New business models for news are not that new

With online ad revenue down for the second quarter in a row and newspaper industry indicators suggesting that 2008 is going be the worst year yet, the frenzy continues for a new business model for news publishing that will magically boost revenue and stop the financial bloodletting.

But innovation is sorely lacking in the new business models proposed; the truth is that many of them have been around since the early 1900s.

In 1923, historian James Melvin Lee outlined in his History of American Journalism alternative business models that newspapers had tried to remove themselves from dependence on advertisers and circulation growth and that now seem strangely prescient: the endowment model, the municipal news model, an adless newspaper, religious news, and what can only be called the “bazooka gum” approach to circulation.

Even before Pro-Publica could be imagined, our predecessors were strategizing how to create an endowment-supported newspaper. Hamilton Holt, editor of the New York City Independent outlined what such a model would look like to other newsmen at the first National Newspaper Conference at the University of Wisconsin-Madison in 1912.

The endowment model immediately had its critics – with much the same response we hear today. James Kelley of the Chicago Herald argued that an endowment newspaper was an “impossibility” for only the “people” could truly endow journalism without it being disinterested. In other words, whoever provided the cash was likely to have the dominant influence.

Lee worried that the endowment model was championed by academics and was unlikely to work because no one was willing to front the cash. He wrote, “The nearest that the endowed newspaper has come to a realization in America was a promise of Andrew Carnegie to be one of 10 men to finance such a venture. It would take just about ten men of Mr. Carnegie’s wealth to establish successfully an endowed daily newspaper.” Looking around in today’s news environment, the St. Petersburg Times stands alone as an independent, endowed print newspaper.

Lee mentions another curious model that seems strangely reminiscent of the turn toward hyperlocal blogging: the municipal newspaper model.

Los Angeles in 1912 had evening and daily newspapers, but it also had the first, and possibly only Municipal News. Financed by the city of Los Angeles, 60,000 copies were distributed by newsboys and to homes. It was under the control of a municipal newspaper commission, composed of three citizens who served without pay and who were appointed by the mayor. They were to hold office for four years and were subject to recall and removal by referendum.

The mayor, the city council, and political party that had more than 3% of the vote were guaranteed column space. Financial support came from an appropriation of $36,000 set aside by the city of LA. Ad revenue was a second stream of income, but the newspaper did not support any major department store ads. Civic minded, it had a special student section.

The Municipal News was truly hyperlocal – it didn’t truly compete with any LA papers because it didn’t cover national or state news or carry wires. Lee is unclear on how long it actually lasted, but was voted down by the city council due to cost.

Some newspapers in the early 20th century tried to do without ads entirely. On September 28, 1911 the Day Book, an adless daily newspaper appeared in Chicago. It began with only 200 copies and sent personal agents of the paper to subscribers to generate revenue. Eventually, circulation got up to 22,938, but when the price was raised from one to two cents and the cost of paper increased due to World War I, it died a few short months later. A major downfall – the lack of department store ads failed to attract women readers.

Still, Lee suggested that people ought to be willing to pay for quality and that adless papers could be a reality: “The adless newspaper may possibly be a part of the journalism of to-morrow, if fifty thousand people will be willing to pay ten cents per copy for their daily paper and will agree not to cancel their subscription orders even through displeased with the presentation of the news or offended at the editorial policy adopted by the editors.”

One form of news that was increasingly popular was a turn toward news financed by religious organizations. Lee dismisses most of these for being too narrowly focused on spreading religion to attract a broad audience, with one exception – the Christian Science Monitor, which kept its religious news to the back and even then was noted for its international outlook. Other religious newspapers are still running strong: The Desert News, affiliated with the Church of Jesus Christ of Latter Day Saints, acts as a competitor to the Salt Lake Tribune. And the Washington Times‘ conservative stance pursues its agenda from the Rev. Sun Myung Moon’s Unification Church.

The Christian Science Monitor is reinventing itself as we speak as one of the first major dailies to switch from print first to an online daily with a print weekly. Lee’s refinement of religious newspapers as a distinct model may be reflected in the Monitor’s bravado: perhaps religious newspapers are hotbeds of innovation.

The final model Lee proposes and dismisses is what can only be called the Bazooka Gum Model and reeks of the gimmicks and cereal box circulation efforts ad departments have tried for years to boost revenue.

For Lee, these efforts were a lost cause. He told the sorry tale of the 1905 United States Daily of Detroit, which offered people little trading stamps that they could exchange for things like bicycles if they collected enough. Coupons failed to bring in enough circulation – and the newspaper died after 68 days.

A return to our history books provides a useful warning and reminder: we don’t have the answers yet. We didn’t have them in the 1920s, and we’re still searching for them now.

But even without answers, news innovators of times past were willing to experiment. We should take our cues from the past, and consider new business models as opportunities for our industry rather than signs of its failure.

About Nikki Usher

Nikki Usher is a doctoral student at the Annenberg School for Communication at the University of Southern California.


  1. says:

    Just FYI: It is Hamilton Holt not Hold. [Fixed – Ed.]

  2. says:

    Absolutely, I could’nt agree more on this. Everyone knows that Newspaper industries offers tons of values to all, especially more for businesses, but the main problem arise when it comes to pricing for their customers, that’s the area that they should focus on today.