Newspaper – Revenue or Journalism: Is It One or the Other?

August 15, 2010

If you were to ask an editor for a local newspaper what type of value local news provides, you would probably get an answer along the lines of: “Quality information is an intrinsic civic good whose value cannot ever be fully measured. Our constitution’s second amendment could not stand without the aid of this indispensable value.”

And of course, our wise editor would be completely right. But at the same time, she would be missing something fundamental about the nature of local news. In addition to these lofty “values” that it supports, it also has an economic value, one that that is simply cannot survive without.

Let me illustrate this point using a quote from an excellent article by Dave Chase: titled The next step in advertising: Local media as merchants? Dave writes, “Media companies should recognize their business purpose is to connect their audience with products and services the audience desires. Without that business purpose, they can’t fulfill their editorial mission.”

This “editorial mission” is the lofty civic value that newspapers strive to produce, the one that our hypothetical editor loves to eulogize upon. But without this other value, the newspaper’s “business purpose,” they simply won’t have enough money to stay afloat. And guess what? This means that all of that wonderful civic value is going down the drain right along with the failed business. The truth is that things are not as the legacy thinkers have tried to characterize them. Local newspapers do not have some this-or-that choice between delivering journalism or making money. Rather, they can’t possibly continue to do the former (conduct journalism) if they don’t find some way to do the latter (make money).and this model is starting to become outdated

This means that newspapers need to become more proactive in using their economic value to generate revenue. In the past, this was done through advertising, and the newspapers seemed to be okay with this “hands off” approach to monetization. But unfortunately, this model will soon cease to be profitable. And the new model to take its place will be for local newspapers to directly sell products to their communities. They will be in the business of bringing quality products to their readers; products that they known that their readers will be interested in, because they understand the nature of the communities they serve. Rather than simply being payed to display ads, regardless of their relevance, they will actually sell products that they know their readers want.

Once again, the legacy thinkers are certain to condemn this new tactic. Why? Because it forces them to become directly involved in their means of monetization  (as opposed to just putting up an ad and then washing their hands of its content). As Dave Chase wittily notes, the news industry seems to see the separation of news and business as more guarded than the separation between church and state! And this is exactly why big players like the LA Times have gone to so much trouble to not promote their affiliate links (last week’s post). They don’t want to admit that they are running a business!

But if the news industry doesn’t face up to the facts and start changing the way they think about generating revenue, they will be doomed to fail. If you can see any other way out, go ahead and leave a comment.

Think outside the newsstand,
Joe

Photo by Marcel Germain

{ 3 comments… read them below or add one }

1 Philip S. Moore August 17, 2010 at 3:07 pm

What media companies tend to forget is that the saw cuts both directions. The economically viable newspaper, and journalism as we know it, is less than 180 years old. Local “news”–the reporting of police, courts, fires and other mishaps–was a response to the need for something fresh to fill the columns of the daily newspaper, made possible by dramatic improvements in printing technology.

The eyeballs this attracted made it practical for ads to replace broadsides and leaflets as the primary means for attracting customers. Attracting more customers, more easily, made mass retail possible.

Department stores were an outgrowth of the ability of the newspaper to reach a large audience, who bought the paper to get the news. Name brands became possible because the newspaper’s readership allowed the manufacturer to reach their customers directly, rather than through the merchant.

Even grocery advertising was an outgrowth of the “pure food” movement, launched in the news columns at the beginning of the 20th century. The ability to identify quality foods with the movement allowed grocers to assure the public, which in turn allowed them to centralize and expand their offerings, which culminated in the modern supermarket.

You’ve got to have the news to get the ads and you’ve got to have the ads to pay for the news. It’s a symbiotic relationship.

2 Joe August 17, 2010 at 11:36 pm

I totally Agree!! I just think the old revenue (column inch) is being replaced by page views, and other forms of services… After all when a vendor places an ad in the newspaper they fundamentally want the community to spend money on their product or service… The newspaper (referring only to the business side) merely acts as a broker of sorts. With an online paradigm, everything else being equal the broker game has changed big time and I am afraid the publisher has not kept up!

I do believe that “quality professional journalism” creates the community and “quality professional revenue models” keeps the money coming in to fund the mission…

3 Philip S. Moore August 18, 2010 at 5:52 am

Joe, I’m actually inclined to believe that the online world will soon need to adopt a better billing strategy than page views, since that cumbersome system is too complex, unpredictable and, frankly, provides an unacceptably generous bargain for most online advertisers–one that Web companies will ultimately find too much of a burden to continue to carry.

As for the context, remember that the newspaper advertisement is almost never designed to sell a product. It is designed to create a prospect, who will visit the vendor who sells the product. It’s a subtle but important distinction, and especially important when you put current display and classified advertising in context of the Internet.

Newspapers, like direct mail, are a “push” medium. They connect with the potential customer in a non-specific manner, providing a channel for a directed sales message. A smart advertising department, responding to CL or Cars.com or Realtor.com or any other Website, adjusts that “push” message to drive traffic to the “pull” medium (the Web), where the vendor can shape the response.

From there, the vendor can either pursue direct sale (like Amazon.com) or further develop prospects for sale at the physical place of business (the pattern that remains dominant for real estate and vehicle sales).

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