News start-ups can’t survive on ads alone

Reuters Institute fellow Rasmus Kleis Nielsen has a great post on the blogs at Reuters warning European journalism start-ups to avoid surviving on advertising alone. He backs up his warning with some stark examples of start-ups who have failed due to meagre revenue they were able to earn on ads:

Advertising-supported online news production did not work for Netzeitung in Germany (which in 2009 shut down its newsroom after nine years of consecutive losses), did not work for Rue89 in France (impressive and innovative as it was, the site never broke even and was bought by the weekly newsmagazine Le Nouvel Observateur in 2011), and is not working for Il Post (widely considered one of the most promising startups in Italy, the site generated revenues of just 35,000 euros in its first year of operation, resulting in an operating loss of more than 150,000 euros out of a total budget of little more than 200,000 euros). Why should we expect it to work for other startups when all these widely praised ventures, and many more besides, failed to pull it off?

Ouch. Nielsen makes the broader point that the journalism start-ups are simply mimicking US models, when the US market is massive both in terms of population and ad spend compared to European markets, but he also makes some excellent points about how a glut of digital content has pushed down ad rates and kept them low. Those low rates aren’t just hitting start-ups but even established players. 

A lot of journalists are trying their hand at start-ups as they leave or are pushed out of the stable of big media. When I left The Guardian two years ago, Suw and I thought about pursuing a journalism start-up. We decided not to do it for several reasons, with the major one being, our start-up dreams were over-taken by media consultancy work. However, we thought long and hard about the revenue streams that would fund our start-up. We knew that ads alone wouldn’t cut it. 

Nielsen suggest that journalism start-ups look to how other non-content start-ups are diversifying their money mix by adding “digital subscriptions, donations, consultancy services, live events, event planning and e-commerce”. Honestly, I think for certain types of content, you could even mix consulting and content, although I know from personal experience that gets sticky. Journalism quickly meets the requirements of client confidentiality.

Regardless, if you’re launching a journalism start-up, make sure your content dreams are leavened with some thoughts of business reality. If you don’t have business planning experience, get some. Freelancers have always had to learn about marketing and the business side of journalism. It might feel a little weird at first. Just remember, you’re not working for the Man. You’re fighting for your own survival. 

Peering into the future of newspapers at the NYTimes R&D lab

New York Times R&D Group: Newspaper 2.0 from Nieman Journalism Lab on Vimeo.

Suw and I visited the New York Times R&D lab last August when we were in New York. It was an impromptu visit. A friend, Jason Brush, at Schematic put us in touch with Nick Bilton after seeing that we were in New York from our Twitter status updates. (Yet another example of how useful Twitter is.) Nick was kind enough to work around our hectic schedule, and Suw and I were both happy to be able to fit the visit in before we had to dash for the airport. Nick showed us his table of devices including the One Laptop per Child, various e-book readers and the odd netbook.


photo by Scott Beale / Laughing Squid

The Nieman Journalism Lab at Harvard University is running an excellent series of interviews with Nick. It’s definitely worth watching the videos or reading the transcripts.

Nick not only showed us their collection of devices to show people at the Times how their audience might view their site, listen to their podcasts and view their video, he also showed us some of their projects. One that really impressed us was a print-on-demand customised version of the newspaper. However, this isn’t your father’s PDF to print. No, this was much more advanced and showed elements of effortless personalisation married to a future-looking mobile strategy. The system works by users having a card, similar to the Oyster cards used on the London Underground, that is linked to their account at the NYTimes. Based on the stories that you read on the site, it knows what your interests are, adding personalisation without the cumbersome box-ticking that has led most first generation customisation services to fail. Research shows that people say that want customised services, but they will rarely go through the hoops of ticking boxes to tell news sites what they want to read. This is not only customisation, but it also changes with users’ habits instead of being a static set of preferences. After the user swipes the card, they are presented with the top three sections of the site based on their reading habits. They can choose a version with the top story in full from each of those sections or a digest of those sections, similar to an RSS feed view. However, after each story, there is also a QR code or semacode. Using your mobile phone camera, these QR codes are translated to URLs and take you to the full story using the web browser on your phone.
Nick also showed us something that the R&D Team first came up with at a Hack Day in London, which is the idea of content following a reader throughout the day. They created a system with some of the ideas called, which is actually a working site if you want to have a play.

The thinking behind is actually realising that as we go through our days we actually shift from device to device, from form factor to form factor. Content that might be relevant or accessible on one platform might not be appropriate on another platform. The reader might begin reading a story on their computer before going to work and then want to continue reading that story on their mobile phone on their train ride to work. They might not want to watch a video associated with that story until they can come home. They can mark the video for viewing at home on their flat screen TV at home. This is the kind of user-centered thinking necessary to adapt to news consumption as it is instead of asking readers to modify their behaviour to our platforms and business models.

Nick and the rest of the team at the New York Times R&D lab are doing some great work that I hope drives thinking in the rest of the industry. I think it’s also an opportunity for cross-disciplinary academic research. How do we surround our audience with our content, delivering relevant information to the relevant devices as they move through their day? That’s a service I’d pay for.

What content will people pay for?

Four years ago, I went to the Web+10 conference at the Poynter Institute in Florida. It was an honour to meet some of the pioneers in digital journalism, many of whom I had corresponded with online for years but never had the opportunity to meet. It was 2005, long before the depth of the crisis in newspapers was obvious to all, but everyone was asking the same question: How do we pay for professional journalism? Contrary to popular belief in the industry, newspaper websites were profitable, some quite profitable, but those profits could not sustain the size of newsroom that big-city metros in the US had at the time, newsrooms that dwarfed the size of the British national newspapers.

The crisis has been coming for years as newspapers have seen circulation declines for decades, but the Great Recession is amplifying pressures on newspapers. You read blog posts and articles from journalists and editors who say that the public should pay, must pay for ‘quality journalism’. We hear arguments that they will pay as content becomes scarce with the decline in the number of journalists and the number of newspapers. Leonard Witt, the Robert D. Fowler Distinguished Chair in Communication at Kennesaw State University in the US, says in this post:

So will people pay for high quality journalism and information? I do think so because I know one person intimately who already has. And trust me that person is very tight with his money.

Keep in mind, I am saying high quality news and information. Run of the mill junk is a worthless commodity. High quality journalism is scarce and will be more so in the future, and that’s when everyone who loves great journalism will begin to pay.

But I tend to agree with David Kohn, of, who says this in the comments:

I think this is right on Lenn – as you know, I tend to agree with you. But more and more I’m realizing that certain types of news and information that journalists think is priceless have less value than others.

David elaborates on his point back on his blog citing lessons he’s learned from various citizen journalism and crowd-sourced projects.

Increasingly I’m of the belief that the newspaper industry is relying far too much on its values in its estimates of what readers value enough to pay for. We need some solid facts and figures on what people will pay for. I might be hoping for concrete data that just doesn’t exist right now, but I think we as journalists have to move from asserting what people should pay for and do a little reporting and research to find out what people will pay for and the types of services that might be able to subsidise professional journalism.

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