Expanded Revenue Generation for News Outlets

What Can Existing Experiments Tell Us?

Expanded Revenue Generation for News Outlets

What Can Existing Experiments Tell Us?

A few weeks ago, I came across this opening line from a newsletter on Press Gazette: “If high-quality written journalism is to survive someone needs to pay for it.” Makes sense. The premise of that article was that readers would pay for good journalism. I am not convinced, however, of the “field-of-dreams” metaphor: “If you build it, he will come.” (The pronoun here refers to Shoeless Joe Jackson, the brilliant White Sox ball player who was banned from baseball after he was implicated in the conspiracy to fix the 1919 World Series.)

I prefer another mantra: “It’s the revenue, Baby.” Sorry, I just made that up, but it summarizes another recent thought piece from Imtiaz Patel, the former CEO and Publisher of the Baltimore Banner:

the real issue in local news is revenue, not cost. We don’t have enough revenue to do the essential work we do. Cutting cost won’t solve the problem. We need to find revenue. Cutting costs every year, hoping we’ll be fine, just won’t work. As an industry, we must think about long-term revenue growth. We need a revenue reset!

This statement is the strongest possible contrast to the legacy papers’ approach, where the road to profit is through job cuts.

Patel draws from his experience at the Banner and concludes: “Key takeaways:

· Diversify your revenue streams.

· Lean into reader revenue as your foundation.

· Make the business of news everyone’s responsibility.

· Have a point of view but be open to alternative ideas.

· Be intentional in every aspect of your organization.”

Historically, news outlets received revenue from a combination of printed circulation and printed advertisement. In 2005, advertising accounted for slightly more than 82% of news revenue. (Source: Pew fact sheet). By 2022, ads accounted for 46% of news revenue. Meanwhile, total news revenue dropped from $60.2 billion to $21.4 billion – a drop of 64.5%!

The legacy chains responded through job cuts. Alden Global Capital was in the vanguard. It had purchased what became (through various name changes) MediaNews Group in 2010. The NewsGuild-CWA documented the employment reductions at Guild-represented papers: between 2012 and 2020, new jobs fell by 75%. Job cuts have continued in the last five years.

But Lee Enterprises and GateHouse and Gannett (after their 2019 merger) quickly caught up. Five years later the merged company had shed 58% of its workforce (compare the 2024 SEC Form 10-K with the 2019 Form 10-K). Meanwhile, Lee had bought BH Media from Berkshire Hathaway in 2020 and had cut 46% of its workers by the end of the 2024 fiscal year (compare the 2024 SEC Form 10-K with the 2020 Form 10-K).

Penny Abernathy has observed, “the loss of journalists always results in a loss of journalism, as editors have to make hard decisions about which stories to cover and which to ignore.” Not surprisingly, we have seen newspaper closures, ghost papers (published but without sufficient staff), and news deserts (counties without daily news coverage) developing over the last two decades.

I am not absolving the Internet platforms for the migration of advertising and the consequent loss of overall revenues to newsrooms. (See the 2020 Senate Report.) The anger of journalists is real and justified: Facebook and Google have been reproducing news articles without paying. More importantly, the platforms have provided a much more economical way for businesses to reach potential consumers: $40,000 for the Los Angeles Times print or $5,600 for the Los Angeles Times digital versus $16 for Google search (see the Senate Report).

This problem is only going to get worse, with little relief in sight. Now that they are developing big-machine AI, the platforms are scraping the web for content, including news content, to train their programs. We can anticipate readers will see less need to rely on news from news company websites as the proportion of AI-generated content increases. (For a preview of what may be to come, see how Google AI Overviews lowers the click-through rates for publications.) Keeping the focus on local news appears to be the best counter to what we might call artificial (AI) news.

The Business of News Publishing

But something else is happening over which news companies could have more control if they expanded their business models. News companies, especially the chains, have so far failed to adjust to a changed marketplace. The last decade has shown us that those who innovate have a greater shot at success. (Okay, I will genuflect before the ghost of Joseph Schumpeter, the Austrian economist, who theorized about the role of innovation. See Capitalism, Socialism, and Democracy.)

A cursory look at The New York Times suggests that a better way is possible. The Times has managed to play off its strengths to add games, puzzles, food, and sports to its offerings. It has also experimented with other innovative ways to make money, including renting out space in its historic building for private events and running summer programs for future journalists. Much of the paper’s successes are not necessarily adaptable to local news. The Times has a national / international readership and more cash reserves than virtually any other news publication. Hence it could buy Wordle and The Athletic. It could afford to ramp up a tech department in excess of 600 employees that has enabled it to lure 11.6 million online subscribers. The key takeaway from The Times’ success is its willingness to adapt and break the circulation/advertising-only-revenue mold.

Every publisher – of any kind – is in the business of producing some kind of information product. This publishing business has been conducted profitably by providing something that people will pay money to get – printed newspapers or books – or by making it available free to attract an audience that sponsors will pay to reach – broadcast TV and radio. We’re in the process now of adapting this business to the new world of the internet, but the business really is the same. To produce a successful news product, the news outlets need to produce something that people will choose over what’s readily available free off the internet. And as they ramp up, these news companies need alternative revenues to support staff.

Audience

1. Circulation. No longer is it sufficient to figure out a story to write, interview the subjects, write up the article, edit the article, publish the story and assume readers will come to you. The reader needs enticing. Newsletters, free and paid, are helpful. So is social media enticement. And podcasts. An investment in data analysis could provide unique stories. Websites need to be de-cluttered of annoying pop-up ads to be reader friendly. Make it as easy as possible to access content.

Membership creates a sense of ownership (and can even recommend story ideas). News organizations could also consider tiered memberships. A simple membership gets regular news feed. A more expensive membership gets other perks.

Keep it local. As the news chains have de-populated newsrooms, they have relied increasingly on regional content from their regional hubs and on wire services. That tends to de-prioritize local issues. Regional and national content can be accessed via a quick Google search. Local content is what attracts readers to the local newspaper or digital site (see Chip Hutcheson’s useful column).

2. Events. News companies have finally figured out that the reporters who cover certain beats – police, education, city hall, entertainment – are in demand by the public. Journalists pick up more information than what appears in their articles. Readers always have follow-on questions. Events could be restricted to members only or they can be open to the public. They can serve as a reward for membership or an enticement to join.

News organizations can also celebrate high school sports. An evening with the best county basketball, football, baseball players. Girls’ and boys’ sports. Awards. Parents want to see their children celebrated. The kids enjoy the fame.

Graduations happen every spring and are an excellent moment for local businesses to showcase their wares. The same can be said for the start of every school year and local holidays or the annual county fair. Creativity is the key. Figure out what sells.

News organizations can also sponsor political debates for local offices. This can be tricky in our polarized political environment. But it is a real public service. It informs the public. It advances the brand.

My wife, Nancy Gallagher, the Director of the Maryland Center for International and Security Studies at Maryland, also suggested:

Some of these events could have a social function to help people who are new to the community and/or single meet other people who share their interests. Some could take place in local bars or coffee houses. Sponsoring trivia nights that include a local news and history category could be fun. Many smart, interesting people, including current and potential future news media readers, want low-stakes ways to meet like-minded human beings “in real life,” which an increasingly AI-driven internet can’t provide.

Sponsorships

1. Advertising. Sponsorships have developed for nonprofit news companies – although the Trump administration is trying to quash that source of revenue for nonprofits – but they can also benefit for-profit ones. For the business, sponsoring a news edition or set of articles can promote the brand. For the news organization, it can be steady revenue. But local news can take advantage of special events to promote businesses and attract customers/readers. Staffing the ad department can help local news outlets touch local businesses, so the latter can showcase their products and services.

2. Contributions. The nonprofit model depends on donations, large and small. For-profit entities can pursue this route as well – contribute to saving the news. The Seattle Times has raised money be reaching out to readers for special donations. Such contributions could be generalized (ensuring quality journalism) or targeted (funding a particular news beat).

Other Revenue Generators

1. Parallel businesses. Storytelling is not limited to news production. News companies could set up business consultancies based on the storytelling of their reporters. This could be a first step for recent journalism school graduates, supervised by a reporter on leave from the newsroom.

Ditto for data analytics. This is a relatively new specialty within newsrooms, but the result has been more clarity and better transparency for stories involving significant amounts of data. The back end – analysis of audiences, content optimization, and subscriber decision-making – can assist small businesses in marketing. The front end – using data to tell a story – could help small businesses relate to their existing and potential customers.

Those news organizations who still put out a printed product can do more than produce a newspaper. They can produce calendars, community pictorials, tourist maps.

A news outlet could use a local space to start a small community bookstore, which could be used for meet-and-greets with reporters. Or they could serve as a drop-in site for readers and potential readers to suggest stories, to ask questions, to bring together local officials.

2. Swag. People like mugs, glasses, stationary, t-shirts, etc., especially if it aligns with their beliefs – saving the news. This may sound small-scale, but it can produce revenues. Limited editions of cool stuff can be reserved for members. Wearing/using branded merchandise builds loyalty and is free advertising. The more people identify with their local news source, the more they will feel like a valued member of their community.

Bottom line

The point of all these options is to be creative and to give the news organizations the space to experiment with ways to fill a wider variety of their readers’ and their communities’ needs. That means building up the business side of the news outlet, not cutting jobs. If push comes to shove, and I know this may be controversial, but it may mean hiring a salesperson instead of a second education reporter. The immediate objective is increased revenue generation as a means to the ends of sustainable news, democratic governance, and civic health.

These ideas require staff. To ensure the website makes it easy to contribute, someone needs to remind subscribers about renewal time. Someone must stay on top of the website to ensure readability. Someone needs to coordinate the events or drive the contribution campaign.

This is where the chains have it all wrong. They cut the workforce to eke out some profit to sustain publication. The chains keep new investment to a minimum to service their debt, which they accumulated on the path to their many acquisitions. But it is ultimately suicidal since the result is a hollowed-out news outlet.

Certain local news outlets have produced sustainable journalism. Here I would cite The Lookout Santa Cruz (for-profit) and Block Club Chicago (nonprofit) among the smaller start-ups. Certainly, the Baltimore Banner (nonprofit), now with 80 employees, should be included. I think we could also point to the Minnesota Star-Tribune and the Boston Globe, both for-profit companies, as companies that have succeeded in sustainable journalism.

In the coming months, I plan to explore what these companies are doing right. They appear to be creating value for their customers/readers who are willing to pay for it.

I want to end with something Ken Doctor, the media analyst and founder of Lookout Santa Cruz noted two years ago, reflecting on the success and troubles (staff reductions) at the Texas Tribune which has won accolades for its high-quality reporting:

I was surprised in a couple of stories about the layoffs that they said they just had two people in revenue generation for a big organization. This is a common problem in the new news, that mainly they are editorial people. I'm an editorial person, but I had other kinds of business experience, and people focus disproportionately the resources on newsroom and content, which has got to be the lead. But you've got to have the revenue generation staff and smarts to be able to monetize it. They seem to be in a real imbalance as to how they were doing it. So that's a big lesson right now. It is still a model, but it is both a really positive model and a cautionary model at the same time.

Local newspapers are small businesses. They need to act like it.