The 8 Business Models for News
Part 2 of news business discussion: Construction and reconstruction of business models — how to make $. Picking up from Part 1: Best news about news business is gigantic expansion of addressable market — rise of developing world + Internet.
Total addressable market for news by 2020: ~5 billion people worldwide; straight extrapolate from # of cell phones -> smartphones globally. However, we all have to get more sophisticated about defining and segmenting markets. Critical to really understand who, where, when, why.
Many evolving markets seeing “death of middle”: broadest breadth winning; deepest depth winning; neither broadest nor deepest in trouble. So logical to expect big winners in news business to either be the broadest or the deepest: to max mass or go max specific.
With that as backdrop, here are most obvious 8 business models for news now & in the future; each business should mix & match as relevant:
- Advertising. Still central for many news businesses. But need to get out of “race to bottom” of bad content, bad advertisers, bad ads. Quality journalism businesses need to either take responsibility for own high-quality advertisers & ads, or work with partners who do. There is no excuse for crappy network-served teeth whitening and “one weird trick” ads served against high quality content. Disastrous.
- Subscriptions. Many consumers pay $ for things they value much of the time. If they’re unwilling to pay, ask Q, are they really valuing?
- Premium content. Paid tier on top of free ad-supported. High end e.g.: Bloomberg & Reuters. Will work for more & more. Again, value = $.
- Conferences & events. Bits becoming abundant; human presence becoming scarce. Charge for scarcity. Bits drive demand for presence.
- Cross-media. I think Tina Brown was right but too early w/Talk. News key source of material for books, TV, film—also growth businesses.
- Crowdfunding. GIGANTIC opportunity esp for investigative journalism. Match people with interest in topic to reporting. Click = vote = $. (Helpful hint: Start today with @Crowdtilt — easy as pie, no brainer.)
- Bitcoin for micropayments. Easy to get started now (@coinbase); as consumer use scales up, easy to ask for small $ w/low or no fees.
- Philanthropy. Today @ProPublica & @FirstLookMedia, tomorrow could get much larger. ~$300B/yr philanthropy in US alone. Underutilized.
In addition, as my friend Jim Barksdale says, “Two ways to make money in business: you can unbundle, or you can bundle.” Or, rebundle. We already see the rise of new kinds of aggregators in the wake of the great unbundling of newspapers & magazines. Another thread to pull.
One frequent critique of brave new world is, “Won’t oceans of crap drive out quality content?” I don’t think so, in fact the opposite. On Internet, no limitation to # of outlets, voices; therefore quality can easily coexist with crap. All can thrive in respective markets. And, the more noise, confusion, and crap — corresponding increase in need for trusted guides, respected experts, quality brands.
Finally, the “investigative journalism problem” — how to fund investigative journalism, believed to be least commercially viable type.
- Answer #1: Total global expense budget of all investigative journalism is tiny — ~$10s of millions only. Small $ problems easier to solve.
- Answer #2: Crowdfunding + philanthropy + subsidization by otherwise healthy news businesses should easily cover invst journ & even increase. Same answer to “Baghdad bureau problem”—conflict zone reporting super-important; expensive vs other reporting; but not that much $ total.
Remember: Most great businesses are not big businesses. This market plenty big enough for thousands of high-margin small-medium businesses.