News for Digital Journalists

Posts tagged with: Business Models

May 13, 2011

Report: What we know (and don’t) about digital journalism business

Judging from coverage that greeted it, a widely discussed report on the state of digital journalism may be as notable for dinging journalists about what they don’t know, as for discovering what they do about about their fast-changing business.

The 139-page research tome, “The Story So Far: What We Know About the Business of Digital Journalism,” out this week from Columbia Journalism School, takes a comprehensive look especially at the business side of digital news economics, addressing audience, advertising, subscription paywalls, alternative revenue, staffing costs, and more. The new report follows a related study of similar scope last year, “The Reconstruction of American Journalism,” which controversially called for a government fund to support journalism (see our coverage).

It’s the “the saga of digital journalism as a business (or a lack of one) from the mid-90s through now,” writes PaidContent.org’s Staci Kramer of the new study. “It isn’t all dismal but it isn’t pretty.” Capturing the researchers’ conclusion best, notes Columbia’s Emily Bell in the Guardian, may be a line that “leaps out” of the report, in which Interactive Advertising Bureau’s Randall Rothenberg comments: “Here’s the problem ... Journalists just don’t understand their business.”

It’s not just journalists who are having a hard time getting it, Bell adds; in a time of fundamental changes, “commercial departments are equally disoriented.” And no surprise for industry watchers, but advertising is fingered as the key fault line for the news business, per a lengthy writeup in Forbes: “The traditional model where ads are placed next to content is dead, and that it’s time for media companies to redefine their relationships with advertisers.”

The New York Times’ Brian Stelter also zeroes in for his analysis of the report on the idea that journalists must rethink their relationship with advertising, advertisers and audences. “That does not mean yielding editorial control to sponsors, but it might mean coming up with alternatives to impression-based pricing, creating higher-value content for the Web by tapping into page view data, and helping to ensure that Web ads have value on their own.”

The Columbia report does outline a series of nine recommendations for how the industry should move forward, including several related to advertising, others related to editorial content and newsroom structure, and one tamping down expectations on pay models. And an analysis of the report by Poynter’s Bill Mitchell concurs that it does explore some interesting, if controversial advertising alternatives, including custom, advertiser-produced content, as well as to examine alternative viewpoints on audience and aggregation.

Bottom line, as a piece in Mediabistro concludes bluntly: “Journalists need to understand the business side of things much more than they do now.”

There’s a pdf version available, as well as an e-book version of the text, which was co-authored by Bill Grueskin, a former top editor at Wall Street Journal and now a dean at the journalism school, along with a Columbia Business School prof and principal at Quantum Media Ava Seave, and J school researcher Lucas Graves (bios for all three here). CJR also has a Q&A with report authors, and responses from Jan Schaffer, Felix Salmon and Staci Kramer. Plus, you can listen to a podcast of a May 10 panel with report authors and other leading journalism industry figures.

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

June 03, 2011

Small dailies more likely to charge for digital content

Paid digital content strategies generally work best in niche markets—and small newspapers may be one relatively viable niche, according to new research from the Reynolds Journalism Institute...

In more than 300 phone interviews with publishers at a random sample of US daily newspapers, RJI found that 46% of dailies with circulation under 25,000 now require payment for at least some of their digital content. For dailies with circulation greater than 25,000, only 24% now charge.

The RJI report did not speculate on why more small dailies are charging for some content, nor did it specify which types of content they are charging for. But in smaller communities, generally there are fewer outlets for local news and information—which could make paying for some local news, or for archive access, more appealing than might be the case in larger cities or regions.

RJI researcher Mike Jenner wrote: “Underlying the move to begin charging is a strong belief that audiences will pay to consume quality news content. Two-thirds of the publishers believe customers will pay. Only 14% agreed with the statement, ‘I don’t believe we’ll ever be able to get customers to pay for online content.’”

Are these paid content strategies bringing in much revenue? Not so far. “In the coming 12 months, one-third believe the revenue from their pay models will count for up to 20% of their companies’ digital revenue. Only one in 10 expect revenue from content to make up more than 20% of their digital revenue. Half expect a negligible contribution to the bottom line.”

But looking ahead three years, that return might improve: “60% of publishers expect digital revenue to represent more than 15% of their papers’ overall revenue stream—with nearly one quarter expecting digital revenue to represent more than 25% of all revenues.”

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

June 27, 2011

E-readers more popular than tablets: Pew report

Many news organizations have launched iPad apps, but few have offerings that target e-reader devices. This publishing strategy could prove to be backwards. A new Pew report finds that e-readers are more popular, and growing faster, than tablets…

The headline from the Pew Internet and American Life project reads: E-reader ownership doubles in six months: Adoption rate of e-readers surges ahead of tablet computers. Here are the key statistics:

Last winter, tablets were slightly ahead. Pew reports that at that point, 7% of U.S. adults owned a tablet computer of any kind, while only 6% owned an e-reader device. This Spring saw a surge in e-reader adoption. By May 2011, 12% of U.S. adults owned an e-reader. Meanwhile, tablet ownership expanded only to 8% of U.S. adults.

So right now, the e-reader audience is considerably larger than the tablet audience. This trend is likely to continue, and the gap should widen considerably—for good reason: E-readers are far cheaper than tablets.

Right now you can buy the least expensive Kindle brand new for $114 (with sponsored screensaver ads), and Amazon has hinted that they may start giving away the Kindle for free at some point. And on the high end, the top-of-the-line Nook Color e-reader starts at $249.

In contrast, the most basic (16GB, wifi only) current models of the iPad, Android tablets, and the BlackBerry Playbook all start at $499—and considerably more if you want to add 3G or 4G wireless data network access.

Blurring the tablet/e-reader line. Tablet and e-reader technology exist along a spectrum. Most notably, all tablets can read e-books—although the e-book format each accommodates varies by device and available apps. So: If you have a tablet, you also have an e-book reader.

Flipping that around: The Nook Color is really a modified Android tablet. In fact, it’s possible to hack the Nook Color to turn it into the cheapest full Android tablet now on the market.

It’s likely that in the future more e-readers will adopt tablet-esque hardware. But since low cost is a key part of the e-reader’s consumer appeal, it’s also likely that many lower-tech (and thus lower cost) models will remain on offer.

How news orgs can tap the e-reader market

The most basic approach is to sell e-reader subscriptions to your periodical content. Kindle, Nook, Sony, and most other e-bookstores have “newsstand” sections. This requires some initial investment in setup and testing, but after that the sales, publishing, and distribution processes are automated. Furthermore most e-bookstores don’t take nearly as big a percentage of subscription revenues as Apple does.

The New York Times recently reported that magazine sales on the Nook Color rival, and in some cases surpass, iPad subscriptions. Similarly, leading consumer magazine publisher Meredith Corp. has an aggressive strategy to “go wide on e-readers, narrow on iPad,” according to EmediaVitals.

Like any subscription business, e-reader subscriptions require active marketing. So if your news organization promotes e-reader subscriptions via your print, web, mobile, and social media channels, your e-reader subscriptions will likely increase. But if you expect e-reader users to find this option entirely on their own, then curb your revenue outlook.

Most e-readers in consumer’s hands today use black-and-white e-ink displays. these devices offer a relatively clunky experience of reading a periodical such as a newspaper or magazine. However, all e-readers (regardless of hardware) excel at displaying books. This is yet another reason why news orgs should consider repurposing content as e-books.

Earlier I wrote about this emerging revenue option, with tips from BookBrewer founder Dan Pacheco on how to turn news/feature content into sellable e-books.

If your news org is currently investing in (or considering) tablet offerings,  it makes sense to also explore your options in the larger and faster-growing e-reader market. It may be less glamorous than a fancy iPad app, but it might be better business.

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

September 20, 2011

AP launches iCircular weekly ad service for mobile news sites

Although many journalists hate to admit it, advertising circulars are a big reason why many people buy newspapers. This week the AP stepped beyond its core content mission to debut a new service that delivers weekly circular-style digital ads from top national consumer brands to the mobile presences of 40 partner newspaper…

According to an AP press release, the new iCircular service is a “mobile advertising service that appears under a ‘deals’ section on each of these newspapers’ apps and mobile sites.”

Initially, the service features weekly ads for 20 national retailers such as Kohl’s and Kmart.

The service is at least nominally localized and personalized. AP says the iCircular “automatically delivers geo-located deals and special offers nearest to the consumer. For smartphone users, iCircular also provides tools to create shopping lists, to connect to social media and to store loyalty card information.”

Such ad delivery services may be a good idea for newspapers, since—as U.K. researchers noted at a recent journalism conference, most newspapers are messing up their mobile strategies by failing to consider the business model and consumer value proposition in that environment.

The AP release did not disclose how revenues for iCircular mobile ads are handled.

For all partner papers, iCircular is integrated as a section within their mobile web site—a smart place to start if you want to reach the largest possible mobile audience, since feature phones still outnumber smartphones two to one, and since many feature phones and BlackBerry devices include web browsers. Some papers also are offering iCircular within their iPhone or Android apps.

It appears that some bugs may need to be worked out, both with how the service works on mobile phones and how its value is communicated to users.

On the technical side, I tested the San Francisco Chronicle’s mobile web implementation of iCircular. It had difficulty accepting my location data, and also generated an error when I tried to get information on local specials from Macy’s. But technical bugs can generally be solved.

Perhaps the larger challenge is that right now mobile visitors to a participating news site simply see a section heading called “iCircular” somewhere near the middle or bottom of the mobile news site’s home page. How are they supposed to know what this is? It might make more sense to label this “weekly coupons” or something similarly intuitive to consumers.

Also, clicking that section link in your mobile web browser yields a page that lists store brand names and logos, but no immediate examples of the kind of deals on offer that week. This might make it difficult for consumers to decide which store to check out first—and anything that makes clicking decisions harder means more mobile users are likely to give up.

Of course, this project is just beginning its pilot phase, so bugs are to be expected. It’ll be interesting to see this effort develop—and which other mobile advertising solutions emerge for newspaper sites and apps.

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

October 24, 2011

Crowdsourcing R&D: USA Today starts licensing data for commercial use

News organizations generate lots of stories, and this body of work represents a database with value for reuse. USA Today had offered this data only for personal and noncommercial use, but now they’re open to selling it for use in some commercial projects.

The point may not be to make money directly off licenses, but rather to indirectly expand their business opportunities via crowdsourced R&D…

On Oct. 13 the USA Today developer team announced new commercial terms of use for their articles, reviews and census via its application programming interfaces (APIs).

Nieman Journalism Lab explains that this means USA Today is “offering commercial licensing of its data on a case-by-case basis. Premium licenses would remove rate limits and caps for data-hungry programs, too. That means USA Today can make money selling its data and app developers can make money using it.”

So far, commercial licenses will be granted on a case-by-case basis. No pricing has been announce yet.

In the U.K., the Guardian has been offering a similar “freemium” model for access to content via its Open Platform services since last year. They also recently hosted a two-day internal hackathon to spur development ideas by their staff.

How much revenue can this bring in? In a GigaOm post, Mathew Ingram observed that direct licensing revenues may not be significant, but “it allows for experimentation outside the traditional confines of the publication itself—and that can generate valuable ideas and feedback.”

In other words, commercial licensing of a news organization’s content via an API is a way of outsourcing R&D creativity, to take advantage of expertise and perspectives that are hard to find within most news organizations. Also, developers are more likely to do their best work when they stand to earn a profit. Of course, many news organizations lack the internal tech capabilities to develop their own APIs. But perhaps that represents a market opportunity for developers to assess content databases and develop APIs on behalf of news organizations?

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

November 30, 2011

New Brunswick, Canada: No more free local news

Today the Canadian Journalism Project reports that the province of New Brunswick is “about to become the first place in Canada where readers must pay for local news.”

As early as next week, the family-owned chain Brunswick News Inc. will end free access to the websites of 26 of its papers: 18 English-language and eight French. This comprises all but one of NB’s English-language papers.

BNI’s paywall will be absolute: No free online content at all. “According to those familiar with the new system, every single scrap of content will have a price. No one will get free access to any part of the newspaper websites run by the Brunswick News subsidiary Canadaeast.com,” reports CJP.

This is different from the “metered paywalls” implemented at the New York Times, the Baltimore Sun and several local papers owned by MediaNews Group—which allow free access to a limited amount of stories, and beyond that visitors must pay for further content.

In terms of print dailies, BNI doesn’t have much competition in the province, and it has more reporters in NB than the CBC. So it’s possible that, at least for awhile, it may have a captive paying audience for local news. But this move could create a market opportunity for digital news startups in the province.

Hat tip to GigaOm’s Mathew Ingram

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

December 13, 2011

Digital First Media launching news technology incubator

Yesterday Digital First Media announced that in 2012 it will launch an “investment company” to foster tech startup companies that focus on content, advertising and audience development.

Vice President Jonathan Cooper clarified that the new spinoff, Digital First Ventures, will be more of an incubator than a venture capital firm…

So far few details are available about Digital First Ventures, but in an interview VP Jonathan Cooper clarified: “The idea is to use this to create partnerships with companies that we can work with.”

According to Cooper, eventually the spinoff may invest in other startups, regardless of whether they end up partnering with Digital First for its properties through Journal Register Company or MediaNews Group.

Cooper demurred on whether Alden Global Capital, the secretive hedge fund backing Digital First Media, will play a direct role in choosing or managing investments by Digital First Ventures. He noted that more details about the incubator are coming in early 2012.

In a related note, in a recent presentation, JRC/DFM CEO John Paton observed: “Clearly, we are not digital innovators in the newspaper business. But we are adapters.”

Paton also argued that news publishers should push beyond shovelware to start doing digital media right: “The right uses for the right platforms on the right occasions. And not just the simple re-purposing of content from one platform to another in order of priority.”

On the revenue side, he noted: “JRC is now launching about one new sales product each week. We source centrally and train and implement locally. Our local sales forces call it the ‘The Firehose’—an unending stream of products and ideas because in this transition no one knows what will work unless you try. To fill that firehose requires partnering. And just like in yesterday’s newsroom the old-fashioned closed sales floor didn’t partner very well. That’s now changed.”

And: “It’s time [for the news industry] to step forward into the fight for our markets. Because we can change and we have learned to partner and we already have the scale—as does the rest of the newspaper industry—that just about every content and sales startup is looking for.”

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

December 28, 2011

How publishing changed in 2011: O’Reilly’s take

Yes, right now every media outlet is adding to the incessant flood of 2011 wrap-up stories. But today the O’Reilly Radar blog published one that’s actually pretty important to everyone in the news business: how publishing changed in 2011, and how it’s still changing.

Here’s a quick recap, plus takeaway lessons for news organizations and journalists…

Publishing isn’t only about books. All news organizations and journalists are involved in the publishing business. In fact, back in July, Robert Niles posted in Online Journalism Review a three-part journalist’s guide to e-book publishing.

Today in her O’Reilly post Five things we learned about publishing in 2011, Jenn Webb observed: “Many of publishing’s big developments from 2011 will continue to shape the industry in 2012.”

She pointed out these trends:

1. Amazon is, indeed, a disruptive publishing competitor. “The wave started out small, with a host of expanding self-publishing tools for authors, but it grew to tsunami proportions as Amazon launched imprint after imprint.”

Webb also noted that “Amazon may be encroaching on feature magazines like the Atlantic and the New Yorker as well,” with the launch of Kindle Singles. Journalists eventually may find these and similar publishing options to be more lucrative than writing for magazines.

2. Publishers aren’t necessary to publishing. This is the year self-publishing started to go mainstream, wrote Webb, thanks to the influence of Amazon and other players.

Also: “Another trend emerged this year to further sideline the publisher’s role: the rise of the agent-publisher. This controversial and contentious business model allows agents to step in to provide expanded publishing services to authors.”

This development might increase options for writers (including journalists), while threatening the business model of publishers (including news outlets).

3. Readers sure do like e-books. Citing a number of statistics about sales of e-books and e-reader devices and apps, Webb noted: “The conclusion is clear: e-reading is now mainstream.” Which indicates that journalists and news publishers should be aggressively pursuing this market now.

4. HTML5 is an important publishing technology. This basically boils down to the role that responsive web design and utilizing the capabilities of different device types can play in creating a seamless user experience that bridges devices—key points that mobile design expert Luke Wroblewski mentioned in his recent KDMC interview.

5. DRM is full of unintended consequences. News sites that are trying to build a business model based on restricting access to content—via paywalls, digital rights management, or other means—should take note of why Webb finds this approach short-sighted and ultimately bad for business.

Webb quoted a recent blog post by author Charlie Stross, who wrote:

“DRM on e-books gives Amazon a great tool for locking e-book customers into the Kindle platform. If you buy a book that you can only read on the Kindle, you’re naturally going to be reluctant to move to other e-book platforms… If the big six [book publishers] began selling e-books without DRM, readers would at least be able to buy from other retailers and read their e-books on whatever platform they wanted, thus eroding Amazon’s monopoly position.”

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

January 23, 2012

Tablet/e-reader ownership doubles over holiday gift season, says Pew

More of the U.S. media audience is going mobile, fast—as indicated in the dramatic spike in ownership of media-focused mobile devices over the recent holiday gift season. The Pew Internet and American Life Project found now nearly 30% of U.S. adults now owns either a tablet computer or e-reader device…

According to a new Pew report: “The share of U.S. adults who own tablet computers nearly doubled from 10% to 19% between mid-December and early January and the same surge in growth also applied to e-book readers, which also jumped from 10% to 19% over the same time period. ...The number of Americans owning at least one of these digital reading devices jumped from 18% in December to 29% in January.”

What caused this shift? The introduction of smaller, cheaper tablets such as the Kindle Fire. Although these devices are marketed as e-readers, they actually are modified Android tablets capable of browsing the web, doing e-mail, running apps and more—even though these devices have less functionality than an iPad, and the Kindle Fire in particular is comparatively more clunky to use. Pew’s data considered the Kindle Fire and Nook Color as tablets, rather than e-readers.

Meanwhile, the price of many simpler e-readers (those with e-ink screens and very limited online access, such as the basic Kindle or the Nook Touch) has fallen well below $100. In fact, the New York Times recently started giving away the Nook Touch for free to readers who purchase a $20/month Nook subscription to the Times.

Who’s using tablets more? Pew found a surge in ownership of tablet computers among college graduates and people from wealthier households (annual income over $75,000). “Additionally, those under age 50 saw a particularly significant leap in tablet ownership.”

For simpler e-readers, Pew found different patterns: “Ownership of e-readers among women grew more than among men. Those with more education and higher incomes also lead the pack when it comes to e-book ownership, but the gap between them and others isn’t as dramatic. For instance, 19% of those in households earning $30,000- $50,000 have e-book readers. They are 12% behind those in households earning $75,000 or more in e-book reader ownership. The gap between those income levels on tablet ownership is 20%.”

What does this mean for news publishers? News organizations, entrepreneurial journalists, and other publishers should recognize that e-books are now a bigger market than ever. So 2012 would be a good time to start repackaging your content (or creating spinoffs) in e-book form. See Online Journalism Review’s recent journalist’s guide to e-book publishing for advice on understanding this market and getting started.

Also, when crafting your overall mobile strategy, take the form factor, opportunities, and constraints of smaller tablets into account. Your responsive web design, mobile themes, or app design should should accommodate the Kindle Fire and Nook Color as core use cases. Also make your mobile apps available through Amazon’s app store and the Nook Color app store. Those devices don’t access the full Android Market.

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

April 16, 2012

Google microsurveys: new revenue option for publishers

A new service from Google offers digital publishers a new way to earn money, without trying to get consumers to pay directly for content. Voluntary short “microsurveys” offer consumers a way to access content free of charge, which providing marketers with useful data. Could this work on community and niche news sites?...

Google announced its Google Consumer Survey service at the end of March. Since then some publishers have been kicking the tires on it.

Some publishers have been field testing Google microsurveys Journalism.co.uk reported that over the last eight months of testing, the Texas Tribune is earning about $5,000 per month from this service.

How do these one-question surveys work? According to Google product manager Paul McDonald, “When a site has implemented this option, the user will see a prompt that offers a choice between answering a market research question or completing another action specified by the publisher (such as signing up for an account or purchasing access). All responses are completely anonymous—they aren’t tied to your identity or later used to target ads. Publishers get paid for hosting surveys.”

According to Journalism.co.uk, “Market research companies pay Google 10¢ a question and Google passes 5¢ of that on to the publisher.”

Does this sound familiar? A while back the journalism crowdfunding site Spot.us began offering community funded sponsorships where marketers create short surveys, and they pay Spot.us to offer those surveys to users. Spot.us users who opt to take those surveys earn $5 credit to help fund the story pitch of their choice.

“I hate to sound like that guy at the bar who says ‘that was my idea,’ as I cry into my whiskey because it’s not just about the idea/concept. It’s execution,” Spot.us founder David Cohn recently wrote. “And certainly anything Spot.Us (or really any startup) does can be executed at a grander scale by the big three (Twitter/Facebook/Google).”

Can the survey approach pay off? Cohn noted:

“Some people value money greatly and won’t spend it on journalism. For this large subset of society, the surveys are ideal. What we found on Spot.Us was that the number of folks who valued time over money (preferred to donate rather than take a survey) was below 1%, whereas when we offered a survey the number of people who engaged rose to be closer to 10%. Moreover, these people were more than willing to take new surveys as they came about. Some members of Spot.Us have taken every single survey we’ve ever offered. (With a sales force of one—this is not exorbitantly high—but still a positive indicator.)

“On a long enough time line an individual who took surveys was more valuable to the organization than an individual who donated hard cash. People who gave money on average gave $40 twice—separated by 60 days. So after 70 or so days I could say a donor was worth $80 to the organization. But in 160 days I couldn’t say they’d be worth more. A survey taker was worth $5 a pop, which means after 16 surveys they are just as valuable as a donor. Anything after that is gravy and perhaps a reason to shift gears.”

Want to try Google Consumer Surveys on your site? Complete the publisher signup form.

The News for Digital Journalists blog is made possible by a grant to USC Annenberg from the John S. and James L. Knight Foundation.

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