Monday, December 8, 2008

Electronic Newspaper Business Models

Expanding on my post about the transition from print to electronic media from earlier today (Print Is Doomed, Electronic Media Set To Boom)...

So, how will outlets publishing exclusively via electronic mediums make money?

Aside from advertising revenue, which should be a major component, micro-payments should in principle be able to go a long way toward paying writers', editors', photographers', etc. salaries. Particularly small outfits could even outsource their advertising sales departments to auction-based ad market brokers such as Google with its AdSense and AdWords programs. However, such outsourcing means paying the broker a substantial portion of ad revenue, so larger organizations will likely continue to sell at least some of their own ads.

People working in public radio are already discussing how to use micro-payments to get donations from people who wish to give a small amount and/or remain anonymous:

The social media folks have spoken: Us pub media folks need to get serious about micro-pledging. We need to make it seamless and convenient and free of fear that an act of generosity will reap paper avalanching through the mail slot.

To wit:
micro-payments could be huge. i’d talk to paypall (or whoever else does these), and see if they could facilitate micro-payment fund raising - in form of a website widget.

many people don’t like donations because they have to disclose to much personal information, and then they end up on mailing/calling lists and get harassed by everyone. anonymous micro-donations would take care of that problem.

Continue reading.

Smaller outlets will also be able to outsource management of micro-payments to specialized businesses. In a comment to the above post, a person representing one such company posted a link to its site: This service is apparently primarily aimed at online game businesses, but something very much like it could operate effectively for micro-payments to voluntarily subsidize media content. Though some publications can and do sustain themselves largely on support from just a few big donors, being able to rely on an army of small donors keeps one out of the mercy of such big spenders.

So, to sum up, electronic newspapers will publish their content in an open format that is easily viewed on any type of flexible or traditional screen. Along with the media, there will be ads, likely in text, audio, and video form. But there will also be a beckoning little "donate" button at the bottom of each story--or end of each slide show or video. People can click it and pay whatever they want for what they just saw.

Some will no doubt protest that people deserve to be able to set their own prices and charge a flat subscription fee. And businesses can indeed attempt to do so if they desire--no doubt some people will continue to pay in this way. But it seems as though it will get increasingly difficult for businesses to pull in sufficient subscribers in this manner. As writer and technologist Cory Doctorow argues, in the new media world obscurity is perhaps the greatest threat to a publication. Thus, giving away content in order to attract an audience may be the best option.

Oh, and finally, this has nothing to do with some sort of silly "blogs vs. newspapers" notion. Blogs and newspapers serve different functions. Neither one is going away. They'll just both (along with all sorts of things we can barely imagine at this point) be published via electronic paper-based technology.

Wake up, people, this is much bigger than different types of publications vying for market share. This is as big as the shift from scribes to printing presses.

Business is all but destined to be a bit shaky for a while, but such major changes are never totally smooth. The future wouldn't be interesting if it weren't challenging. And it would be far worse if the status quo in American media appeared strong enough to continue indefinitely.


Nate said...

Don't worry, Taco. I'm sure he's making up the entire thing. Surely he could have said something like this in the paper.

Dan Taylor said...

Hi Chris! That was me that left the comment about fatfoogoo. If you'd like to talk further about using fatfogoo's microtransaction systems for micro-donations, please feel free to give me a holler at dt[at]

Neal Schuett said...

What a wonderful idea for a editorial. We should have thought of this a month ago and ran it for our readers.

Nate said...

Neal, you're a genius. I'm sure it would be widely accepted by our entire staff!