8 News Media Business Trends for 2010

by Vadim Lavrusik

With the news industry struggling to find new revenue streams that can reshape their broken business model, 2010 will be defined by experiments in news media monetization. This will also include content that is guided more than ever by the audience and ad revenue.

This coming year we will also see the results of news organizations putting pay walls up, as well as new experimental models like accepting Web donations from readers — some of which may prove to be successful. Below are eight emerging news media business trends to look for in 2010.

1. Social Media Monetization

Statesman Twitter Ad Image

The coming year will see emerging business models, including social media monetization. And as advertisers become more comfortable with advertising in social media, news companies will look to capture those dollars.

“Twitter display ads,” said Matt Thompson, interim online community manager for the Knight Foundation. “I don’t understand why this hasn’t happened yet.”

Thompson pictures a half-page ad that is actually a Twitter (Twitter) widget from a retailer’s corporate account. In fact, some news organizations have already experimented with social ads. Robert Quigley, social media editor at the Austin American-Statesman, said they gave Twitter ads a try and have gotten some mixed reactions from followers, but did not lose any of them. The Huffington Post is also going to sell tweets to advertisers.

2. Revenue Beyond Advertising

But maybe news organizations aren’t cut out to dive into social capital. Paul Bradshaw, course director of the MA Online Journalism program at Birmingham City University, said in 2010 news organizations need to at least adapt to the “measurability, customizability and personalization of advertising.”

“Ad sales departments are even more behind than journalists, so I’d be surprised to see them monetizing social capital,” Bradshaw said.

Some news organizations are already beginning to reshape their structures in a way that erases the line between advertising and editorial division. And online advertising is not predicted to overtake the market share of newspapers until 2015. Perhaps rethinking advertising altogether and looking for additional services, value, or products to sell may be a new approach going into 2010.

Steve Buttry, C3 coach at Gazette Communications, outlines a revenue strategy that calls on news organizations to move beyond just ads and look for revenue in direct transactions, local search and lead generation. “I think the advertising model is breaking down and our future is not in finding new ways to sell eyeballs, but in finding ways to facilitate the local marketplace,” Buttry said.

3. As Publications Fold, Others Become Lean and Mean

A tweet from Patrick Thornton best summarized how some felt when they learned last Thursday that the very publication that covers the print industry, Editor & Publisher, was closing: “Does anything better symbolize the state of print media right now than the closure of E&P? Yes things are very bad.” It was a shock similar to the announcement of Gourmet Magazine’s folding.

Though advertising is going to stabilize in 2010 and with it some budgets of print publications, the year will see more print publications close shop or go online-only. However, with publications closing others will come to fill some of the gap. In 2009, there were 428 magazines that stopped publishing, while 275 new ones launched. Those that make it through this downturn will be poised to rebuild leaner and meaner –- investing in the future of digital news rather than simply hoping it fades away like a bad trend.

4. Growth in Hyperlocal and Community Models

Oakland Local Image

With many traditional and regional news organization’s facing cutbacks in staff and in some cases closures, local and community-based models and startups will look to fill the gap in content. In fact, some hyperlocal publication models have done pretty well in comparison to most. This year we have seen the launch of many hyperlocal online news start-ups from the big Texas Tribune to the smaller Oakland Local, often relying on grants or funding from wealthy donors.

Michele McLellan, a news consultant who blogs at the Knight Digital Media Center, said the sites that will succeed going forward are sites that are highly entrepreneurial and community-driven with a tech expertise. The best example she’s seen is that of Oakland Local, which is a blend of building community and a focus on using technology to gather and report news.

David Cohn, founder of community-funded reporting startup Spot.Us, said there is a huge opportunity in hyperlocal news “that if missed is like giving away a golden goose.” However, the problem he said is that traditional news organizations still need to let go of the idea of “big journalism.”

“Whether traditional media companies or small media companies pioneer it – there is a future,” Cohn said.

5. Local Advertising Grows

Cohn is right. There is a future in hyperlocal, and advertising is a big part of it. According to eMarketer senior analyst David Hallerman, “the economic cycle has reached bottom –- at least for the online ad industry.” Hallerman authored a report on 2010 ad spending, projecting a 5.5 percent growth. The highest growth is expected to come in online video with a 34 to 45 percent growth between 2009 and 2014.

And Borrell Associates predict that local online ad growth will continue, and project a 5% growth for 2010. It’s clear why large news organizations like CNN are investing money into local aggregator content sites like Outside.in.

6. Local Advertising Models Emerge

Place Local Image

Some companies are looking to take advantage of the growth in local ad dollars. PaperG is launching a new product called Place Local. Place Local is currently in stealth, but Victor Wong was able to demonstrate the new ad-generating application for us.

The basic idea behind the application is that it automates the ad creation, sales, and management, Wong said. If a local advertiser agrees to place an ad on a site, all you have to do is type in their address and name into Place Local and the application generates an ad to be placed on a site based on content pulled off the web, which can include the logo, picture and even a web review. “In 2010, I think what you’ll see is that everybody is an advertiser,” Wong said.

Fwix, a local news aggregator site available in five different countries, is launching Adwire widgets, which let people embed a content widget that includes text ads within the stream of news headlines (identified as ads) from a specific location.

The ads are also locally targeted. Darian Shirazi, CEO of Fwix, said the the company is sharing Adwire revenue with those who place widgets on their site. Shirazi said they are also releasing a video version too, which will play pre-roll ads.

7. To Charge or Not To Charge?

Some news organizations that have been tip-toeing around the idea of putting up pay walls will finally take the dive in 2010, and most will see a decrease in traffic, similar to the early results Newsday has seen. The readers that do end up paying for content online will be loyal and few.

However, Cohn from Spot.Us points out that if any pay walls do work, it would be for national brand news organizations. “I am actually cheering [Murdoch] on. Somebody needs to try it so we can stop having the conversation,” he said. “But I don’t think it will be successful for News Corp and I am very confident it would be a disaster for most news organizations.”

Gina Chen, a Ph. D. communications student at Syracuse and blogger on the news industry, said news organizations that put up pay walls may die and flounder and those that don’t will be forced to innovate new ways to make money. Chen said the future for news organizations will have less to do with news than it will be about filtering information and “making life easier for readers.”

“News organizations’ product isn’t news, it’s making sense of a community for readers,” Chen said.

8. The Freemium Model

Mathew Ingram, communities editor at The Globe and Mail said that if the likes of Rupert Murdoch are able to make a pay wall work and get some money from Bing (Bing) for indexing content, he would be losing far more potential value if he were to go with a more open model instead.

Ingram said that a “freemium” model that has free content and value-added content or services that require payment make much more sense.

What other business models are you seeing emerge for news media in 2010? Share your thoughts in the comments below.

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