Most Online Newspapers Lack Functional Business Models

Jan 15th

Mediapost referenced a 66 slide powerpoint by The World Association of Newspapers, titled Shapping the Future of the Newspaper.

Each bulleted list below is a slide from their presentation. I grouped some of them together to discuss how/where I think they relate.

Product Packaging

  • Broken information asymmetry: Information is easy to charge for as long as only a few have access to it. Today's information symmetry makes it increasingly difficult to charge for regular news/information.
  • Losing loyalty: Consumers are increasingly grazing media. If they don't like it, they immediately move on to greener pastures.
  • Increased individualism: As we see a strong trend of individualism in the society, mass media has the downside of offering the same message to everybody.
  • Design Hype: 50-70 percent of buying decisions are made in the store means more focus on design.

They realize they are no longer able to sell what they once sold and they are losing loyalty each day. Eventually they won't even be able to pay people to take what they once charged for.

They see that consumers want an individualized focused product. They realize that buying is largely a game of taste and packaging. And yet they do not realize that they are selling news, even if it is free. If packaging matters for products it also matters for information. Niche brands are a good thing. Niche bloggers get this. NTY got this when they bought About.com's blog network. Why doesn't the rest of the media get it? Probably because actually changing to give the market what it wants feels risky, and the only niche they appeal to is local.

Authenticity

  • The search for authenticy: In a world of fake stories the authentic and real becomes important.
  • PR and marketing merging: Editorial content has higher impact than ads, which turns PR into a sales activity.
  • Online transactions a new revenue source: As media goes online, transaction revenues for services become an increasingly important revenue stream.
  • New revenue models: Newspapers need new revenue models to keep being profitable. New technology offers endless options to reach the future customers (e.g. rich-media ads, virtual worlds, viral marketing, product placement, parasite distribution, maglogs)

They realize that the perception of authenticity is becoming more important, but their journalistic rules will keep their content too vanila to create it, and they are fine with promoting public relations and looking for new business models including affiliate marketing, product placement, and parasite distribution. Eek.

Complexity & Depth of Coverage

  • Simplified news: "News snacks" are becoming the norm as customer needs are oversaturated. Simplification means a newspaper can only afford to be good enough.
  • Analytic journalism: Newspapers will offer deeper analysis, opinions and explanations of the news in a larger context to help people navigate in an increasingly complex world.

I can't see news organizations being as efficient as blogs on the news snacks angle. And the in depth reporters are not going to be able to beat out subject matter experts unless they focus on a niche. If they focus on a niche and get a following then they don't need the news organization behind them. Google or Federated Media or some other ad network can do the selling for them.

Published: January 15, 2008

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Comments

January 16, 2008 - 12:27am

Aaron

I am interested in what you think about the weekly papers like the SF Weekly or the East Bay Express. While they have certainly taken a hit in the revenue model in terms of classifieds, display adds and personals along with all the other news papers, they have historically been free.

Does this change your view point? Does this niche of being local (and generally liberal with an editorial leaning towards "hard hitting" stories instead of "News Snacks") provide enough value?

Jonah

January 16, 2008 - 1:19am

Hi Jonah
I think it stands a good chance of doing so...especially if they turn into community yellow pages type sites with events and features...like the Berkeley parents network type stuff cross referenced with a local SuperPages + a Google calendar of events, etc.

January 16, 2008 - 4:25am

People are addicted to news, amazing that the "dealers" haven't figured out how to profit from their product.

The internet resells news at an astronomical rate. News can be repackaged so many ways, I would think the newspapers would making so much more use of the web to repackage their products before others do it for them.

They're trying, but all their efforts are mostly terrible also-rans. Their SEO is basically terrible. Even the simplest thing to see---content---they don't know how to benefit from it (though the Times has figured it out).

January 16, 2008 - 10:05am

It never ceases to amaze me how online newspapers continually manage to sabotage their own success. For example the Financial Times (www.ft.com) recently introduced a new business model. Visitors can read 10 articles a month for free. If they want to read more they have to pay an annual subscription. This startegy undermines both of the business models newspapers have. Restricting page views limits traffic and therefore limits advertising revenues. Giving ten articles away for free is enough for many people so reduces the potential of selling subscriptions, thereby reducing membership revenues.

The newspaper industry needs a few major failures and some tech savvy youngsters in the boardroom to turn their amazing resources into successful online businesses.

There is a very good article about what WSJ.com could do to triple their online revenues at http://www.subhub.com/articles/20071129_1

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