Everyone is talking about the imminent end of the newspaper industry and the prominent rise of social media (social networking, social bookmarking, etc.), but in reality, both publication sites and social media platforms face the same dilemma: getting people to pay for content they are used to getting for free.
A lot of the burden has recently been placed on Twitter’s back to find a successful revenue model for a social media platform (that is, other than getting bought by Google, Yahoo, Microsoft, News Corporation, or eBay), but previous media darlings YouTube, Delicious, Facebook, MySpace, and StumbleUpon still face the issue of finding a sustainable cash flow – the urgency being relinquished solely by the large pocketbooks of the buyers.
Why then are social media platforms seen as the future and newspapers as relics of the past?
Is it because social media relies largely on user generated content, an abundant, inexpensive resource, while newspapers rely on expensive wire reports, beat reporters, and investigative journalists?
A quick check of Digg shows over 77,000 submitted entries from the nytimes.com. Delicious has over 188,000. Backtweets.com cuts off at 500 links, but the 500th link was from 1 day ago (i.e. people tweet about articles on nytimes.com over 500 times per day).
Clearly, social media platforms owe much of their success to publication sites (newspaper, blog, or otherwise). And while social media platforms may be better at manipulating available content, they are no better at making money.
Facebook is considering an IPO to raise money, largely to offset high bandwidth costs while the company looks for the right recipe to turn a profit. YouTube is burning through cash. Twitter is rumored to be considering selling to Google. MySpace turned to Citi Bank.
All have created successful brands, but not one has established consistent profit margins (although LinkedIn has found some success by offering a paid service). For the most part, social media platforms, like newspapers, are merely treading water until the money runs out.
Hopefully, Facebook is not waiting on Twitter to learn how to generate revenue or vice versa, and hopefully, the newspapers recognize that they should be a part of this discussion. Likely, the solution is going to take more than one body at the table.
Sadly, I have seen more innovative solutions from bloggers bloviating than from any social media platform or large publisher.
In my opinion, Google has already unlocked the model: cater advertising to the individual and the individual’s intent. Newspapers and social media platforms now need to take the next step and adapt the model to their respective services.
What if the New York Times gave a free subscription to every user who registered his address and filled out personal preferences online? The registration would link a user’s physical address with an account on nytimes.com.
The New York Times would now be armed with a slew of new readers, preferences of those readers, and data on how those users behave online (including which ads they clicked on) to attract advertisers.
In turn for users signing up on nytimes.com, the New York Times should not only provide a free newspaper but should also serve less ads online and incorporate less inserts in their daily paper. This can be accomplished by providing advertisers with better targeting (including targeting by specific section, article, and keywords within articles on nytimes.com) and more information on the demographics of its customers.
In this scenario, a company like StubHub could advertise New York Yankees tickets to men 34-55, earning over $60k in New York City, in the Sports Section, and on articles featuring A-Rod in both the print and online version of the New York Times.
There is a ton of logistics involved to turn this concept – or countless others like it (e.g. Mark Cuban’s concept of sports leagues subsidizing beat writers) – into reality, but it needs to start happening soon. Investors are beginning to hold back, and social media platforms and newspapers alike need to begin making changes while they still have the money to implement them.
Thoughts on how social media platforms and newspapers can generate revenue in the new economy?
{ 3 comments }
The number of newspapers may shrink but I think the newspapers will coexist with social media. There will still need to be local community news and information with support from local advertisers. Of course the store fronts numbers are getting smaller as well, with less dollars to spend. Fewer papers more directed information. Reform and eliminating junk mail subsidies would have the benefit of going green and free up some advertising dollars. I think social media will grow and possibly as bigger newspapers go, the “membership” costs will be added to the websites. Ages ago TV was suppose to eliminate the radio but car travel changed that. As more and more governmental controls happen on the internet- and less money is made on the big papers–the true revelutionary rag might be the local paper.
Articles in decent papers are generally much better written than blogs and more informative. This is as it should be. Professional who are being paid to write have an obligation to do the job right. Further a newspaper or news magazine is obliged to stand behind their stories thereby enhancing the story’s credibility with the reader.
As newspaper get further into their internet editions they often rush their stories and can at times be as poor of a source of “news” as television media. At my work my employer pays $10-25,000 a year for the news I read. A lot of this is market stuff and the rates are the most vital piece of what we pay for, however the news is often the key to direction and it is important to get it right. Instant often just doesn’t cut it. And in recent years the tendency has been get analysis out immediately. This lowers quality and while it has a place, it needs to be supplemented by writers taking a little more time. The only thing instant that I want to see work-wise are the straight facts [in my boring case this generally means straight economic number, perhaps some graphics]. However, I am also an economist.
I subscribe to the NY Times because it is well written with thought provoking editorials. I cannot find don’t find this quality as easily in blogs where you have to sort through the trash for the gems. To me, the higher quality of the writting is well worth the money.
SPORTS to me though often is better on blogs where the raw enthusiasm of the fan comes through.
News is always needed. Advertisement and subscription fees have to pay for it. I like what you say about targeted ads. They are worth far more to the buyer of the Ad and are far more “of interest” to the reader whether on line or on paper. I believe both types of media will survive side by side and serve somewhat different purposes.
Now that social media sites have established large user bases they should stop giving away all the new features they add. They should consider adding features that bring more value in the experience the user has on their site and start charging small amounts to use the new features.
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