journalism

The Future of Print Journalism Pt 2: Business Models


Online news: the way of the future

In my last post I briefly mentioned the driving force behind the decline in print journalism – declining advertising dollars. In this post I will explore the different models newspapers can adopt in order to survive in the Internet age. I will examine the merits and disadvantages of each, and determine their feasibility.

As my last post established, newspapers need to adapt and offer content online. A failure to do so will most likely lead to the inevitable: death. These are some of the options that I’ve found:

  1. Free or discounted hardware with contracts for content

Involves paying for content by signing up to a contract. You are then given a free or heavily discounted iPad or other portable tablet device, which will act as a ‘modern newspaper’.

Some consider the iPad the modern newspaper

The problem with this model is that it limits the number of potential readers. A Nielson survey conducted in 52 countries found that in 2011 80% of consumers would cease to use a website that charges. As a consequence, this model is highly unlikely to attract new readers. Further, 71% of respondents say online content must be considerably better than what is offered for free before they pay for it. Hence, there is a heavy reliance on producing high quality content, and a lack of quality from competitors or substitutes that offer free content.

  1. Micropayments

This model involves paying to read each article. Typically, there will be a number of free articles, allowing for new readers to become engaged with a newspaper’s (or, more aptly, news site’s) content. Theoretically, once a consumer becomes an engaged reader they will then be willing to pay for the “exclusive” articles. This model represents the halfway point between paying for content and a free-for-all system. The only lingering question is whether it can generate enough revenue to be sustainable.

  1. Tiered (or metered) system

The tiered model gives readers free access to a number of articles. For example, free access to the first 20 articles a month and then starts charging beyond that point. The central problem with this model is that it punishes engaged readers. Instead of rewarding good behaviour – reading a lot of articles – it charges for the privilege. On a basic psychological level this encourages engaged readers to look elsewhere for their news. The New York Times implemented this system in 2005 with ‘Time Select’, which was abandoned in 2007, due to its ineffectiveness. Fairfax newspapers The Sydney Morning Herald and The Age and others currently use this system. It remains to be seen whether it will be financially successful long-term, however. Given the number of journalists that have been recently laid off, it appears unlikely.

  1. Day pass

Users are charged only on the days when they access the content. In other words, they subscribe for 6 months, but a day is only counted if you actually access the content. This model has all the same problems as the first.

  1. Customized content

The customized content model allows each user to select the content they will subscribe to by topic. For example, they may wish to only read the sport section, so they are able to subscribe to only this content. They will be charged based on the number of sections they wish to access.

  1. Free online access for print subscribers

This model is simple: if you have a newspaper subscription, you can access the online content for free. The motive behind this model is to attempt to save print newspapers. For readers there is greater inventive to pay for a subscription than to go online for the publication. This model is at odds with the increasingly common consumer habit of going online for news.

  1. Free for all

The free-for-all model sounds nice for users. Unfortunately, the revenue generated by online advertising is not enough to make it a very attractive option. It isn’t the worst model though. Adopted by the United Kingdom’s pre-eminent intellectual newspaper, The Guardian, they posted very worrying losses last year. Nevertheless, this model has a view to long-term sustainability. While online advertising does not generate anywhere near as much as print advertising at the moment, the amount of money being spent on it has been increasing dramatically year on year over the last 5 years.

As part of The Guardian’s strategy, they also aim to expand their readership into new markets. Indeed, with a larger readership base comes greater online advertising money. Thus far they have expanded into Australia, the U.S. and are beginning their expansion into Asia. It is an ambitious and bold strategy, but with the drastic decline in print journalism dollars it may prove to be the only way to survive.

In the video below New Yorker journalist, Ken Auletta, and New York Times editor David Carr, debate the effectiveness of the subscription model and the free for all. As they point out, The Guardian aims to first build their readership, then they will probably begin charging on a subscription model. Ideally, by this stage they will have the largest readership of any newspaper in the world. They will then be able to capture more value than ever.

Conclusion

It is unclear which model will prove to be most sustainable. Each have significant drawbacks that threaten long-term financial sustainability. My guess: it will require a combination of a few, and constant adaptation to meet consumer needs and the competitive environment. It is likely that many newspapers will not be able to survive through these changes, as they confront the toughest period print journalism has ever faced.

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