New business models must include consumer revenue growth


To ensure the viability of the newspaper industry we love, most of us reading this blog are urgently looking for the business model that will instigate the next great step-function of revenue growth. I definitely come at this challenge from a strong point of view: that all quality newspapers, print or digital, should charge readers for valuable content.

I understand not all newspapers are yet charging readers for their digital content. However, I assumed there was a basic — and shared — hypothesis that consumer digital revenue was a fundamental growth engine to drive the evolution and health of newspapers.

A recent report, “How newspapers are faring trying to build digital revenue,” from the Pew Research Center’s Project for Excellence in Journalism does not support my assumption. This morning, I eagerly read the report for insights about the search for a new business model, and was surprised when I finished that all I read were reports on newspapers trying to grow digital advertising revenue — no mention of digital consumer revenue.

Checking again, I found one reference on page 5: “The study did not ask about digital subscriptions or paywalls, leaving that for the future, because the number of papers that have moved in that direction is still small and, in many cases, not enough time has elapsed to draw conclusions.”

The good news is digital ad revenue has grown 19% on average for newspapers studied. But the bad news is that represents just 8% of overall ad revenue. “Thus the actual dollar gains were outnumbered by losses by a factor of 7-to-1 for those papers.”

Not considering consumer contributions in a digital revenue business model is a vicious cycle.

  • Without a focus on consumer revenue expectations, digital products aren’t developed with the incentives to sell them — elegant simplicity, quality content, and platform appeal that will generate valued demand.

  • If the quality and innovation aren’t there, the newspapers’ management doesn’t feel confident in charging for the content.

  • If advertising is the sole driver of digital revenue, management thinks about circulation rather than consumers. There’s a difference between circulation and consumers. Done right, both reflect “wantedness.” However, a focus on circulation creates a heated need to grow in volume regardless of the content. A focus on consumers reflects a rational view of profit and loss, return on investment, and healthy market expansion.

Take a read and let me know what you think. Is the industry missing something? Where can we improve? 

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