Online Revenue Business Model Has Changed Little Since 1996

Newspaper Research Journal, Spring 2007 by Mensing, Donica

Despite the success of Apple iTunes and other services that are experimenting with micropayments and pay-per-use content models, online news managers did not provide much support or anticipate much growth in this revenue source for online newspapers. Given the success this model is having in other Internet sectors, it would be reasonable to encourage experimentation and investigation of alternative models, such as micropayments in the online news economy.35

Judging from the answers to the open-ended question about promising revenue strategies, few of the 2005 respondents are thinking about content as a path to profitability. Yet attention to content is one strategy that many analysts argue could benefit online news sites in the long term.36 Online newspapers are in an ideal position to conduct research on what content is attractive to readers and why, as well as to consider what content is needed by a community and how to provide it. Research on the placement and timing of content, types of headlines, types of enriched content and multimedia elements could be carried out to understand better what attracts and engages users. These types of usability studies could do much to educate news providers about the evolution of the use and presentation of news. This does not mean that reporters and editors should respond passively to the market. Instead, they should understand how to use content research to ensure that news is conceived, developed, shared and published in ways that respond to the genuine needs and interests of citizens. Focusing exclusively on advertising as the primary source of revenue, without working creatively to consider the quality, organization, interactivity or type of information and experience offered to users, violates many of the lessons learned by successful online content services.37

By relying on traditional advertising as a primary revenue strategy, online news managers are forced to design online sites that make advertising a primary activity on their pages. Failing to consider how the basic purpose of newspapers is transferred to an online environment minimizes the value of the overall product. Now, more than ever, news managers have to articulate clearly the purpose of their work. The online environment forces organizations to focus on what they offer to users. In the formerly monopolistic environment of many newspapers, the purpose of the news organization was apparent and unchallenged. In the highly competitive online environment, this purpose is far less clear. This fact represents both a challenge and an opportunity for newspaper journalists and managers.

No simple model has been found to assure profitability for the online newspaper industry. It may be that adaptability to local conditions and the development of multiple revenue streams site-by-site will be the most promising path to profitability. However, based on the data in these two surveys, there is little evidence that the industry is addressing this problem imaginatively or comprehensively, given the scale of change in the market economy in which newspapers operate. Observing the small size of most online newspaper staffs, the tentativeness of news managers to articulate promising revenue strategies and the significant reliance on classified advertising, the industry as a whole does not appear to be actively investing in the type of long-term research and development necessary to ensure survival in the new digital economy.