Online Revenue Business Model Has Changed Little Since 1996

Newspaper Research Journal, Spring 2007 by Mensing, Donica

RQ4: Did the strategies online news managers think will be most profitable to pursue for their online products change between 1996 and 2005?

In both the 1996 and 2005 surveys, respondents were asked an open-ended question about the strategies they thought would be the most promising for online newspaper sites. The question generated a wide variety of responses in both years, revealing some interesting shifts in emphasis between the two surveys. [See Table 3] While the number of respondents emphasizing advertising and paid subscriptions grew slightly between 1996 and 2005, the number of respondents who described audience-centered, or content-centered strategies declined steeply, from 24 percent of all comments in 1996 to 8 percent of all comments in 2005. The number of respondents mentioning customization services and transaction fees did grow, from 11 percent of all comments to 18 percent of all comments in 2005, indicating more awareness of the potential for alternative revenue sources to emerge online. The other surprising result was the number of respondents in 2005 (13 percent) who said they "didn't know" what strategies would be most promising. Respondents in 2005 also avoided all mention of partnerships or alliances, a topic that emerged as a minor theme in 1996.

The 2005 survey asked respondents to rate various revenue sources on a five-point scale from Unimportant (1) to Very Important (5). The responses show clearly that advertising is considered the most important way to make money on online newspaper sites. [See Table 4] Classified advertising was considered very important by almost 80 percent of the respondents, with 58 percent identifying display advertising as very important. Respondents were extremely divided on the importance of subscriptions, with 34 percent rating subscription revenue unimportant and 26 percent considering it very important. Nearly half of all respondents considered subscriptions somewhat or very important, while 40 percent considered them unimportant or somewhat unimportant. Revenue from archives was considered somewhat or very important by 35 percent of the respondents, slightly less than the number who considered archives unimportant to their current business model. All other revenue sources were considered much less important. Other sources" were considered more important than were transaction fees, customized services or Internet access fees.

Discussion

This comparison of the revenue sources of online newspapers between 1996 and 2005 shows that modest changes have occurred in the past nine years. The mix of revenue sources has changed somewhat, with revenue from Internet access fees nearly disappearing by 2005 after providing significant revenue in 1996. Advertising has become a much more important source of revenue; nearly half of all respondents earned at least half of their total revenue from classified advertising in 2005. Revenue from subscription fees is still very low but more sites were charging for some content in 2005 than in 1996, and more sites were requiring registration to access some or all content. Micropayments are not considered a viable or important potential source of revenue by any but a handful of news managers. "Other" sources of revenue beside the primary ones identified in the survey are becoming more important, with nearly two-thirds of all sites earning some revenue from alternative sources. Overall, sites earned an average of 18 percent of total revenue from sources other than advertising, subscriptions and archives.