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)
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. Continue reading →
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? Continue reading →
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?
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:
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. Continue reading →
DRM always works like this: It never stops people who really want to steal or break the law, but it almost always hinders law abiding, paying customers. Will this extra layer of code eat up CPU cycles and RAM, bring computers to a halt and not even work on some machines? My guess is that this negatively impacts law abiding users. User experiences matter.
“MLB.com’s already wildly successful iPhone app [has] a $10 price tag that sports fans are apparently happy to pay, this could provide a great model for other struggling media to find an important new revenue stream – and not just because it charges for content. “… Any media outlet that can leverage statistics and data visualization as a central part of its coverage would be well served to put those visualizations in an iPhone app and sell it. The iPhone and Android platforms are brilliant for scrolling and zooming through layers of data in ways that print, TV and radio could only dream of. Mobile, touchscreen and hand-held beats a web page on the desktop computer too for data visualization.”
Amen to that.
Whenever I do sessions with people in the industry about online business models I show them The Guardian’s Chalkboard. That for me is a prime candidate for a premium mobile app (assuming there are no licensing issues) – not just because of the data, but because it is social. News orgs take note.
I only recently came across this video of Umair Haque talking about some of the economic changes we’re living through and outlining 5 principles for businesses looking to adapt to those. Well worth watching.
Dwayne Spradlin is CEO of InnoCentive, a company which has been building and managing crowdsourcing platforms since 2001. I asked him what news organisations could learn from InnoCentive’s experiences:
News organizations are at a turning point right now. The problem is that publishers have yet to find an online advertising model that can compensate for the shift from paid to free subscriptions. And when you think about what it means to compensate for this shift, online advertising needs to both fund online content and subsidize traditional print content if both vehicles are to survive.
Publishers have not found this magic formula, which is why you see so many abandoning their print publications. Today, they must innovate and reinvent their businesses for the online world.
We have had the opportunity to observe how established industries (R&D, for example) have been forced to change and adjust to a new reality. News organizations are no different from other industries in that to grow and compete in an increasingly Internet-driven world they need to operate within a fundamentally different model – an interactive model. Continue reading →