Making small digital news providers sustainable has become the holy grail of journalists and the search continues for workable business models and revenue streams.
Advertising may produce some revenue, but it will never generate sufficient resources to support digital journalism because so little advertising money is available for sites with small audiences. About three-quarters of all online advertising goes to the top 10 sites and Google, Facebook, Microsoft, and Yahoo account for about 60 percent of all online revenue. This leaves very little advertising expenditures to be contested among all other players--of which news providers are only a small fraction. At the same time, the prices paid for online advertising are falling because there are so many sites offering advertising, the advertising inventory is nearly infinite, and audiences continue fragmenting.
This means the majority of funding for start-up digital journalism must come from elsewhere and online news sites—especially start-ups—are having mixed success trying to construct multiple revenue streams from philanthropy, memberships, events, consulting services, and payment systems. Both large legacy news organizations that dominate provision of news in the digital space and free automated aggregators are hampering efforts of small sites to develop audiences. The primary successes that can be observed have been for start-ups carrying out special forms of journalism or concentrating on highly specific topics.
The answer to sustainability may not lie in the business creation and business operational approach. The key to making emergent digital news providers sustainable may lie in the 18th and 19th century approaches to journalism, in which journalism was an avocation and not a profession (or at least only a part-time profession).
If one reviews the history of newspaper start-ups around the world, one finds that the bases of journalistic compensation were not journalism itself. It many cases it was funded by public employment—serving as postmasters, teachers, or other civil servants—or by operating commercial endeavours—such as printing firms, taverns, and retail shops (Even brothels funded the costs of newspapers in some towns in the Western U.S. during the nineteenth century).
The current inability to effectively fund small-scale digital journalism means that we all need to be thinking more broadly about how we can support the functions and people involved in them. If the past is a guide, we may need to return to provision of local journalism as community activism, political activity, or business support service—all of which played significant roles in establishment of news provision in years past.
The term pluralism is regularly used in critiques of media and in arguments for public intervention. It is employed so loosely, however, that it allows varied interpretations to be attached and this makes it highly challenging to turn general support for the concept into specific policy. Much of the lack of clarity is the consequence of indefiniteness of the term and because it is used as a proxy for more involved concepts.
The term is derived from “plural”, an indistinct quantitative concept indicating the existence of more than a single thing and plurality itself merely indicates a state of being numerous. This alone allows the term plurality to be used in various ways when applied to media.
For some it means a plurality of media outlets. This is indicated by having multiple types of media and multiple units of each media and the existence of a range of print, broadcast, satellite, and Internet content providers can represent pluralism. For other observers pluralism means plurality in ownership, that is, a range of owners and different types of ownership. For others it is indicated by the existence of public service as well as private commercial firms so some provision is made by an organisation(s) without direct individual economic self-interest(s).
The amount of media, its ownership, and its operation are not in themselves the objects of concern about pluralism, however, and these usages are merely shorthand semantic devices that indicate a collection of political, economic, and cultural concepts and ideologies. Because that collection is not universally agreed, the term pluralism is disparately employed.
The term encompasses fundamental concepts in liberal democratic media ideology and neo-Marxist critiques of media. It incorporates ideas of the benefits of free flow of information, ideas and opinions and the value of a variety in artistic and cultural expression. It recognizes the amount of content that can be offered by any one provider is limited by temporal and spatial factors. It accepts that the abilities of individuals to obtain and attend to content are affected by monetary and temporal limitations. It recognizes that operation of media is accompanied by political and economic benefits such as access, privilege, influence, and power and that those can be used for personal advantage and interests.
Those who accept these concepts underlying the term pluralism differ widely about the proper means for its pursuit, however. They have divergent beliefs about the roles of the state and the market and differ widely about whether policy should promote beneficial outcomes through regulation or incentives and whether—and the extent to which—non-market provision of content is desirable.
The difficulty of achieving the ultimate objectives is further complicated by the fact that public policies promoting pluralism tend of focus on the overt evidences of plurality in media outlets, media ownership, and media operation. Although multiplicity of media outlets, ownership and operation increase the possibility of achieving the objectives of pluralism, they do not guarantee because they are not necessary and sufficient conditions for its existence. Thus ‘external pluralism’ is sometimes not enough. This has led many to advocate for ‘internal pluralism,’ meaning that within a single broadcasters or publisher as variety of content and perspectives are provided. The provision of internal pluralism is typically used to justify public service broadcasting and narrow internal pluralism is a typical critique of private media.
The contemporary world creates lower barriers to participation in communication by making production easier and shifting distribution away from technologies that limited the number of providers and content available—the fundamental rationale for concern about pluralism. In the digital media world, the fundamental challenge involving pluralism is not limitations on producing content, expressing divergent ideas and opinions, or access to distribution systems. The primary challenge is the ability to effectively reach audiences.
In this environment promoting pluralism must focuses on reducing control over what flows through new digital distribution systems so dominant owners of production and distribution systems are not able to marginalize alternative perspectives and make them difficult to locate. And the fundamental content and attention problem remains.
Although digital media provide many more opportunity to be heard, the issue today is not ‘share of voice’, but ‘share of ear’. We need to seek ways to promote knowledge about alternative content and to make it more readily accessible. Otherwise the concentration of where the audience goes—in terms of aggregators and sites—is every bit as damaging to pluralism as limitations on spectrum and concentration of ownership. This is especially true by the Internet service providers, content aggregators, search engines, and video on demand services that pursue their own interests through in-transparent practices and algorithms that skew the access to and distribution of information, even when it is ‘personalized’ by individuals.
Those who hold that pluralism is no longer an issue in the digital world argue that its underlying infrastructures are neutral. That technology may be neutral, but the systems necessary to make them function are under the control of companies with their own agendas and the abilities to limit or direct its use in ways that harm pluralism.
U.S. newspapers are increasing their use of co-opetition practices, that is, cooperating with competitors to reduce costs, create synergies, or reduce risk in new markets. Such activities are permissible if they are not designed to create cartels or control prices for advertising or circulation.
The latest example occurred this week when the Boston Herald announced an agreement with the Boston Globe for its competitor to print and deliver the Herald. The move creates cost savings for the Herald by allow it to cut printing, trucks, and delivery personnel, while simultaneously creating production and distribution economies and an additional revenue stream for the Globe--a win-win for both companies.
Such service agreements do not violate antitrust laws because the papers remain independent, set their own prices, and create their own content. If papers were to engage in such actions they would have to apply for an antitrust exemption under the Newspaper Preservation Act (see John C. Busterna and Robert G. Picard, Joint Operating Agreements: The Newspaper Preservation Act and its Application. Ablex, 1993), but those agreements have not proven successful in the long run.
The Boston agreement comes on the heels of numerous printing agreements, including that of the Chicago Tribune and Chicago Sun-Times, that have been made among publishers in the last couple of years.
Another example of co-opetition is seen in the 59 newspaper and information companies—including New York Times Co., McClatchy Co., Washington Post Co., E.W. Scripps Co., A.H. Belo, and Associated Press—that have now banded together to create NewsRight to track use of digital content and ease its licensing. By cooperating with each other, the companies have brought more than 800 content sites into the operation and created a significant player in the digital industry.
Daily newspaper companies have historically disliked cooperation unless it was absolutely necessary—as in the case of news services. The new types of cooperation emerging show that the preference to go it alone is being eroded by contemporary financial conditions and the difficulties of operating independently in the digital environment.
Netflix used to have a charmed life.
This year, however, poorly thought out strategy and lurching decisions are stripping away many of its advantages and making it vulnerable to competitors.
Established in 1997, its founders saw opportunities in creating an Internet-based DVD-by-mail distribution system. It was designed to be a competitor to physical video stores, making it more attractive by offering a larger selection and using a unique IT driven distribution system that combined distribution centers across the country to serve customers within 24 hours at highly attractive prices.
The DVD-by-mail service became a hit, ultimately devastating the market of physical stores such as Blockbuster. By 2007 it had delivered more than 1 billion DVDs to customers. That same year it launched on-demand video streaming service so customers could also select a video and stream it to a PC (and later other platforms) for immediate viewing. The company allowed viewers a highly popular choice of physical DVDs or streamed video for the same price.
Effective marketing and the enviable distribution system led the company to became the largest video subscription service in the U.S., with 24 million customers
Despite--and because of the investments required for--its growth, the company was losing money on its $10 per month price for the joint service, so it suddenly increased it price to $16 dollars (a 60% increase) in July. That significant price change and the poor way it was introduced to customers—especially in the midst of poor economic times, angered customers and created price resistance that led a least a half million to drop the service.
Then, in September, the firm announced it would spin off its DVD-by-mail service and rebrand it Qwickster, leaving Netflix with the digital streaming business. Customers were furious to learn they would now have to pay separately for both services. By downplaying its DVD-by-mail business, the company hopes to reduce distirbution costs and its costs for content by moving content from a per rental basis to per subscriber basis that is more beneficial for the firm.
Netflix's decisions were not made with a customer focus, but a focus on stemming losses that worried some investors. That strategy is dubious, however, and share prices have fallen from nearly $300 per share in mid-summer to $140 per share.
The lurching changes have also made the company’s position seem vulnerable, leading to new competitors to enter the market. Dish Network, which bought Blockbuster out of bankruptcy, is now using it to introduce a competing DVD-by-mail and digital delivery services at competitive prices and Hula and Amazon are reportedly looking a ways to exploit consumer dissatisfaction.
The entire episode is a classic example of why companies should never take customers for granted and why company decisions need to be driven by creating--rather than subtracting--value for consumers.
The U.S. Federal Communications Commission has adopted rules designed to halt cable system operators from retaliating against independent channels when there are business disputes or discriminating against them in favor of ones in which they ownership stakes.
The rules are intended to ensure that the monopoly power of cable operators is not used to deny viewer choice or harm competition channel providers.
One rule is designed to prohibit systems from dropping channels when there are business disputes with systems that have been taken to the commission for resolution.
Another rule is designed to create a more level playing field for independent channels by making it possible for them to reach more viewers. Comcast Corp., for example, has been accused in recent years of forcing competitors’ sports channels into premium packages that fewer viewers select.
Given that price rises for cable services have far outstripped inflation rates in recent years, that service providers create bundles of channels that primarily serve their benefits rather customers, and that consumers continually express dissatisfaction with choices, prices, and customer service provided, it is not surprising that the commission decided to act to slightly limit the power of the major players.
The big cable players are livid about the rules, of course, and can be expected to be highly active in the next regulatory stage seeking comments on how to implement the rules.
At this point they and they supporters are complaining that keeping channels on the air while dispute resolution is underway is somehow unfair to them. The system operators, of course, refuse to recognize how it is particularly unfair to customers who have no way to influence the decision.
Read more »