Archive for business models

Future of Local News About More Than Paid Content

// August 13th, 2009 // Comments Off // Best Practices, Financial, MediaShift IdeaLab, business models, community, entrepreneurs, next newsroom, paid content

During an otherwise mundane story about Microsoft’s recent decision to offer a free, web-based version of its Office suite of products, I was struck by this sentence in an Associated Press story:

With Office 2010, Microsoft must decide how much software it can give away online without undermining its lucrative desktop software business. If it doesn’t make the right calculation, the software maker could find itself in the same position as newspapers that gave online content away and now are struggling to replace print revenue.

That second line is almost a throwaway, written with no attribution. That means that the notion has officially entered into conventional wisdom: Local newspapers screwed up by giving away for free the content everyone used to pay to consume.

Conventional wisdom, yes. And untrue.

Correcting this fundamental error is about more than just debating the past. Because this mistaken assumption is driving the debate about new business models for news.

I want to explain why I think this mistaken assumption is causing people to ask the wrong question about the future of local news. And what I think the right questions are. I want to try to reframe the discussion about business models to focus on where true opportunity and solutions might be found for journalism entrepreneurs to pursue.

First, let me address the first half of the assumption about “newspapers that gave away content.” This assumes that people once paid for journalism.

The Myth of Paying for Journalism

Let’s correct that right now: When it comes to local newspapers, people never paid for journalism.

Believing that they did represents a fundamental misunderstanding of what a local newspaper was, or is. Especially when it comes to the business of a local newspaper. And it’s a tragic misreading that I hear repeated on all sides of the paid content debate, whether they’re for or against charging for news online. (The equation is a bit different for national newspapers like the New York Times or USA Today. But I’ll leave that for another time.)

Let’s review the actual business of a local newspaper, at least as it used to be. Back in February, when I was attending a Knight Digital Media Center workshop at the University of California at Berkeley, we heard a presentation from Lauren Rich Fine, a former newspaper analyst for Merrill Lynch and a presenter at Kent State University.

Fine broke down the historic revenues of newspapers. Across the industry, the money people paid to subscribe accounted for, on average, about 20 percent of a newspaper’s revenue. Classifieds, on the other hand, typically brought in 50 percent of the revenue, and 70 percent of profits on average, according to Fine.

So let’s reflect on that: The consumer was only paying about one-fifth the cost of the product. But what were they getting for that money?

Again, the mistaken notion here is that the primary product of the newspaper is journalism. That’s the conceit of journalists, but it’s also the general misinterpretation by those seeking to re-invent news from the outside.

The Consumer View

Let’s look at a newspaper not from the newsroom-centric view, which assumes the whole value is the journalism. Let’s look at the newspaper from the eyes of the consumer.

From that view, a newspaper is a product that, at least at its peak, provided about 50 different services for people. It helped people figure out where to shop. It delivered a boatload of coupons every Sunday. It helped them plan their weekend. It entertained them with comics and puzzles. It let them know what was on the school lunch menu. And along the way, it also delivered journalism.

Anyone who has worked at a newspaper long enough will tell you that what provokes more outrage from readers than anything else is messing with the comics or puzzles.

Just this week, I was eating lunch with a chief executive who had been in Silicon Valley for 30 years. Toward the end of our lunch, he said he had read the print version of my newspaper for 30 years, and still does. But he was frustrated that we now run the puzzles on a different page every day. He’s not alone. About two years ago, when my newspaper all but eliminated the features section, the outpouring of emails from readers were primarily expressing outrage that the puzzles and comics were being moved.

You can shake your head, but that’s as important a part of the newspaper for many people as the journalism is. For their monthly bill, which only represented 20 percent of revenue, consumers were getting a product that did many things, only one of which was the journalism. Did journalism have a higher social value? Certainly. But it wasn’t the core of the business. For the reader, an ad telling them about a sale or a new store might be just as important in their lives.

Losing the Community Marketplace

So if journalism isn’t the business of a newspaper, what is?

Pull back the lens. At their peak, local newspapers did two things: They created community. And they provided the local marketplace for goods and services. These services were so profitable, that they subsidized the civic good of journalism.

The reason newspapers are in trouble today is because they have lost their dominant position on both of these fronts. Classifieds have evaporated, blowing a massive hole in newspaper revenue.

People know this, yet they somehow forget that this was a completely non-journalistic function.

When it came to community, the sum of news and information in a newspaper created a shared base of knowledge, set the conversations about civic life, and provided a bond that created a sense of place. Today, as newspapers have shrunk, and as the audience has splintered, the newspaper no longer serves as community hub.

Having lost all of these things, all that is left is the journalism. And on its own, we’re discovering this is not something people will pay for.

Getting Beyond Paid Content

So the solution that’s carrying the day is to start charging for content. I don’t favor this approach, but I think it’s too late to stop the train. If paid content succeeds, local newspapers wouldn’t be getting people to pay for journalism again. They’d be getting them to pay for the first time.

Once the paid content strategy comes and goes, it’ll be time to look for other solutions. I don’t believe, as some have written, that we’ve tried everything and should simply give up. In my view, there is still enormous opportunity to create business models that support local newsrooms if journalism entrepreneurs ask the right questions:

Let’s stop asking how to get people to pay for content, because they never did.

Let’s stop asking: How do we reinvent journalism? Opportunity abounds here. The new digital tools are allowing us to create deeper, richer journalism than ever. And more people than ever are reading my journalism. Journalism is doing fine.

Instead, newsrooms need to ask:

> How do we reinvent local community on the web?

> And how do we reinvent the local marketplace online?

By no means are these puzzles solved. I don’t believe that Craigslist represents the last, best way people in a community will buy and sell things. Yelp, while growing in traffic, continues to have reputation issues with local merchants.

The discussion over paid content and tweaking the advertising model is too limited. Solve those two bigger challenges of community and the local marketplace, and you’ll create a business that will support smart, multi-platform newsrooms. These newsrooms won’t be dominant, as they were in the past. They’ll exist as part of local news ecosystem.

But create community, help people succeed in business, and you’ll find a way back to re-igniting the passion for a local news organization.

Future of Local News About More Than Paid Content

// August 13th, 2009 // Comments Off // Best Practices, Financial, MediaShift IdeaLab, business models, community, entrepreneurs, next newsroom, paid content

During an otherwise mundane story about Microsoft’s recent decision to offer a free, web-based version of its Office suite of products, I was struck by this sentence in an Associated Press story:

With Office 2010, Microsoft must decide how much software it can give away online without undermining its lucrative desktop software business. If it doesn’t make the right calculation, the software maker could find itself in the same position as newspapers that gave online content away and now are struggling to replace print revenue.

That second line is almost a throwaway, written with no attribution. That means that the notion has officially entered into conventional wisdom: Local newspapers screwed up by giving away for free the content everyone used to pay to consume.

Conventional wisdom, yes. And untrue.

Correcting this fundamental error is about more than just debating the past. Because this mistaken assumption is driving the debate about new business models for news.

I want to explain why I think this mistaken assumption is causing people to ask the wrong question about the future of local news. And what I think the right questions are. I want to try to reframe the discussion about business models to focus on where true opportunity and solutions might be found for journalism entrepreneurs to pursue.

First, let me address the first half of the assumption about “newspapers that gave away content.” This assumes that people once paid for journalism.

The Myth of Paying for Journalism

Let’s correct that right now: When it comes to local newspapers, people never paid for journalism.

Believing that they did represents a fundamental misunderstanding of what a local newspaper was, or is. Especially when it comes to the business of a local newspaper. And it’s a tragic misreading that I hear repeated on all sides of the paid content debate, whether they’re for or against charging for news online. (The equation is a bit different for national newspapers like the New York Times or USA Today. But I’ll leave that for another time.)

Let’s review the actual business of a local newspaper, at least as it used to be. Back in February, when I was attending a Knight Digital Media Center workshop at the University of California at Berkeley, we heard a presentation from Lauren Rich Fine, a former newspaper analyst for Merrill Lynch and a presenter at Kent State University.

Fine broke down the historic revenues of newspapers. Across the industry, the money people paid to subscribe accounted for, on average, about 20 percent of a newspaper’s revenue. Classifieds, on the other hand, typically brought in 50 percent of the revenue, and 70 percent of profits on average, according to Fine.

So let’s reflect on that: The consumer was only paying about one-fifth the cost of the product. But what were they getting for that money?

Again, the mistaken notion here is that the primary product of the newspaper is journalism. That’s the conceit of journalists, but it’s also the general misinterpretation by those seeking to re-invent news from the outside.

The Consumer View

Let’s look at a newspaper not from the newsroom-centric view, which assumes the whole value is the journalism. Let’s look at the newspaper from the eyes of the consumer.

From that view, a newspaper is a product that, at least at its peak, provided about 50 different services for people. It helped people figure out where to shop. It delivered a boatload of coupons every Sunday. It helped them plan their weekend. It entertained them with comics and puzzles. It let them know what was on the school lunch menu. And along the way, it also delivered journalism.

Anyone who has worked at a newspaper long enough will tell you that what provokes more outrage from readers than anything else is messing with the comics or puzzles.

Just this week, I was eating lunch with a chief executive who had been in Silicon Valley for 30 years. Toward the end of our lunch, he said he had read the print version of my newspaper for 30 years, and still does. But he was frustrated that we now run the puzzles on a different page every day. He’s not alone. About two years ago, when my newspaper all but eliminated the features section, the outpouring of emails from readers were primarily expressing outrage that the puzzles and comics were being moved.

You can shake your head, but that’s as important a part of the newspaper for many people as the journalism is. For their monthly bill, which only represented 20 percent of revenue, consumers were getting a product that did many things, only one of which was the journalism. Did journalism have a higher social value? Certainly. But it wasn’t the core of the business. For the reader, an ad telling them about a sale or a new store might be just as important in their lives.

Losing the Community Marketplace

So if journalism isn’t the business of a newspaper, what is?

Pull back the lens. At their peak, local newspapers did two things: They created community. And they provided the local marketplace for goods and services. These services were so profitable, that they subsidized the civic good of journalism.

The reason newspapers are in trouble today is because they have lost their dominant position on both of these fronts. Classifieds have evaporated, blowing a massive hole in newspaper revenue.

People know this, yet they somehow forget that this was a completely non-journalistic function.

When it came to community, the sum of news and information in a newspaper created a shared base of knowledge, set the conversations about civic life, and provided a bond that created a sense of place. Today, as newspapers have shrunk, and as the audience has splintered, the newspaper no longer serves as community hub.

Having lost all of these things, all that is left is the journalism. And on its own, we’re discovering this is not something people will pay for.

Getting Beyond Paid Content

So the solution that’s carrying the day is to start charging for content. I don’t favor this approach, but I think it’s too late to stop the train. If paid content succeeds, local newspapers wouldn’t be getting people to pay for journalism again. They’d be getting them to pay for the first time.

Once the paid content strategy comes and goes, it’ll be time to look for other solutions. I don’t believe, as some have written, that we’ve tried everything and should simply give up. In my view, there is still enormous opportunity to create business models that support local newsrooms if journalism entrepreneurs ask the right questions:

Let’s stop asking how to get people to pay for content, because they never did.

Let’s stop asking: How do we reinvent journalism? Opportunity abounds here. The new digital tools are allowing us to create deeper, richer journalism than ever. And more people than ever are reading my journalism. Journalism is doing fine.

Instead, newsrooms need to ask:

> How do we reinvent local community on the web?

> And how do we reinvent the local marketplace online?

By no means are these puzzles solved. I don’t believe that Craigslist represents the last, best way people in a community will buy and sell things. Yelp, while growing in traffic, continues to have reputation issues with local merchants.

The discussion over paid content and tweaking the advertising model is too limited. Solve those two bigger challenges of community and the local marketplace, and you’ll create a business that will support smart, multi-platform newsrooms. These newsrooms won’t be dominant, as they were in the past. They’ll exist as part of local news ecosystem.

But create community, help people succeed in business, and you’ll find a way back to re-igniting the passion for a local news organization.

Future of Local News About More Than Paid Content

// August 13th, 2009 // Comments Off // Best Practices, Financial, MediaShift IdeaLab, business models, community, entrepreneurs, next newsroom, paid content

During an otherwise mundane story about Microsoft’s recent decision to offer a free, web-based version of its Office suite of products, I was struck by this sentence in an Associated Press story:

With Office 2010, Microsoft must decide how much software it can give away online without undermining its lucrative desktop software business. If it doesn’t make the right calculation, the software maker could find itself in the same position as newspapers that gave online content away and now are struggling to replace print revenue.

That second line is almost a throwaway, written with no attribution. That means that the notion has officially entered into conventional wisdom: Local newspapers screwed up by giving away for free the content everyone used to pay to consume.

Conventional wisdom, yes. And untrue.

Correcting this fundamental error is about more than just debating the past. Because this mistaken assumption is driving the debate about new business models for news.

I want to explain why I think this mistaken assumption is causing people to ask the wrong question about the future of local news. And what I think the right questions are. I want to try to reframe the discussion about business models to focus on where true opportunity and solutions might be found for journalism entrepreneurs to pursue.

First, let me address the first half of the assumption about “newspapers that gave away content.” This assumes that people once paid for journalism.

The Myth of Paying for Journalism

Let’s correct that right now: When it comes to local newspapers, people never paid for journalism.

Believing that they did represents a fundamental misunderstanding of what a local newspaper was, or is. Especially when it comes to the business of a local newspaper. And it’s a tragic misreading that I hear repeated on all sides of the paid content debate, whether they’re for or against charging for news online. (The equation is a bit different for national newspapers like the New York Times or USA Today. But I’ll leave that for another time.)

Let’s review the actual business of a local newspaper, at least as it used to be. Back in February, when I was attending a Knight Digital Media Center workshop at the University of California at Berkeley, we heard a presentation from Lauren Rich Fine, a former newspaper analyst for Merrill Lynch and a presenter at Kent State University.

Fine broke down the historic revenues of newspapers. Across the industry, the money people paid to subscribe accounted for, on average, about 20 percent of a newspaper’s revenue. Classifieds, on the other hand, typically brought in 50 percent of the revenue, and 70 percent of profits on average, according to Fine.

So let’s reflect on that: The consumer was only paying about one-fifth the cost of the product. But what were they getting for that money?

Again, the mistaken notion here is that the primary product of the newspaper is journalism. That’s the conceit of journalists, but it’s also the general misinterpretation by those seeking to re-invent news from the outside.

The Consumer View

Let’s look at a newspaper not from the newsroom-centric view, which assumes the whole value is the journalism. Let’s look at the newspaper from the eyes of the consumer.

From that view, a newspaper is a product that, at least at its peak, provided about 50 different services for people. It helped people figure out where to shop. It delivered a boatload of coupons every Sunday. It helped them plan their weekend. It entertained them with comics and puzzles. It let them know what was on the school lunch menu. And along the way, it also delivered journalism.

Anyone who has worked at a newspaper long enough will tell you that what provokes more outrage from readers than anything else is messing with the comics or puzzles.

Just this week, I was eating lunch with a chief executive who had been in Silicon Valley for 30 years. Toward the end of our lunch, he said he had read the print version of my newspaper for 30 years, and still does. But he was frustrated that we now run the puzzles on a different page every day. He’s not alone. About two years ago, when my newspaper all but eliminated the features section, the outpouring of emails from readers were primarily expressing outrage that the puzzles and comics were being moved.

You can shake your head, but that’s as important a part of the newspaper for many people as the journalism is. For their monthly bill, which only represented 20 percent of revenue, consumers were getting a product that did many things, only one of which was the journalism. Did journalism have a higher social value? Certainly. But it wasn’t the core of the business. For the reader, an ad telling them about a sale or a new store might be just as important in their lives.

Losing the Community Marketplace

So if journalism isn’t the business of a newspaper, what is?

Pull back the lens. At their peak, local newspapers did two things: They created community. And they provided the local marketplace for goods and services. These services were so profitable, that they subsidized the civic good of journalism.

The reason newspapers are in trouble today is because they have lost their dominant position on both of these fronts. Classifieds have evaporated, blowing a massive hole in newspaper revenue.

People know this, yet they somehow forget that this was a completely non-journalistic function.

When it came to community, the sum of news and information in a newspaper created a shared base of knowledge, set the conversations about civic life, and provided a bond that created a sense of place. Today, as newspapers have shrunk, and as the audience has splintered, the newspaper no longer serves as community hub.

Having lost all of these things, all that is left is the journalism. And on its own, we’re discovering this is not something people will pay for.

Getting Beyond Paid Content

So the solution that’s carrying the day is to start charging for content. I don’t favor this approach, but I think it’s too late to stop the train. If paid content succeeds, local newspapers wouldn’t be getting people to pay for journalism again. They’d be getting them to pay for the first time.

Once the paid content strategy comes and goes, it’ll be time to look for other solutions. I don’t believe, as some have written, that we’ve tried everything and should simply give up. In my view, there is still enormous opportunity to create business models that support local newsrooms if journalism entrepreneurs ask the right questions:

Let’s stop asking how to get people to pay for content, because they never did.

Let’s stop asking: How do we reinvent journalism? Opportunity abounds here. The new digital tools are allowing us to create deeper, richer journalism than ever. And more people than ever are reading my journalism. Journalism is doing fine.

Instead, newsrooms need to ask:

> How do we reinvent local community on the web?

> And how do we reinvent the local marketplace online?

By no means are these puzzles solved. I don’t believe that Craigslist represents the last, best way people in a community will buy and sell things. Yelp, while growing in traffic, continues to have reputation issues with local merchants.

The discussion over paid content and tweaking the advertising model is too limited. Solve those two bigger challenges of community and the local marketplace, and you’ll create a business that will support smart, multi-platform newsrooms. These newsrooms won’t be dominant, as they were in the past. They’ll exist as part of local news ecosystem.

But create community, help people succeed in business, and you’ll find a way back to re-igniting the passion for a local news organization.

Future of Local News About More Than Paid Content

// August 13th, 2009 // Comments Off // Best Practices, Financial, MediaShift IdeaLab, business models, community, entrepreneurs, next newsroom, paid content

During an otherwise mundane story about Microsoft’s recent decision to offer a free, web-based version of its Office suite of products, I was struck by this sentence in an Associated Press story:

With Office 2010, Microsoft must decide how much software it can give away online without undermining its lucrative desktop software business. If it doesn’t make the right calculation, the software maker could find itself in the same position as newspapers that gave online content away and now are struggling to replace print revenue.

That second line is almost a throwaway, written with no attribution. That means that the notion has officially entered into conventional wisdom: Local newspapers screwed up by giving away for free the content everyone used to pay to consume.

Conventional wisdom, yes. And untrue.

Correcting this fundamental error is about more than just debating the past. Because this mistaken assumption is driving the debate about new business models for news.

I want to explain why I think this mistaken assumption is causing people to ask the wrong question about the future of local news. And what I think the right questions are. I want to try to reframe the discussion about business models to focus on where true opportunity and solutions might be found for journalism entrepreneurs to pursue.

First, let me address the first half of the assumption about “newspapers that gave away content.” This assumes that people once paid for journalism.

The Myth of Paying for Journalism

Let’s correct that right now: When it comes to local newspapers, people never paid for journalism.

Believing that they did represents a fundamental misunderstanding of what a local newspaper was, or is. Especially when it comes to the business of a local newspaper. And it’s a tragic misreading that I hear repeated on all sides of the paid content debate, whether they’re for or against charging for news online. (The equation is a bit different for national newspapers like the New York Times or USA Today. But I’ll leave that for another time.)

Let’s review the actual business of a local newspaper, at least as it used to be. Back in February, when I was attending a Knight Digital Media Center workshop at the University of California at Berkeley, we heard a presentation from Lauren Rich Fine, a former newspaper analyst for Merrill Lynch and a presenter at Kent State University.

Fine broke down the historic revenues of newspapers. Across the industry, the money people paid to subscribe accounted for, on average, about 20 percent of a newspaper’s revenue. Classifieds, on the other hand, typically brought in 50 percent of the revenue, and 70 percent of profits on average, according to Fine.

So let’s reflect on that: The consumer was only paying about one-fifth the cost of the product. But what were they getting for that money?

Again, the mistaken notion here is that the primary product of the newspaper is journalism. That’s the conceit of journalists, but it’s also the general misinterpretation by those seeking to re-invent news from the outside.

The Consumer View

Let’s look at a newspaper not from the newsroom-centric view, which assumes the whole value is the journalism. Let’s look at the newspaper from the eyes of the consumer.

From that view, a newspaper is a product that, at least at its peak, provided about 50 different services for people. It helped people figure out where to shop. It delivered a boatload of coupons every Sunday. It helped them plan their weekend. It entertained them with comics and puzzles. It let them know what was on the school lunch menu. And along the way, it also delivered journalism.

Anyone who has worked at a newspaper long enough will tell you that what provokes more outrage from readers than anything else is messing with the comics or puzzles.

Just this week, I was eating lunch with a chief executive who had been in Silicon Valley for 30 years. Toward the end of our lunch, he said he had read the print version of my newspaper for 30 years, and still does. But he was frustrated that we now run the puzzles on a different page every day. He’s not alone. About two years ago, when my newspaper all but eliminated the features section, the outpouring of emails from readers were primarily expressing outrage that the puzzles and comics were being moved.

You can shake your head, but that’s as important a part of the newspaper for many people as the journalism is. For their monthly bill, which only represented 20 percent of revenue, consumers were getting a product that did many things, only one of which was the journalism. Did journalism have a higher social value? Certainly. But it wasn’t the core of the business. For the reader, an ad telling them about a sale or a new store might be just as important in their lives.

Losing the Community Marketplace

So if journalism isn’t the business of a newspaper, what is?

Pull back the lens. At their peak, local newspapers did two things: They created community. And they provided the local marketplace for goods and services. These services were so profitable, that they subsidized the civic good of journalism.

The reason newspapers are in trouble today is because they have lost their dominant position on both of these fronts. Classifieds have evaporated, blowing a massive hole in newspaper revenue.

People know this, yet they somehow forget that this was a completely non-journalistic function.

When it came to community, the sum of news and information in a newspaper created a shared base of knowledge, set the conversations about civic life, and provided a bond that created a sense of place. Today, as newspapers have shrunk, and as the audience has splintered, the newspaper no longer serves as community hub.

Having lost all of these things, all that is left is the journalism. And on its own, we’re discovering this is not something people will pay for.

Getting Beyond Paid Content

So the solution that’s carrying the day is to start charging for content. I don’t favor this approach, but I think it’s too late to stop the train. If paid content succeeds, local newspapers wouldn’t be getting people to pay for journalism again. They’d be getting them to pay for the first time.

Once the paid content strategy comes and goes, it’ll be time to look for other solutions. I don’t believe, as some have written, that we’ve tried everything and should simply give up. In my view, there is still enormous opportunity to create business models that support local newsrooms if journalism entrepreneurs ask the right questions:

Let’s stop asking how to get people to pay for content, because they never did.

Let’s stop asking: How do we reinvent journalism? Opportunity abounds here. The new digital tools are allowing us to create deeper, richer journalism than ever. And more people than ever are reading my journalism. Journalism is doing fine.

Instead, newsrooms need to ask:

> How do we reinvent local community on the web?

> And how do we reinvent the local marketplace online?

By no means are these puzzles solved. I don’t believe that Craigslist represents the last, best way people in a community will buy and sell things. Yelp, while growing in traffic, continues to have reputation issues with local merchants.

The discussion over paid content and tweaking the advertising model is too limited. Solve those two bigger challenges of community and the local marketplace, and you’ll create a business that will support smart, multi-platform newsrooms. These newsrooms won’t be dominant, as they were in the past. They’ll exist as part of local news ecosystem.

But create community, help people succeed in business, and you’ll find a way back to re-igniting the passion for a local news organization.

Where’s the Innovation in Business Models?

// March 12th, 2008 // Comments Off // Best Practices, Financial, MediaShift IdeaLab, advertising, business models, mercurynews, minnpost, newspapernext

I’ve been following closely a theme that has developed here in recent days. It began last week with David Sasaki’s post about the legacy of the Knight family, continued with Dan Gillmor’s call for more entrepreneurial thinking in journalism, and was amplified by J.D. Lasica’s call for newspapers to innovate or die.

All great thoughts, and worth reading to the word. But I have a particular interest here. As a business reporter at the San Jose Mercury News the past nine years, I’ve been living at the tragic center of the events being addressed to some degree by each of these posts. (Though I missed the era covered by Benjamin Melançon’s post on Gary Webb).

Last Friday morning, I was one of many Mercury News employees who carefully watched their phone for two hours waiting to see if they got a call informing them their career was done. And make no mistake: In this day and age, getting fired from a newspaper for most people means your journalism career is finished.

My call never came. And that means I have now survived six rounds of buyouts and layoffs. Since it peaked in 2001, our newsroom has been cut by almost 60 percent.

The posts I referenced correctly identify the need to innovate. And indeed, there is tremendous innovation occurring in journalism these days (alas, most of it outside newspapers). I had been part of a group hoping to finally bring that inside the Mercury News, but our project, Rethinking the Mercury News, has been stopped for now.

But as I’ve watched these grand experiments in journalism, I’ve also felt some frustration. Don’t get me wrong: The various projects (including many being chronicled in this blog) are inspiring, groundbreaking, and I believe have made great strides toward a new, and possibly better journalism.

My problem lies with an issue that David Sasaki identified near the end of his post:

“The Knight Foundation is single-handedly making citizen media both more serious and more respected by giving financial support to some of the field’s most innovative thinkers. But is this a sustainable model for the transformation of media? What happens when the News Challenge’s five-year funding period concludes? All of the News Challenge grantee projects are impressive, innovative, and important, but not a single one is turning a profit, nor do they seem poised to any time soon.”

I see tremendous energy going in to breaking new ground in gathering news, telling stories, and creating community. What I don’t see is an equivalent amount of innovation occurring around the business models that will support journalism going forward. What I tend to see, over and over, is people experimenting wildly on the content side, and then falling back on the same old business model: Selling ads.

This model is dying.

A couple weeks ago, I sat on a “Newsroom of the Future” panel at Berkeley’s J-School. The moderator started the panel by asking whether newspapers have an “audience problem or a technology problem?” The answer is neither. More people read the content of the Mercury News than ever. And technology represents an opportunity to deepen our connection with those readers and enhance our impact on their lives.

What we have is a business model problem. Even as our audience has exploded, our revenues have cratered. It’s hard enough for newspapers to experiment with their content. But playing with revenue models is the real third rail. Almost all the money still comes from print. Which means ads.

But all this fails to impress advertisers. For the dollar they pay us to advertise in print, they pay a dime to advertise online.

What truly surprises me is what I see (or don’t see) happening outside of newspapers. Even the most innovative minds I know will describe their dazzling vision for new content, and then insist they will pay for it because this content will optimize things for advertisers. This is true for countless Web 2.0 companies. Even Facebook, for all its hype, can’t seem to figure out any other business model than some twist on selling ads.

Is this it? Is this what we’re stuck with? Why is there all this energy around reinventing the content and almost none being directed toward reinventing the business models? It represents a failure of imagination.

And it’s not just a newspaper problem. It’s a media problem. The New York Times this week looked at the growth in people watching television shows on their computers. Guess what? It’s playing havoc with those TV business models:

“The four and a half billion we make on broadcast is never going to equate to four and a half billion online,” said Quincy Smith, the president of CBS Interactive.

And according to Jeff Zucker, CEO of NBC Universal:

“Our challenge with all these ventures is to effectively monetize them so that we do not end up trading analog dollars for digital pennies.”

Even Google’s YouTube is stuck in a rut. According to a Bear Stern’s analyst report issued last week, YouTube is bringing in $90 million in annual revenues. But while I was attending the TV of Tomorrow Show in San Francisco this week, I sat in on a panel where Jeff Richards, vice president of Digital Content Services for VeriSign, estimated that YouTube’s bandwidth costs were nearly double that revenue. If true, it would dwarf the sinkhole faced by newspapers.

There is an enormous, untapped opportunity for innovation around the business model. This is where the conversation needs to go. There needs to be a new revenue model that will support some form of authoritative journalism, one that ideally exists in tandem with an expansive community journalism element and that is able to be optimized for any platform used by its audience (print, online, TV, mobile, etc.).

While there is far too little happening on this end, there are some efforts to identify a way toward a more sustainable journalism that are worth noting:

  • Newspaper Next: Sponsored by the American Press Institute, Newspaper Next just released the second version of their research called, Making the Leap Beyond Newspaper Companies. Newspaper Next has been instrumental in pushing newspapers to look beyond ads for revenue. And they map out how to get there by creating a framework for newspapers to begin identifying opportunities.
    At the same time, the latest report chastises newspapers for being too timid when it comes to innovation, especially on the revenue side: “On the business side, too, innovation must happen faster because core revenues are declining steadily. But even when launching new products for consumers, companies are mostly sticking to existing business models.”
  • VillageSoup: Ask Richard Anderson, one of the founders, what kind of business he’s in, and he’ll tell you community hosting. Not journalism or media. Though he does publish two local newspapers. Richard is also a News Challenge winner. He sees businesses as members of the community who buy subscriptions to the site (which include the ability to run ads, but also many other services).
  • ProPublica: Paul Steiger’s new public interest journalism project, funded by foundations and a few rich people.
  • The Public Press: An embryonic effort by Michael Stoll to build a non-commercial news organization in the Bay Area (disclosure: I’m one of many, many folks who have advised him on this project).
  • The Next Newsroom Prototype: This represents maybe some of the best, most comprehensive thinking I’ve seen on the business and content side. (Note: This is different than my Next Newsroom project). But this draft plan, formulated by Chris Peck and Bill Densmore (with contributions from many others) contains a number of intriguing concepts, such as a community ownership plan and new ways to think about delivery of the print product. And its overall goal is to de-emphasize the dependence on ad sales. Read and it and steal some of these ideas. Better yet, print out a copy, and give it to your friendly, neighborhood venture capitalist.

I’m sure there are others like this out there. There need to be more. Lots more. If you know of someone taking an innovative approach to the business, or finding a new way to sustain journalism of any flavor, please post something about them below.