Business on the internet is very different from business in the physical world. Shopping at Amazon is a separate experience from shopping at Barnes and Noble.
So why should newspapers and magazines expect to extend the same business model to a new environment?
The good news is that the bigger media organizations don’t have to figure it out themselves. A business model is a business model, and there are literally thousands of small, Venture Capital-funded internet companies that are searching for a strategy that works.
All that the Washington Post has to do is pay attention to what these startups discover. A number of companies have already found ways to run a profitable business online.
What’s the key thread in their solutions? Charge people money.
The Long Tail
You may have read Chirs Anderson’s latest opus in Wired, Free. Here’s where it’s misleading: “free” is only a reasonable price point if the cost of producing the good so low, it might as well be free to make. And for journalism, that is emphatically not true.
What has dropped to nearly zero is publishing. In other words, once the content has been produced, “putting it out there” has become really cheap. Unfortunately, “putting it out there” was never the bulk of the cost of running a newspaper.
But this is all academic now. The New York Times‘ failed TimesSelect initiative is proof enough that charging people for access to premium news online is not really a viable path. This business model is called freemium, and we can cross it off the list for content, although I’d keep it mind for other services.
What else have people discovered?
Fred Wilson, a prominent tech Venture Capitalist from New York, put together a list of online business models this past January based on what Chris Anderson put together in his research for the long tail.
There are a lot of good ideas on that list, and a lot of them would be well worth considering as ways for newspapers to make money, especially:
- Streaming video advertising – Newspapers should look into doing more video work where it is appropriate. I know that historically the stats have not been there to support this, but (short) video is fast growing and unlike text, embedded video takes the ad roll with it.
- API fees (you have an API, right?) – Building an API for companies that want to tap into your newspaper database would be a great business to business revenue solution, and it could be a great way to outsource development on new platforms (Kindle, iPhone, etc); let someone else pay you to put your content in more places.
- Live Events (this is a big one) – We’re in the event business at the Parnassus Group, and I can tell you that there is no greater advantage for putting on an event than owning or partnering with a media vehicle. Get lots of people in one place. Charge sponsors. Make money. Ideal for newspapers.