Journalism on the Brink (Part II)

It bears repeating that it is not journalism that’s necessarily on the brink. It’s the newspaper business model that isn’t just on the brink, but hurtling back through time to the penny press days.

Yes, the Web makes it way cheaper to present content. And, yes, there are fewer barriers to entry to both content providers and technology. But one plus the other does not equal profits, or even sustaining revenue.

A lot of the discussion at “Journalism on the Brink” at the University of Washington last week (see Part One) focused on how the Web was changing journalism. Seattle’s two daily newspapers, the Times and the soon-to-be-gone Post-Intelligencer, both were represented by non-traditional content providers who reflected the kind of wrong thinking that has doomed the U.S. newspaper industry into a certain shakedown, if not extinction. That is, that news on the Internet should be free, that newspapers need to be everything to everyone, and that aggregation and what I call “celebrity presentation” (folks such as the P-I’s Monica Guzman not reporting on anything, but snarking and Tweeting about what already exists on the Web).

The Post-Intelligencer online

The Post-Intelligencer online.

The entire newspaper industry is proving the free-content (ad-based), be-everything model to be an utter failure on the Web, and ventures such as TimesSelect offer some emerging proof that “celebrity journalism” — in this case, opinion and news columns — has limited appeal to online consumers of content. I was a part of two media organizations, Scout.com and Rivals.com, that continue to exist (now owned by NewsCorp and Yahoo, respectively) on a subscription model for niche (college sports, on the main) content. Both have relied on cult-of-personality providers and user-generated content, but gained traction after becoming more reliable and credible sources of news that sports fans wanted and (believed they) needed.

Consumers have proven they will subscribe to reliable and “necessary” (however they define the term, of course) content. I have three examples right in my household: Consumer Reports, HBO and Showtime. As for the latter two, cable, just like the Internet, is a digital delivery system for visual and audio content; in fact, in most cases, ions from both piggyback on the same conduit.

Desperate to escape their death beds and lured by the success and sexiness of iTunes, many newspaper types have latched onto micropayments or pay-per-click as a potential online business model. However, it is difficult to imagine daily city newspapers surviving such a high-wire existence since entertainment lends itself infinitely better to impulse purchases than information. Micropayments could be part of the mix in a future online newspaper business model, but as cream, or supplemental revenue.

As such, advertising also would be a supplemental revenue stream in a subscription-based business model. As we discovered at Scout.com, a vast majority of consumers maintained their subscriptions after making their initial decision to buy. So subscription revenue could be banked, projected and budgeted for production, marketing and other costs.

Advertising would offer supplemental revenue.

Advertising would offer supplemental revenue.

If newspapers were willing to bust themselves apart into several parts, all under the newspaper’s branding, they would speak to the demand for niche content, as well as overcome what I’ve long thought has been a huge navigational hurdle. Newspapers and other productive online media entities (including my own, ESPN) produce so much content, individual pieces of it can be near-impossible to find. If a given newspaper’s home page simply was a linked listing of the day’s pieces of content, its users would be scrolling beyond their point of tolerance (would this be the “Moses Model” for emulating ancient scrolls?).

One newspaper could potentially produce several sub-sites, each charging a subscription. The newspaper’s home page would serve as a portal to the sub-sites, and each sub-site would have its own discreet look and existence. A newspaper’s offering could be: hyper-local news, regional news, arts and entertainment, then separate sports.

I will plot out a sports example, since it’s the subject matter I know best. In Seattle, the Times or a post-ventilated Post-Intelligencer would offer University of Washington athletics, Mariners (MLB), Seahawks (NFL), maybe Storm (WNBA) and FC Sounders (MSL) to start. I would charge $49.95 per monthyear for each sport. Each site would offer one main beat writer, one feature writer, one sports columnist, an expert, a multimedia reporter and message boards. My Washington staff would include, for example:

  • Beat Writer (fulltime, year-round).
  • Features/Sidebar (fulltime, shared with other sports).
  • Sports Columnist (shared with other sports).
  • Recruiting Expert (partnered through rev and content share with other online entity).
  • Multimedia reporter (fulltime, shared with other sports).
  • Editor/copy editor (fulltime, shared with other sports).
  • Copy editor / production (fulltime, shared with other sports).

My entire sports enterprise would consist of five beat writers, one features/sidebar writer, one sports columnist and two editors. I’d budget payroll and travel at $1.5 million; if I aimed for 7,000 subscriptions (a fraction of each sport’s season-ticket fan base), my annual revenue would be more than $1.7 million, so I’d pass on $200,000, plus ad revenue and micropayments (I’d take advantage of big events such as National Letter of Intent Day in college football, or playoff coverage) to newspaper “parent” for pooled costs such as technological infrastructure, ad sales, marketing and human resources. Maybe I’d have one upper manager. Maybe.

I probably think more entrepreneurially than most journalists because I’ve been part of three startups, including my very own, and all have sold to major media corporations. I must admit, however, that, on the main, I think mostly like a content provider. So, from a business standpoint, I’ve likely missed something (I’d love to know from people who those things might be).

But I can’t be too far off, can I?

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Comments

  1. Question for you Glenn in your scenario. Would you be able to get 7,000 subscribers to pay $50 a month, when they could get free coverage from your competition?

    It would seem that you would have to offer something clearly “needed” by the sports enthusiast.

  2. glennnelson says:

    Great question, Josh.

    First of all, yikes! I meant $49.95/year (I made the correction in the blog post).

    Some might want to charge, say, $4.95 per month, making the question, “Would you pay five bucks a month to read a professional beat writer, columnist, features, expert content about your favorite team that you otherwise wouldn’t get?” I think a lot of passionate fans say “yes!!” If you look at Scout and Rivals, they have thousands of subs for content that does not even approach the level of that produced by newspapers. When I was there, Scout didn’t advertise and didn’t have the branding, say, The Seattle Times would in Seattle, or Miami Herald would in Miami. We had plenty of sites at the 7,000 sub level, charging $99.95 per year.

    I think people like to add coverage of their favorite activities incrementally. So while maybe 50,000 people might be reading free content at my competitor (generating little revenue, so my competitor is in danger of going out of business), I’d be happy with my 7,000. At some point, my competition is going to figure out a better business model or go out of business.

    By the way, I don’t think my scenario works on a national basis, particularly for sports, because national news, on some level, is commodity news. There are exceptions, of course. I’d always be willing to subscribe to the New York Times, for example.

  3. Sign me up! What a great idea. Plenty of good news and in-depth stories…and availabilty for stringers.

    I also agree with you about Entertainment. I miss the TV page and the TV news. No one handles radio anymore, except for the P-I once a week. Maybe all the “retired” writers, such as Patrick McDonald and John Hartl can work on a free lance basis.

    The newsroom are there and ready for the taking.

    Keep pushing, Glenn…….

  4. Could an online upstart compete with a small daily paper. Could you sub out local news/sports and all the associated multimedia and compete with daily free? What do you think you would need content wise to compete?

  5. glennnelson says:

    Josh, I believe that an upstart could absolutely compete with a small daily paper. The Internet is the great equalizer. There are plenty independents out there kicking major media’s butt in niche content. There would of course be challenges:

    * Newspaper has infrastructure (could be duplicated).
    * Newspaper has branding (tougher challenge; would need to be proactive — guerilla marketing, community outreach, maybe even advertising).
    * Can you match the newspaper’s pockets?

Trackbacks

  1. […] or PI.com are local politics, watchdog functions, sports or arts and culture. Pick one. And, as I have been advocating for years, they both need to start charging for their niche […]

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