Private sector news media exploring new business models
Newspapers and broadcasters across Europe are investing in a wide variety of digital news initiatives to reach new audiences and build new business models, a new report from the Reuters Institute finds – but most of their revenues still come from traditional print and television operations, even after almost 20 years of investment in digital news.
The report, Private Sector Media and Digital News, by Alessio Cornia, Annika Sehl and Rasmus Kleis Nielsen, examines how 25 different private sector legacy news organisations in six European countries are adapting to an evolving media environment, especially in terms of dealing with the business of digital news, the rise of social media, the move from desktop internet to an increasingly mobile web, and the growing importance of online video.
“Newspapers and broadcasters are sometimes derided as old media and criticised for their conservatism and cautious approach to digital media. Our research suggest they are in fact investing significant resources in experimenting with new formats and platforms” Dr Rasmus Kleis Nielsen, Director of Research at the Reuters Institute and co-author of the report, says. He continues, “Experimentation is absolutely necessary, but also costly and uncertain. Since digital revenues are still limited, the resources for investments in digital generally come from cross-subsidies from legacy operations or from cost-cutting elsewhere in each organisation. This means that legacy organisations have to continue balancing exploiting traditional business models with exploring future opportunities”.
The 54 executives, senior managers and editors interviewed across Finland, France, Germany, Italy, Poland, and the United Kingdom highlight three main challenges when it comes to digital advertising, which is still the main source of digital revenues for most:
- the increasingly dominant role of large US-based technology companies, which are able to sell larger audiences, more targeted advertising, and at lower rates than those of legacy news providers;
- the low average revenues per user, especially on the mobile web;
- the growing number of people who use ad-blockers.
The mounting pressures on revenues from print and broadcast operations combined with a challenging digital advertising market underlines the importance of developing new business models to support journalism.
The report identifies many relevant initiatives and shows how more and more news organisations are moving to various forms of pay models (with the exception of commercial broadcasters and a few high-profile newspaper titles with very large audiences). Legacy news organisations are also exploring alternative sources of revenue to supplement display advertising and subscription, including:
- the launch of new verticals (content offerings beyond the organisations’ main brands), new products based on re-packaged content, and new sections aimed at cultivating specific audiences more effectively;
- investment in native advertising and branded content activities, which allow legacy news providers to capitalise their storitelling skills to better compete with big technology companies that dominate other sectors of the digital advertising market;
- diversification strategies, with a move into e-commerce, business-to-business services, and offline activities including events and merchandinsing.
Newspapers in particular are working hard to develop new and more diverse business models.
“National newspapers are generally exploring new avenues more aggressively than broadcasters, in large part because the decline in their legacy revenues is much more severe, making the transition to digital much more urgent. Broadcasters, who have more stable legacy revenues, have also invested in building digital reach, but have so far invested less in developing digital news as a part of their overall business”, says Dr Alessio Cornia, lead author of the report.
The development of new sources of revenue are important for the future of private sector news media themselves, but also to support their continued investment in journalism that can serve a wide public and enrich democracy.