This piece is based on my remarks at <a href=”http://chijournalismtownhall.com/” target=”_blank”>Chicago Journalism Townhall</a>. It is currently a draft, so I welcome your comments or suggestions as I work to develop it further. I have listed the models and included examples of each, however my list is not exhaustive at this point. If you have a suggestion for a site I’ve overlooked, leave it as a comment. Currently, the models and examples reflect mostly newspaper, not television news operations.
The economic assumptions that businesses operate under aren’t the same today as they were 50 years ago, or even 10 years ago. Today, we live in a time of abundance, not scarcity. Thomas Jefferson noted that an infinite or abundant resource, once created, costs nothing to give away and the original creator retains the original.
Give away what’s abundant, say information or news, to increase your market and build your reputation. Charge for what is scarce, and make money from that. For news, timeliness or in-depth coverage might be the scarce aspects.
Not all opportunities for making money from content can be captured by the creator, but if giving some information away for free increases market, 20% of a large pie, is better than 90% of a small pie.
Those who are making money from models based on scarcity aren’t guaranteed a market share in models based on abundance. In businesses that are based on scarcity, <a href=”http://www.investorwords.com/1653/economy_of_scale.html” target=”_blank”>economies of scale</a> prevail, favoring “big” over small and promoting consolidation.
In “<a href=”http://freeconomics.ocm“>freeconomics</a>,” the <a href=”http://thelongtail.com“>long-tail</a> prevails and “big” is no advantage. This business model works with small markets, not big operations.
Surveying existing news operations, from small non-profits to large well-established corporations, I identified eight business models alternatives to those typically called mainstream media.
<ul>
<li>Collaborate and syndicate
<ul>
<li><span class=”text”>The Star-Ledger of Newark, N.J.; The Record of Hackensack, N.J.; the Times Union in Albany, N.Y.; The Buffalo (N.Y.) News; and the Daily News of New York share content and look to increase their appeal to advertisers. They can cover stories better with fewer reporters by sharing. Other groups of news operations are doing this, as well as some newspapers and television stations. <a href=”http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003942334” target=”_blank”>View Source</a>
</span></li>
</ul>
</li>
<li>Non-profit funding from grants and foundations
<ul>
<li>Often this kind of model sets out to provide news to populations, geographic areas, or topics that are not covered well by existing media. <a href=”http://chicagotalks.org” target=”_blank”>Chicagotalks.org</a>, <a href=”http://newstips.org” target=”_blank”>Community Media Workshop</a>, <a href=”http://chitowndailynews.org” target=”_blank”>chitowndailynews.org</a>, <a href=”http://womensenews.org/” target=”_blank”>womensenews.org</a> are a few of these. The low barriers to entry in online publishing make these models possible</li>
</ul>
</li>
<li>Local pay, in an NPR-like model
<ul>
<li>Small with relatively low traffic counts. A few, <a href=”http://www.minnpost.com/” target=”_blank”>MinnPost</a> in the Twin Cities and the <a href=”http://www.stlouisbeacon.com/” target=”_blank”>St. Louis Beacon</a>, top 200,000 visitors per month. Some of these are non-profits, too. Len Witt intends to add a journalist to an existing popular placeblog, with foundation support which he seek to replace with money from local readers.</li>
<li> Another from MinnPost. The <a href=”http://www.minnpost.com/braublog/“>braublog</a>has a widget collecting donations from “Highbrau” supporters ($25) and “Lowbrau” supporters ($10) with Ruth Harnisch matching funds.</li>
</ul>
</li>
<li>Get a patron
<ul>
<li><a class=”zem_slink” title=”Mark Cuban” rel=”homepage” href=”http://blogmaverick.com“>Mark Cuban</a> has funded <a href=”http://sleuthshare.com” target=”_blank”>sleuthshare.com</a>, <a href=”http://bailoutsleuth.com/2008/12/fifteen-banks-15-billion/“>bailoutsleuth.com</a> to investigate stock stories and the current bailout. His proposal for a “<a title=”Cuban’s beatwriter collective proposal” href=”http://https://biverson.com/?p=2204” target=”_blank”>beatwriter collective</a>” where several reporters are bankrolled by sports team owners, but editorial control remains with the daily newspaper proposes to help newspapers, benefit the sports franchise owners, and be less expensive than advertising alone would be.</li>
</ul>
</li>
<li>Hybrid model combines features of other models
<ul>
<li>llinois foundations have $350 billion in assets and they are required to invest 5% of that, or $17 billion, in programs that serve a social purpose each year. New legislation recently introduced in the legislature, would allow the formation of L3C corporations, which are hybrid non-profits that can make some money. <a href=”http://www.huffingtonpost.com/sally-duros/how-to-save-newspapers_b_164849.html” target=”_blank”>View source.</a></li>
<li>NewWest.net is an interesting case. It provides local areas with a turn-key website, but aggregates stories and aims to be the place where water rights and other environmental issues can be discussed on a regional level. They also set up and run events and conferences across the West, and that is one of their revenue sources.</li>
</ul>
</li>
<li>Post news story “bids”and take reader “pledges” and donations to fund stories. If the story is picked up by a news organization, donors are repaid.
<ul>
<li><a href=”http://spot.us” target=”_blank”>Spot.us </a>does this, mostly for the Oakland and Bay area so far. The potential here is in the software which can automate the bidding and donation collection process.</li>
</ul>
</li>
<li>Begin mobile or online, evolve to print
<ul>
<li><a href=”http://ohmynews.com” target=”_blank”>Ohmynews.com</a> (here is the <a href=”http://english.ohmynews.ocm” target=”_blank”>English version</a> which is a translation of the Korean original) the original online citizen news website which had professional journalists as editors and reporters but relied on user-generated content was influential in politics, and evolved into a media institution that has a printed version. <a href=”http://mymissourian.com“>MyMissourian</a> from University of Missouri followed a similar path and publishes in print in the Weekend Missourian.</li>
</ul>
</li>
<li>Open source or “King Gillette” model
<ul>
<li>Free and pro versions where 10% of users pay for the other 90%. Flickr.com uses this model. The MLB sites for each team allow you to get scores, see text of the game for free, but to watch in real-time, you have to pay.</li>
</ul>
</li>
</ul>
With new operations coming online daily, and some going offline, it is an exciting time to be involved in the news business, but difficult to keep up with all the changes. The Online Journalism Review (OJR) <a href=”http://www.ojr.org/ojr/people/davidwestphal/200810/1560/“>compiled a list of 20 sites</a> on the rise that includes sites which are non-profit and several that are for profit, who use a local advertising model for money.
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Barbara K Iverson 