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    The Search for a New Revenue Model in Journalism

    by David Cohn
    January 19, 2010

    My writing on PBS Idea Lab was introduced to me as a way to publicly discuss the growth of Spot.Us,
    my Knight News Challenge project. I’ve received kudos for being honest in my blog posts. I’m comfortable talking about where Spot.Us is falling short, and where we are exceeding expectations. I think we are doing a bit of both — and trying to adjust to succeed more and fall short less. Hey, that’s the nature of iterative projects, which I’ve always said needs to be at the heart of Spot.Us as a new concept.

    So let’s keep that bit of honesty alive in this post in order to talk broadly about
    journalism. (If you just want the updates on Spot.Us, scroll down to the bottom.)

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    Robert Niles at OJR wrote two recent, fantastic pieces. In the shadow of The Economist’s article proclaiming this to be “The year of the pay wall,” Niles wrote “there is no revenue model for journalism“ and that “doing journalism is an act of community organizing.”

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    Doing journalism as an act of community organizing is something I’ve been writing/thinking about for a long time — ever since Assignment Zero
    first failed. (Its failure only becomes more beautiful and poetic with hindsight). But I want to focus on Niles’ first point.

    “There is no revenue model for journalism.”

    That’s not an easy thing to say. Probably not good cocktail conversation at
    a journalism mixer. But let’s entertain Niles for a minute.

    He says there are three main ways publishers can make money.

    1. Direct purchases, such as subscriptions (or pay walls), copy sales, and tickets
    2. Advertising
    3. Donations, including direct contributions and grant funding

    Niles then proceeds to break down the three and concludes,
    “Publishers must take a sober look at these three options and decide how best to maximize their income opportunities within them.”

    Others might disagree with Niles and cite a plethora of other revenue streams (see: How to turn journalists into profit centers),
    but I don’t think we can outright dismiss Niles’s point of view by dreaming up other revenue streams outside of these trusted few.

    Keep in mind the tone I mentioned earlier: Honesty, both the
    good and the bad. So let’s take a good long look at just the headline. Certainly, Niles didn’t mean there were no revenue streams. He simply meant there is no new revenue stream to pluck out of the sky aside from those main three.

    But let’s take his headline to the extreme for a minute.
    We can keep these three revenue streams and, as the trends show, entertain the idea that journalism just isn’t sustainable. That’s what I did in a thought experiment while witnessing the back and forth banter of two friends on Twitter, an exchange that was archived by Deanna Zandt

    My response to ‘journalism mimics art’ in full was captured in a bit of a rant:

    ….a hard cold truth might be that [journalism] isn’t sustainable.

    But you know what – even if journalism isn’t sustainable in that
    classic sense it doesn’t mean it will disappear. There are plenty of endeavors that have NEVER been sustainable in the true sense of the word.

    I use poetry as an example. Poetry in and of itself has never been
    sustainable in the way we might think of other goods and services.

    Are we afraid poetry will die? No. Has it ever even been scarce?

    I think we could extend this [lack of sustainability] to almost all of the high arts (as opposed to pop arts).

    One of Clay Shirky’s most profound and popular posts about newspapers had this to say:

    The expense of printing created an environment where
    Wal-Mart was willing to subsidize the Baghdad bureau. This wasn’t because of any deep link between advertising and reporting, nor was it about any real desire on the part of Wal-Mart to have their marketing

    budget go to international correspondents. It was just an accident.

    And while we all agree with the wisdom of this, we seldom take Shirky to task. If Wal-Mart won’t subsidize journalism, somebody else must step up. But perhaps whoever that is won’t have profits and sustainability in mind.

    I’m not proposing that we just give up, all join co-ops and grow
    dreadlocks (although that would be cool with my internal hippie). What I am suggesting is that, in this age of experimentation, which we all agree is happening, there are certain assumptions we make that steer the direction of our thought.

    One of those assumptions, and I
    claim this all the time, is that there will always be a market for news and information. That marketplace is in flux and hard to pin down at the moment, but people want accurate and thorough news and information. If this assumption is true, then journalism will be sustainable once we figure out the marketplace again and how to “sell” the news.

    Compare this to poetry, where
    there is little demand. There is no robust marketplace and poetry is not “sustainable” in the true sense of the word. Instead, it is traditionally professionalized through patrons of the arts.

    The Relative Importance of News and Information

    In
    conversations with people that conduct audience research I’ve come to realize that news and information is not as important to the average reader as it is to folks like you and me (bloggers, journalists, news junkies, etc).

    Here’s what they tell me: two times a week. That’s how
    often people have the urge to dive into civic issues at the local level. Of those two times it’s unclear whether or not news and information is even desired, or if it’s just the urge to tutor the kids at your local school, or do some public gardening, etc.

    I wonder how often people feel the urge to hear poetry?

    I
    don’t claim to know any truths about the value of journalism and original reporting. Hey, I’m biased! I’m just suggesting that, as journalists, when we have this discussion we should recognize our bias and tendency for over-valuation.

    In that vein, I want to follow this train of thought
    to an extreme. For me, it’s often helpful to think in extreme examples and then determine the factors that lead to one or the other extreme. I could very easily write a blog post where the value of news and information is compared to food (three times a day, please) instead of poetry. Following that path would give us different conclusions.

    So fear not! No truth has been discovered in this post — it’s just an attempt to shake things up.

    Spot.Us Updates

    1.
    The Redesign is making progress — It’s always slower than you want it to be. But so is transportation. One day, we’ll just be able to snap our fingers and, presto-insto, be somewhere new.

    2. Pitches are coming in
    and going through the pipeline
    — We still need to figure out a better way to keep pitches on a deadline. A last resort would be to start deducting money from pitches that go past deadline, but that is a last resort. I’m sure there are other measures we can put into place to make sure deadlines are met. By the way, the newest pitch comes from a very cool Peter Byrne who wants to investigate the UC Regents.

    3. The iterative process continues.

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    Tagged: business models journalism knight news challenge poetry
    • Yo. Nice post.

      Here’s my issue regarding the revenue thing: When someone like Niles or Shirky says there is no business model, what they’re really saying is that there is no more room for innovation in this area. They may not realize that’s what they’re saying, but it is. And so from there, the next step is this: Stop trying. Accept the inevitable. We may not like it, but that’s life, kiddos.

      You know I’ve thought about his issue a lot, and like most folks, don’t have concrete answers. Yet. But I’m also confident that we’re in early days with this whole Internet thing. We’re just beginning to understand what has value to people online, and what they will and won’t pay for. I can’t believe that at this point, we’ve tried every possible solution, or even conceived of them.

      The behaviors, patterns, emotions involved with those decisions about how and where to consume news and information are still emerging and rapidly evolving. We’re still learning about where the true value and assets are. They’re not always on the surface, or directly attached to the obvious asset, in this case news or journalism. Who would have guessed even a couple of years ago that people would be spending billions of dollars each year to buy and sell virtual goods online? Why will someone spend $1 on a virtual beer, but not pay for news? (I know why, and am working on a post for next week about that).

      And of course this issue applies to businesses far beyond the media, since every start-up and their dog in Silicon Valley seems to think they’re going to make money from advertising. Which means none of them will.

      I think Shirky is a genius when it comes to thinking about issues like crowdsourcing, groups, forums, etc. And I’m not saying that as a backhanded compliment. Reading his work, even watching his TED videos have really bowled me over. But I remain unimpressed with his thinking about news and its future. including the “unthinkable” post you mention. He seems out of his depth here when wading into issues of business and transactions and their relationship to news and information (and in Early Modern European History, for that matter).

      To cite one flaw (since you quoted it): Wal-Mart has NEVER advertised in newspapers. I mention this because, in fact, Wal-Mart has contributed to the decline of many newspapers by squashing many local businesses that did advertise. Yes, I understand Shirky’s central point about how advertising subsidized journalism. But I point it out because the reason for the decline of newspapers has been about many more factors than just the Web and digital media. I think that he thinks it’s just about the Web and what it’s done to news consumption and production.

      There are numerous factors that contributed to the fracturing of the newspaper model. The way forward, to a sustainable ecosystem of news and information, will be even more complex, relying and many types of monetization and identification of value. (I’m in agreement with Buttry and the post you linked to). But I’m convinced that we haven’t even begun to glimpse, or conceive, of the forms these will take in the coming years.

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