Industry, scholarly and policy discussions about the future of the news industry in North America and Europe continue to focus on how news enterprises can sustain themselves in the 21st century. Publishers keep asserting that things will be fine if they can erect pay walls and charge for news online and they argue that governments should provide legal protections for online news so they can make news a viable digital business product.

Their approach is wrong and ignores the fundamental reality that news has never been a commercially viable product because most of the public has been, and remains, unwilling to pay for news. Consequently, news has always been funded with income based on its value for other things.

Historically, the first collection and dissemination of news was funded in ancient times by emperors and kings, who used governors and officials throughout their realms to collect news and information and send it to the seat of power. Emissaries, consuls, and ambassadors collected foreign news and information in places important for trade or seen as potential threats to the realms. In this Imperial Finance Model, news and information were collected and shared with officials throughout the realms to assist in governance activities. This revenue model was based on official financial support because it served the interests of the state.

In the Middle Ages, a Commercial Elite Finance model developed in which wealthy merchants hired correspondents in cities and states with which they traded to collect information about political and economic developments relevant to their trade. Linen, porcelain, sherry, and spice merchants used the news for commercial advantage and held it in confidence rather than sharing it with others.

In the 18th and 19th centuries a broader Social Elite Finance Model developed to support newspapers that served the needs of the aristocracy and widening merchant class. Even with high cover prices, this model news was not viable and newspapers were subsidized by commercial printing activities and income from other commercial activities, governments and political parties, and merchant associations.

The Mass Media Finance Model appeared in the late 19th and 20th century, made possible by the industrial revolution, urbanization, wage earning, and sale of finished goods. In this model news was provided for the masses at a small fee, but subsidized by advertising sales. Because most of the public was uninterested in day-to-day events and “hard” news, the bulk of newspaper content was devoted to sports, entertainment, lifestyle, and features that increased the willingness of the public to spend pennies for the product.

This mass media financing model remain the predominant model for financing news gathering and distribution, but its effectiveness is diminishing because the “mass” audience is becoming a “niche” audience in Western nations as those less interested in hard news continue abandoning newspapers for television, magazines, and the Internet. This is creating a great deal of uncertainty how society will subsidize and pay for journalism in the twenty-first century.

Focusing on news as a commercial product appears futile and commercial news providers would do well to put their efforts in creating other commercial activities that can subsidize news provision, such as events, education and training, bookstores, travel agencies, and a variety of merchandising activities. Many publishers subsidized news activities with these types of activities a century ago and some continue to do so. It is likely that news providers will rely on a far wider range of revenue streams in the future than merely on the consumer and advertising streams upon which they depend today.


Jason Grant said...

So true, interesting debate and should be taking seriously by others looking to set up news organisations.

Grospoulet said...

Merci M. Picard de vos exposés qui font contre-poids à l'envahissante pensée unique. Je me permets d'émettre un commentaire supplémentaire ayant trait au fameux modèle économique du média de masse et de sa survivance grâce à la publicité.J'aimerais rappeler que le modèle économique d'un journal est celui d'un système à deux faces: certes le journal tache d'attirer un lectorat par ses nouvelles (d'ou cette surenchère dans le titre et le traitement de l'information), mais son objectif ultime est de vendre ce lectorat au publicitaire et non pas de se contenter de vendre de l'espace publicitaire...

mgeorgieva said...

I disagree, actually.

If newspapers show unique value, readers will be willing to pay. The Wall Street Journal and the Financial Times, for instance, seem to be doing fine.

Local newspapers, such as the Daily Hampshire Gazette, whose content is remarkable enough and cannot be found elsewhere on the Web, also seem to be doing fine.

Advertising sales might remain the dominant revenue stream, but paid subscriptions need to also enter the equation. This is especially possible with the separation of mass audience into niche communities.

anke said...

i like the <“mass” audience is becoming a “niche” audience> part :-)