News Distribution and Revenue-Generation in the Internet Era

-- By SamSalyer - 03 Nov 2011

It is no secret that the Internet Era has hit news organizations hard; the slow death of newspapers has, of course, been a widely reported phenomenon. As more people access news though free online sources, less are inclined to pay for newspapers or magazines,

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transforming the once wildly profitable newsprint industry into one that struggles to turn a profit. Nationally, the number of newsroom staff has shrunk by a quarter over the last five years, as newspapers laid off reporters and copywriters to combat sharp decreases in circulation and advertising revenue. As the revenue generated by print editions shrinks and online revenue growth stagnates, it is clear that news media must identify and develop new sources of revenue to remain viable organizations.

As AJ Liebling long ago pointed out about journalism, there was never any free lunch in the saloons. And if saloons aren't going to make any money, the problem isn't how to prop up the saloonkeepers, it's how to found journalism on a basis that doesn't pretend to be free lunch in the saloon. That's not hard: many of the best news organizations on Earth, from the BBC to NPR to WikiLeaks? , are non-profits already.

The Dying Model

How it was for newspapers

Most of those who bemoan the fate of newspapers are centrally concerned about the “serious” news – investigative reports, coverage of the Governor’s budget cuts, or the city counsel meeting. To focus solely on these types of reporting, however, obfuscates the way the business traditionally functioned. Most newspaper’s devoted more coverage to soft news – sports, entertainment, human interest stories – than to hard political or investigative reporting. A glimpse at the “Most Read” stories in the online version of my hometown newspaper (in one of the 20 largest media markets in the country) seems to confirm that this is still what people are interested in reading: of the eight stories, three are human interest pieces, two sports, and one is on Kim Kardashian.

The bulk of newspaper revenue came from advertisements: car dealerships, retailers, listings for homes, and job openings. These businesses advertised in newspapers because of the circulation those papers had built of people who mostly wanted to read about celebrities and sports.

How it is now for newspapers

Now things have changed. The internet provides celebrity and sports news, reducing newspaper circulation. Car dealers have learned that most people spend several hours researching a potential car purchase online, and have shifted their advertising dollars in that direction. Newspapers have responded to this lack of revenue by cutting back on their newsroom – getting rid of the guys who used to cover the city counsel meetings. The old model, as stated by Clay Shirky, of “[w]riting about the Dallas Cowboys in order to take money from Ford and give it to the guy on the City Desk” is broken.

It’s important to recognize, however, that there was never a golden era in which investigative reporting generated the revenue necessary to run a newspaper. “Serious” news-gathering has always been subsidized by something else. For newspapers to survive in the Internet Era that subsidy is going to have to come from new sources.

Potential New Revenue Sources

Insufficient online revenue

Many cling to the idea that newspapers will be saved by “online revenue,” despite all evidence to the contrary. For any Wall Street Journal or New York Times that experiences moderate success through a pay-wall limiting access to online content (though ways around these restrictions are readily available), there is a Fort Worth Star-Telegram that finds less than 1% of its readers will pay for content. As other media industries have learned, attempting to limit the distribution of content online is not a successful method for increasing revenue.

Online advertising revenue growth is slowing and will continue to do so. As more commerce is conducted online and Google is able to gather even more information on individuals’ purchasing patterns (and even more so if Google, AT&T, et al. are successful in “digitizing” currency), advertisers will be gather vastly more information about individual consumers. This will enable them to tailor messages much more directly and specifically – making the mass audiences offered by newspapers even less valuable.

New ideas

So where can this new revenue come from? Some have suggested that newspapers adopt a non-profit model, using extensive endowments to fund their operations. While this is a viable option for well-known newspapers which could attract the sort of massive endowments that would be required (an estimated $5 billion for the NY Times) it doesn’t seem realistic that money could be found to endow papers around the country. And the existing newspaper model depends on a nationwide network of papers sharing content, so that there will be a reporter on the ground when a tornado hits in Iowa, or reporters from Anchorage who can inform the country about the back-story of the newest Vice-Presidential candidate.

My dear man, if you're going to write about new ideas, think newly. The society doesn't need lots of local papers, it needs lots of local reporters, each of whom is supported by the community in which she is permanently embedded, and whose work is available to others whenever the attention scope ordinarily applied to the facts she handles radically expands. In an age of RSS, there don't need to be papers: Whether we read the Daily Me or the finest news service that's ever existed for our diet in the history of the world depends on how we intelligently build and maintain our source garden. The way our form of syndication works, finding the source currently offering the best coverage of something you want to learn about and staying with the feed as long as it serves you is easy. Learning how to do that, instead of "surfing" with a browser is one of the crucial information management techniques we need to teach people. But one you have changed how people use the information, the models for paying the people who produce it come sharply into focus and are surprisingly simple.

Another possibility could be implementing the “Street Performer Protocol,” as described by John Kelsey and Bruce Schneier: conditioning the release of certain stories on a level of donation from the public. This could hold particular promise in funding investigative reporting, as it could target reporters’ investigatory energies into areas of specific concern to their readers. One potential fear, however, is that the newsroom’s focus and direction could become controlled by outside, monied interests.

Anarchist News Production

Without new sources of substantial revenue we must begin to think of new models of producing news. Wikipedia has earned rave reviews for its coverage of breaking news stories – particularly the platform’s ability to immediately capture diverse points of view as well as news being published in different languages and different media. What takes place on Wikipedia, however, is news aggregation, not reporting. This leaves Wikipedia dependant on other news organizations to create and publish news which its editors can then gather and categorize.

The fact that such a transparent aggregation, evaluation, and promotion engine as Wikipedia exists potentially opens the door for less established reporters and publications to reach much larger audiences. Newspapers’ remaining value is primarily reputation-based. By evaluating and promoting stories based on their content rather than the name-recognition of their publisher, a respected editorial community such as Wikipedia could expose work from online publications or independent reporters to a wider audience. Wikipedia’s editorial process could provide credibility to reporters without the reputational clout provided by a newspaper.

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