Business opportunities in the newspaper industry: Let’s work it out
No month seems to pass nowadays in which some newspaper doesn’t declare bankruptcy or gives notice about stopping its presses. Newspapers seem to be in a fairly bad shape, generally speaking (there seems to be some difference between the US and Europe on that matter, the reasons for which I’ve not yet wrapped my head around).
There have been a lot of missives recently, discussing the possible reasons for the decline of newspapers. Although I do think newspapers have to share some blame for their too often faulty and misleading reporting, there seem to be a lot of factors at work. The time may just be ripe for some disruption of the business.
Which is why I gave business opportunities in this apparant moment of industry disruption some thought. I may as well share it with you. After having read a lot about the future of news and journalism, I am no doomsayer. I believe societies need people or mechanisms for getting important thoughts some outreach; and I believe societies will find ways to accomplish that. It may just not be the newspapers’ obligation anymore as they have failed “us” too often (while also providing splendid work on occasion).
Which niche would I expand into if I were to open up a news/journalism business right now?
Where are the opportunities?
- Hyperlocal news supported by hyperlocal advertising: Knowing the latest developments from your original neighbourhood provide you with immediate value. You know what’s happening, where to go, etc. And this is one of the very moments where you are actively open to advertisement: You even want to know which local shop has some sales going on, where you can find the cheapest xy etc. This model provides obvious value to its users. There are several problems: Local shops may not know about the internet yet. You have to have some sales force convincing mom-and-pop stores to advertise at your site. Your margins may therefore be very low, if you can get this done profitably at all. The model doesn’t scale that well as the sales force is probably needed everywhere; you have to have people for quality checks who know the neighbourhood etc. High cost basis, unknown revenue potential. This is an aggregator business, so you have to be good at it technically. You need good filtering, need to know what kind of local news are wanted. Last but not leas: it’s already being done. But fear not, there are a lot of neighbourhoods in the world..
- Paper-on-demand: People define what they are interested in, you provide a customized online paper to them. Sounds easy in theory, but is very hard to actually accomplish. First, online readability: no one has yet solved the problem that reading on a screen just doesn’t enable you to scan as many headlines and articles as with an actual newspaper. Bigger screens probably are only part of a solution; getting closer to Google Reader designwise (lots of scrolling through news then) could enhance efficiency. The second issue is a technical one: Your system has to be really good at automatically tagging stories into their appropriate categories. This model all depends on getting the customization right. Customers may not even know what they want and may not be satisfied with your selection. Human filtering and tagging is probably too expensive at first, but may be feasible as soon as the model scales. And getting to know your customer (so that you can present him with those stories he will definitely be interested in) will take time.. time in which he probably will not pay yet as your service remains mediocre at best.
- Marketplace for topic-on-demand: This may be one of the more experimental ideas. As journalists get fired, some will probably set themselves up as writers-for-hire. And some people or organisations may be willing to pay someone to research or investigate their topics. If this ever scales, there might be an opportunity in being the middleman.
- Citizen journalism, supported by professionals (pro-am journalism?): The OffTheBus initiative (lots of volunteer reports coordinated by a few professionals) worked wonderfully when there is an event of such enourmous importance as the US Election ‘08. There are a lot of people out there who would just love to feel important by contributing their view of any topic. If you can find a way to successfully engage enough of them on a regular basis for free, you might be able to pay for the staff required to edit their on-the-ground reporting and even establish a community around it. The path to monetization remains unclear though; you could argue a case to combine this with a hyperlocal portal, so people could report about their local community (and others could read about it) which would intensify their usage of the site (which means hyperlocal advertising might earn you some money).
Where I definitely would not want to wander into:
- Micropayments. There are two issues at work here, I suppose. First of all, micropayments have not been solved as of yet. iTunes works, sure. But I don’t know of any website – anything really which does not use proprietary software – which has solved the problems and hassles of micropayments: How to get people to shell out .99 $ or € for something of dubious value? How to safely process the payment in the least intrusive way? Someone would need to invent much better ways of paying across a variety of websites – in other words: one-click-charging all over the web, how to do that securely? Secondly, news analysis and even original reporting are not scarce. It’s inherently difficult to imagine a way in which journalism can be marketed so that people are willing to pay .99 or even more for a single piece of it, when they could just as well surf elsewhere and probably get comparable quality.
- Paywalls are most probably dead (on arrival, depending on whether they will be tinkered with again). It just doesn’t fit with the internet as an open-source/free/etc. medium. Scarcity of news analysis or reporting just ain’t gonna happen. People will go elsewhere. The only possible way I see for this is to target highly specialized niche audiences whom you can provide value to by accurate, fast and well-done journalism (e.g. finance professionals, obviously, i.e. people who can use your journalism to further their goals, not just to inform themselves).
As you see, some niche might just work and spit out some profitable businesses. And fear not for the future of quality journalism. As quality content is considered, it has always found a way to get published and that will not change by way of the internet – which is just a different medium for providing you with information.
