Continued from:
Thesis Part One
Thesis Part Two

Translating Value Into a Revenue Stream

Selecting an Online Revenue Model:

After determining how value is created for an important community of users, and considering how this value can be maintained in a competitive environment, the next critical question is how value can be translated into recurring revenue streams.

Start with developing a set of criteria against which to evaluate revenue options:

-Alignment with the mission of the site
-Fit within your staffs capabilities
-Agreement with you core competency
-Fit within your IT infrastructure
-Level of risk to bottom line and reputation
-Additional benefits

Use Your Criteria to Evaluate Existing Revenue Streams:

Newspapers need to generate an economically sustainable revenue stream or their best plans for innovation and growth may never be realized. The purpose of this paper is not to promote a generalized revenue solution for all newspaper websites, indeed no such model exists. Using the criteria gathered in the previous section, apply them to existing revue options including these below:

1. Acquiring another company as a hedge against current newspaper revenue streams.
2. Get a Non-Profit designation and serve your donors best interests.
3. The advertising only revenue model (current model of most news sites, NYTimes.com, LATimes.com, Washingtonpost.com)
4. Utilizing a pay or partial pay subscription revenue model (FT.com, WSJ.com, Economist.com)
5. Advertisement Types
. Ad agency generated Display Advertising (standard IAB ad sizes, cpm, cpc, very low $performing)
. In-house Display ads (better performing)
. Expandables (do you want to allow it?)
. Overlays (do you want to allow it?)
. Microsites (do you have the resources to manage these?)
. Advertorials (do you want to allow it?)
. Competitions (do you have the resources to manage these?)
. Sponsorships (probably the best return on investment, best performing advertisement, requires good site mapping and cms)
. video pre-roll (good when you are already serving up video content)
. video post-roll
. Email display ads (alerts, newsletters)
. Surveys (grant corporate surveys on your site, for a fee of course. Economist.com)
.Pop-unders/ Pop-ups (never ever use these, you will lose readers)

1. The Acquisition model:
If you are comfortable with operating at a loss or breakeven, then continue giving away your content for free and relying on advertising revenues to support operations. You must purchase another company however with a revenue stream that acts as a hedge against what you are doing. Some large corporations that are already diversified (such as The Washington Post, CNN, and News Corp.) are already benefiting from a diversified revenue model.

——————————————————————– Continue reading →

…Continued from newspaper thesis part 1

Why are newspapers in such bad shape? 1) Reduced Cashflow: Newspapers rely on fat revenue streams generated by print advertising revenues and paid print subscription revenues. The cashflow being generated by these revenue streams is barely large enough to service debt. 2) Debt Obligations: “Newspaper companies have been skipping loan payments, missing financial targets in debt agreements and accepting higher interest rates in exchange for more flexibility”. -also read AJR.org article

With the decline in print, what is the expense implication?

. The savings on paper, production, circulation sales and delivery would slice at least 35% off a typical newspaper’s expense base in one swoop. -from Poynter Institute

Why did people historically subscribe to / buy print newspapers?

· THE ONLY GAME IN TOWN: Prior to the ubiquity of high-speed broadband connections and personal computers, newspapers had little competition. Radios were for listening to and televisions were for watching. (This is the only reason. Do not even try to think it was because your company was so awesome people didn’t want something else.)

———————————————————————– Continue reading →

I could bury this thing somewhere, but I figure I’ll use this platform to work through this paper here.  Comments are welcome.

M.A. Thesis Statement:

While publishers are afraid to lose readers , free newspaper websites are untenable.

Newspapers’ current online advertising only revenue model is failing to supply sufficient cashflow for servicing current and long-term debt. Developing a diverse set of revenue streams is the most secure path to achieving ongoing financial sustainability.

1. I present the current state of the newspaper industry to defend my statement that; The current free model is untenable.

2. I then explore different revenue models that news site and other websites use both successfully and in failure.  I highlight my case that news sites using diverse revenue streams are financially sustainable.

3. I bring it all together with my conclusion that; The most important reason free newspaper websites are untenable is because they do not posses a diverse set of revenue streams to create a sustainable economic model.

CONCLUSION:
In conclusion, although publishers are afraid to lose readers, free newspaper websites are untenable for two main reasons.  First, news sites using a hybrid subscriber and advertising revenue model are doing well. But more importantly, free newspaper websites are not generating enough advertising revenue alone to sustain operations.

—————————————————————— Continue reading →