I’m on a panel at the 2018 International Journalism Festival on “the business of news after advertising?” with Raju Narisetti, Rene Kaplan, and Janine Gibson.
Here are my background notes for the session, in part based on things I’ve written elsewhere, including this Nieman Lab post about how the business of news after advertising may look a lot like the business of news before advertising (more elite-oriented, more often based on subsidies from for example political patrons) and this longer book chapter.
Key points are–
News production has historically been funded by advertising and sales, but the advertising investment in news is in long-term structural decline—in the US, for example, newspapers’ share of total advertising has been in steady decline for more than half a century.
This is really important, because newspapers still account for the majority of the funds invested in news production. In US, Bureau of Labor statistics suggest print publishers still accounted for more than half of all journalists employed as of 2016.
Most legacy news media will never make kind of money off news that they made in past, because
1) they no longer have market power they had in low-choice environment,
2) their content bundle is being unbundled, and
3) they compete head-to-head w/platforms that offer advertisers cheap, targeted, unduplicated reach, and therefore dominate digital advertising.
(Some of this is shared with various partners through revenue sharing and the like — Google, for example, reported that they paid out 24% of total advertising revenues in Q4 2017 in various forms of “traffic acquisition costs”.)
So, given dwindling cross-subsidies from legacy ops like print/broadcast, what lies ahead, beyond cost-cutting in many news orgs, in some countries possibly public subsidies, and in more and more cases a return to various forms of politically-motivated investment in news?
My fellow panellists demonstrate different approaches.
At Gizmodo, Raju Narisetti has pursued diversification with emphasis on different kinds of advertising.
At the Financial Times, Renee Kaplan and her colleagues focus on reader revenues.
At Buzzfeed, Janine Gibson and her colleagues have pursued off-site reach and revenue-sharing with platforms.
(Beyond this, we can look at the incremental growth in non-profit models for news provision, though the resources in aggregate are far smaller than those generated by private sector, for-profit news media.)
There is no one model that is right for every publisher in every country, but the basic structural change seem clear and near-universal — advertising remains an impotant part of the business of news, but traditional forms of advertising (print, broadcast, and digital display) are declining, because most advertisers seem to think they get more value for money elsewhere (and they were always interested in audiences’ attention, not news in itself).
News organizations who want to thrive in this changing environment have to operate very lean cost structures and seek to generate other revenues, for example by pursuing new forms of distinct digital advertising, by seeking reader revenues, or by trying to leverage platforms for reach and revenue-sharing.