

Journalism: The Advertising Business Model - ig1
http://blog.awesomezombie.com/2010/03/journalism-advertising-business-model.html

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marciovm123
Nice work-up by the OP.

I think people are still in the mindset that the value produced by a
journalist is in articles, period. I think there is more value to be created
in the interaction between journalist and audience that the web makes simple
to execute.

For example, right now articles have to be the same for all subscribers. But
there will be some subscribers who care more about a particular article (or
topic) then others. Why not enable those extra-interested subscribers to pay
more for additional information about a particular article, or interaction
with the journalist? Articles could have multiple tiers of access, journalists
could have VIP hangout areas where your comments are guaranteed to be
responded to, etc. Or an audience could put up reward money for journalists to
investigate a particular topic (this has probably been done already, right?
EDIT: spot.us).

Right now everyone is forced to subsidize the "general" interest categories,
so we get a million articles about the same top-10 topics of the day, and this
sucks. Enabling additional revenue will not come from a different way to treat
those same topics but rather from better ways of engaging with increasingly
niche audience groups.

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cschwarm
I also think the future value of news is in the relationship to journalists
and reporters. They need to become 'celebrities' to a certain degree. The
Huffington Post is a good example.

However, I think the transaction costs of crowd-sourcing articles are too
high. People have better things to do then finding topics to fund. It already
didn't work for open source projects.

My favorite solution is still the club model as described here:
<http://news.ycombinator.com/item?id=678801>

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greyman
I would object against naming HuffPo as a good example.

1) They are not profitable.

2) Quite a few of their articles are just rewrites of other journalists work.
They read article in other media, and then re-tell it in their own words.
Which of course is much cheaper than to really report. So they are dependent
on other media in their operation, and also the point 1) applies.

p.s: I don't have anything personal against HP, I just think they didn't prove
anything yet.

~~~
cschwarm
I meant the Huffington Post is a good example to make/use 'celebrities' in
their 'Featured Blog Posts' section.

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morisy
Interesting analysis, but with 80% of the profit going direct to the
journalist, I have a hard time imagining how they give their sales staff a
decent commission AND cover their overhead. In such sales-driven industries,
the commission alone regularly hits 15% and upward.

That means at best, without a dedicated sales staff, there's going to be a lot
of that remainder traffic that doesn't require sales staff and pulls in even
lower margins.

 _Edit: The blog post goes into all these issues quite well, including
factoring in a commission in his calculations. So, yay original poster_

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michael_dorfman
What it really means is that online ads simply don't pull in enough money to
support journalism, except in weird edge cases-- another business model is
needed.

Exactly what that business model might look like is left as an exercise for
the reader.

~~~
morisy
Great point. I would add the caveat that "online ads as they currently exist
simply don't ...".

Jeff Jarvis (<http://www.buzzmachine.com/>) has been pushing papers to jump
into marketing packages that go beyond the ad/CPM model. It requires better
sales/marketing/ad staff and innovation, and isn't as simple as "We have your
target market hostage," but then again, the pay is a lot better.

~~~
Perceval
One wonders why the major news/media corporations haven't simply cartelized
their ad space. If NYTimes, News Corp, Knight-Ridder, and Conde Nast got
together and decided the ad space in their properties would cost $X, where X
is enough to sustain good journalism, people would probably pay X in order to
advertise in those websites, because they have large prestigious markets.

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anamax
> If NYTimes, News Corp, Knight-Ridder, and Conde Nast got together and
> decided the ad space in their properties would cost $X

Those folks have been selling ads for some time. What evidence do you have
that they're doing it (significantly) wrong?

Note that all of those publications are losing off-line subscribers like crazy
and the on-line numbers aren't growing as fast.

Are there anti-trust implications in your proposal?

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Perceval
As far as I can tell, those corporations have been using third party ad
networks to serve ads on their web properties. I think that limits the amount
of control the NYTimes or WSJ might have over the pricing of ads, since the
same ad might be run on a high-status newspaper like Washington Post and also
on middling web-only pages alike.

I'm sure there are anti-trust implications if done improperly. But "The Deck"
advertising network works on the same principle: limit ads to a certain
network of blogs with a certain type of content, charging a different rate,
having control over the type of ads, and delivering a certain known target
market to advertisers. My idea for the big news/media corps is essentially the
same.

<http://decknetwork.net/>

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jessriedel
Here is the standard framing of the print-to-online journalism problem:
newspapers can no longer make enough money because (1) users won't pay for
online subscriptions and (2) online advertising cannot make up for the lost
print-subscription revenue. Thus, giving away content for free is not
sustainable. (This argument is repeated everywhere.)

But haven't newspapers _always_ subsisted on advertising? My understanding is
that, historically, the print subscription price didn't even cover the cost of
printing. So isn't true that the problem has _nothing_ to do with giving away
content and _everything_ to do with the value of online ads vs. print ads?

I have never gotten a good answer to this question. Could someone help?

~~~
ig1
Historically a lot of newspapers made their money through specialist ads
(classifieds, jobs, housing) - but both in print and online they just can't
compete against niche sites that cover those areas.

Many major print newspapers aren't profitable any more either.

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zaphar
Just thinking out loud here but I wonder if the longevity of online content
has been factored into these analyses? It might take a longer ramp-up but
theoretically at least an article published online exists longer than an
article in print. So the time revenue is earned on an article is also longer
than revenue earned on an article in print. It's not entirely unreasonable to
think that there might continual revenue per article earned for online content
so as more content is created it snowballs.

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AmericanOP
Newslab is going to see a big pivot down the road. They want to build several
complex structures simultaneously: an advertising network, a syndication
network, and a content network. Technical innovation in any one of these areas
will determine the path of the company and whether yahoo news buys them or
not. It is highly unlikely they will succeed in all areas, especially content,
but since they are smart they may be able to build a tool the big media sites
want.

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njharman
Still think people will _continue_ to be willing to pay for editors, artists,
photographers, page designers, researchers and all the other jobs news orgs
have besides journo and ad sales.

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dsplittgerber
His descriptions are mixed up. First one is best case, third one worst case.

