The kind of journalism we pay for

How the internet reversed the value structure of news and content

As a business, news media has always skated on thin ice. The internet broke it.

For years, the news media industry has attempted with varying levels of success to reconcile its traditional ad-based and subscription business models with the structural disruptions that the internet has brought.

As it stands, the web persists as an exceedingly hostile incubator for the traditional newsroom. Importantly, a significant side effect has been the upending of the “cross-subsidy” model employed by publishing institutions, in which expensive coverage is often funded or subsidised by profitable high-audience stories. This model — which has allowed for the sustainable co-existence of news coverage alongside things like op-ed, investigative and feature journalism — is at risk of extinction, simply because those profitable high-audience stories just aren't that profitable anymore.

But whilst news becomes increasingly more commoditised, feature journalism remains a significant point of differentiation amongst publishers. Through some creative re-thinks, it still is possible that feature stories can become profitable ones too.

Where did all the money go?

Journalism stopped making money because the internet through its architecture managed to single-handedly cut down every revenue stream that news media relied on. The subscription model failed to make the trek across from the analogue to the digital realm because the plethora of quality free content on the web rendered it redundant. Would you pay for something you can get for free? I wouldn’t either.

Advertising space, which used to be a boon for the printed press lost its value overnight when the internet by virtue of its limitless and frictionless reach removed the geographic monopolies that most newspapers had in their regions. Additionally, the sheer abundance of destinations to advertise on the web has drastically reduced the marginal value of each publisher to an advertiser.

These days, online advertising is mostly done through programmatic ad networks (such as Google’s Display Network) that allow advertisers to place ads in countless destinations. The scale of these networks also facilitate precise targeting through the tracking of user behaviour and search queries. But the problem for publishers is that the ad networks capture a lot of this revenue. And since advertisers only ever pay per click, high-brow media organisations built on the premise of being authoritative sources are now not any more important than any one-man blog on the same ad network.

In a world where money is made by getting people to click on ads, journalism, and even more pertinently, quality journalism, appears to be a shockingly costly and irrelevant way of achieving that. The correlation between quality editorial and profitable editorial is tenuous at best. Good writing, really is just a matter of pride.

A reversal of value

By simply altering the parameters of distribution, the internet has brought to light the inefficiencies that have always been present in the publishing industry. It was these exact inefficiencies that allowed the cross-subsidy model to thrive.

News content can be divided into two broad groups: news and feature stories. News consists of basic reporting, a summation of events, rolling coverage of breaking news and the like. Feature stories are mostly everything else, ranging from interviews, investigative journalism, opinion pieces and research stories. For the sake of this discussion, we’ll include foreign news coverage as part of feature journalism too due to its steep costs relative to local news reporting.

As the cross-subsidy model purports, the former usually pays for the latter, because reporting on who won last night’s soccer match would not only make for a popular story, but would be much cheaper to write and produce than perhaps, a deep investigation into FIFA’s 2015 corruption scandal.

In the pre-internet era, people would pay for news because they couldn't get it anywhere else. Newspapers, and by extension basic news coverage was profitable because newspapers had geographic monopolies on public knowledge. The myriad of free news sources that exist today courtesy of the web — social media, independent bloggers, and news websites — didn't exist before.

And for the majority of people, news was worth paying for because it is considered by many to be a necessity. I think we often forget how important journalism is for making us feel safe and connected. On the other hand, feature journalism — the stories that scratch below the surface — are not a necessity and are more akin to an augmented product layer: a set of benefits that enhance the initial commodity. Historically, feature journalism, which often also defines a publication’s emphasis or political positioning, has been a prevalent factor in differentiating publishers which would otherwise only report on identical local news.

The difference between newspapers and virtually every other business is that newspapers have always relied on their commodity product, the news, as their primary source of value. People paid for newspapers because they wanted news. Quality feature journalism was just a niche bonus. In every other business, it’s the differentiating augmented layer that acts as the primary source of value. Think about the iPhone, people pay for an iPhone because they want everything that makes it more than a phone.

When I opened this story with the assertion that journalism has always been a business on thin ice, it’s because the news media business model, which derives its core value from an undifferentiated commodity, was just waiting to be disrupted. In fact, when the internet wave crashed into the publishing industry, the realisation came that, economically speaking, news actually has no right to be profitable at all. After all, how can publishers expect to sell news when every other publisher is writing the exact same story?

Since the internet removed physical boundaries, people can read the same news on the Guardian, the Herald Sun, the Telegraph, the Wall Street Journal or almost anywhere else, wherever they are. The scarcity that once made news coverage valuable no longer applies. As such the cross-subsidy model in which inexpensive news content pays for resource-intensive feature stories is on its death bed.

As I’ll explain later, publishers are desperately trying to recoup the value of news-based content by rethinking what kind of news stories are published, and how they are delivered. However I would argue that publishers should instead seek to find ways to actively profit from feature journalism. One way could be by decoupling news stories and feature stories, given that the disintegration of the cross-subsidy model is undoing the requirement for the two to exist in tandem.

Is there a solution?

In the age of digital ad networks and content discovery channels such as Google, Facebook and other social media platforms, the ways in which readers are able to access news and the ways in which it is monetised have been completely redefined. That is, the reader loyalty that newspaper subscriptions once mandated has been replaced by a system where consumers simply read stories on platforms where they find it first.

For example, a user browsing their Facebook news feed who stumbles across a link is likely to click through if the headline tickles their interest. For the user, it doesn't really matter what the source or destination of that link is, as long as it tells them the story they want to hear.

As such, link-based discovery undermines the reputation of many publishers as ‘destinations’. The new destinations are Facebook and Google, which aggregate links, bringing order to the abundance of content on the web. The publishers have found that the best card they have is simply to find ways to have their links surface somewhere amongst the persistent trawls of internet users.

Unfortunately, this existential requirement has spawned a practice of crafting misleading click-bait headlines to simply drive traffic in spite of reader frustration. In a world of link-based discovery, publishers are resigned to the fact that there is very rarely any reader loyalty to gain, and click-bait exists as a means to drive immediate traffic as opposed to fostering long-term relationships. But just as importantly, publishers know there’s no loyalty to lose either, and have therefore been at liberty to provide absolutely dreadful user experiences to advance profit-driven motives. Things like invasive advertising, auto-playing videos, and cluttered link-heavy design are amongst many.

As it so happens, this new digital economy is neither conducive to good news reporting nor good news delivery. As a fervent believer in quality journalism, it’s time for a drastic change of focus.

Here’s the thing: news media has always been foundationally driven by the production of news. But as I've explained, news is in fact an economically valueless commodity. It is the feature stories that are exclusive to publishers and defined by in-depth research, unique voices, interesting perspectives, and innovative delivery that are likely to be worth paying for. Worth paying for with real money, not just by suffering through ads which only pay a fraction of the amount for publishers.

In news that may surprise many, including me, it appears that people aren't completely averse to paying for quality editorial. Blendle, a Dutch start-up is one innovation that is paving the way by allowing publishers to decouple feature stories from their publications and sell them individually at a small price each. The platform, which launched exclusively in the Netherlands, but has now expanded to Germany is growing at a phenomenal rate. Blendle’s user base currently exceeds half a million: that’s half a million people in the Netherlands and Germany alone who are happy to pay a dollar or two for a great story.

Much like what is happening in the music industry (bar some quibbles), consumers have proven that they’re happy to pay for content if it’s delivered in a way that makes sense: a seamless user experience, and content that is priced to value. More importantly though, it’s the economics of this a la carte system in the publishing industry that work: it’s a system that makes quality editorial, profitable editorial, and therefore provides journalists with incentives to produce great work. It also means that readers are satisfied, because they can be confident they get exactly what they pay for.

In comparison, why would a consumer ever pay a subscription to a newspaper, limiting consumption to a singular source, getting a bunch of stuff they might not read, and an assortment of news content that can be accessed for free anyway?

Blendle’s model finally corrects the value structure of news media that was wrong the whole time. Feature journalism, the stuff with meat, becomes what people pay for and perhaps the revenue — if garnered with sufficient scale — can be used to support news content produced for the purposes of public interest. This effectively reverses the incumbent cross-subsidy model. In this order, it actually makes sense.

Of course, time will tell how sustainable this model really is. Even so, it’s already providing a new revenue stream for many publishers from a myriad of users who weren't paying for journalism before. If it’s proven anything though, it’s that there still is a kind of journalism we pay for. It’s the investigations, the research, the interviews, and the behind-the-scenes: the kind of stories that journalists work really hard to create, and it feels right that way.