Knowledge Bridge

//Kevin Anderson /November 28 / 2012

News organisations have a wealth of digital revenue opportunities to explore

One of my favourite quotes about meeting the challenge of building a sustainable digital journalism business is from Jim Brady, the former executive editor of Washington Post-Newsweek Interactive and the current Editor-in-Chief of Digital First Media. He said:

There are no silver bullets, only shrapnel.

It’s a clever way of saying that there is no single solution, no single revenue stream, to address the challenge of journalism businesses trying to make the digital transition.

In country after country, as digital media has disrupted the traditional sources of revenue for news outlets, especially print media, many news executives have lamented that they’ve been forced to give up “print dollars for digital dimes” (a US ten cent coin). Longing for the fat profits of the past will not bring them back, but it is true that digital advertising isn’t coming close to offsetting the declines in traditional revenue. Around the world, digital advertising rates are under pressure, and while many rapidly developing digital markets such as Russia are seeing dramatic growth in digital advertising revenues, as we’ve said many times here at the Knowledge Bridge, much of that new digital ad spend is going to new players such as social media and search engines, not to news businesses.

Rather than long for the past, at Digital First Media, where Brady is the editor-in-chief, they talk about “stacking” digital dimes. While revenues from digital sources may not be as great as revenues in the past, by combining several different digital income streams, digital revenues can start to replace declines in traditional sources. Many news organisations are realising that there are a number of ways to make money from digital media that go far beyond the simple model of selling display or banner ads, which as we have noted before are suffering from downward  pressure.

Could it be that some of the revenue woes that news organisations are facing are made worse by a lack of imagination and a lack of awareness of all the revenue possibilities available to digital media companies? To get a sense of how wide-ranging the revenue possibilities are, a long list of digital and web revenue models was collected in an open document online started by venture capitalist Fred Wilson.

The list includes more than 20 different models for advertising alone, but also includes e-commerce, subscription and transaction-processing models. Not all of these are applicable to news and media, but they start to demonstrate the wide range of possibilities, many of them unexplored by news groups, to start creating a number of complementary revenue streams.

In the advertising section of the document, some of the revenue models cover new ways of increasing the return of digital advertising, such as ad retargeting, which delivers targeted advertising to digital audiences based on their recent activity on online. For instance, if a person visits an e-commerce site and puts something in their shopping cart but doesn’t buy the item, for a limited period of time they would see ads based on the item that they had almost purchased. The thinking is that the person might still be looking for that item as they have expressed a clear interest in buying it, so a seller of a similar item might be more successful targeting that web user than by simply using random display ads.

The advertising sales section also includes affiliate fees or sales. Some news groups, including The Guardian, have used affiliate sales via Amazon in their book reviews: after reading a review of a book, readers have the opportunity to buy it via the e-commerce site and the news outlet receives a small fee for the business referral.

With the rise of smartphones and even less expensive mobile handsets with GPS, location-based services  such as Foursquare have been one area of rapid growth in recent years. If a person checks-in using one of these services – alerting their friends that they are at a certain store, café or restaurant – they might get a coupon. Such local deals might be an untapped source of revenue for local media.

This just scrapes the surface of all of the innovations in advertising that are listed in the document. Under subscriptions, there are three different types of paywall amongst the dozen or so models identified. The paywall models include a full paywall like the one at The Times in London, a metered paywall where readers get a limited number of stories free before being asked to subscribe, such as the ones in use at the News York Times and the Financial Times, and also a freemium model, where some general content is available for free but premium content requires a subscription.

Advertising and subscriptions/paid content are just two of the revenue models. The document also explorers revenue opportunities involving mobile, data and transaction-processing. As we said before, not all of these models would be applicable to news organisations, but it is an incredibly useful list that publishers should keep close to hand.

This isn’t to say that digital success is simply a matter of stringing together a number of random digital revenue streams. You’ll need to look at your market and your audience to prioritise which of these models might deliver the greatest return, but this list of revenue models shows that you have a lot of options and opportunities. A good example of this approach is the Dallas Morning News. They introduced a paywall in March 2011, and they are now also offering marketing solutions and social media support for advertisers as a new source of revenue. News organisations need to apply their creativity not just to creating innovative news products but also in exploring the myriad revenue opportunities available to support the mission of journalism.

Article by Kevin Anderson