The Business Model That Will Save Journalism

Advertising, wearables, Oculus, Bitcoin, Snapchat, and sponsored content won’t save Journalism with a capital J. But lateral thinking and a little treeplanting might.

I’m not worried about the death of content. The Internet is made of the stuff. Nothing captures the human mind and attention like a great story, and I believe nothing ever will. It’s in our biology.

But the Journalism business is an old man on life support.

That’s what the news tells us, at least. One thing that’s become painfully obvious in my last four years building a media-tech company (Contently) is that the shaded area of the Venn diagram between “Effective Journalist” and “Effective Businessperson” is geometrically tiny. Creative brains are naturally great at providing value without managing to capture it. But I don’t think that means we journalists need to give up—we just need to help the suits find a business model that works.

So what is the business model that will save Journalism?

Two and a half years ago, I argued that this was the wrong question, that the news would not be saved by one magic cure but a by a cocktail of different models. At the time, I predicted four:

  • Crowdfunding of stories (pre- and post-publication);
  • Crowdsourced and/or roboticized news-gathering for lowering the cost of coverage;
  • “Lean” publishing (i.e., low-overhead digital news outfits like Mashable);
  • And branded content.

A lot has changed in those 30 months. Nearly every major media outlet has adopted sponsored content in some form. Startups have talked investors out of millions of dollars to serve brands-turned-publishers. Tech billionaires like Marc Andreessen, Jeff Bezos, and Pierre Omidyar have bought or talked their way into the news business. Snapchat happened. Oculus Rift occurred. Twitter went public. My company, which drew skepticism early on from investors who said, “Content is a bad business,” started getting courted by those same investors, now with dollar-sign eyes. We raised 9 million dollars to build branded content tools and grew from ten to seventy employees and about half of the journalists in America.

In 2014, the world sees itself through brand new lenses. It’s time that the Journalism business did, too.

In his new book Geeks Bearing Gifts, veteran journalist, entrepreneur, and CUNY professor Jeff Jarvis argues that the key word for the future of Journalism is “relationships.” I couldn’t agree more. Historically, media companies have been the businesses with the best relationships with their audiences, the most loyalty and attention. That’s primarily because they are in the business of giving information and telling stories, and, as I often say, great stories build relationships and make people care.

In the introduction to Geeks, Jarvis writes, “I hope that every reader of this essay outdoes me … finding more and better routes to explore—and exploring them. I hope to hear the discussion about news shift from its lost past to its future—its many possible futures.”

That’s what I’m hoping to do now as I revisit my and others’ predictions about the future of our industry.

But first, I’d like to discuss the problem with every argument I’ve heard about the future of Journalism:

Journalism vs. content: A vital distinction

Critics of the news business and of the recent flourish in brand publishing[1] tend to conflate two things that are very, very different: Journalism with a capital J that exposes injustice and reports news that’s important for democracy and society, and stuff that we call Journalism but actually isn’t.

The fact is: Most of what we read in magazines or watch on television or browse on the Internet is not journalism. It’s information, education, entertainment. But not Journalism.

When I read my monthly issue of Details magazine, it’s not Journalism. I’m under no illusion that the story about “8 Topcoats Perfect for Beating Fall’s Cold,” or the feature on Rick’s epic beard on The Walking Dead, are making me a better voter or keeping the government accountable. Nor are Details’ editors. They’re giving me entertaining, sometimes uplifting, and nearly always illuminating content. But they’re not giving me Journalism.

And that’s fine.

For the first couple years of Contently, back when people were calling branded content “brand journalism,” I worried about the questions we got regarding how brands could possibly “do Journalism” when one of the core tenets of Journalism is to “act independently.” I felt better after interviewing ethicists and standards editors for our Code of Ethics, but then Bob Steele of DePauw University admonished me, “Accept the fact that it’s not Journalism. It’s a very different animal.”

Accepting this fact made it easier for me to swallow the idea of our journalists finding and telling stories on behalf of brands. When a photographer shoots a wedding on the weekend, or a commercial for Mountain Dew in her spare time, she’s not yelled at by her photo editor at The Wall Street Journal when she comes in on Monday to photograph a campaign speech. The key is in transparency about where you’ve worked, where your loyalties lie, what your intentions are as a creative person or a publisher, and not fronting like what you’re doing is Journalism when it’s not.

This is why it’s troubling when you see a company like Verizon attempt to cover news and politics while scrubbing information on topics that affect its business and only disclosing that it’s the sponsor in a footnote at the bottom of its website. But when GE writes about a DJ making music from industrial machines, or about the Nobel-winning former GE scientists who invented the LED on, GE makes it clear who it is as a brand. They make it clear that it wants the reader to like its company, to advocate for the brand and perhaps eventually buy GE products. They’re making it clear that they’re providing information and entertainment, not Journalism—just like Details and 90 percent of the rest of the magazines and blogs we read.

The problem is that people generally don’t differentiate these two types of information when they talk about content. That’s likely our own fault as the press. Reporters seem to be bad at articulating the difference and good at conflating the two, often in the service of the hand-wringing concern that “lines are blurring” and “the sacred cows are being murdered.” And the distinction is made blurrier when a brand publishes not on its own turf, but on a journalistic media property as “sponsored content.” More on that later.

This distinction between Journalism and content is crucial to the discussion of business models because the former has never been independently profitable. By ignoring this fact, and the difference between what-to-wear entertainment and keep-the-government-honest Journalism, we distract ourselves from the actual challenge at hand.

“Pure” Journalism has always been subsidized

We need to admit to ourselves that high-minded Journalism was never a good business by itself. In the newspaper, the ads in the sports section have historically paid for the war reporting on page one. Commercials keep the power on at the radio station. The glossy photo of James Bond wearing an Omega watch lets Tom Junod report on mercenary assassins. Bloomberg’s terminals subsidize Bloomberg News. The content that we are generally willing to pay for online—music, television shows, books—by and large aren’t Journalism; the movies and music and books that a journalistic outlet might have once sold on the side as an e-commerce play are now available on demand and lower cost from Apple and Amazon. And, of course, rich families have kept less-than-profitable news orgs afloat as long as any of us have been alive.

The “great unbundling” of the news business that’s been talked about is about exactly that: the disentanglement of things that aren’t Journalism—but pay for Journalism—from the Journalism that was never that profitable. Sports and watch advertisers creating their own publications to compete with their former ad outlets is just the next evolution of the Internet’s magnetic pull, which has already shifted ad money from Esquire to Google.

Publishing became a lucrative enterprise because media companies—whether news or not—had audience. As much as it pains me as a creative person to say it, it was that attention that the advertisers paid for, not the content itself (though the content attracted the attention). But even the advertisers steered toward the information and entertainment and education kind of content, because that’s where their business was.

As media entrepreneur Brian Alvey once told me, nobody wants to advertise next to the story about the orphanage fire.[2]

What won’t “save” journalism

So. Media’s economics are strongest for content that’s not Journalism. And bundling is largely done for. Additionally, with the rise of the web, advertisers want their ads to be closer to the purchase than ever before. We’re not going to go back to a model based on exposure—how many people drove past the billboard. So advertisers pay based on clicks (and, increasingly, attention time). Publishers, meanwhile, cram ads into every crevice imaginable, from the related links to the comment sections to the story feeds.

That’s not going to save Journalism.

We’ve finally gotten past the point where news orgs are trying to stuff last century’s tape back into the cassette. However, I contend that most of the technologies that critics and entrepreneurs get excited about with respect to the future of media are at best wishful thinking with no economics to support them—and at worst just dumb.

Case in point: When I was writing about the rise of geo-location social apps like Foursquare and Loopt and Gowalla in 2009, “bleeding-edge” media critics hailed geo-social as the beacon of hope for the news business. “We’ll get news alerts beamed to us based on our locations!” we cried. “And that will… somehow… make money…”

In reality, all those applications did was give reporters tools to do their jobs a little better, while siphoning more ad money away from their parent companies. In fact, media companies like New York and Bravo were some of Foursquare’s earliest paying customers.

Likewise, when I see posts about how virtual reality or wearables or “ephemeral content” (e.g., Snapchat) will save news, all I see is a desperate industry grasping for hope. In reality, little of the money made from computer watches will find its way to news orgs. Optimistic media bloggers tend to stop typing right before the part where math is required.

This includes Marc Andreessen’s prediction that “Bitcoin for micropayments” will save the news. A new currency, even one that divides into tiny, tiny increments, does nothing to address the fundamental problem of funding journalism. It’s a cool technology, but not a business model.

Finally, though of all people in the content industry I should be bullish about brand publishers’ potentially positive effect on Journalism (because building relationships through storytelling is more effective than advertising, and so much nicer, too!), I’m skeptical that sponsored content will be the economic savior of the news business in the long run. For two reasons:

1. It’s hard to mix the Journalism and Advertising worlds without diluting the value of the Journalism Brand. Studies show that people don’t trust sponsored content as much as both publisher and advertiser would like. This is often due to labeling and editorial design—people don’t know whether “sponsored post” means the post was written by the advertiser, or if the advertiser simply underwrote the post but didn’t influence the content. But even when we get the labeling right, there will be a natural limit to the amount of sponsored content that a reputable publication can shove in front of people before it alienates its audience and loses the asset that it’s able to charge a premium for in the first place: its own brand.

2. Sponsored content works best for the kind of content that advertisers have always wanted to be associated with: The not-Journalism content. This is precisely the kind of content that brands can publish under their own banners, on their own websites and in their own magazines—at lower cost and higher ROI because the brand can own the experience from content to shopping cart (or brand advocacy). I predict that in the next two-to-five years brands will shift from sponsoring information and entertainment to producing their own rival publications. Writing for the Columbia Journalism Review last week, Michael Meyer seemed to agree, writing: “One day soon, native advertising may be recalled as a quaint evolutionary step, as brands are increasingly comfortable simply reaching an audience themselves.”

This will push the premiums for sponsored real estate down to the point that news organizations need to find yet other ways to subsidize their non-advertiser coverage.

I do believe that sponsored content will be a profitable business for a little while. It just won’t be the panacea for the news. And I think by nature it will be much more profitable per unit for Details magazine than it will for The Washington Post.

What Can “Save” Journalism

In my book, I write about how “lateral thinking”—or the questioning of our most basic assumptions—has helped innovators and revolutionaries throughout history make breakthrough change. One of the problems with the news business is that we don’t use much lateral thinking; the models we construct are built on centuries of assumptions. Like when we defined automobiles by the past paradigm, calling them horseless carriages. When we strip away those assumptions and analogs and “best practices,” what we’re left with are the principles that I believe can lead to real ways forward. And you find at the crudest level two models for funding Journalism: subsidizing it, or getting people to directly pay for it.

I think we can still find profits in both categories:


Two and a half years ago, I predicted that crowds could directly pay for Journalism. Sites like Beacon do this now in the Kickstarter method: People pitch in to fund a story idea, then a reporter makes the story. Conversely, companies like Atavist act much like book publishers, funding stories out of their own pocket with the hopes that consumers will essentially crowdfund back the advance in $1.99 increments. We’re seeing a little, but not much, traction in this field. Paywalls like the one employed by The New York Times essentially do this: They pool readers’ money for content.

In the future, the paywall/crowdfunding/subscription model will only work, I believe, in the presence of two if not all three of the following variables:

1. Premium content, of a high caliber

2. A niche audience

3. A top, respected news brand

Again, the math is tricky. It might take something like a half million subscribers at $10 a month to pay for a 500-person newspaper staff’s salaries. That’s more than the 1,300-staffed NYT‘s current subscriber count. So subscriptions alone are not enough to keep Big Journalism’s nose above water.


I think one of the most important ideas for the future of the business of Journalism is this: Instead of chasing new technologies and shoehorning them into old business models, we should step back and ask, Can the fundamental assets that news orgs accrue be used to generate subsidies for Journalism? If they can, this is good news. If news orgs can maintain market leadership with products that can also subsidize Journalism, those subsidies will be hard to siphon away.[3]

Here are the core assets that effective journalistic organizations accrue over time:

  • Audience relationships
  • Expertise in publishing and distributing content
  • Deep institutional knowledge of an industry
  • Sometimes: proprietary publishing tools

I think the “business model that saves Journalism” is a cocktail of subsidies generated by the smart monetization of the above assets. Here’s my current thinking on each:

Audience relationships:

Access to audience is what media companies typically sell advertisers. Now that we have Google and Twitter and Facebook and every other website to compete with, selling online reach to a targeted audience is a tough business to win. But one advantage media companies do have with their audiences is immense trust built on telling stories. These relationships can be monetized through events where the audience can meet each other in person and pay for live access to content, speakers, and talent (e.g., anchors and writers). Audiences are willing to pay for this kind of access with media brands to which they’re loyal, and we’ve seen many smart media companies start to take advantage of this in earnest. Events are not necessarily an interesting business for Google (which likes revenue opportunities with a couple more zeroes attached to the them), but for media brands, it’s effective.

Second point on this front: Contently Editor-in-Chief Joe Lazauskas often talks about media companies’ ability to leverage their audiences’ enthusiasm to contribute content by creating “minor leagues” wherein lots of user-generated content happens, and the good stuff bubbles up to the main brand. Examples include Gawker’s Kinja, BuzzFeed’s blogs, Forbes’ contributor network, and Medium. A lot of low-class content gets created by the audience itself at these secondary tiers, and exceptional stuff periodically gets brought to the main brands. This is a way to lower the cost of creating quality content (through a spray approach, essentially). This doesn’t solve the model question, but it does help with one of the inputs of the model. It also carries the advantage of infusing news organizations with new blood and points of view.

Finally, though the world is full of content, good publishers are in a position to engage audiences with better content than alternative sources of entertainment on the web. As more of advertising turns to the attention-based model that Upworthy and Chartbeat and others (including Contently) advocate, the incentive for those who make money from advertising is to engage people longer. News organizations, with their expertise in building and maintaining relationships with audiences, can win at this game.

I do harbor skepticism that attention-based advertising will work in the long run, simply because an advertisement next to the thing that you want as a consumer is not a good experience. (And I’m further skeptical that the longer you read an article necessarily means that you’re paying more real attention to the ad on the side of the article, though research shows there’s some correlation here.) I think the rates for attention-based banner advertising will eventually fall, but the so-called silver tuna in this model is when you apply it to sponsored content. If readers pay lots of attention to a sponsored article, that’s valuable to a brand, and brands will pay a nice premium for that.

Publishing expertise:

Many (and I think soon most) commercial brands now aim to become publishers and build audiences of their own; they’re turning to agencies for content strategy and solution providers (like Contently) for the tools, talent, and expertise to execute. Every variety of agency, in fact, from PR to creative to media to digital, is now pitching “content marketing services.” News brands are in a unique position, given their expertise in publishing, to compete against them for seven-figure contracts as consultants and agencies for this growing line of business.

If I were Ogilvy, I would be nervous that Fast Company or Vogue could step in and steal clients, helping them build big publications with legitimate audiences. This practice will pose questions about church-and-state separation within a media brand, and those ethical issues are going to be important future discussions. But I’m convinced that news organizations with deep publishing expertise are in a unique position to gobble market share as service providers for brands-turned-publishers, whether the brand is doing sponsored content or building its own publication.

Deep industry knowledge:

There’s a scadzillion “publishers” out there dumping content into the Internet’s maw every day. But journalistic organizations with good reputations and top talent are in a position to provide deeper information for businesses and researchers—as B2B publishers.

The product: premium educational (not Journalistic) content. On subscription or demand. Think academic studies, books, industry reports, and market research. This is the model that the Harvard Business Review pulls off well with its books and case studies and research. 99u, the publishing arm of Adobe’s Behance, makes a bit of money publishing books and other products based on its reputation and expertise, as do magazines like Men’s Health with its house-made books.

The B2B research and educational publishing markets are massive and growing, and journalistic publishers have an opportunity to win share in these areas.

Proprietary publishing tools:

Many of the fast-growing new media companies of the last decade have developed their own technologies for better publishing. The Huffington Post used its headline-testing tech to grow its business. Vox and BuzzFeed tout their content management systems as competitive advantages. Circa attributes its mobile content atomization tech to its success so far. And Medium’s clean publishing experience is both the envy of the publishing world and a big reason for the company’s growth.

Regular ol’ software companies like Adobe and Sitecore and Automattic make billions of dollars off of technologies like these. Any tool that a publisher develops to make publishing better could possibly be licensed as SaaS (Software as a Service) on a four- to five-figure monthly subscription per client. This would require resources to support and maintain, but it’s a great business with high margins. Basically: Media companies can become software companies, publishers-turned-brands instead of brands-turned-publishers.

This is essentially what we realized that Contently did not long ago. We built a marketplace for hiring freelance journalists, and in the natural course of business developed project management and publishing technology to help companies—and ourselves—manage this talent and content more effectively. We used this platform to grow our own industry publication, The Content Strategist, to hundreds of thousands of readers. That publication pulls in customers for our publishing tools, which we charge for on a monthly subscription. The content attracts the audience, which proves the value of the publishing platform that creates the content, which pulls in clients and profits for the business, which fund more content.

And that brings me to the Journalism business model that I’m perhaps most excited for:

A new model: Corporate responsibility

We started Contently with a vision of what we call “a better media world,” where content is awesome and interruptive advertising doesn’t exist, where storytellers get paid what they’re worth to do what they love, and consumers get content they want without feeling betrayed. As our business grew, we kept asking the question, What happens to the kind of Journalism that newspapers can’t afford? We were helping brands publish information and entertainment, and therefore journalists make a living, but we weren’t doing Journalism.

Until we realized that our brand revenues could subsidize Journalism just like brands always had. In this case, as a form of corporate responsibility.

Most corporations have initiatives for giving back to their communities—planting trees or cleaning up highways. As a company that cares about Journalism, we decided to put some of our profits toward funding investigative reporting in the public interest. So we formed a nonprofit called The Contently Foundation and started commissioning stories about gun trafficking and illegal surveillance and sex slavery—real Journalism that gives voice to the voiceless and has nothing to do with our brand marketing goals.

If we think about real Journalism as a public service, we ought to be able to ask corporations to do the same: to donate to nonprofit Journalism as part of their responsibility to their communities. I think Starbucks and Zappos and Whole Foods and other brands that like to show that they care about community ought to put some of their profits toward funding public-interest Journalism—and do it without expectation of influence on the coverage that ensues. There are plenty of ethical guidelines to be created and enforced around the model, but essentially, we’d be asking corporations to fund a slew of ProPublicas.

The exciting part about this is that Fortune 500 companies spend $15 billion dollars a year on corporate responsibility. A small percentage of that could fund a lot of Journalism for a long time.

When I was a kid, I was terrified of the part in All Dogs Go to Heaven when Annabelle tells Charlie, over and over, ”You can never come back.” We in journalism can never go back to a pre-Craigslist, pre-WordPress, pre-Oculus world. But we can stop being so scared about what comes next.

“We still have more imagining to do,” Jarvis writes in Geeks. I’m imagining a terrific new life after old media’s death.

It’s just going to be different than we pictured.

Image by Tara Jacoby

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