On From Advertising: Why Journalism Needs A Change

This morning, I read an interesting article that included the statement that the New York Times intends to make subscriptions its primary revenue source. They apparently believe both print, and contrary to popular beliefs at the moment, online revenue cannot be counted on to sustain a news organization.

If you’re reading this, you’re proving them right. And they’re dead right. Here’s why.

The lifeblood of print newspapers has always been advertising revenue. Local businesses and, more rarely, national ones would run advertisements in newspapers and they would know the readers each day likely saw them.

As more readers have shifted to online readership, that number has decreased.

Online advertising revenue, meanwhile, has increased but only very slowly, and websites like this one are part of the reason. Advertisers have infinitely more places online to post advertisements. A website like this one can be created cheaply. Blogs like this are absolutely free to create. They can cover any topic, and can be posted to as often or as rarely as the writer wants. Advertisers can pay WordPress.com directly for advertisements that appear on a growing number of personal and business websites at little cost.

Sites like these attract the increasingly selective readers of today’s world, and thus threaten news agencies making the shift to online-based advertising revenue because the more of these sites there are, the more places readers/advertising viewers have to miss advertisements. To counter this, advertisers have to place their advertisements in as many places as possible.

And with seemingly infinite options, advertisers have the bargaining power over agencies like news agencies. Want to charge them heftily, that’s OK, they’ll publish on any of the million other websites they can. So what does the news agency have to do? They have to lower the cost of advertising, even to the point it puts newsroom operations in the red.

At the moment, the easy counter to my argument is “But Shelton, online advertising revenue is rising.”

For now.

The New York Times has a relationship with its competitors that is rather similar to the relationship Bill Belichick has with his fellow NFL coaches and personel managers. That is: they’re right. Annoyingly often, in fact.

The recent rise in online advertising revenue is, in my opinion, due to the idea that not a lot of credible news agencies have fully made the switch to primarily-online content. Sure, the Times and the Wall Street Journal and the other A-List news agencies in the United States have, but many of the local online newspapers haven’t made that switch.

This means that many news agencies who aren’t competing for online advertising eventually will do so.

At the moment, news agencies with excellent websites are ahead of their competition. What happens when those news agencies who can’t make the switch die and the rugged ones who are able to make the shift and compete begin actually competing?

Once those who can make the transition to online-based content make the switch, competition for advertising revenue will again be even more competitive than it already is, because as citizen journalism takes hold, more and more citizen journalists will also give advertisers reasons to look at places other than mainstream news outlets.

Newspapers who will have then found out how to survive based upon online advertising will find themselves exactly where those relying on print advertising are today.

Things, to be honest, are going to get worse, not better for those agencies which rely on advertising revenue.

Therefore, the only way to avoid finding ourselves facing similar problems later again in the future is to stop relying on advertising revenue altogether.

This may mean non-profit journalism. Maybe writers need to figure out what they can do to make a living so they can afford to recreationally serve their news readers through their spare time. It’s hard to say for sure.

The one thing we know is that surviving on advertising revenue is no longer a feasible way for news agencies to make money.

This is the real problem behind the others in the news industry.

The New York Times alone seems to see it. Other agencies would be wise to take their hint.

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