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News outlets are mostly bad at planning long term. But they are able to change – with the right mindset.
Put your hand on your heart and tell me you are not guilty of telling your newsroom peers that if you only did such and such things like The New York Times (or another news outlet you look up to), you would pull ahead.
I’m absolutely guilty of it. I have been doing it for years. Sometimes the ideas failed, sometimes they survived, yet they had to be adapted in the right manner.
I believe it’s good to look for inspiration at places that are doing things well. The mistake most make is trying to copy the successful formula.
There is a good quote by the former NYT Company CEO, Mark Thompson, saying: “The worst thing is if you take something from a conference as a recipe: we should all do what The New York Times did. But the most important thing is to think about your own market.”
The point is, there is not a universal formula for building a sustainable business model for news. What works for one outlet might not work for another.
Another, I think more important point – what works now does not have to work in the future.
The news business has already experienced this and the takeaway should be to diversify, keep betting on emerging business models and build adaptability into your news outlet’s DNA.
At the moment the best option seems to be some kind of a reader revenue model (although there are so many approaches to this, just compare reader revenue models by NY Times and The Guardian, subscriptions vs. memberships, hard paywall vs. free for all).
Ten to fifteen years ago it was scale and online advertising and before that printing a newspaper and selling it on the street.
What is a sustainable business model for news?
There are many definitions out there, the best and simplest in my opinion is this one quoted by Business.com: “A sustainable business model is one that generates value for everyone involved without being a drain on the resources that help create it.”
The Shorenstein Center’s News Sustainability program has produced original research on sustainable business models for the digital age.
The Shorenstein Center on Media, Politics and Public Policy is a Harvard Kennedy School research center dedicated to exploring the intersection of press, politics and public policy in theory and practice.
The News Sustainability program’s research is based on understanding new business models for local journalism in the United States, which is why I find it much closer to the situation of most news outlets in Europe.
One of the issues when comparing your national news outlet to US-based national news outlets like the NYT or Washington Post is the scale that enables such big publications to have a team in place where your newsroom can barely afford an intern.
I believe that if you work for a news outlet in a non-English, non-German, non-Spanish, non-French European country, which is roughly more than half of Europe (not counting Russia), there are better lessons to be learned from US-based local newsrooms than the big national ones.
Sure, the same principle applies also to local or regional newsrooms in bigger European countries. I work for a national news outlet in Slovakia but the things we deal with are much more in line with the issues a regional paper in south Germany faces than The Wall Street Journal.
The Shorenstein Center’s Solutions to America’s Local Journalism Crisis provide an excellent overview of literature (articles, academic papers) that have focused on the topic in recent years.
Last summer, Mather Economics, a global consulting firm that offers analytical tools and insights to understand and develop pricing strategies, dwelled deeper in sustainable business models for newspapers and found that a newspaper with 1 million unique visitors would start about 400 digital-only subscriptions per month across all sales channels. In time the number decreases.
Mather Economics is also developing all kinds of benchmarks and one of them mentioned in their study above is a benchmark on ratios of full-time newsroom staff per 1 million unique users. Early data points suggest current ratios are approximately one newsroom full-time equivalent per 70,000 monthly unique visitors.
The authors of the study say a rough rule of thumb is that a publisher’s newsroom should be about 50% of its digital-only subscription revenue.
There are also other resources available: The Shorenstein Center’s Playbook for Launching a Local, Nonprofit News Outlet, Sustainable innovative journalism and new business models report from the European Federation of Journalists and many articles, even older ones like this one from Poynter.
2050: Ads, subscriptions, memberships or something else?
There is one dilemma for media managers switching, updating or changing their news outlet’s business model even in 2022 that remains hard to solve, here is one example I have heard many times:
My newsroom has had its current business model (online ads) for a decade, it was a good business (probably not for the readers as they kept seeing more ads, but let’s not dive into that right now), we see it is declining and have set up a reader revenue business some time ago but the online ads business still drives most of the revenue. What should we do?
I would love to have a definitive answer that would work for all of them. But there isn’t. Most of the time the problem is to focus, set goals, and deliver them.
With an ad business, the focus is on advertisers, the goal is chasing scale, clicks, eyeballs and thus the content becomes clickbait, articles get divided into parts you have to click through or worse split into single sentences in a 40-part image gallery.
On the other hand, a reader revenue model is focused (or should be) on the subscribers / members that are paying the newsroom to do journalism, the goal is growing their number and most publishers now have a specific target in mind they want to hit. You are aiming to deliver the best experience for your readers.
If you see how these two models go against each other, raise your hand. OK, I can see you, all hands are up.
There are examples of news outlets that figured out how to run a mixed business model, reader revenue, ads, events, ecommerce side by side. Of course, it is easier to go all in on one of them that appears to be the most successful and sustainable longterm (for some outlets that could still be ads). It is simpler to set goals and explain them to your colleagues.
Running a mixed business model might appear to be better suited for the future. I think it is not the model that matters but the organisation and how it can adapt.
Going all in on one model, let’s say reader revenue, does not have to mean you cannot train your other muscles, revenue diversification is a good predisposition for future success.
What I am trying to say here is that the beginning of the year is also a good time to rethink some things and plan for the future and not just tomorrow.
This piece was originally published in The Fix and is re-published with permission.
