By Esa Sirkkunen, Clare Cook and Pekka Pekkala
The media landscape is changing. The stranglehold of mass media over production and dissemination is loosening, and media entrepreneurs are increasingly taking up their place in a fragmented media ecology. New global actors have emerged as the production, consumption and distribution patterns transform (Wunsh-Wincent 2010; Newman 2011). And this new era of entrepreneurialism is not just about Silicon Valley: media entrepreneurs around the world are harnessing new tools, ideas and platforms to flex their muscles and redefine what it means to do journalism.
Change is constant. The old way of making money is broken and most organisations are facing an unstable economic future, especially for those professional and legacy media in most of the Western countries. The rapid transition in media markets, which started to intensify in the USA after 2006, has more recently struck other countries. The fundamental stability of the industry as a lucrative business has been drawn into focus. Even countries like Finland and Japan with high newspaper density are facing a rapid shift in the media economy and production.
There are several common factors being faced everywhere. Firstly, the legacy media business model is struggling to adapt to an online and networked environment. As Picard (2010) states, it should be remembered that journalism has never been a viable product as such. It has always needed some other source of revenue than just the money collected directly from the readers. The mass media model that has been so successful and predominant for more than a century has based itself largely on two revenue sources: small fees collected from the mass audience and selling advertisements to subsidise the production costs. Now this model has been challenged from various sides by new media uses, products, devices and technologies. Media organisations have been, on the whole, slow to adapt to the new unique capabilities of a social and online space, failing to push new lines of business or grapple with the pace of change (Filloux 2012). Many are burdened with legacy operating costs and, faced with the worst recession of the post-war economy, have found it challenging to cope with the rapid business transformation needed to cope with new digital competition.
There has been a lack of innovation in terms of finding – as well as conceiving – new revenue models. It is inevitable that news and ads are moving from printed outlets to Internet and/or mobile platforms. And there are more rivals for the traditional media in the ads business who collect huge user data and can target advertising to smaller segments and user profiles and do this cheaply. Overall, advertising models that supported media offline seem – for the most part – unable to do so online. Most attempts to shift business models online fail as they trade “old media dollars for new media pennies” (Nichols and McChesney 2009). The fundamental trade on scarcity of space cannot hold value in abundant space. Yet advertising remains one of the bedrocks of revenue for most media organisations.
Online and user trends also change online. Audiences have an expectation that digital content, especially breaking news, should be free. There may be more consumers of online and mobile news but fewer of them are prepared to pay for it (Anderson 2009). Readership is more sporadic and irregular than in printed forms and it is still unclear in which cases the subscription model of paying for content works online. News are now socially consumed and distributed since social media platforms have become ever more popular for sharing content.
It is also clear that the so-called pure players (online-only news providers) are growing reach since they have made their production models, content genres and business ideas to work solely online. The new media-rich environment has allowed for experimentation on many different levels. They can trade off a grassroots approach. In this sense, they are ahead of the legacy media outlets who, instead of working from an idea and building up, are still seeking ways to transform, change, or in some cases break down, their business in order to reconfigure something sustainable on the Internet.
Inevitably, there has been much lively discussion about the future of journalism and its business model (see for example Rosenstiel & Jurkowitz 2012, Grueskin et al 2011, Downie & Schudson 2009). However, there has been little research or academic focus to date on the business models for for-profit journalism startups. Significant work has mapped the potential business models available to media businesses and the general challenges facing media managers, see for example Kayne & Quinn (2010). Nicola Bruno and Rasmus Kleis Nielsen (2012) explore media startups in Germany, France and Italy. Briggs focuses on the practice of entrepreneurial journalism (2012). Some studies have attempted to detail the startup scene in national contexts, such as a database of American journalistic startups run by the Columbia Journalism Review (CJR 2012) and Radcliffe’s report on the UK hyperlocal landscape (Radcliffe 2012). There has been limited analysis of the characteristics and consequences of these iterative changes across economies and cultures. Even between America and Europe there are different economic and institutional frameworks with different media habits and demographic profiles (Levy and Nielsen 2010). Studies of this changing landscape have, to date, taken a broad brush approach and focussed on the predominantly gloomy picture being presented of the business model. This has been especially true for the fate of legacy media in Western countries.
Comparing countries and contexts
This study builds on the research to date by mapping 69 case studies of journalistic startups in nine countries around the world. It moves forward not only by mapping journalistic startups with a worldwide perspective but also by focussing primarily on those sites which are sustainable. It sets about delineating the crisis in journalism funding in different economic structures and to look at how ideas and experiences from different countries can be used to inform challenges across borders. It is an international research project in that it compares different countries and contexts trying to better understand how the economy affects journalism in the era of Internet-based consumption and networked action.
It is also unique in that the study’s focus is solely on sustainable business models. The study sought out those business models that work in order to understand how the field is developing in different countries. Contrary to other reports preaching the death of journalism as a sustainable business model, the SuBMoJour project aims to gather working examples of media outlets from different countries that have succeeded in funding their work in a sustainable way operating on the Internet.
The three journalism schools building the research consortium – USC Annenberg in California, University of Tampere in Finland and the Waseda University in Tokyo – set a joint mission to find out how the future of journalism is going to look and in what kind of landscape journalists of the future will work. An international research team was set up to focus on a more elaborated understanding and concepts in this field: some theoretical, some practical. Some of the broad questions underpinning the consortium’s work include: when professional journalists are working more and more as entrepreneurs, what does this mean for journalism as an institution? How should newsrooms be organized in the future? How the accountability function of journalism will survive if we are heading to a more segmented and niche-oriented environment? Or, how should the education of journalists change if the whole media industry is changing?
The SuBMoJour study has allowed for more detailed focus on sustainable journalistic startups internationally. It has created an online database detailing the business models of these journalistic startups from nine countries (http://www.submojour.net) and produced this accompanying narrative report. Both outputs focus on three key research objectives:
1. SuBMoJour frames the business models of journalistic startups within national settings thus allowing for a comparison between countries or in depth understanding of national cultures. The database, and accompanying qualitative study, allows for country by country mapping of journalistic startups. The database can be searched on a country by country basis. The SuBMoJour project draws on an international research team who have been able to bring professional knowledge or expertise about national media markets.
2. The database and this accompanying narrative analysis also identify trends in revenue models. The database tracks the evolutionary change of journalistic business solutions across borders and cultures. The resource 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, trends can be identified thus facilitating a better understanding of sustainability for media startups. See chapter three of this report for summary findings.
3. 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. This is further facilitated by chapter four of the report which brings together advice for entrepreneurs based on the interviews carried out during the project. By creating and sustaining the database, the project aims to increase the resources on which media entrepreneurs can draw and thus enhance the collective creativity of journalists around the world. It acknowledges the growing likelihood for journalists to work alongside, within or indeed create such entities and for all those who are considering a career as a media entrepreneur and wanting to start their own journalistic outlet on the Internet.
Key concepts defined
At its core, the database pulls together sustainable business models. For the purposes of this research, the cases had to have some sort of credible background in order to tally with our definition of sustainability. We have narrowed the concept of sustainability here close to economic profitability because we wanted to find out how journalism finds revenue sources and how it is able to survive and grow in the new environment. We define sustainability not only in its reference to a product being able to maintain itself in whatever context its objectives dictate but also in profitability and the qualification of gross turnovers being greater than net. Our main focus is in commercially profitable and viable cases.
The database contains examples of Internet outlets that are already profitable, or are soon to be such. Many of them have been active for more than five years so there is some tested sustainability. We also used public registers, country-specific knowledge of individual researchers and other sources to identify the most interesting cases. We did not seek for the high end or next generation of startups specifically. This was not the primary focus of the study and there are other forums detailing this genre of activity, for example there is an extensive list of journalistic startups collected from the US (CJR 2012) or a competition for innovative journalistic startups in Finland (Uutisraivaaja 2012). We did include some non-profits that have versatile revenue sources. However, they are more exception than majority. Non-profit journalism may well play an important part in the overall landscape of journalism in the future but this study was primarily concerned with sustainability over time. As such, where these sites were based on time-determined grants, they were not included in the overall database as the risk of the venture ending at the end of the operation period was high and this was not deemed concurrent with sustainability. Instead, we have focussed on those models whose incomes are more versatile and robust.
During the project the researchers found out that the exact figures of, for example, the yearly revenue of the case companies were hard to get. In these cases we have given a rough estimation of the yearly revenue. Attempts were made to check the yearly revenue, staff size and other information about the case companies.
In general it is important to remember that the cases were chosen in order to collect a rich variety of revenue sources and business models, not to represent the field or its revenue models statistically correctly. This means that along with display advertising which is the most common revenue source also for pure players there are several others – and more rare – revenue sources mentioned in the database. The aim of the project was not to find one single revenue model but rather to list a variety of different models and try to find common traits among them.
As such, the methodology for the study is based on semi-structured interviews made in different countries applying a consistent template of questions. In the preliminary stages of the project we drew on unconventional sources to map out different revenue sources, and thus questions. Bloggers had already created their own ecosystem with multiple revenues, as shown in problogger.net chart from October 2010 (fig. 1.2). The questionnaire was designed in part based on these findings, along with some additions, allowing us to qualitatively assess the sustainability of the business models for inclusion in the database.
The questionnaire was structured to allow for consistency of questioning and case study representation across a team of nationally divergent researchers, operating in multiple languages. However, with the SuBMoJour project, the revenue sources were categorized with some freedom and in more detail than the revenue ecosystem detailed by ProBlogger, in order to maximise the inclusion of any revenue streams. For example, some interviewees were happy to talk more freely about wider issues regarding media entrepreneurialism or to offer more detailed understanding of revenue models such as what kind of advertisements sell, do partnerships work and how to sell syndication. This information was included where possible.
The term business model is also understood and operationalized in various ways. In general a particular business model describes the architecture of the value creation, delivery, and capture mechanisms employed by the enterprise. We have used this concept rather broadly covering the features and the value proposition that the outlet is offering, the customer segments for which the content is made, and the finances, for example the cost structure and the revenue sources. The business model is an umbrella term for the overall strategy of the startup to make sustainability happen in the longer term which includes revenue streams, the specific mechanics of how startups generate income.
Journalism is again here understood rather freely. It is important to note that the focus was more on how startups are making money and less about who journalists are. In sourcing the cases, researchers refrained from applying specific definitions or judgements as to what the startups were doing, and the extent to which this was journalistic. However to organise a consistency in terms of gathering the case studies we have represented the term to mean startups engaged in some way in the act of reporting, or presenting content to audiences, either as professional journalists or in collaboration with citizen journalists. This could be in the long tail of journalistic outputs, the space increasingly populated with niche or hyperlocal sites where journalists operate content curation, aggregation, dissemination or original reporting based on topics of interest or locality. Or it could be in the long tail of supply, where journalists have carved out a new way to serve content to mass media or other journalistic outputs. Considerations were given to the definition of journalists as distinct from bloggers, for example, based more on the business model behind such an entity than the inference of journalistic identity bestowed on that person or site.
The report is made up of four main chapters. The next chapter presents an overview of the diversified media landscapes and then presents an empirical representation of the cultural and national settings for the nine countries included in the study, along with a summary of the startups. The country-by-country analysis represents what kind of media environment there is and how the independent journalism has been developing, what kind of content these outlets offer and what kind of business models they have. Chapter three synthesizes the revenue models delineated by the case studies with accompanying examples. Chapter four draws together advice for media entrepreneurs interested in locating themselves in this dynamic sector of the media landscape based on the interviews conducted and current meta-journalistic commentary. Chapter five pulls together the conclusions from the project.
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