The different ways newspapers can make money

11:20 am - August 13th 2009

by Mark Pack    

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A collection of tabloid newspapersAlmost all the discussion of how newspaper should make more money has been based on the implicit assumption that the only business model available is ‘put some content behind a login that requires people to pay‘.

Up against that is the argument ‘but lots of other news is available for free, so why would anyone pay?

But there are actually quite a wide range of business models.

The existing model
Both the Wall Street Journal and the Financial Times have shown how paywalls can work. It hasn’t worked for some, but is there any reason to believe the current demarcation is set in stone with no scope for future changes? No. The Guardian looks to be thinking about a variant on this where the paid-for content is more like the benefits of club membership than the specialist news approach of the FT.

The loss making model
Losses aren’t fun and don’t sound good, but … we’re surrounded by industries that repeatedly make large losses. Some survive because people are willing to put money in for the status, fun and other benefits it brings. Some survive because of fundraising from other sources – such as appeals to support public radio in the US.

Some survive because the state puts money in. The last may sound implausible, but Alan Rusbridger has floated a version that may be palatable – public funding of a Press Association-style system to ensure that there is minimum factual reporting of local public sector bodies such as councils. That would both reducing the costs for newspapers and allow them to give better local coverage.

The Gmail model
Access is free for everyone, but a small group of heavy users pay for extra services to fit their heavy use (you can pay for extra storage space). Possible newspaper version: you get charged if you want to visit more than a certain number of stories in a time-period.

The Flickr model
Access is free for everyone to this photo-sharing website, but a small group of heavy users pay for extra services to have more data and to sort their data (you can have more sets). Possible newspaper version: you get charged for advanced search and sorting facilities. It is easy to see how this would appeal to business users – who are often willing to pay much more heavily for services than the normal consumer, as we see with train and airline tickets.

The (smart) music industry model
For some in the music industry, songs are now the free taster in order to sell more merchandise and tickets to events. Polly Toynbee being a sell-out at Wembley stadium? Hmm… but could there be more scope for the media to organise events for the public at which their journalists are the star turns? Could the star columnists’ writing end up being tasters for events where they turn up in person?

The radio industry model
In the early days of the US radio industry, radio manufacturers paid for content to be produced because that raised demand for radios. The clearest analogy is with Google: they want lots of good content easily available online because that ends up producing more advertising revenue for them.

So why shouldn’t Google pay? It’s hard to see how we could get from here to there, but then looking round at the radio business now, it’s pretty hard to see how that original model could ever have been in place – yet it was.

The DVD industry
It’s littered with boring and bizarre “special extras”, but where done well – such as on the BBC’s range of Doctor Who DVDs – the DVD can add significantly to what is available already through numerous other formats, at lower or no price.

Finding out how a story was put together, the trails that turned cold, the extra background details and so forth – perhaps there could be a market for regular “how the news was made” background information, which again might be of particular appeal to the willing to pay business audience?

The format splitters
It’s increasingly common for goods to be free in one format but paid-for in another. Chris Anderson’s new book, Free, does just this. You can listen to it for free or pay for a printed version. A printed version has sufficient benefits that some are willing to pay. News that you can read on your mobile phone – especially if it works when out of signal range – could provide that sort of benefit people are willing to pay for.

The book industry model
Book publishers don’t employ lots of staff to write books. Instead, they provide the infrastructure for editing, publishing and promoting books. The actual content production is done by a large army of individuals. There are two particular benefits for the publisher: first, they can pick and choose which content they think is good enough to publish and, second, as many authors have non-monetary motivations for wanting to get published, they can offer lower financial rewards to authors.

The newspaper industry could switch to a similar model. It would be a massive cultural shift, though we’ve already seen some hints of what it might be like with The Guardian’s Comment is Free. Although some Guardian staff write for it, it is in many ways a publishing platform to which others contribute – and as the contributors often have non-monetary motivations for writing, those contributions are frequently either not paid for or only paid relatively modest sums.

And so…
What is common about many of the models for getting people to pay is that only a small proportion of people have to pay in order to support a large number of people who don’t pay. The small proportion of people who pay for Flickr, for example, support a large number of people who don’t. Add in that many consumers of media are businesses who in turn make money from their quick and detailed knowledge of the news and there appears to be plenty of scope for getting some people to pay, by some means.

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About the author
Mark works at Blue Rubicon and lectures at City University. He also edits Liberal Democrat Newswire - the monthly newsletter about the Liberal Democrats. He is co-author, 101 Ways To Win An Election and blogs here.
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Story Filed Under: Blog ,Economy ,Media

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Reader comments

Well thought out article.

What would be interesting is knowing how much of the 50p or so that it costs to buy a newspaper is printing costs. The ‘download for offline reading’ model is an interesting one. Perhaps you can have a personal and business use model there (so for instance you download the day’s paper to your phone, and if you want to read more than X stories you have to pay a fee).

It’s essentially the computer game model. A demo is free for everyone, but those who want the full experience have to pay.

The existing model and the Gmail model are the same, i.e. advertising. Gmail wouldn’t be profitable if it only relied on those who paid more for storage. (Google Apps being a separate proposition). Considering a free (ad-supported) inbox already gets 7.4GB of storage, it isn’t entirely surprising.

In a similar vein, I wouldn’t say the DVD model works by providing extras. With the amount of movie piracy, it’s debatable whether it’s working at all; perhaps still waiting for a dominant “iTunes” marketplace. Where it does make sales, it seems to be mainly people wanting permanent, owned copies of loved movies, not the extras.

Kentron: it’s a good point about permanency being a reason for DVDs. The same benefit could apply to news as some people will want news to consume the once but others to have access to it for a long period of time (e.g. for reference purposes or for emotional purposes – ‘Oh look, my mum’s in the paper!’).

The DVD model works because most people can’t download high-quality video at superfast speeds and don’t want to watch films on a laptop with their neck permanently bent to the optimal angle. Those are problems which will almost certainly be solved by the relevant technology becoming cheaper and more available in the near future.

Frankly I don’t think the distinction between print and online media is the problem. The problem is content. Get rid of all comment/opinion, ditch most news too (except detailed stuff, interviews and investigative journalism) print a slimmed-down version of the paper which provided content you can’t get elsewhere, and I’d probably buy it.

5. Shatterface

‘So why shouldn’t Google pay? It’s hard to see how we could get from here to there’

Most of us didn’t forsee how Google could be a success either, and that’s why we’re not rich.

As to the DVD extras, I’m an obssessive collector because both the extras and permanency. I’d happily ditch my bootlegs of ‘Out of the Unknown’ if the BBC or Network brought out official versions, vidfired and loaded with extras.

How that translates to news coverage, I’m not sure. Maybe this could include automatic updates on stories, or where-are-they-now followups?

@5: I would personally applaud it, but proper news costs more to create and I doubt its widespread appeal. The Sun and News of the World each have sales of 3.5 million and readership of around 8 million, while trying their hardest to avoid anything even vaguely resembling detailed journalism. (The next four largest are: Daily Mail, Mail on Sunday, Daily Mirror, Sunday Mirror).

Really interesting discussion. I’m not certain enough of any idea to contribute, but i’ll follow this with interest

Agreed, but there’s more life in the model the Sun/Mirror/Mail follow. The Guardian/Times/Independent/Telegraph will die quicker.

Very interestng article. I guess one of my major problems with the way things stand at the moment is that I don’t believe that journlaism nad news should be a bi product of the advertising industry. Open any newspaper, and the business sections are out of all proportion to popular interest simply because they’re prime advertising space. With a paid-for model papers actually get paid to offer the kind of journalism and news that seizes readers interests.

On a more basic level i just think that consumers should stop being such a bunch of fucking freegans, when it comes to something that necessitates enormous human endeavour.

Can’t see why people would pay for mobile news content really, unless it was something like a penny an article. I’ve had my iPhone since it came out in June and have only just bought my second app (a game no less), but would I pay nearly a quid a day to read my news on it? Not likely…

On the mobile small prices are bigger. 70 pence a day would seem massive to those used to paying 59p just once.

The newspaper industry have to get their head around the idea that their age is over. They’ve had nearly 15 years to come to terms with the Internet haven’t really grasped things properly.

Mark, you missed out the political party and charity models.

There is a hardcore of people out there who would surely pay for a newspaper to be Out There which produces content that endorses, or at least does not conflict with, their world view.

£5 a month to fund a progressive newspaper? I might be tempted to cough that up, but I might want a say in how it is run. Elections to the editorial board?

Is the model we should be looking at MoveOn’s? And instead of bemoaning that existing newspapers are dying, should people be thinking about what future papers – largely online but possibly with a published arm – might emerge?

A Lib Dem newspaper? A Libertarian newspaper?

One question I haven’t seen raised is how they could handle people who research their websites then provide linking content – e.g., bloggers referencing pieces to comment on them or cite evidence.

How they handle it will depend on two things:

1 – how much do external links drive traffic.
2 – how much do external deep links help drive search engine prominence of articles, and how much does *that* drive traffic.

And it will also depend on whether newspaper websites get any better at internal navigation.

If I can’t access websites to research my pieces, I can’t link to articles on those sites.

Or will the whole thing actually drive traffic to independent sites?

Mark, you’ve outlined some excellent examples – but the viability of some ideas needs to re-examined.

Loss making model – Rusbridger’s idea is good but the papers are moving away from local council reporting anyway. They got bored of it before the current crisis – so I’m not sure whether this would get anywhere.

I’d rather we think about how citizen journalists can look at keeping tabs on their council. That seems to me a much better way than funding some PA type group which may come with its own biases.

Gmail model – already used by FT now.

Flickr model – looks closest to what the Guardian is considering now…

Smart music industry model – the papers can potentially use their star people to make money but I bet it will conflict with those journos wanting to make money themselves doing talks etc. Besides, I bet people would soon start accusing those papers of bias.

DVD industry – not sure why people will pay for this… but the Guardian does this sometimes. Most newspapers don’t do mostly because the answer is: ‘press release’.

Book Industry model – actually I see more of this happening. The Guardian has been quite conservative in this regard actually… it should think more like the Atlantic – where it has some external bloggers coming in and setting the agenda, while it’s own journos concentrate on journalism rather than blogging.

£5 a month to fund a progressive newspaper? I might be tempted to cough that up, but I might want a say in how it is run. Elections to the editorial board?

Sounds like a blog idea! Why would you want to fund a newspaper for that?

Saying that though, has anyone seen the article on – and how the site only started turning money once it produced a print version? I think it’s in Vanity Fair…

The problem, it seems to me, is that newspapers are still very bloated and not hungry enough. Far too nepotistic and people rely on press release to fill stories. I think they could go much further in slimming down, and frankly they need to. They need to be more like Politico basically…

““how the news was made” background information, which again might be of particular appeal to the willing to pay business audience?”

The problem with this is that in a huge majority of cases the feature would go:

“Checked emails, opened attachment, copied and pasted press release into word, changed occasional words to fit house style, submitted copy to newsdesk, went to pub”.

Newspapers are failing because they have become slaves to the medium and tried to be all things to all people all of the time.

I think the ability to make money from marketing information is more about identifying an audience to cultivate and developing a model designed to appeal to that market segment: technology must be a servant to the product, not the other way round.

With the quick adoption of the RSS technology by millions of Internet users, website owners are starting to find ways to monetize this new content distribution channel.

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  8. What business models can newspapers copy to bring in more revenue? | Mark Pack

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