You can’t find the right answer if you’re asking the wrong question. If you (or your bosses) aren’t finding a solution for making money from news online, maybe you need to ask yourself some fresh questions about the real nature of your business.
Start by reading a post Dave Winer put up last month called Paywalls are backward-looking. In the piece, Winer focuses on the heart of the news business model over the past century, and shows why traditional thinking about the news business won’t help it survive in the Internet era.
“Before the Internet, news orgs had a natural paywall, the distribution system. If you wanted to read the paper you had to buy the paper. And the ink, and the gasoline it took to get it to where you are. In fact, everything that determined the structure of the news activity, that made it a business, was organized around the distribution system.
“But that’s been over now for quite some time. And paywalls express a desperate wish to go back to a time when there was a reason to pay. Now news, if it wants to continue, must find a new reason.”
Let me back up a moment before advancing Winer’s point. Many beginning news publishers cripple their business by failing to recognize who their customers are. A customer is whoever writes you a check (or gives you a credit card number). Too many publishers naively believe that their customers are their readers, when the customers actually are the advertisers or foundations that are paying the bills to keep the publication running.
In a similar way, many news publishers – rookie and veteran – mistake the benefits that they provide these customers in exchange for that financial support. This is the brilliance of Winer’s post. It illustrates the real value, the real benefit, that news publishers once provided to the market: the ability for information to flow more easily. Customers paid for access to that information distribution system – readers paid for home delivery or newsstand access to the information included in the day’s paper, and advertisers paid for access to those readers.
The Internet, of course, allows information to flow even more efficiently than even newspapers ever could. Which is why the Internet – once widely adopted – meant the inevitable doom for the newspaper business model. Newspapers, with printing presses to pay off and circulations departments to pay, never could hope to deliver information as inexpensively as could publishers on the Internet.
Have you ever heard newspaper publishers lament their failure to install paywalls in the early days of the World Wide Web? “If only we’d started charging upfront,” they say, “our information wouldn’t have been devalued and we wouldn’t be in this financial mess.”
It’s like listening to a four-year-old talk about the Easter Bunny. It’s so naive I actually find it kind of cute, in a completely nihilistic way.
It’s naive because comments such as that betray a belief that what newspapers grew rich selling in the 20th Century was information itself instead of the access to information, as Winer describes. The information that the newspapers were providing (and continue to provide) access to is almost never unique to the news organization reporting it. It’s commodity information – available to anyone on the scene or with access to the source reporting it.
The market opportunity for news publishers was the fact that the average reader isn’t on the scene or doesn’t have access to those sources. So getting access to that information becomes valuable to that reader. That is what the reader was paying for when he or she bought a newspaper – the access to that information.
By making access to the world of information ubiquitous with direct connection to sources, eyewitness accounts, and publishers with cheaper overhead, the Internet has forced news publishers into the marketplace that so many publishers naively believed that they were in before. Now, news publishers really are selling just information, instead of the access to it. And they’re running into trouble because the market’s telling them just how worthless much of that commodity information is to them.
But there is a way out for newspapers – and that’s to embrace the change the Internet has forced and move into the segment of the information business that books – and to a lesser extent, magazines – long have occupied. Newspapers should reinvest in producing and selling information that is unique to their publication, and not readily available to anyone who was on the scene where news occurred.
So what unique information can a news publication provide? Investigations. Perspective. Analysis. And don’t overlook the uniqueness of a specific community of engaged readers, contributing to the publication’s information with their own unique perspectives, reports, and analysis. When well-cultivated by engaged leadership, that community itself can become a publication’s greatest unique asset.
But to produce that information at a low enough cost to compete with the uncounted number of competitors and potential competitors online, a news publication has to eliminate everything else it pays for that doesn’t advance the cause of creating unique information assets. That means ditching everything in the organization that obtains or reproduces commodity content – the stuff people can get elsewhere online. Drop the wire services, the syndicated features, and all the editors and designers who work on them. Eliminate the division between “news” and opinion, and demand reporters who have the expertise to draw informed conclusions from the evidence they report. (And the experience to know – and then report – when they can’t.)
Drop the division between newsroom and online production, and charge your reporters with the responsibility for cultivating a community of readers talking about that beat. Don’t leave investigations for a dedicated team of newsroom hotshots. Make investigation every reporter’s responsibility, and then reach out to other organizations – J-schools, nonprofits, readers and even competitors – who can help you uncover fresh, unique information that your readers will want.
Yeah, it’s a lot of work, but the best independent publishers out there are doing that work, under very low overhead, and if you can’t compete with them, you’ll soon be done in this business.
Then don’t forget that building an audience is only part of building and maintaing a business. You need those customers, too.
Let’s step back and remember why advertisers have been supporting news publishers in the past. Without in-media advertising, business owners had very limited media through which they could deliver information to potential customers. A storekeeper could put up signs around town or hire people to go up and down the street passing out flyers. But media advertising allowed business owners to reach people inside their homes, by interjecting the businesses’ messages into a newspaper, television show, or radio broadcast to which the consumer already had chosen to pay attention. And that’s what advertisers were paying for – access to that information flow.
Again, the Internet tore down barriers separating advertisers from consumers. With email lists, Facebook pages, and Twitter feeds, the Internet allows businesses more media through which to connect directly with their customers. Business owners don’t need advertising as much any more. Yet I believe that some demand for advertising will remain, as businesses look to connect with and acquire new potential customers. But news media hoping to attract that advertising income will have to be able to offer those advertisers sharply defined audiences who are well-qualified as potential customers for that business.
It’s the era of the niche – whether topical or geographic. And if your reporters aren’t producing that targeted, informed, uniquely valuable niche information, you’re not building an audience that any advertiser will pay to reach.
Think non-profit is your salvation? Think again. As we’ve written before, non-profit isn’t a business plan. It’s a tax status. And the foundations that support non-profit journalism are looking to reach desired audiences just as much as advertisers are. Again, if you’re working in the non-profit world, you still have to be delivering unique information to a targeted audience. Otherwise, you’re just not delivering the value your foundation customers demand.
If you’re going to be a success in business, you must at least be able to recognize just what business you’re in. Winer has told us the way toward building a viable news business online. The challenges for news publishers are to put aside their assumptions and to hear him.