I’ve written a lengthy article for InPublishing on the commercial side of data journalism, from increased engagement, hits and advertising opportunities to tapping into latent development talent and selling data itself – you can read it in full here.

For the past few weeks I’ve been casually enjoying Funding Journalism in the Digital Age, a book that surveys the business models underpinning the industry – and those that are being explored for its future. And it’s rather good.

The book has four broad parts: the initial 3 chapters provide the current context: a history of news publishing as a business; and an overview of current business models and commercial tactics, from paywalls and hyperlocal projects to SEO and dayparting.

The bulk of the book then looks in detail at particular types of business models: micropayments and microfunding; sponsorship and philanthropy; family ownership and trusts; niche content; e-paper, and e-commerce.

Alongside this, a number of chapters look at organisational innovation, from pro-am collaboration to institutional partnerships. And finally, two key chapters look at the principles of microeconomic concepts for the industry, and the importance of innovation.

Rather than sit back and paint a neutral picture of things, the book states quite firmly why now is not the time to stick with old models (the economics of both publishing and advertising have changed), while also not pretending to know the answer to the industry’s problems.

Instead, over the course of the book, readers get a good overview of how media organisations are attempting to adapt to the new environment, as well as a sample of the different models being experimented with by innovative startups – the successes, failures, but mostly the wait-and-sees. The result is a valuable insight into the increasingly varied nature of the industry side of ‘the industry’.

The chapters are littered with examples from both mainstream and lesser-known publishing projects, and it’s refreshingly global in its perspective: the usual US and UK stories are complemented with online and print examples from France, Singapore, Norway, Australia and elsewhere. Sadly, like most journalism textbooks, magazines and, to a lesser extent, broadcast, are a little neglected.

Although this is an entry-level book the subject is broad enough – and the industry itself so varied – for most people to find something new here.

For students, this is a book to join the list of must-reads. Too few books address the current commercial realities that students face upon entering the media. It would be nice to see some more.

Last week Karl Schneider, Reed Business Information’s Editorial Director, spent an hour chatting with students in my Online Journalism class. Most of it is available on video here, but of particular interest to me was a point Karl made about how Reed separated its online advertising into a separate company very early on, and are now reaping the benefits (embedded above).

“Because we had print businesses to protect we spent at least as much time worrying about not doing something on the web that would undercut the money coming in in print as worrying about ‘How do we make this new stuff grow’ … One of the big revenue streams for us was recruitment ads … So when we started to do online jobs one of the big challenges was ‘How can we do this without damaging all of the money tied up in print?’ And very quickly we realised that if we worry about that, we’re going to be rubbish at online job ads, because we’re always going to be operating with one hand tied behind our backs. And we’ll be competing against pure-play onlines who won’t have that worry.

“So what we ended up doing was setting up our online jobs advertising operation as a separate business and allowed it to compete head-to-head with our print business, and it caused all sorts of internal arguments – but it was absolutely the right thing to do because we’re making more money now out of online jobs than we ever did from print jobs. Less per job – there’s a lot more job ads – but it took separating it off [as a separate business] to do it.”

I’ve written about this problem before. Although on paper there are economies to be made by combining print and web ad sales, that’s not a strategy for future growth.

Instead, it appears to result in a prolonged addiction to the dying cash cow of print ads (and, anecdotally, a frustrating experience for advertisers wishing to move money from print to online). Judging by the recent research into magazine ad sales (PDF) in the US (image below), the magazine industry may need to listen to Karl’s experiences.

Image taken from CJR research into magazine websites (link above). 'To' should say 'Two'

Media organisations who only offer partial RSS feeds might be interested to look at a couple of posts from 2 websites with different experiences of monetising their feeds. First, Jason Snell of MacWorld:

“RSS doesn’t generate revenue directly. There are ads in RSS, sure, but they’re cheap and lousy and don’t have remotely the return as ads on web pages.”

Then, John Gruber of Daring Fireball (cached here if you find it as slow as I do):

“The ads in most sponsored RSS feeds are indeed cheap and lousy. The ads in DF’s [Daring Fireball's] RSS feed are neither. They’re priced at a premium, and have attracted (if I do say so myself) premium sponsors.

“If you’ve got a model where revenue is tied only to web page views, switching to full-content RSS feeds will hurt, at least in the short term. The problem, I say, isn’t with full-content RSS feeds, but rather with a business model that hinges solely on web page views. The precious commodity that we, as publishers, have to offer advertisers is the attention of our readers. Web page views are a terribly inaccurate, if not outright misleading, metric for attention. Subscribers to a full-content RSS feed are among the readers paying the most attention, but generate among the least web page views.”

Snell’s response: “What works for [Gruber's one-man] kind of site doesn’t necessarily work for our kind.”

It’s also worth noting the tertiary benefits of full RSS feeds. Offering full RSS feeds makes it more likely a developer is going to create something useful out of it (expensive development time for free), bringing more readers and attention to your advertising or, in the case of the BBC (which may have licensing issues holding it back), fulfilling its public service remit.

Do you or your organisation do anything interesting with your RSS feeds? Are they full or partial? I’d love to know.

(Note, OJB uses the <more> tag to to ensure the homepage isn’t dominated by a single post. Unfortunately, this results in partial RSS feeds. Some day I’ll sort this.)

The first study (PDF) of magazines and their various approaches to websites, undertaken by Columbia Journalism Review, found publishers are still trying to work out how best to utilise the online medium.

There is no general standard or guidelines for magazine websites and little discussion between industry leaders as to how they should most effectively be approached.

Following the responses to the multiple choice questionnaire and the following open-ended questions -

• What do you consider to be the mission of your website, does this differ from the mission of your print magazine?
• What do you consider to be the best feature of aspect of your website?
• What feature of your website do you think most needs improvement or is not living up to its potential?

- the researchers called for a collective, informed and contemporary approach to magazine websites with professional body support.

The findings were separated into the following 6 categories:

Staff Structure and Decision Making

The researchers found decision making on the website to be the single most important factor in how its website functions.

Most websites were staffed by people who primarily worked on the print editions, and less than a quarter of staff were hired with web experience (29 per cent).

Independent web editors were the only decision makers in the most profitable websites, and the higher a magazine’s circulation and monthly web traffic, the more likely it was to have an independent web editor making budget and content decisions.

Standards and Practices

The researchers found the approach to fact-checking and sub-editing for online content website standards were in general much less rigorous than for printed editions; 51 per cent of original content that appears on web sites is either not copy-edited at all, or is copy-edited less rigorously than in print.

Just under half (43 per cent) of respondents reported either a lower standard for fact-checking online (35 per cent), or no fact-checking at all (8 per cent).

Strangely, they found that websites are more likely to have lower standards in these areas as web traffic rises and when content decisions are made by independent web editors.

Many website editors correct errors without acknowledging the mistake; they are often more likely to be corrected than print, but less likely to publicise the correction – particularly when an independent web editor is involved.

The most common reason for material to appear online is because it ran in the print edition, often because it is breaking news, multi-media content or to maintain freshness and, sometimes, because the quality is not high enough to run in the print edition.

Business Model

For 68 per cent of surveyed publishers, advertising is the largest revenue source – just over half of the magazines (52 per cent) offer all their print material online for free, and profitable sites offer all of their content online for free more often than non-profitable ones.

Only about a third of magazine web sites make a profit, and magazines that publish more frequently, and those that have a higher web traffic, tend to have more profitable web sites.

However, they found magazine circulation generally has little bearing on web site profitability.

62 per cent of the web sites with between 1.5 million and 2 million unique monthly visitors were profitable, compared with 21 per cent of those with less than 50,000 unique monthly visitors.

Social media and community building

Unsurprisingly, most web sites, (47 per cent), have adopted social media tools and techniques, and do so more when independent web editors are in decision-making roles.

However, editorial standards tend to slip even more in this environment. Blogs are rarely copy-edited or fact-checked and comments are moderated at editors’ discretion.

Most magazines have blogs on their Web sites (64 per cent), and those are mostly maintained by staff members (87 per cent); 39 per cent use freelancers or contract-writers for blogs.

Web sites are more likely to have blogs when independent web editors are in charge of the budget. Most magazines allow comments on blogs or other online content (73 per cent).

Technology

The researchers found most magazines are not keeping pace with mobile display and interactivity technology.

Less than one in five are designed for smartphones and very few are formatted for e-book readers (4 per cent).

Again, web sites are more likely to have multiple display options when independent web editors are in charge of budget or content decisions.

Roughly half of magazines surveyed use metrics to guide content decisions (47 per cent), but only 8 per cent closely monitor and rely on them.

Less than half use traffic statistics (43 per cent), and those that do so regularly for content decisions are significantly more likely to be profitable.

Web sites that receive more traffic are more likely to use traffic statistics in content decisions.

Most magazines name Google Analytics as the online metric that is most helpful to their web sites.

Content management systems vary, with custom-designs proving most popular.

Mission

Most editors said their website and their print magazine shared a common mission.

16 per cent of respondents said their Web site’s mission involved community-building with readers.

Interestingly, only 5 per cent mentioned new or unique content as integral to the site’s mission, with 96 per cent reporting the primary use of content from the print magazine online.

In conclusion, the researchers call for a “Habermassian convention” to continue the discussion of issues raised by the study.

They suggest an inclusive and wide-ranging approach to help foster the democratic ideal of the public sphere in online publishing, to address the challenges for the future of journalism and of online business models.

Specifically they call for the following questions to be addressed:

• What is keeping web experience out of magazines and why?
• Why doesn’t the industry create codes of conduct and guidelines on matters such as online fact-checking, copy-editing, and error-correction?
• Is it true, as one respondent said, “if it’s fact-checked, it’s not a blog,” and is this an existential or a definitional question?
• Subject for discussion: Why have earlier attempts at standardizing the world of blogs and social media notoriously failed? Is it, at long last, possible to identify best practices for using the tools and techniques of digital journalism?

A good example of how seeing your website as a platform for other people to do things can lead to one of the oldest business models around: taxes. From TheNextWeb:

“Facebook still has one major trick up its revenue-sleeve: taxes. With companies such as Zynga raking in millions from the Facebook platform, Facebook could easily implement a 10% tax with little damage to its community, instantly raising tens of million more in revenue.”

This article frames the problem of news dissemination as a problem of market lemons, analogous to the issue raised by George Akerlof in 1970. Framing news as a mechanism of vetting common knowledge as opposed to entertainment allows one to see that instant common knowledge in the byzantine and uncertain way in which humans communicate and live in is unattainable. Given this frame of the problem a potential solution is posited which allows traditional newspaper companies to serve and focus on the role of validating news rather than simply creating or capturing it. The most value added service that traditional news organizations can provide is validation of truth and quality assurance.

“It is hard to get the news from poems, but everyday, men die miserably for lack of what can be found there.” (William C. Williams)

Introduction

Gauging quality of entertainment is fairly simple and self-evident. Consumers know instantly whether a product is entertaining and consumers continue to pay attention if they find the material to be entertaining.

News providers tend to serve both an individual’s desire for entertainment and information in one product bundle. Although it is very easy for consumers to test the quality of the entertainment component of news it is much more difficult to gauge the information quality of news.

Consumers face the intangible dilemma of assessing whether news is accurate or true, which poses a problem of asymmetric information for consumers.

Despite the availability of virtually infinite potential news sources and automated search engines, the search costs of getting the truth are too high. Human beings are bombarded with information throughout the day and despite the ease of search engine technology only 28% of the internet is actually available for search (Barabasi, 2002). The internet is growing in content exponentially and current computing cannot search the majority of the internet.

The threat of news becoming a market for lemons is an important issue worth exploring as news serves to provide a gatekeeping and watchdog function in democracies.

Although it might appear that the advent of increased competition for news via independent and unbiased bloggers on the internet would improve news quality this may not be true in practice. Without a way to assess the accuracy and quality of the information the market of news on the internet tends toward a market for news lemons.

Shleifer’s research on the market for news shows that competition is not enough to ensure accurate news and that, ironically, competition results in “lower prices, but common slanting toward reader biases” (Shleifer and Mullainathan, 2005).

Shleifer posits that ‘a reader with access to all news sources could get an unbiased perspective’ and that ‘reader heterogeneity is more important for accuracy in media’ (2005).

That said, the issue of search costs of consumers has not been explored as in practical terms as no reader has time to read all news sources to form a perfect model of unbiased information.

The problem of assessing the validity of news quality is in essence the ‘market for lemons’ problem raised by Akerlof (Akerlof, 1970). The market for lemons phenomenon relates to ‘quality and uncertainty’ and news is clearly a business in which “‘trust’ is important” and, as Akerlof points out, “Informal unwritten guarantees are preconditions for trade and production” and “where these guarantees are indefinite, business will suffer” (1970).

The aim of this paper is raise the issue of the market for internet news lemons as the quality of free information served piping hot on the internet is ‘indefinite’. When the quality of a good is unknown consumers are willing to pay for it, assuming it is not reliable, and thus this drives sellers with a good product out of the market as the consumer is unable to determine high quality from low quality goods.

Akerlof showed the detrimental effect of markets for lemons using the case of used cars in the 1970s where people with good used cars could not obtain the price their car was worth and would not sell their cars, thus leaving the market full of lemons in a self-fulfilling prophecy of sorts. Similarly, any market for good where the quality of the product is uncertain tends to a market for lemons.

This phenomenon has been at play in the mortgage securities market and is no different for news as a product.

Towards a definition of news and newspaper quality

News as a system for humans provides the following affordances to humans:

• connects people with information,
• provides branding of perceived truth,
• helps support democracy and its ideals, and
• fulfills an entertainment component via narrative integrity.

The narrative integrity itself has recently been criticized by Taleb as it encourages readers to build unrealistic assessment of risk in financial and other aspects of daily life (Taleb, 2005). Newspapers in general tend to either exaggerate or under-represent risks faced by individuals and are not sound guardians from a risk management point of view.

Quality for a news product is a perception of validity and truth amongst peer groups that consumers communicate with. Most consumers of news want to know what is going on. What is big? News thus functions to provide roles of gatekeeping, watchdog, anti-corruption, and in general a sharing of true facts of interest to human communities in relation to purported values and themes.

The existence of a strong free press has been associated with lowered corruption across nations (Brunettia & Wederb, 2003). In a study of government ownership of the news media, which is the case in 97% of countries, it was found that per ‘public choice theory…government ownership undermines political and economic freedom” (Schleifer, Djankov, Mcliesh & Menova, 2003).

Scoping News

For the scope of this work the emphasis will be on the non-entertainment quality aspects of news as a product. This is consistent with Shleifer’s definition that the ‘quality of [news] information is its accuracy. The more accurate the news, the more valuable is its source to the consumer. Pressure from audiences and rivals force news outlets to seek and deliver more accurate information, just as market forces motivate auto-makers to produce better cars’ (Shleifer, 2005).

Hamilton’s book on the economics of news highlights the fact that news is meant for rapid commoditization, it is information good and is a product of network effects (Hamilton, 2003). Per Hamilton’s point, speed of delivery, accuracy, and relevancy seem to be desirable characteristics of news as a product (2003).

If we step back and look at this, news is really a mechanism of generating ‘common knowledge’ within a byzantine environment where quality and truth are uncertain.

Taking this perspective one can see that the work in artificial intelligence and philosophy conducted by Halpern and Moses is relevant in this context (Halpern etal, 1984). Halpern and other students of common knowledge find that in practice it is impossible to guarantee reliable and true common knowledge in real time. The closest one can get to is almost common knowledge (Halpern etal, 1994).

Given the complex nature of the problem of common knowledge in a distributed uncertain environment Halpern et al point out that the modeling of time is critical in achieving eventual common knowledge. One way to look at this is, given that a consumer wants common knowledge, they should wait a sufficient time until a news story can be vetted. The expectation of instant and true knowledge is a pipe dream, as Eugene O’Neil would say.

One side effect of the current market equilibrium for news is the segmentation of the market for news into the following groups of people:

1. people who don’t read the news,
2. people who the read news to interpret facts to suit agendas i.e. politicians, lobbyists etc, and
3. people who read what they want to believe and are aware of it.

I believe this segmentation exists due to high search costs for the truth.

I personally don’t read the news much at all. If I am interested in a topic I research the field, get input from experts, and make my own inferences. I of course do not engage much in casual conversation. For the majority of citizens who do, news is an invaluable source to relate with others and share experiences of ‘true events’ and common knowledge.

Noted anthropologist Roy Wagner has pointed out the pervasive problem of information which humans grapple with:

“Persuasion, from the days of Aristotle onwards, never works as it is intended to and has its greatest effect on the persuaders … To the extent that the vast, worldwide communications industry, the media, the internet or Web, the ubiquitous ‘sensory’ modes and guidance-circuitries use ‘information’ or ‘communication’ as code words for what is really going on, we live in a world that is actually created by a failure of persuasion.

“This means that we live in a world of information-stealth – the half truths of our lies and the lies of half truth  - or what the CIA, or at least its critics, would call disinformation. I wouldn’t be kidding you, now would I? Disinformation has a far more ambiguous or ambivalent effect than persuasion ever could have and is both more informative and communicative than its buzz-word surrogates. It works on a ‘leakage’ principle, partial truths leaked out in the telling of deliberate lies and deliberate lies leaked in the telling of partial truths. It is motivated by goals and objectives that have nothing directly to do with either belief or conviction on one hand or doubt and cynicism on the other; it offers deniability with both hands. ‘It is either half true,’ as the Viennese aphorist Karl Krauss said of the aphorism or ‘one and a half times true’.

“We are unconvinced (e.g. apathetic) on one hand, and overconvinced on the other, and the middle ground is the most contested of all … Disinformation rules the world, and it does so through ‘deniability’. We know for a fact that every single trade, occupation, and especially profession has its secrets, known to its initiates and unknown to others.” (Wagner, 2000)

The last piece applies to journalists as well.

Potential solutions: a new business model for news

To date innovation in news has been focused on either transforming traditional media into high tech companies, which is unlikely, and the adoption of the market niche strategy of hyperlocal news.

The model of niche and differentiation/specialization has potential but is perplexed with the issue of changing interest and taste. How does one know which hyperlocal news is of interest? With limited time and highly contested attention spans hyperlocal news is a difficult to maintain proposition. That said, given non-profit and community support it can work as a niche solution.

The solution we propose here is targeted to larger well established news players and is a novel approach to the problem.

Traditional print sources like the Washington post etc. have a platform and reputation for checking and ensuring high quality information. The expertise that existing print media companies have can be used to focus on validation and authentication of breaking news stories, as on the internet there is no authority for the validity of news.

One innovative solution to the market of news lemons problem might be for traditional news papers to create reputation-based blogging spaces where stories are tested and validated before publication. This is consistent with the work of Yamagishi who studied the market-for-lemons problem in online trading and found an online reputation system to be a useful solution to the problem (Yamagishi, 2002).

Yamagishi noted that online trading results in “information asymmetry” which “drives the … market into a lemons market” (2002). This is analogous to the problem of news consumption.  Yamagishi’s analysis segments reputation into 2 forms: positive and negative reputation. Yamagishi finds the openness of internet trading precludes negative reputation and  “promotes positive reputation as an effective means for curtailing the lemons problem” (2002).

An important aspect of understanding why negative reputation is not effective on the internet is that it is too easy to switch and create new identities. Thus methods of “inclusion” which validate positive reputation are critical to combating the lemons problem (2002).

Per Yamagishi’s suggestion, existing newspapers with positive brand reputations have value as providers of positive reputation in an open market of internet news.

An enterprise devoted to assuring quality of the news could be a new hybrid form of existence for traditional newspapers in which the goals of the news system is preserved.

The price differential paid to the news companies would be based on their quality of checking and not on slant of the news or sensational quality of it.

Under this model papers would specialize in news domains with expertise and offer objective validation stories. For true objectivity the influence of advertising profit would need to be removed. Perhaps the advertising revenue would accrue to content providers who provided the stories along with advertisements which underwrite the authors. The news intermediaries who select the stories based on quality and validation would be paid only for quality assurance.

A successful example of dealing with ‘cyber lemons’ was that of an ‘online intermediary’ used by China’s largest online consumer-to-consumer trading site, which built a “credit evaluation system to serve as a quality-intermediary and reputation” (Pan, 2005).

In short, several eBays for news, specializing in different news domains, would serve to mitigate the lemons problem.

The newspaper industry must face the disintermediation of its power to dictate the news agenda. The notion that a few, supported by commercial advertising, would decide what was newsworthy was paternalistic and with the disintermediation of this component the responsibility of what to pay attention to falls on society. This issue itself is best tackled through education and the fostering of civic and democratic ideals in youth.

Dhruv Sharma is an independent scholar in the fields of organization behavior, risk management, artificial intelligence, and systems engineering. A graduate of the McIntire School at the University of Virginie, he holds a Masters in Systems Engineering and a Masters in Organizational Development from Marymount University.

This article is dedicated to Emma Brown, a greater writer and journalist and George Akerlof, the great economist.

Citations:

• Akerlof, GA. (1970) The Market for “Lemons”: Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics, Vol. 84, No. 3. (Aug., 1970), pp. 488-500
• Barabási, A.L. (2002) Linked: The New Science of Networks, Perseus, Cambridge
• Brunettia, Aymo & Wederb, Beatrice (2003) A free press is bad news for corruption. Journal of Public Economics 87 (2003) 1801–1824
• Hamilton, James T., (2003), All the News That’s Fit to Sell. Princeton, NJ: Princeton University Press
• Halpern,J.Y. and Moses,Y. (1984). Knowledge and common knowledge in a distributed environment. Journal of the ACM, 37(3):549–587, 1990. A preliminary version appeared in Proc. 3rd ACM Symposium on Principles of Distributed Computing
• Halpern,J.; Fagin, R; Moses,Y. and Vardi,MY (1994). Common knowledge revisited. Theoretical aspects of rationality. Proceedings 6th Conference. Retrieved from http://www.cs.cornell.edu/home/halpern/papers/ck_revisited.pdf
• Schleifer, A. Djankov, S., Mcliesh, C. Menova, T. (2003) WHO OWNS THE MEDIA? Journal of Law and Economics. vol. XLVI
• Shleifer, Andrei & Mullainathan, S. (2005) The Market for News. The American Economic Review
• Taleb, N.N. (2005) “THE OPIATES OF THE MIDDLE CLASSES” Retrieved from http://www.edge.org/3rd_culture/taleb05/taleb05_index.html
• Yamagishi, T. Masafumi, Matsusa. (2002) Improving the Lemons Market with a Reputation System: An Experimental Study of Internet Auctioning. Retrieved from http://joi.ito.com/archives/papers/Yamagishi_ASQ1.pdf Hokkaido University
• Wagner, Roy (2000) “Our Very Own Cargo Cult”. Oceana

More questions from a student that I’m publishing as part of the FAQ section:

1. If News Corp starts charging for news stories, do you think readers would pay or they would just go to different newspapers?

Both, but mostly the latter. Previous experiments with paywalls saw audiences drop between 60 and 97%. And you also have to figure in that a paywall will likely make content invisible to search engines (either directly or indirectly, because no one will link to them which will drop their ranking). Search engines are responsible for a significant proportion of visits (even the Wall Street Journal receives a quarter of its traffic from Google). Still, some people will always pay – the question is: how many?

2. A newspaper website which introduces paid content is very likely to see a decline in number of visitors. How would this affect advertisers and the amount they agree to pay to that website/newspaper?

Advertisers will pay more per user, firstly. Both because they will know more about that user through registration details (and therefore advertising will be more targeted), and also because they know that that user has paid to see content, making them both more engaged and likely to be more affluent.

Of course, there will be fewer of those users, so the challenge is compensating for the loss of quantity through the increase in quality.

3. In your opinion, how could the concept of ‘charging for content’ affect the quality of journalism?

The interesting thing about the recent announcement by the editor of The Times is that he said they wouldn’t charge per article because that would influence their commitment to expensive journalism such as covering Sri Lanka.

An optimist would hope that charging for content would mean that a news organisation would focus more on unique journalism that doesn’t replicate what is available elsewhere for free. Sadly, I don’t think we’ll see that happen, at least in the near future.

It’s worth pointing out that many web operations churn out content because the advertising rates are so low they need to get as many views as possible.

On the flip side, if your paywall is preventing you from attracting enough readers to fund decent journalism, then you save the same problem.

More generally, putting up a paywall means that your journalism is seen – and criticised – by fewer people, which I would argue does present a quality issue. The future of journalism is collaborative, so if you’re putting up barriers you’re not enabling that opportunity to tap into the enormous knowledge in your former audience.

4. Do you think other newspaper publishers would follow News Corp and start charging for content or there would always be “free” places for news?

If News Corp makes it viable, then yes, others will surely follow. Until then I think almost all will sit back and see what happens with News Corp. But there will always be free places for news for a range of reasons: firstly, publicly funded organisations like the BBC and those with a social remit such as The Guardian; secondly, those funded by voluntary or foundation income such as The Bureau of Investigative Journalism and organisations like Amnesty; and finally, passionate citizens and those who simply like to chat.

5. Do you think that ‘charging for content’ is a vital business model which would last for long time?

I think it’s a business model that can work in some circumstances, if managed intelligently. The FT, for example, seems to be making it work, mainly because that content is financially valuable (I’d argue it’s information they’re charging for rather than content) but also because they’ve not cut it off entirely.

But broadly I think it’s the most difficult model because people never paid for ‘content’; they paid for a package and a service that included content. They bought a newspaper, not ‘the news’.

As for its longer term viability, as the means of production and distribution become more widely available, and advertisers themselves become content producers, it’s going to be increasingly difficult, and we’ll see increasing pressure on government to legislate to shore up publishers’ monopolies because of that, I fear.

On 18 September 2009, beloved London evening freesheet thelondonpaper folded. In its wake, London Lite remains.

While the closure is part of a larger effort by owners News International to trim the fat from their portfolio and erect paywalls around profitable titles, it also speaks to the future of freesheets on the web.

Back in April, thelondonpaper re-launched their web site. What was interesting about that was that London Lite had effectively no web site. It still doesn’t — just a ‘e-edition’. Its content is “incorporated” with morning freesheet Metro.co.uk. Looking back, one has to wonder what would have happened if the money hadn’t been sank into the web presence. Would thelondonpaper still be around?

In a comment on a Guardian article about the closure, a now-former londonpaper web developer had the following to say about the redesign:

I’ve been a freelance web developer at thelondonpaper.com for the past two years. After fighting through a huge amount of red tape, we were finally able to relaunch the badly failing launch website in April this year and have doubled our traffic within four months.

When it closed, thelondonpaper had a circulation of about 1.1 million. What we don’t know is the web stats. It’s great they doubled traffic — but what did they double?

The lesson to be learned here may be that general interest freesheets have no business expanding into the web. Other London freesheets that have web sites include Metro and City AM.

Metro qualifies as a “general interest” title, but the competition they face in the mornings is minimal — either pay for a paper, or pick up a free Metro. Also, City AM is extremely niche. There isn’t another free daily business news title that competes with it. The City AM web site isn’t very good, which is possibly intentional so to discourage web visits and drive print readership.

With thelondonpaper, News International wanted it all: a robust free print product and a robust free web site. When your product is free, losing millions every year and is often read just because it’s there, you’ve got to make a choice.

News International chose to close it down, cut their losses and move on. By the end of it, News International was so disconnected from the title they wouldn’t even entertain an offer to buy it. The brand dies with the company’s decision to close the title.

But it still makes me wonder what could have been if thelondonpaper had stayed away from the web. Had they of taken that money and instead sunk it into something else — other than a robust web presence — to set themselves apart, would the paper have survived?

So, students at CUNY have delivered their much-awaited New Business Models for journalism - four in total, that aim to answer “What happens to journalism in a top-25 metro market if a newspaper fades away. Can journalism be sustained? And how?”

The post introducing the models is surprisingly succinct: the real work has gone into 3 spreadsheets which are linked to under each heading (there are only 3 as 2 of the business models have been presented together).

Each model has a separate post which is equally succinct, but invite comments. They are:

• Hyperlocals and the Framework
• New News Organization
• Not-for-Profit News Organization

Much credit goes to CUNY. Although this has the luxury of being funded by the Knight and McCormick Foundations, it is always going to attract much criticism. And I’m not going to shy from being critical: I’m disappointed.

Why? Well, the first 2 (combined) models are pretty old-school, being solely based on advertising. The innovation, it seems, comes from a networked approach to selling that and in production – but I can’t help feeling it overlooks one of the core problems presented by the web: reduced advertising spend over a much larger number of sites where audiences are valued more cheaply. (Note: Matthew Sollars responded: “We’re assuming conservative advertising revenue (and other rev streams). Online only pub with occasional print eds.”)

New News Organisation

Moving onto the New News Organisation, this is more promising. Advertising features largely again, but now there are business-to-consumer and business-to-business services. These include text alerts, events and conferences, themed issues, coupons, iPhone apps and a donation service for watchdog journalism.

What I can’t find is the logic behind these figures – now that would be really interesting. (UPDATE: It seems I’m not the only one; TechCrunch report on the livestream from Jeff Jarvis after the figures were published: “Everyone from Esther Dyson to Michael Kinsley and Marissa Mayer pointed out at the forum, the numbers don’t look very realistic.”)

The other issue, which I wouldn’t have expected CUNY to address, is that their idea of a metro market for this new news organisation is an adult population of 5million. That’s the equivalent of London, so by that reasoning the Evening Standard (which only recently decided to stop claiming to be a national newspaper) is the only newspaper in the UK with an equivalent ‘local’ market. So it’s hard to see how these figures might work in the UK.

Also, I’m somewhat baffled by the projected margins of 29% by year 3 – those are the sorts of margins news organisations enjoyed during the ‘print bubble’© and led to the sort of debts and shareholders that have been just as problematic as advertisers. I’m not sure that those are sustainable and would suggest allocating some of that money into investments that prepare for the next big disruption. (Note: Matthew Sollars responded: “We weren’t aiming at 29% margins, that’s what we believe the market will bear for lean, online news orgs”)

Not-for-profit

Finally, the not-for-profit, based on a combination of foundation support, advertising and corporate support, fundraising and membership, and e-commerce. One thing that stands out for me is that website development costs are static at $150,000 every year – experience suggests this should be heavily increased in the first year, but that’s a small point. 

Again, the really interesting thing is missing: how did they arrive at these figures? (Note the spreadsheets have a number of sheets that drill down into detail – it’s worth spending some time exploring that.)

So, lots of numbers, lots of questions, lots of missing back-story, but in the end this is far more developed than anything I’ve seen in this area. Journalists hate spreadsheets – so here’s a great place to start getting used to them. And let me know what you find.