Napkin sketch: A news business model free from advertising

(Originally published in Sept 2015 but sadly still relevant.)

We know that advertising in all its forms is cluttering and degrading our experience of the web. Great stories and bits of news are accompanied by six-packs of “26 gay celebrities, you’ll never believe #4!” and “Stop bellyfat with this great tip to end credit card debt!”

It’s ridiculous. Even the “good” ads aren’t that good. The advertising is abysmal, a joke.

Aside from the quality of ads, the technology is abysmal as well. How much of your wifi and cellular time is spent waiting for a garbage ad to load?How often does the ad tech break the system entirely, forcing reloads, etc.?

By listening to media companies, we learn that the advertising isn’t even really working that great for generating revenue. So we hear of all sorts of “innovations” in ad delivery like “programmatic” or “native” or “shit-tons-of-modal-pop-ups” and so on.  All of these just further degrade the relationship between reader and publisher.

So we have a non-virtuous loop: advertisers make garbage advertising, that advertising clutters the interface, people avoid the clutter, fewer people clicking/seeing/retaining means more advertising is required for the news organization to keep its head above water.

Update: Meanwhile, it’s much more efficient to just publish garbage news-like content to deliver ads. Without the need for producing anything factual “content” that scratches the itch of news consumers while being devoid of fact or other expensive aspects of news, a publisher can make a better profit altogether–the irrelevanting of news by publishing “news.”

The system is broken.

Perhaps it’s time to seriously investigate alternate revenue sources for news.

A different model for news

If the part we like about news organizations is access to well-researched, timely, well-written stories about the world we live in, then we need to find a way to fund it. Doing these things requires someone’s time, and that person will do a better job if they have had proper nutrition, are clothed, are secure in the knowledge that they have a bed to sleep in, and so forth.

There have been attempts in the recent past to discover a new model for news. I think Poynter even had a small site devoted just to this specific challenge. Most of the models talked about aren’t that new, really: subscription-only, non-profit funded, government funded, “better” advertising.

I’d like to make a quick sketch for a different business model altogether. This model would be disruptive, and therefore culturally challenging for existing organizations to adopt. But I figure I should throw it out there all the same, in case someone wants to get disruptive — or just to pass the time thinking about the problem from a different angle.

Analytics funded

In my new news business model the revenue is generated by analytics. Not individual or PII or subscriber data, just bulk analytics. The customers for this would be organizations that develop messaging campaigns (a.k.a.,  the-organizations-formerly-called-advertisers) who are seeking data to craft better and more meaningful messaging. Those customers then deliver that messaging on their own, like they already do, via their owned channels and social media and the remaining media outlets that do accept advertising funds.

The analytics and pricing could be sliced and diced a variety of ways, but the point is simply to learn what kind of interest there is in a variety of topics. What’s the market size for stories about technology? What’s the market size for stories about real estate? Or energy? Or this specific aspect of energy? What’s the interest spread for the following geographic areas?

Answering questions like this could help companies not only with messaging, but with product development, physical plant/store/office location and so on.

In addition, it need not influence the newsroom at all. Since the answer “no one in the state of Georgia is interested in articles about winter fashion” is still very useful to a company looking to expand their snowboard showrooms, it really doesn’t matter what the stories are. The newsroom is freed from “delivering eyeballs” and can instead simply focus on making well-produced stories about matters they consider to be important.

Some of the tricky details

For this model to work there are, of course, some tricky details.

The customers would have to understand and value analytics in a much broader way than advertisers currently value analytics. Human engagement with a story would need to be mapped to a specific business process (including those beyond messaging or marketing). This would have to be a core competency of the customer.

This requires a multi-disciplinary skill set. The individual or team would likely draw from a variety of business units beyond marketing. All of them would likely have to be bent in a slightly entrepreneurial fashion. Extracting the greatest value from the data via whichever department or method seems best suited for this work (and retooling fluidly as needed) would take precedence over set systems producing data-as-justification-for-expenditure.

This would, in some ways, replace the marketing/messaging department with an intrapraneurial/entrepreneurial unit as the main point of contact with the news organization. This frees marketing/messaging to handle the task of message creation and distribution.

The news organization would also have some challenges. The skills of the sales staff would change somewhat. While the good salespeople would still sell, because that’s what good salespeople do, the means and method of sales would change. Selling data would become more of a consultative sale than a price-sheet-and-calendar thing. Again, good salespeople are probably already in a more consultative role. But there’s no denying that there’s a shift here. This specific cultural shift is probably what would prevent an established news organization from succeeding at transitioning to the new model.

On the upside, the analytics-driven model points to a shift from advertising-as-a-product to data-as-a-service model. This will likely have positive ramifications on the operations of the business in terms of planning and sustainability.

The parts of the news organization devoted to developing/maintaining/producing/billing/handling/making ads would be replaced with a unit that develops and services analytics reporting. This is sort of a cold way of noting that some people probably won’t be working at the news organization any longer. But I also suspect many of the jobs could be repurposed into helping make genuinely engaging stories.

The editorial staff would be free to pursue whatever stories they feel are important since eyeballs would no longer be relevant. There would likely be some confusion during this transition. That confusion will be minimized if the new sales staff is good at the consultative side of their job and if the new analytics department is good at mapping human engagement to appropriate audience segments.

The news production staff will be focused on making stories about a diverse set of topics. In addition, making stories of consistent quality will also be valued so that attention and engagement can be assessed across those diverse topics. This might present a challenge.


The result should be…

Assuming such an organization could be built, and the customers for this new analytics product could be developed (because I’m certain the first few orgs will indeed have to develop alongside this model as partners) the public should have access to:

  • A news interface that is focused primarily on the content with little to no distraction.
  • A variety of stories in a variety of formats in a variety of topics.
  • News headlines free of the negative side-effects of the need for eyeball delivery or attention generation.
  • Ultimately, a healthy ecosystem of several news organizations approaching this from their unique cultural perspectives will exponentially magnify the variety of content available.
  • Consumer-Company relations that are more attuned to consumer interests, better products delivered in the right way, etc.

Yes, but…

In the interest of saving someone some time, I’ll discuss the issue of sample size. Someone will say “Yes but they need lots eyeballs to generate a meaningful sample size for their analytics and this will lead to more of the same garbage posts about things that aren’t relevant to our society, like [insert something that reinforces one’s negative worldview here].”

No. Because generating eyeballs on stories that are not useful to society will have limited utility for the paying customers as well.

Certainly there will be celebrity news organizations and so on that will be able to generate revenue on the classic fluff news by selling data to the entertainment industry. But more importantly, all niche news and general news will not be forced to compete against the eyeballs on the fluff.

Each organization will be valued on its own merits regarding editorial choices and story diversity. If there’s a small sample, then there’s a small sample. If it’s the only relevant data, then it’s meaningful — all the more so if it can be calibrated against other related topics. But generating a large sample through sensational news would not increase the value of the original data, which would remain the same, regardless.

If in-depth stories about international policy have to compete financially with Taylor Swift based on a metric of eyeballs, we get the news environment we have today (no disrespect intended to Ms. Swift or international policy). In my analytics-driven news organization, stories do not compete with one another, they merely shed a variety of lights on what it is that interests us.

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