I get the same question again and again as I explain our innovation efforts at Gazette Communications: How are you going to make money doing that?
When I explained our plans to separate content from product, people could see that we were moving to an organization built for the future rather than the past. But they still asked: How do you monetize that? (Yes, even journalists have started using the M-word.)
I answer in my Blueprint for the Complete Community Connection, published this week on my blog: We need to move beyond advertising.
Harvard Business Professor Clayton Christensen, the foremost authority on disruptive innovation, says established businesses take two approaches when faced with disruptive technology: They ignore it or they try to cram their existing model into the new opportunity. The newspaper industry did both. When we realized we couldn’t ignore the Internet any longer, we tried to cram our newspapers into our websites.
On the content side, we are finally getting beyond that, producing videos and interactive databases and Flash graphics exclusively for digital audiences. We are liveblogging events, Twittering and posting breaking news as soon as we verify facts, rather than holding back in fear of “scooping ourselves.”
On the revenue side, though, most news sites remain stuck in the print ages. We still live on display ads, priced by how many eyes will see them. Beyond the disparity between print and online ad rates, this places us in a vulnerable position with the business customers who provide the money that supports our watchdog journalism.
In our advertising model, we are a big expense line in the budgets of our business customers. We bring shoppers through the door, but the business actually makes the sale. In tough times (and these are tough, you might have noticed), our business customers do the same thing we do: They look for places to cut expenses. That advertising budget line looms huge – the merchant cuts the ad budget and the newsroom cuts its staff. But advertising works, so fewer people will come into the store. Instead of blaming the steepening decline on the cut in advertising, the business blames the economy and cuts advertising some more. And the newsroom cuts again, or maybe furloughs this time.
We need to change the fundamental relationship with our business customers. What if we sell tickets on our sports and entertainment sites, offer gift registries with engagement announcements and sell gift certificates and make reservations in our dining guides? The customer takes out the debit card and makes the transaction right from our news site and we collect the money. That changes us from an expense line in the customers’ budgets to a revenue line (actually, we want to be both). Our fee is like withholding tax – our customer never had the money so it doesn’t sting as much and it’s not something the business can cut from its budget. In fact, the merchants want to grow that revenue line, so in tough times, they’ll want to do more business with us.
This is what the Blueprint for the Complete Community Connection seeks to do: Change the relationship that media companies have with our communities. We become more than just a source of news, crossword puzzles and sales ads to our consumers. We become their connection to community life: news, information, shopping, social life. And for businesses, we become an essential connection to customers.
An example of how we change both the content and revenue approach is the blueprint’s proposal for a new driving vertical. For years, newspapers’ automotive content has been focused on a single purpose: buying and selling cars. Ads focused on new and used cars for sale. Editorial content was sparse but often included reviews of new cars. An advice column used as filler might provide a little help in the actual operation of a car. Because we ignored the possibilities of the Internet too long, others beat newspapers in developing digital platforms for buying and selling cars, and our automotive vertical is faring about as well as Detroit right now, taking a 29 percent hit last year.
Buying a car, though, is actually a rare task for most people. I did it last summer for the first time in more than five years and hope it’s that long before I buy again. But I drive daily. What if we developed a vertical for the everyday tasks of driving? This would provide a traffic map, gas-price map, pothole map, databases of bridge inspections, parking meter citations and gas-pump inspections. We would provide discussion groups for classic-car fans, parents of teen drivers and other automotive interests. We’d offer a place for sharing photos of souped-up cars and stories about first cars. We’d provide text alerts about traffic problems and road closures. (Many newspaper sites already provide some of these services, but not grouped together. The auto-focused databases are grouped with other databases, as though we want to appeal to some imaginary broad segment of the population interested in data.)
The revenue opportunities of a driving vertical are vast: Places that service cars and sell tires, parts and insurance, most of them not big newspaper advertisers, would love to reach this audience. We could offer an emergency-service option, where drivers in need of immediate repairs text or email their need and we alert business customers and make the appointment with someone who can squeeze the driver in today. If we develop a place where drivers come frequently for help, where do you think they will turn when they’re ready to buy? That’s where the car dealers will want to advertise.
Initial reaction to the C3 blueprint has been encouraging. Mark Potts quoted it extensively in a blog post, saying, “the Gazette’s plan feels like a much-needed revolution.” Mark Briggs and Michele McLellan praised it as ambitious. Robert Ivan called it a “must read for all news media professionals.” Jay Rosen praised it as “today’s future-of-news key read.”
Praise feels good but doesn’t get the job done. You could find far more voices claiming that our solutions lie in charging for content, which I view as a waste of time and energy. I don’t claim that the C3 blueprint has all the answers to that persistent money-making question. But we have a plan and we are pursuing it. Now my Gazette Communications colleagues and I need to deliver.
Journalists need to engage in that discussion. I hope you have (and share) some better ideas.