Future Business Model for Newspapers

I love print. I’m sensitive to the paper- the texture, the weight, the smell. Did you know that thinner paper is more expensive to print than the 100g glossy ones? The paper itself may be slightly cheaper, but thin paper could tear and so the presses have to run slower. Of course, if you are shipping or making prints more than 50,000, thinner paper is cheaper- which is why you see more glossy, thick paper in magazines. Of course, magazines’ editorials lean towards the “glossier” side too, so you may see it as a chicken and egg thing. I love fonts, the graphic design of print layout, the beauty of words… all of which seem to have lesser meaning as we move into the digital age of news.

But how will newspapers survive? Clearly their current business model (relying 90% on print advertising) is not sustainable. Ethan Zuckerman suggests that newspapers’ CPM doesn’t make sense. I agree, but only because now, we have the web as an alternative for marketing. The high CPM of newspapers in the past was the cost advertisers paid not only to encourage sales of their products, but to also sell their brand, make an ego statement. It was a price they were willing to pay, and that high price barrier made advertising in newspapers all the more supportive of their ego.

Then comes along web advertising, which is, in many aspects, entirely different. Web advertising is not so much making a statement, but getting sales. Conveniently, one can track how effective one’s web ad is. Print media now has competition, and competition (in the free market) drives down the price, right? With more advertising mediums (Internet, mobile… who knows what will come next?) it’s inevitable that advertising prices go down. Newspapers should have seen it earlier- it was so obvious- and quickly adjusted their business model.

Will web ads make up for their losses? Never in a billion years. Do the math, it’s not going to work. Even if all the articles were porn-laced content that gets high traffic, it won’t work. That is why- in addition to the journalistic reasons- it’s not financially worth it to write trashy articles. It may get you a few extra bucks, but it won’t be enough to pay another full-time, quality reporter. So what do we do? You can only cut capital costs (printing, delivering, etc) to a certain extent and cutting human resources (your reporters and editors) may save in the short-term, but will put you out of business in the long term because if you don’t have good, original content, no one will bother to read you anymore.

I don’t have a solution for national newspapers, but I have a suggestion for regional newspapers– something that would only work when it is targeting a community that is geographically specific. Local papers should actively engage citizen reporting to produce real-time news only for its (free) website, and publish a weekly paper newspaper that contains more feature stories, op-eds, lifestyle stories, etc. (A couple pages can be used to publish briefs on major stories from the past week) The reason this needs to cover a small area is so people can personally relate to information that they would otherwise have no access to. National news can be obtained everywhere and it will be impossible with a small staff to cover anything better than what other papers have covered.

Social networking is a key point in getting people to visit the website, by letting them pitch tips, and participate in discussions. I found that online forums take on more life when they are hyper local, because the issue at hand is always very close to heart.

The local paper shouldn’t have more than five full-time employees and doesn’t require a huge office– it doesn’t have to have an office at all, except that the weekly paper production would be easier if the staff were together. Frankly, I think two or three editors is all that it takes to run a local paper, as long as it actively engages the community, utilizing freelancers, collaborating with local bloggers, etc.

In addition to print and web ads, local newspapers have the advantage of making money from hosting local events because it has such strong ties to the local community and its brand name. When I was running Ewhaian.com, I had no idea this could be an actual way to earn money until I saw that offline events were bringing in much more money than online ads, and that the events were not only profitable in terms of finances, but also good in bringing more content and more people to the site. Of course, this involves having people who are event planners, not necessarily journalists.

We are at the brink of facing at least a decade of degrading journalism. Newspapers have to wake up. Here is an interesting business model about a regional paper that is charging its readers and working on technology to make a “closed” web site. I don’t know if that’s the right direction, but it is an unique success case.

One thought on “Future Business Model for Newspapers

  1. Pingback: Hyperlocal News Needs Social Networking « Arctic Penguin

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