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CHAPTER III - Economics and Journalism

Economic Models of Modern Journalism
There is no clear answer to the future of how journalism will be funded. In today’s world, advertisers are in control of where they go and what they pay. Again, 85 cents of every ad dollar goes to Facebook and Google.

The biggest crisis is in local news. There are plenty of people covering the White House. There are not enough journalists covering the suburban areas around fill-in-the-city.

“Whether it’s technology or we’re talking about the audience, you feel like the stepchild at the third table at Thanksgiving. And all the adults speak at this national level, and they talk about all these national things, and they forget that this democracy is supported by diversity of local media,” said Frank Blethen, Publisher and CEO of The Seattle Times. “We all know it’s a disaster out there. Five years from now, I don’t know how we’re going to make money.”

If you’re going to survive as a media business, you’re going to have to operate in at least eight out the following 11 revenue strategies, according to Tom Rosenstiel.

  1. Shift heavily toward subscriptions.
  2. Get into the technology leasing business. The Washington Post offers digital content managing services. The Dallas Morning News has acquired a host of businesses in Dallas that they lease to the Morning News.
  3. Sell digital services. Why share revenue with digital ad agencies when the ad departments could offer that service and provide a digital advertising solution?
  4. Develop new revenue segments: events, newsletters, podcasts, data services and printing are examples of segments that news companies have developed. Billy Penn, a Philadelphia digital news startup, makes 85 percent of its revenue from events.
  5. Sell post-display advertising such as sponsored content. Banner ads are unappealing to consumers and will not support the future of journalism. Publishers can sell branded content and social lift.
  6. Expand brand and market share. The Washington Post is selling an insert with its content.
  7. Share resources to increase market power. The Local Media Consortium is an alliance of local news companies who negotiate advertising with Google. It’s helpful, but it’s not the answer.
  8. Consolidate and try to exploit economics of scale. This is Gannett’s strategy—to buy up newspapers and build an advertising network that looks like Verizon’s coverage map. It can help cut costs, but it’s fundamentally a traditional advertising pay.
  9. Use aggregated models, such as Blendle’s micropayments platform for single news articles.
  10. Leverage nonprofit funding. ProPublica, Center for Investigative Reporting and Texas Tribune now each have annual budgets of $10 million. This is a niche play that can bolster reporting on topics such as climate change or education, but it will not be the solution to covering Toledo, Ohio.
  11. Utilize curation platforms such as Medium.

“The secret is a really shrewd operator that does everything well,” Rosenstiel says.

Build products that are relevant to people, says Jeff Jarvis. Then you will have reach. Then, convert people to something of higher value. To do that, news companies have to know their customer, even if most of the data is a black hole going to Google, Facebook and Apple.

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