TRYING TO MAKE A PROFITDec. 7, 2009

ANNOUNCEMENTS Dec. 9—Begin website presentations

Any questions?

Online teacher evaluations Peer evaluations available online In-class evaluations of student websites

FREE THOUGHTS?

Is Anderson confusing two things: distribution costs and storage costs converging toward free or too cheap to meter and the cost of content?

The cost of creating content hasn’t halved every 18 months unless you count blogging.

It has stayed constant or fluctuated depending on supply and demand. Right now, we have too much supply and too little demand?

FREE THOUGHTS?

On the one hand, information wants to be expensive, because it’s so valuable. The right information in the right places just changes our life. On the other hand, information wants to be free, because the cost of getting it out is lower and lower all the time. So you have these two fighting against each other.

Abundant information wants to be free. Scarce information wants to be expensive.

Where are the news media when it comes to the five stages of getting to “free?”

FREE THOUGHTS

Denial Anger Bargaining Depression Acceptance

Maybe all five at once.

WILL FREE LEAD TO A FREE WORLD?

TRADITIONAL NON-NET MODELS

Newspapers and magazines supported through advertising and subscriptions that make up 80 percent of their revenues

Television supported through advertising Radio supported through advertising Public radio and television supported through

government funding, viewer funding, and non-profit funding

EARLY NET JOURNALISM MODELS

No funding model for news websites. They were “shovelware” sites that offered no more than the news that was already in print and broadcast

Websites were initially expensive to produce. Media got caught up in the dot.com craze—IPOs were planned for the likes of NYTimes.com and others—to provide the funding

Two newsrooms were generally created, adding to cost and confusion.

Today, we are still paying the price for this mistake in media convergence (or lack thereof)

MOVING TOWARD A NEW FUNDING MODEL Problem is that the early ‘Net models were not good—

advertisers weren’t willing to pay high prices for ‘Net advertising—and they still aren’t.

In fact, companies are shifting to other forms of online advertising: branded websites, social networking.

While we have become better at creating multimedia journalism from the days of “shovelware,” we haven’t spent as much time creating new funding model.

We haven’t explored with advertisers what content draws consumers—and what doesn’t.

Can we make it for the next couple of years as we work out how to pay for journalism online?

How do we “monetize content?”

MAKING A PROFIT—SOME IDEAS

  The Rich Uncle Model – Media moguls decide to fund through acquisition websites that look a bit like journalism—but aren’t really. They are more facilitators of multimedia journalism.

Example: Rupert Murdoch buys MySpace for $580 MM and Google acquired YouTube for $1.65 billion. Yet neither have truly figured out how to monetize the content or their audience.

Example: Huffington Post—Arianna and friends and venture capital

Example: Sharesleuth and Mark Cuban

RICH UNCLE SAM

The federal government continues to consider how to help the ailing newspaper industry—just as it helped autos and finance.

FTC is considering changing how newspapers are regulated News-gathering organizations could be exempt

from anti-trust laws—which could mean that all newspapers could move to a paid model on the same day without being charged with violation of anti-trust?

Could grant subsidies or ease tax burden as well.

TIP JAR

The Tip Jar Model – Many content sites and the famed release of Radiohead’s “In Rainbows” album asked consumers to pay however much they thought the content was worth. Some bloggers also subscribe to this “tip jar” method. While there are some people making money, most aren’t.

Example: Chris Albritton funded a reporting trip to Iraq to cover the war with $15,000 in donations from his readers

NEWS AGGREGATORS

Aggregators like the Huffington Post, Fark.com Websites are far less expensive to create—so

the new ‘Net journalism models don’t have the same overhead as the old model.

So they can be “free.” Content, however, still has to come from

somewhere, even as newsrooms are cutting staff…so how do we pay for journalism so that we can still aggregate it

Big news: News Corp’s Murdoch wants to block Google from searching its sites and will only allow Microsoft’s Bing to search (and pay)

MORE NEWS ON AGGREGATORS

Fark.com—which aggregates user-generated links—signs a deal with USA Today in which it will sponsor Fark’s Tech aggregation section and share ad revenue

MSNBC buys BNO—a Twitter service that nearly 1.5 million people receive streams of news updates on their mobiles or the Web. (Started by a Dutch teenager)

CROWDFUNDING

Crowdfunding Model—like Obama’s campaign or Radiohead…but for journalism

Example: Spot.us—created by journalist DigiDave and NYU. The rules: Anyone can come up with a "Tip" or story idea they'd like to see

covered. People can "pledge" money toward that story. Freelance journalists can sign up to cover those story ideas or pitch

their own stories, attaching a cost to writing the story. Once a story has a journalist attached to it, people can donate

money to help fund it (but no one can give more than 20% of the total cost of the story).

When the story has full funding, the journalist writes the story, and a fact-checker is paid 10% of the funding to edit and check it.

Before the story is posted, news organizations have a chance to get exclusive rights to the story by paying the full cost, which is given back to the donors. Otherwise, the story is posted online and any news organization can run the story for free.

AD-SUPPORTED

The Ad-Supported Model (big media). To date, the most successful content models are those that are free, but advertising supported with only a few still offering content for a fee.

Example: New York Times, CNN, Washington Post

AD-SUPPORTED

The Ad-Supported Model (small media)—Google AdSense and other advertising aggregate models are reliable sources of revenue—it’s just not very much revenue.

Example: Most news sites have Google AdSense, but it isn’t their main source of revenue

SUBSCRIPTION AND SERVICES

The Subscription / Services Model – WSJ was one of the first out of the gate with a true subscription-based model. It remains one of the few subscription models that still works, although Murdoch has talked about making the site free. Still it also added advertising to support its revenue stream.

Services may include job listings or content that is aggregated for use by a specific industry.

Example: www.wsj.com, www.bondbuyer.com

AD NETWORKS

The Ad Network Model – A derivative of the ad-supported model, but in this case publishers participate in an ad network and receive a share the revenue for ads sold on their sites. In the blog world, look at Weblogs, Inc. and Gawker Media as the pioneering models. Outside of the blog world, there are literally hundreds of ad networks working off of a revenue share based on either impressions or clicks.

Example: www.celinabean.com, part of the Martha Stewart ad network that aggregates blogs and websites

Example: www.voiceofsandiego.org--and other city sites that may be able to band together to create a network that advertisers would want to buy into—when they wouldn’t buy one city.

AFFILIATE

   The Affiliate Marketing Model – Marrying your content with ads for 3rd party products and services, publishers are paid a fixed commission (usually in the 5-15% range) based on sales directly resulting from clicks on the publishers’ site.

Example: Amazon’s and Barnes & Noble affiliate programs

NON-PROFIT

Non-profit/public service model—taken from the world of public television and public radio

Examples: www.propublica.org, www.michiganmessenger.org.

Foundation money to support journalism with the next step being traditional media using that journalism in their publications—either free or paid—to raise awareness levels.

SPLOGGING?

Outside of journalism—but still in the realm of content, brand marketers who create their own social networking sites. P&G’s www.beinggirl.com.

Sometimes referred to as “splogging,” bloggers who are paid by companies to create content.

 

CELEBRITY CONTENT?

Individuals who have managed to monetize their content and launch careers—in celebrity—not necessarily journalism…but what can we learn from Obama Girl, Lonely Girl 15, and the dancing guy from The Evolution of Dance? The creation of “web celebs.” Why not “web journalists?” 

NEW RESEARCH…TOWARD A FUTURE MODEL

New research shows that you may actually be willing to pay for news on personal computers and especially on mobile devices But it has to be “cheap and easy” in the words of

Steve Brill, founder of Journalism Online In the U.S., Boston Consulting Group’s research

shows people would pay $3 a month for news especially if it falls into these categories. Unique, local news Specialized news Timely, especially if there were news alert service Accessible on any device And news that isn’t available for free anywhere else

NEW RESEARCH: DIGITAL YOUTH RESEARCH REPORT The net is useful. Despite what parents might think,

teens' time online is not wasted. It is practice for new social and creative skills.

Motivation. Online media use is either friend-driven ("hanging out") or interest-driven ("geeking out") -- or both.

Safety. Online friendships -- mostly are extensions of real-world friendships. (That is, not with scary unknown people.)

Self-directed learning is peer-to-peer. Status is conferred by expertise, not age. (Adults do not get more respect merely for being adults.)

They know it's public. Teens do understand that their online life is public and creates a permanent record.

Expectations of ubiquity. Internet use permeates teens' days. They expect to be "always on" via desktops, laptops, mobile devices or phones.

DIGITAL YOUTH RESEARCH PROJECT

Community is king. Teens live their online lives within communities, not alone.

Remix culture. Teens respond to information and culture by appropriating, sampling and remixing it. They then look to their communities for reaction.

Multimedia rules. Teens expect that information will be delivered by multimedia. They expect self-taught multimedia expertise among each other, including video and audio, graphic design and coding.

SO WHAT’S NEXT: WILL CONTENT STAY FREE?

Clay Shirky “Revolutions Get Worse First.” Demand Studios—starts from the other side

—determining how much revenue the multimedia piece will generate (using algorithms on search words and phrases) and then determines whether to create the work.

Maggwire—buy pieces of content from many different magazines along the iTunes model.

FLYP—a new multimedia online “magazine” run by

FROM POYNTER’S “WHO WILL PAY FOR THE NEWS?”

Collaborate and partner—Yahoo creates an ad marketplace that brings together publishers with advertisers

Harness experimentation—The Knight News Challenge Target and customize Promote the value of news—why should we care

anyway? If people care, they may pay? Get over being “jilted by your audience.”

Quote: Mike Orren of Pegasus News said at the event, "Stop thinking about how to regain what was 'lost' and focus on what can be gained. Play offense more than defense. Be opportunistic.“