their additions of content will still provide only the most popular of search choices. Yes, we run as a herd. But over time the choices will get narrower and narrower. That means that their choice offerings will become fewer and fewer…
Businesses that try to control their customers are successful for a while. Ultimately the limited selections and directed attention will provide less and less value. A new service, selection, or even presentation will have a greater attraction and appeal…
All businesses exist solely to serve the customer. Who is the customer and what do they want-? What do we want from our news media providers-? When we find that value how much will we pay-? From inside the organization there should be only one question “What do they want and how best to provide it?… The purpose of an -investment- is to make money. A customer doesn’t care if you make money when you are not providing value to them.
Any focus on govt subsidy, govt rents, rates and methods of charging, rate collection, membership, advertising, subscription etc. models are only valid considerations after the customers are coming for value…
[...] Jarvis has an interesting post on the future of news on his blog BuzzMachine. In a nutshell he is proposing that in a post-apocolyptic newspaper [...]
It’s probably realistic to project, after three to five years, revenue in the range of $300K to $500K in a small market or slice of a metro area.
It’s important for the aspiring publisher not to aim too high (like the entire metro area). Start with just what you can cover and sell yourself.
Jeff, the main issue I have with above is: Why wait until the metro dies? Be a Fast Company now. Be the disruptor. Get a head start on the market. This could be a situation where first-to-market is an advantage.
Aspiring publishers should be taking charge of their own destinies now.
The barrier to entry is low and slicing off a portion of a metro area is often a wide-open opportunity, especially with all of the staffing shortages in metro papers these days. Seize the opportunity.
And write to me: howard at the batatavian dot com if you need advice.
I”m not saying anyone should wait. We are modeling a hypothetical.
I appreciate you for your this amazing work, although their is some mistakes of statics
Well done & Keep it up……………
It’s polite company around here… but is it OK to ask what Andrew Breitbart and biggovernment.com might mean for the news industry?
This seems like a very possible, perhaps even probable, future for the news industry. I agree that pay walls are a terrible idea. With so much free content on the internet, a pay wall is one barrier that a struggling news organization does not need. However, offering much for free and then charging for premium content seems to be working very well for established that move online, such as ESPN. Perhaps the more popular online news organizations could follow a similar strategy, offering basic news for cheap but charging more for in-depth analysis.
As a former journalist – my first summer job was cub reporter for the Straits Times in Singapore – and hardened tech entrepreneur, the opportunity-inside-a-riddle-inside-a-mystery of what’s next for news excites and dismays me.
Your work to decode the next model should be appreciated by everyone who values information, truth and access….thank you.
I agree that your services aggregation as hub with bloggers/freelancers as spokes is the right model.
I’m focused on building an open source app/cloud services enablement venture at the moment so don’t have my head in this space. However, it seems that a Glam-like vertical network platform as foundation, advertising+subscription+micropayments+public funding as hub revenue model, and revenue share+freelance as blogger/citizen journalist revenue model nails it and might solve the failed newspaper model. Maybe there’s an affiliate network for news orgs somewhere in the mix.
The fatal flaw in citizen journalism is unverified information. Anybody can post a story, it takes a committed reporter to check and verify facts before submitting a story for publication. Maybe one way to overcome this fatal flaw of unfettered access to publication outlets would be to place payment premium on information that is verified as truth. Placement – front page/backpage/photos, etc. – could be another basis for paying contributors….no different than freelancers currently.
To give some context to where I get my news info….I read the NYTimes, Washington Post, WSJ, Economist all online, various blogs…were you to take away my news sources, I would feel like I went totally dark.
My $0.02….
Keep up the good work.
> The fatal flaw in citizen journalism is unverified information.
That flaw didn’t seem to affect “professional” journalism, so why is it “fatal” to citizen journalism?
> Anybody can post a story, it takes a committed reporter to check and verify facts before submitting a story for publication.
And we’ve seen that print and TV doesn’t have much in the way of committed reporters. In fact, we see more committment in the on-line community, because fact checkers don’t have to get an editor’s permission.
> were you to take away my news sources, I would feel like I went totally dark.
Where did that come from? No one is suggesting taking away your news sources. (However, as the Van Jones episode proves, if you’re relying on the NYT and WashPost, you’re not getting news, you’re getting talking points.)
Is it too much to ask to stop writing bolox like ‘hyperlocal ecosystem’ ??
I could speak to you in Welsh, with you speaking in American neologisms and we wouldn’t get far. So SPEAK ENGLISH !!
Using ridiculous jargon doesn’t make you look intelligent [NOT 'smart'] it makes you look thick [NOT 'dumb' which means 'unable to speak'].
This linguistic imperialism is getting on my tits to be honest.
Well, that’s helpful. What words do you suggest? You seem quite fluent at insulting in English. So what words would make you more comfy?
Hyperlocal, love it or hate it, has become a standard. Would you prefer mondolocal?
Ecosystem is a perfectly good English word and on its behalf, I’m insulted that you would insult it.
One thing that seems to be glaring in its absence in your article is that of micropaments. There seems to be a lot of talk about this as a mechanism that will “save journalism” as described by Walter Isaacson in Time some months ago.
Do you think this might be a viable option rather than the advertising route? Personally when I read a blog I just about never click on one of the ads. And the scandals of click-fraud still hang over this entire model, costing literally billions of dollars to advertisers.
I like the concept where you see a headline, perhaps the intro, and if you are intereseted you agree to hand over one or two cents to see the main body of the article. The cost is so small hardly anyone would baulk at this. Plus iTunes has proven this model works, where 99c for a song doesn’t put buyers off at all.
Of course, no one has come up with a method to do this as yet. But, hypothetically, would this work?
Existing micropayment systems have huge transaction costs. No, not payment processing costs, but the hassle to the user.
Advertising is less hassle.
If what you’re providing is worth less to them than the time, hassle and money (if you charge directly), they’ll do without. If they can get a reasonable substitute for less, they’ll go elsewhere.
[...] This leveling of the playing field (or tilting it, depending on who you ask) is also evident in PageRank, which confers authority on websites based on inbound and outbound links from other websites. This means that power now rests with the media outlets that are linked up, rather than conventionally defined ‘authoritative’ sources. Which is why the Wall Street Journal and The Economist fall behind in Google searches – they may be trusted sources, but they have hidden themselves from view, behind a gate of paid subscriptions. Although the focus of Battelle’s book is charting Google’s progress rather than exploring the future of news, his book poses some uncomfortable questions that are mirrored in much of the current writings in the blogosphere. When will conventional media start to ‘invest in the future instead of merely trying to protect their past’? [...]
[...] This leveling of the playing field (or tilting it, depending on who you ask) is also evident in PageRank, which confers authority on websites based on inbound and outbound links from other websites. This means that power now rests with the media outlets that are linked up, rather than conventionally defined ‘authoritative’ sources. Which is why the Wall Street Journal and The Economist fall behind in Google searches – they may be trusted sources, but they have hidden themselves from view, behind a gate of paid subscriptions. Although the focus of Battelle’s book is charting Google’s progress rather than exploring the future of news, his book poses some uncomfortable challenges to conventional media, mirrored in much of the current writings in the blogosphere. When will newspapers start to ‘invest in the future instead of merely trying to protect their past’? [...]
[...] Less is more. Referring to the new news organization, Jeff Jarvis said in his NewBizNews in the Guardian post , “with a staff of 100 instead of 1,000 – and without the cost of printing and [...]