Sarah Rich and Alexis Madrigal deserve a ton of credit for creating The San Francisco Post-Chronicle, a wiki dedicated to "building a model for the daily news organization of the future." Anyone who believes proactive brainstorming will lead to a reinvigoration of the content business should take a look at this site (curmudgeons need not apply).
The wiki covers nearly every angle, section and position found at a large metropolitan newspaper, but I found the business model page most interesting. Quotes and comments follow:
Journalists don't like to talk about cost control -- maybe because it seems that's all the biz types do talk about -- but if we're going to offer a workable model for the future of news, we've got to look the problem in the eye. We're assuming 140 employees, just for fun. Below, you'll find a possible distribution of employees with salaries attached. Perhaps this is completely the wrong approach. There are other models we could explore, say, bonuses -- a la Gawker -- for high-traffic stories? [Link included in original post.]
Three comments here:
- Journalists who ignore business models won't be journalists in the future. Everyone -- every ... single ... person -- involved in a content operation needs to understand how their work fits into the business. You need to justify your existence to the company and to yourself.
- I've harped on scale quite a bit lately, but it bears repeating: digital content businesses cannot -- and should not -- support the vast infrastructure of traditional media. A staff of 140 is simply too big (to their credit, the folks running and commenting on the wiki consistently challenge this figure). The point isn't to employ 100+ people, it's to develop a sustainable content product that serves a specific group. Low-cost content management systems and the vast number of Web-based tools allow a small staff to generate a lot of content with minimal overhead. Start small and fight to stay small -- that's the key.
- In theory, I like The Gawker bonus model, but anyone implementing a page-view-based incentive program needs to understand the sheer number of page views needed to make this type of program attractive for writers. Let's say you get $10 CPMs (that's a big if, but $10 is a nice round number), and you've got four ad slots per page. A single story generating 1,000 monthly page views would bring in $40; 5,000 page views = $200; 10,000 page views = $400. Seems reasonable -- especially in that 5-10k page view range -- but those types of stories are few and far between. Even if a writer generates three 10k stories per month (possible, but unlikely), you're looking at only $1,200 in ad revenue. How much of a bonus does that net? $100? $200? There's a dark side to page-view incentives as well: writers learn the dirty tricks of Web traffic. Your site becomes riddled with lists and photo galleries and celebrity gossip. This type of material grabs short-term attention and boosts page views, but value dissipates and those all-important CPM rates eventually drop because your audience is no longer targeted. A page-view incentive system might work if ground rules are set (no bonuses for cheesy traffic grabs) and it's positioned as an add-on for writers, not a reliable revenue stream.
Here's another interesting bit from the business model page:
One scary thought: this investing blog estimates that only five blog/blog networks -- the Gawker network, HuffPo, Drudge, Perez Hilton, and Sugar, Inc -- make more than $7 million a year. [Link included in original post.]
Blogs make money, but they don't make old-school newspaper money. The reason: audiences are no longer locked in to a small number of distribution channels -- they go where they want, when they want. Attention is spread over a wide number of products (online and offline) and the huge number of eyeballs once enjoyed by newspapers and broadcast television are gone -- forever. If you can make $7 million -- or even $1 million -- from a blog network, God bless you.
The Post-Chron business model page closes with a section that looks at ways to create value for employees without spending cash. There are some fantastic ideas here:
The assumption of the right to work from home, reducing commuting costs and handing employees an extra hour a day.
If you're creating a Web-based product and you've hired people who don't need babysitting, telecommuting is a no-brainer. Let people work from their chosen locale. Give them schedule flexibility. Let go of the command-and-control attitude and trust that they're getting the work done.
One weekday off per week (replaceable with a weekend day) to work on freelance stories for other publications.
The combination of low ad rates and small audiences makes freelancers attractive (i.e. - no benefits, little overhead). Let your employees take advantage of those outside opportunities. If they become self-employed superstars, hire them back as freelancers.
Support for building personal brands online through Twitter, Facebook, web pages, and other means.
Attention is the scarcest product on the Web. Companies need it to sell ads and products. Individuals need it to book gigs (and sometimes sell ads and products). The interesting thing about attention is that it can be redirected and shared -- a company can send attention to an individual and an individual can send attention to a company. If these entities engage in mutually beneficial attention sharing, they both benefit. Case in point: We invited a number of guest writers to contribute to O'Reilly's Tools of Change for Publishing blog. Exposure on our platform helped these writers boost their industry profiles, but these same writers used their own sites to direct attention back to the blog and related TOC projects. It was a beautiful, organic cycle.
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