Advertising is done with. Our readers hate it, and marketeers are starting to hate it too. There are better ways to reach customers than with banners and billboards. And so ad spends are going down, down, down. Ninety percent of all discussions about new business models in media, beneath the surface, boil down to this: help me, advertising isn’t paying the bills anymore.
Let me back up and explain the ad-supported business model for news in a couple of sentences.
The first thing to realize is that, since the 20th century or so, people have never been willing to pay for good journalism. A good newspaper is worth maybe half a cup of coffee to a reader, but certainly not more.
Complaining has never saved a business, and so instead of whining about the ignorance of the hoi polloi and their unwillingness to pay for journalism, instead newspaper executives sneakily redefined their business as selling eyeballs to advertisers. A substantially more profitable business to be in. The pocket change you shlep out for a subscription is primarily meant to prove to advertisers that you actually care about what you’re reading and won’t just throw it away like a flyer or spam mail. Advertisers care about that sort of thing, because if you’re not an engaged reader, the advertising gets lost too. But subscription revenue is not the point.
Most newspapers get anywhere from fifty to eighty percent of their income from advertisements, and of course, free metro papers get all of it from ads.
When newspapers are actually a service to advertisers and not readers, people running newspapers have to start thinking in different ways. Videlicet: how can I, publisher, sell the most and the most expensive advertising, while spending as little as I can on good writing?
If you sack your senior city hall reporter and that costs you a hundred subscriptions, but it saves you $40,000 a year and doesn’t really bother the advertisers, then why not? If advertorials are upsetting your readers, but not enough for them to actually switch to your competitor, is that really a problem?
Economic optimization of the newsroom and ad-supported journalism go hand in hand.
You could cry and pout all day about how commercialism is destroying newspapers, but it is how it is: readers don’t pay for journalism, advertisers do, so advertisers hold the strings.
But here’s the thing. Advertising is waning. A couple of percents each year, ad expenditures are going down. Upswings happen, but they’re freak events. Plus, the ad money that remains is moving away from newspapers to other outlets. So we have to figure out a new business model that isn’t ads.
Getting people to actually pay for our content at full price is tricky. Even paywalls don’t go that far, and paywalled news websites merrily show you a shit-ton of ads even after you’ve paid over a hundred dollar for a year of digital access. Same for dead-tree editions, of course: that big subscription fee does not entitle you to an ad-free printed newspaper.
There are other, partial, solutions – ways to make money with journalism. Not enough, but enough to get started.
Some organizations have reported great success with organizing real-life events, others are monetizing workshops that teach local businesses how to use social media, some make money with Kindle and books and yet others ask readers to sponsor (not pay for) their enterprise reporting on a per-story level.
All these new business models have something in common: they allow you to make money because people respect your newspaper, your brand. And the more they respect your brand, the better you can monetize it.
The New York Times can sell their Manual of Style and Usage to the general public but the Bozeman Daily Chronicle in Montana can’t.
You can teach businesses how to get their act together online, but not if your own website is horrible.
Your events can be the talk of the town (and cheap for you to organize, with all those journalists and their rolodexes) or they can be “that pathetic thing our pathetic newspaper is pathetically trying to get us to attend.”
There’s no reason for people to come to your newsroom café instead of any other bar unless they genuinely appreciate what you’re doing.
When copies are free, you need to sell things which can not be copied. Trust. Community. Fun.
When advertising slips below the symbolic 50% revenue line, news organizations will see that they have to start caring about their readers again. Not because the executives at the top aren’t ice-cold capitalists – they are – but because it will make business sense again to make you, the reader, happy, when it didn’t make business sense before.
When advertising wanes, selling a mediocre product for next to nothing to boost circulation is not a valid business model anymore, and instead, trusted news brands gain in importance. Maybe ten years from now, we can start being proud of the news we put out again.