Journalists’ down and dirty guide to the money side
Get a better understanding of the complex ways media makes money and ideas about what your organization can do
I have two degrees in journalism, yet I learned zilch about the business side. When I started there was still a solid and uncrossable church / state line. To talk about money was heresy.
What I learned was on the job, in the front lines of the Internet revolution (a decade or so late in media) then social revolution (the second part of one-two punch to totally disrupt the industry).
Journalism organizations began to crumble under financial pressure. Some closed forever. Old business models melted; new ones were needed. And for the first time in like a century, journalists who wanted to get or keep a job had to know what was going on beyond that uncrossable line.
If you’re a veteran you know this, if you’re new to this, you need to know it. Either way, our industry is in transition. If you want to work in media, you have to at least understand the money side, if not help the bottom line.
Old organizations are adapting; new ones are evolving. It’s a moving target. No one’s quite sure how to monetize content, even the business-types.
Journalism is an unique industry. Even an MBA might not prepare you for the mysterious ways media is monetized.
WHY?
In many industries it’s pretty easy to get how businesses make money. They provide a service or product and people pay for it. Of course, there’s a lot of detail there and execution is key, but the underlying concept is simple.
In journalism it’s not that straight forward. Content can be a service or a product. It can be neither. It might be funded by advertising, foundations or VCs. It might not even be a business at all; there are non-profits.
What pays the bills, nevertheless makes money in media, is whole matrix of things. It’s continually and quickly changing.
This guide’s goal is to not only give you background but outline the basic sources of money for both relatively new and established media brand.
For media brands of any real size, there are business types to manage the business side, but they need partners on the editorial side who understand content — what works and what doesn’t —and help create and execute ideas.
For journalists, this isn’t just about job preservation, but it’s also about preserving journalistic values. The church-state line is blurring. In general that’s a good thing, but it can be pushed too far. We need journalists in the front lines to help distinguish creative monetization versus a step too far.
SO WHAT EXACTLY HAPPENED TO OLD BUSINESS MODELS?
Before the Web, news organizations had a monopoly on information. If you wanted to know what was going on in the world or your community you had to subscribe to publications, watch TV or listen to the radio.
This monopolization made it possible for the industry to have crazy profit margins, one of the largest in any industry. In general, costs were low in comparison to the amount of money they could charge to know.
People subscribed to papers and magazines, a big source of income. Member organizations — like AP, NPR and TV networks — had local news outlets pay fees for content. Newspapers had classifieds (think Craigslist before Craigslist).
On top of that, print, TV and radio thrived off of ads. Without the Internet tracking impressions and clicks, there was little real math behind what was charged. Some combo of circulation or viewership, placement (like where and size in print, when for TV and radio) and what advertisers were willing to pay (which was high, as once again media was one of the only games in town).
But yeah, the Internet changed everything. The key piece to making money in media was the monopolization of information. The Web democratized it. As the monopoly crumbled, so did the revenue from existing business models.
Locals were hit hardest. Nationals had leverage to figure it out.
So what now?
HOW JOURNALISM MAKES MONEY
Well first off, be aware that no one has really, totally figured this out.
Even the big boys in town — from established brands like the The New York Times to new ones like BuzzFeed to conglomerates and networks — are continually adapting, finding new ways to make content pay.
That can be scary, but don’t panic. That’s just how tech (the foundation of media distribution and monetization) works.
Remember media has always been on the cutting edge of tech from Gutenberg to radio and TV. We just had a long golden period where we didn’t have to re-assess business models. We’re just in a change phase.
So below are the main ways that media gets and makes money. Most organizations are doing a combo of these methods. There’s no perfect mix for everyone; it’s just what works for your brand.
(Note: These are general groupings to give you a gist of the ideas. Terminology in this realm is tricky as it varies by media sector, can be organization specific and keeps changing. The same term could mean many things; the same concept may be called a lot of things. Check out the ‘Basic idea’ section for the grouping’s general concept.)
Subscriptions
Basics idea: People pay to access your content.
Subscriptions is a hot topic in journalism. As mentioned, this was one of the go-to moneymakers pre-Web. There’s a a lot of experimentation to make it thrive in the digital age so stay tuned.
For now, the best examples are at organizations that had subscription models before the Internet (i.e. print publications). How it works is in flux as less and less people are willing to pay for content. Most offer a certain amount of free content before you have to pay.
The subscriptions that seem to be flourishing are major media brands (like the WashPost and NYTimes), especially those that offer exclusive content that makes money (like WSJ).
In media, we usually think of subscriptions as just readers accessing next-generation print content, but there are other forms as well. (See ‘Membership networks’ and ‘Paid services’.)
Membership networks
Basics idea: Organizations pay to access, use and share your content. Exact terminology varies.
This is generally how the AP, TV networks and NPR work. Basically, local organizations pay to access and use national content. They also can contribute local content to be distributed nationally.
As local-national paradigm fades in the digital age, these organizations are adapting. (For example, AP provides content to national organizations as well. This ranges from text to photos to video to election results and more. They’ve done this for ages, but locals used to main focus.)
The idea is also expanding. People pay for stock images. Content marketers now have networks to create, distribute and share content to fill their pages.
News organizations share content with tech companies — like Apple, Facebook and Google — and each other to improve distribution and increase ad revenue. (See ‘Partnerships’.)
Paid services
Basics idea: People pay to access your content and services. Exact terminology varies.
One example of this is Bloomberg. They not only create content, but have terminals that give financial types cutting-edge information.
Mainly though, this idea takes other forms.
Telecommunication companies have bought a lot of media brands raging from cable TV to print to digital. Although it’s often not a direct connection, these telecoms subscriptions and business models often fund media brands.
For example, HuffPost was bought by AOL (which still gets revenue from dial-up) which in turn was bought by Verizon (which gets money from phone and Internet services).
That’s just one example and not even close to full one. AOL at one time owned Time Warner, a whole other saga. Point being it’s complicated and changing.
Main take away is that a lot of content is funded by paid services and that’s only growing. For example, Netflix and Hulu have moved into content creation after having just a subscription service.
So yeah, you might not be a huge media brand, but how they work can be an inspiration. People may not pay for content alone, but they are willing to pay for other things. (See ‘Partnerships’.)
Direct-sold ads
Basics idea: Advertisers pay you for a placement.
This is also an old school money maker. A sales team goes directly to advertisers or ad agencies and makes deals for ad packages to be displayed on your site, app, publication or cut into your video content.
Considering, this takes a lot of upfront manpower, sale cycles are months long, not everyone has sales or ads op teams and most users hate ads, this method has fallen out of favor.
Established brands, especially national ones, can make it work and pay big but for new, digital brands this is rarely a go-to.
Programmatic ads and content
Basics idea: A third-party acts as a go-between for ad and content placement.
For an observer, it may be hard to tell what’s a direct sold or programmatic ad. The same ad slots can be used for both.
The difference is that instead of having your sales team make the deal, a third-party feeds the ad into your system.
You don’t even have to have an ad slot on sites. It can just be a widget, a bit of code, that you add to your content that displays ads or paid content.
Considering the low upfront costs and potential returns, both big and small brands are fans of this monetization method.
This is a growing space and there are a lot of competitors who all do slightly different things. Do your research to find the right fit.
Native advertising
Basic idea: Content that advertisers or marketers pay for on your site. Main distinguisher is that it looks like the rest of your content.
What I neglected to mention above, is that ads in general are losing favor on the Web and mobile.
Users hate them because they take forever to load. Advertisers are moving away from them as users block them or just skim over them.
What is supplementing and replacing ads is content marketing. Advertisers are creating or funding content to promote their brands.
This takes a lot of forms from content on their own site, to programmatic content (see above) or — as you probably guessed — native advertising.
BuzzFeed was the pioneer here. They weren’t a fan of ads, so instead they worked with advertisers to create unique content to fit their needs.
It was controversial at first, but then old school companies got on board and third-party providers popped up to specialize in this.
Media brands will sometimes have their journalists create this working with advertisers, sometimes its a special unit that just does it, sometimes it’s created by a third-party, like the advertisers or a native advertising company.
What separates this from programmatic content is that it looks like the rest of the content on the media brands’ site, usually with just a little banner or description that says “Advertisement” or “Sponsored” or something similar.
What separates this from the below, “Sponsorships” (I told you terms get muddled), is:
- It’s content marketing, not editorial. (The difference is that content marketing is written specifically for or by an advertiser. Editorial is old-school journalism that may align, but isn’t dictated by the business side.)
- It’s displayed in certain way that looks native to the site.
- Doesn’t need to be part of a larger deal.
Sponsorships
Basic idea: Organization pay to sponsor your content. Usually a packaged, custom deal that includes things like logo placement, ads, events and more.
Advertisers will give you money to align their brands with yours. What form it takes varies.
It can be as simple as a logo placement on your site or newsletter or at your event. It can be as huge as a packaged deal that includes that logo placement on all of the above plus direct-sold ads, native advertising and more.
Usually it’s somewhere in between. A logo placement on the exact content they want to target (a newsletter, a specific site section or event) plus a little extra (like ad placements).
Events
Basic idea: IRL events— like a parties, panels and conferences — that help fund and promote your brand.
This isn’t new. Big brands like magazines are known for their fancy and star-studded events. What has changed is what used to be seen as just brand promotion, has turned into a main revenue source.
TechCrunch is known for Disrupt. This goes beyond their content and is something unto its self.
Other media brands are exploring this realm. They’ve discovered you don’t have to have huge, fancy events to make money.
It’s super simple to set-up groups and events through sites like Meetup and Eventbrite. Partners and sponsors can cover basic costs like food and location. Attendees will pay if you do it right (i.e. good content, free stuff, good networking, just fun and such).
What used to be just promotion, can be pure profit.
Products
Basic idea: Your media brand sells products.
No really. This is a thing. Think the NBC or BuzzFeed store. Thrillist even attempted an entire line, JackThreads.
Not going to waste a lot of time on this as experimental and usually just a side line. But it can be simple to set-up through a site like CafePress, which handles the hard part. Example here.
Affiliates
Basics idea: You put widgets or special links on your site. You get a commission if people use the link and buy something.
If you do a lot of product reviews or write about anything people buy (from travel to clothes to music), worth looking into.
Once your set-up, it can be as simple and unobtrusive as just swamping out the general hyperlinks you’d use anyway, for the special affiliate ones.
There are general programs like Amazon and Apple, but there’s are a ton of others especially in certain areas like travel.
This is a money maker for bloggers, but usually considered chump change for conglomerations.
Partnerships
Basic idea: You work with another organizations to make money or help your brand one way or the other.
I admit it. This is a catch-all. This usually is filed under business development.
It can be as simple as sharing your content with another media organization for free in exchange for SEO or distribution benefits.
It can be working with Apple, Google and Facebook to distribute your content in a more user-friendly way, to increase your audience and find new platforms for ad revenue.
It could be working with other organizations to add perks to your subscription model, like tying in other services or giving discounts.
It’s really any kind of partnership with another individual or organization that helps to create, distribute and make money for your brand.
This is where new monetization methods are discovered. The limits are your imagination, and your ability to work and negotiate with others.
Funding
Basics idea: People give you money in exchange for a percentage of the business and/or profits.
Funding is a vague term that encapsulates a lot, yet at the same time can mean extremely specific things in specific industries.
What I’m primarily referencing here is startup funding. Basically, you get money in exchange for a percentage of the business. Detailed description here and tons of resources online. Pure content brands won’t get much buy in, but if you provide a service or platform this may be a route you’ll want to explore.
Media companies are also willing to invest in businesses and projects that help them expand their brand or help the innovate in the realms of making, distributing and monetizing. How it works varies. It can work like a VC. It could be a new in-house brand or department, an acquisition or a partnership.
Just like the Internet disrupted traditional journalism, it’s also disrupted the TV, book and movie industries which intersect. Similarly, upfront money comes with strings but the bar to entry is lower, it’s continually innovating and the costs might be totally worth the pay day. If what you want to do intersects with these realms of media, totally worth exploring the details.
Philanthropy
Basics idea: People donate money to fund your content.
I know. That doesn’t sound business-y. But it’s actually been a huge part of journalism for awhile.
For example, TV journalism wasn’t initially expected to make money. It was considered a public service and was funded by the entertainment side.
Between corporations buying media brands and the Web democratizing content, media is rarely seen in a philanthropic light anymore, but it exists.
Think NPR and PBS drives or crowd-funding sites like Kickstarter. Sure you might get a knick-knack or a perk, but really you’re just donating money to something you believe in or like.
Foundations, like Knight, and corporations, like Google through its News Lab, fund journalists, media outlets and projects for the greater good of the industry.
There are also organizations like non-profits, think tanks and more that fund journalism with a specific point of view and mission. Some of it is objective journalism, but often it has an agenda and mission. (That’s not necessarily a bad thing. American journalism was agenda driven for the majority of its existence. Objective journalism, which we know and love, was a reaction to the exaggeration and lies of Yellow Journalism in the late 1800s.)
And then there are business decisions that straddle the line between philanthropy and commerce.
Founders and moguls will pay out of their pockets for years to build or acquire media brands. Many times its the mission and not the money that matters at first. That sounds like bad business, but from Hearst to Murdoch to maybe Bezos what initially looked like philanthropy (as it was funded by fortunes) ended up being a media empire profitable in its own right.
CONCLUSION
I know. This has been epic journey and I’m sure I’m missing something. I told you it’s complex. Hopefully, you’ve got a general sense of what’s going on and have some news ideas or starting points.
If you’ve got this far, I guess you care about this topic so I leave you with some parting advice:
- Listen first. Every journalism organization approaches monetization differently. Each uses different terms. If you’re starting your own thing, know your investors, vendors, potential employees and partners may each use their own terms and methodologies. Journalism’s monetization matrix crosses over a wide-array of array of sectors that each have their own unique lingo. Research and experience will help you, but listening is the only way pick up the language you need to use.
- Ask questions. As terms can mean many things or something you’re not expecting, you often just need to ask to clarify. Nevertheless it’s the only way to get into the details of different business models. If you’re journalist, you already know the importance of questions.
- Be open to new ideas. Journalism has always moved at a fast pace when it came to news, but it tends to move at a snail’s pace when it comes to business, tech and innovation. Many of the money makers today, were initially seen as compromising journalistic values. In truth it often wasn’t about values, but tradition. Know and learn the difference. There are a ton of great ideas out there, be open and willing to adapt.
- But don’t let people condescend to you. When things are confusing, no one’s sure what’s going on and high-performance is expected, people have a tendency to cling to the few things they think they know. People can get defensive and / or aggressive quickly. That’s sooo media monetization. New ideas from both the journalistic and business side that could help not only a particular organization but our industry have been shut down quickly by bullying. You may be new to this, but know no one’s figure this out. Be both open and resilient.
- Experiment. Experiment. Experiment. The most successful news orgs today are continually experimenting. In an industry that is constantly and quickly changing, if you get too focused on the bills today, you may not be able to pay the bills tomorrow. That’s why many news orgs shuttered, they couldn’t adapt. Yes, somethings will lead to nothing, but somethings will be your future. (I mean most news orgs didn’t get the Web or social at first. The few who got it or at least dabbled are now leaders.) Don’t overthink it. Try. Adapt. Evaluate. Move on or iterate.
