Clare Cook, Esa Sirkkunen and Pekka Pekkala
The SuBMoJour study has mapped journalistic startups in nine countries. It has created an online database detailing the business models of journalistic startups that are deemed sustainable (www.SuBMoJour.net) and this accompanying narrative report. The study supports research to date that online environments offer the necessary market characteristics for niche journalistic sites and content production. There is a rich and diverse set of media case studies in the database, all with their unique interpretation of serving communities or reportage. The study was carried out across 12 months with a team of international researchers.
Where it was hard to evidence entirely new revenue sources, it was however possible to find new ways in which revenue sources have been combined or reconfigured. Most of the 69 case studies have diversified their income to include more than one revenue source. As such, there is potential innovation in new business models by way of combining revenue sources in new and interesting ways to make their sites profitable in the long term. Some sites, particularly those born to support products, which were very much of the net, have rebundled or recombined revenue streams in relatively innovative ways.
Situating the business models of journalistic startups within national settings allows for a comparison between countries or in-depth understanding of national cultures. We have seen in the country chapters that different media environments – market structures, legislation, media history, and divergent media usage patterns – create a different set of circumstances for journalistic startups. For example, in countries such as France, Germany and Finland startups are facing a landscape dominated by strong legacy media. In the UK, there is a livelier and imaginative startup scene while the USA has buoyancy in the niche sector. This supports the differences in national media systems depicted by Hallin and Mancini, and presented at the outset of this report. It is interesting to notice that in countries that are classified as polarized pluralist with elite oriented press as France or Spain for example, there are startups that are openly opposing the (heavily subsidized) legacy media and making money out of it. Parallel phenomenon took place in the Japanese media after the earthquake in 2011 when several startups started to offer alternative news contradicting the views and interpretations that the legacy media was broadcasting from the catastrophe. This may imply that the elite orientation may leave space for openly adversary journalism that can become commercially successful at least at a fixed point in time. All in all the connections between the systemic level and the startup scene would be a valuable place for more scrutiny.
However there is some evidence to suggest that national features may be evaporating because of globalized media markets. Media managers cite a growing internationalization of the journalistic space online. It is hard to ignore global web-based players such as Google or Facebook dominant in terms of both revenues and usage. Several startups note the need to look internationally for both potential users and competitors. This is particularly of note for those markets such as Spain, where decentralization is high and much competition comes from sites run from beyond national borders. It is apparent that media startups are moving into a new era in which the globally active players can surpass national media easily and quickly.
Most of our cases are not challenging the legacy media, rather supplementing it by serving smaller niche audiences or finding a place in the media ecosystem as suppliers of niche content to bigger media outlets. General or national news are the bread and butter of traditional media and pure players are for the most part not directly competing with legacy media in this field. On the contrary, they are either curating the national news content or commenting on the news from their own angle. Sometimes startups also collaborate with mainstream media providing content and services for bigger news organisations.
One of the main questions that arises from this study is to what extent startups see – and are seen by – legacy media as a friend or foe. There are significant differences in this between participating countries in this research. Startups in the UK find themselves in a very different position to those elsewhere in Western Europe thanks to an “embrace not replace” mentality from larger media organisations. Startups in France, on the reverse, find themselves battling with legacy media outlets for both recognition and users.
Finding a new place in the supply chain of news (Cook 2012) can become an important feature of some pure players. Much academic and economic interest has been paid to the long tail of news outputs. But there is much to be said for the sustainability of sites or teams who can offer a diverse or unique service in the long tail supply chain of news. Sites such as China Files, Citizenside, Tweetminster, Effecinque and Youreporter are thriving as innovators in the supply of content or services despite vastly divergent national settings. Further exploration into this field would be a valid area for further research.
The study supports research to date that online environments offer the necessary market characteristics for niche sites and content production. There is a proliferation of niche interest or small community sites in all of the countries featured in the database, further evidencing the fragmentation of the media landscape. The database shows how pure players are diversifying journalistic content in new areas and finding smaller niche audiences. Most niche interest or hyperlocal sites are relatively limited in their scope and potential for expansion but are carving out sustainable incomes nonetheless. Their expansion is thwarted by a lack of revenue sources as advertising alone is not enough. Many cases in the USA, for example, have generated sustainable revenues around $100 000 to $200 000 – enough for one to three person operations – but rarely more for development or growth. In the UK, the hyperlocal scene is vibrant but suffering from similar problems: it is hard to find funding, make your site visible to the public and keep it sustainable and popular in the long term.
Grassroots product development is an area of increasing interest. Cases within this study support a growing trend for innovative platforms, either within the app economy, multimedia or mobile. Several have designed a business model around content management systems. In the UK, Audioboo has achieved a sizeable market share backed by innovations in form and function, for example. Briggs (2012) is convinced that the innovation comes from outside traditional newsrooms and publishing companies because they suffer from “innovators dilemma”: larger companies spend their time and energy protecting their position instead of expanding into new markets or attempting to innovate with new products (2012 p. 20). The cases in the database support this assumption, offering evidence of opportunities for newcomers, bloggers, laid-off journalists and recent J-school graduates.
Although the study set out to concentrate on such outlets that were doing their content themselves, some aggregators or curators were also included. This is a trend that is likely to grow as new software innovations with efficient algorithms that are able to collect and filter huge amounts of data will continue to be developed. It is also interesting to note the growing presence of citizen journalism sites in the database. Of the nine countries included, several have sustainable sites based mainly on contributions from citizens, or where citizen journalism forms a central part of their unique selling point. Sites such as Citizenside and AgoraVox in France, YouReporter in Italy, or Niconico in Japan may all have different business models but they represent an interesting interpretation of the capacity of online and networked environments for the creation and harnessing of journalistic entities. Particular understanding on the business models of citizen journalism sites such as these would be a worthy focus of future research.
The SuBMoJour study also identifies trends in revenue models beyond borders and cultures. The database can be searched comprehensively according to revenue streams, such as the advertising models, content models, revenue per year, revenue streams, selling products, staff size or content etc. By presenting the commonality in revenue streams, it has been possible to identify trends in order to better shape an understanding of sustainability for media startups. The aim of the project was not to find one single revenue model but rather list a variety of different models and try to find common traits among them and see what kind of business models the journalistic pure players are using.
Of the journalistic startups in the case study, the five most common mechanisms in use for revenue were: advertising, paying for content, selling data and technology, events, freelancing or consulting. New and functioning revenue sources were hard to find: advertising (especially display) seems to be the most common way of creating revenue. Where other revenue sources were identified, this was often in addition to advertising. The majority had diversified to include more than one revenue stream. Where it was hard to evidence entirely new revenue sources, it was however possible to find new ways in which revenue sources have been combined or reconfigured.
In terms of advertising, there were several case studies evidencing each type of banner advertising: cost per view, cost per click, cost per action, fixed term and advertising networks. Some of the most significant sites in the database, in terms of unique user numbers as well as length of time the site has existed, rely on advertising. Despite moves by many startups to diversify their sources of income, advertising was still a primary source of income for many, especially those startups with the largest turnovers. For example out of the 39 cases making over $100 000 in revenue per year, 25 of those generated incomes through advertising and several others were using it as an important source of revenue. The better performing sites in terms of advertising have found ways to triangulate their advertising more effectively, drawing content and advertising closely together.
There is evidence to support Briggs’ notion that niche market values can vary depending on the topic or community, when the potential for advertising is more lucrative. When sites operate close to a specific section of the economy or industry, they seem to benefit from direct sponsorship from companies. This can blur the boundaries between product advertising and journalism. However the decline of the price of advertising, fragmenting audiences and the new ways that search engines or social media sites are able to serve up user data for advertisers are making life hard not just for legacy media but also for the new journalistic startups that are counting on advertising as their main source of revenue. Where sites set either a service or civic dimension to their content, we noted potential for sponsorship.
There were some exceptions to the advertising model, although the general picture is that selling display advertising is the most common way to bring in revenues. Much business and academic interest has been given to revenue models which rely on users paying for content: making content available in exchange for a fee. We found case studies adopting a range of membership, subscription, freemium and paid-for-only models. The factors pertaining to the success of these business models varied, however. Some traded especially on the independence of their journalistic content, where others offered tiered services and platforms.
Several sites in different national settings have carved out a business model selling data and technology. These represented some of the most original startups in that their products appear to be more born of the net rather than on it. They include products or services which incorporate multiple elements of the functionality of networked, social and online spaces and have found revenue streams which may not be new or innovative in form but appear to be so in function. Similarly, their business models are based on traditional revenue models but reconfigured to offer new tiered systems or repackaged revenue streams. Of particular note are sites such as Citizenside, Blottr and Tweetminster.
Many sites have diversified to run events, freelancing and training. Several sites have looked to leverage their own experiences and know-how into a revenue stream. Where this is being done, there was a distinct sense of the need to connect audiences and the editorial product more closely. It was often cited that a deep understanding of the editorial, and the audience, not only facilitated these events but fed back in a cyclical manner. This confirms journalism as a process not a product (Jarvis 2009, Fiore 2010) with events and training being a potential monetization of the concept.
There were several revenue streams that were used rarely or not at all. Only a few outlets used crowdfunding as their source of revenue in our database. Those that did had very unique content agendas which lent themselves to bottom-up financing. Affiliate marketing was deemed insignificant in terms of revenue potential for the most part. Merchandise was used rarely, and only as a complementary revenue stream. Of the case studies in the database, there was no evidence detailed in the interviews of location-based advertising, mobile advertising, newsletter advertising, advertising on Facebook, Twitter or RSS.
Connecting business models and revenue sources
In our findings the business models of the cases fall into two main categories: those which have storytelling-orientated business models and those which rely on a more service-orientated model. The sites whose business model is based around storytelling are still prevalent in our findings. These sites focus on making money from producing original content, news and stories, for audiences. The difference to the mass media model is that in the online world the target audience is smaller. Online journalism relies heavily on niche audiences built around targeted themes such as hobbies, neighborhoods or psychographic tendencies. In this niche journalism there is a tight triangulation between journalistic content and advertised products. Users can come to a travel site because it offers the best collection of last-minute holiday offers not solely because it offers travel journalism about interesting places to travel. Or when sports news is surrounded by betting-site advertisements one begins to perceive a blurring of boundaries on who is advertising for whom.
The other group, service-oriented business models, seems to be growing. This group consists of sites that don’t try to monetize the journalistic content as such. For example citizen journalism sites are more like platforms that curate and moderate citizen-oriented content, or news aggregators compile stories form other outlets. Some startups have specialized in selling technology, information, training or diversifying to redefine what it means to do news. In these cases, journalistic content may play a part in the wider brand creation that helps sell services or sister products.
These two categories are of course based on generalisations, and there are exceptions. However there are interesting global connections to be drawn nonetheless. If we link together the business models, the offerings that the startups are making, the targeted audience and the revenue sources we can see how certain kinds of revenue sources are connected to certain business models. For example if a startup is offering content for a big audience it seems likely that they would rely foremost on the CPM or CPI type of advertising billing. The table illustrates some of these connections.
Role of journalism
There are more profound questions raised from the study. The database and analysis confirm that startups are carving out – and playing – an increasing role in the service of journalism as reportage. What role they have in the accountability of journalism and civic society, however, remains unclear. This is especially true if small, irregular and sporadic companies – relying in many cases on free work – become common. This study proposes that a dynamic number of sites are being created: there is a rich and growing number of digital journalism offerings springing up in the space every day. As such, startups are likely to play an increasingly influential role in the accountability of journalism. As such it is important to appreciate how they can maintain the professional quality and independence needed for accountable journalism. This becomes ever more critical if the accountability of journalism that is often connected to the mainstream media is becoming more fragile as traditional business models become more untenable or fragile. However many of these sites struggle with recognition by states, governments and official legacy institutes. It is increasingly difficult to define what is and isn’t legitimate journalistic content: where are the lines between role, form and function of bloggers, citizens and professional journalism elites? This identity crisis is discussed at length by several academic authors (see for example Singer et al. 2011, Papacharissi 2010).
It is interesting to note that some journalistic startups have managed to harness the ideological niche of independent and fresh “new” media. Their sites set out a specific function to offer some form of true journalism in the sense of investigation, hard news or intellectual thinking. In France, Spain and Japan some of the startups have been able to monetize this ideology specifically, creating a unique selling point offering journalism that is clearly taking a position and giving an alternative to legacy media. The subscription model has gained the most traction in countries where leverage can be wagered on the price of good journalism. Readers seem more willing to pay if the output is unique and challenges the status quo. These questions were not central to the objectives of the study but further exploration would form a valuable addition to critical thinking in this sphere.
Journalist as business person
By creating the SuBMoJour-database the study set out to create a tool of research and development, an open-innovation database, to act as a how-to guide about creating revenue models for Internet outlets. The focus was to help those planning their own startup by giving some lived experience of more established entrepreneurs. By creating and sustaining the database, the project aimed to increase the resources on which media entrepreneurs can draw and thus enhance the collective creativity of journalists around the world.
Studying national markets from the point of view of journalistic startups has exposed a labour market that is flexible, but often badly paid, relying on fixed or short-term contracts and a reliance on atypical work. Most startups were either one-man-band operations or small teams of one to three people. There were exceptions in some of the longer established journalistic sites but even they had much leaner teams than legacy media. It would be interesting to see if the European countries are able to create a different roadmap than the one taken in the USA in terms of the job market. This new way of working in smaller, global teams would justify further mapping and investigation to build on work by for example Deuze (2007) and Briggs (2012).
The method of gathering an extensive range of case studies from nine countries by way of semi-structured interviews has enabled the study to gather insights first-hand into life as a media entrepreneur in the startup scene. Several cite the need for journalists to hone a new skill set which includes business acumen, and think about money making from the start. Journalists wanting to be successful in this field need to think of themselves as much as sales people as content creators which has interesting implications for the future framing of journalistic identity. Relationships with advertisers is also something to consider as startups need to carve out and sometimes lead the way with advertisers in this space. There is also scope to draw on community resources.
To conclude, the study did not find new revenue mechanics or streams but the potential for dynamic innovation in terms of sustainability lies with the way startups connect the existing revenue sources, and other resources, in a new way. Diversifying business models is a key theme to come from the case studies from across the national settings. This supports research by Kaye and Quinn (2010) which notes the problems journalism as a business has faced and how legacy newspaper business model have become obsolete. Their conclusions (Kaye and Quinn 2010,173) hold true to the findings within the SuBMoJour project. This study concurs with their prediction that there is no single, one-size-fits-all solution but each news provider has to rely on a combination of revenue sources in order to grapple with fragmented media markets, social connectivity and the internationalization of news production.
“The problem still left unsolved, however, is how journalism will be funded. Traditional business models and methods have become outdated, but it is not clear what will replace them. Advertising will remain the single most important source of revenue for the news industry… Ultimately, we believe, news organizations will rely on a combination of revenue sources.”
Briggs, M. (2012) Entrepreneurial Journalism: How to Build What’s Next for News. Los Angeles: Sage.
Cook, C. (2012) Sustainable business models and the long tail of supply. (18.5.2012) http://www.clarecookonline.co.uk/2012/05/sustainable-business-models-the-long-tail-of-supply.html
Deuze, M. (2007) Media work. Cambridge: Polity Press.
Fiore, S. (2010) Journalism Is A Process, Not A Product. An Interview With David Cohn From Spot.us. Digimag Issue 51, February 2010. http://www.digicult.it/digimag/issue-051/journalism-is-a-process-not-a-product-an-interview-with-david-cohn-from-spot-us/
Jarvis, J. (2009) Product vs. process journalism: The myth of perfection v. beta culture. Buzz Machine 07.06.2009. http://buzzmachine.com/2009/06/07/processjournalism/
Kaye, J. & Quinn, S. (2010) Funding Journalism in the Digital Age. New York: Peter Lang.
Papacharissi, Z. (ed.) (2010) A Networked Self: Identity, Community and Culture on Social Network Sites. New York: Routledge.
Singer, J. et al (2011) Participatory journalism: guarding open gates at online newspapers. Chichester: Wiley-Blackwell.