Journalism: The Advertising Business Model
blog.awesomezombie.com
blog.awesomezombie.com
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.
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
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.
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
Exactly what that business model might look like is left as an exercise for the reader.
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.
The problem with web-based advertising is that it is so damned measurable-- it's trivial to see if your ad is working or not (where "working" is defined as leading to a conversion appropriate to the task at hand.)
In the old days, a company might pay $X to run a print ad, and suspect that it was helping business, and then run it again, etc.
Now, it's trivial to know for sure, one way or the other. Which means that ad prices get tied to actual effectiveness, not to some amorphous notion of "prestige".
In other words: a lot of print advertising was horribly overpriced. I don't think a cartel is going to be able to put that toothpaste back into the tube....
I think that Michael_Dorman's largely correct on this issue, however: If they do find they can even legally follow on your suggestions, there is still the next question of whether it's the most cost-effective buy. For some branding purposes (the prestige buy you mention), it might be. But while that is a substantial spend, it's not the majority spend and at the end of the day, cartel or not, the revenues simply won't reach where they need to be to support their businesses.
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?
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.
Meanwhile, the calculations in this post are very conservative. Lots of journalists make more than $300 for a 1000 word article. The financial situation for working online journalists is even more difficult than suggested by the post.
But still, in certain sectors like Tech or some other niches, the best outlets actually are profitable online; those are typically something between media and blog, like Techcrunch, gadgets blogs etc., where about 10 reporters are pumping out articles 24h/day, and maybe about 25% of articles can be called journalism (they called someone or went to some event).
But where this model doesn't work are general news, since they are quite expensive to produce and yet not perceived as very valuable. There it doesn't work.
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?
Many major print newspapers aren't profitable any more either.