Business model disruption/Financial resource allocation

Situation

The business models of traditional news franchises are being threatened, as a new wave of online development begins to take shape in a rapidly evolving market for on-demand, two-way interaction with news and information sources. This new wave has been spurred by near-universal access to online information resources and improved technology for delivering highly relevant content to consumers through an ever-expanding variety of applications and devices. These developments have fundamentally altered the rules of engagement between information providers and consumers. Traditional “one-to-many” models of mass communication are quickly giving way to new “many-to-one” models that hold the promise of delivering highly personalized news and information to consumers, whenever and however they want to receive it. Business models in this new world can no longer be sustained by depending on users to make “appointments” with established media franchises, such as newspapers, scheduled broadcast programming or even Web sites. News and information providers must enable completely open access to their content, real-time news or archives, across media type, and monetize that open access with a variety of business models. This new imperative has dramatic implications for the economics and mechanics of newsgathering, the quality of journalism and delivery of content to end users.

Challenge and Opportunity 1 – Newsgathering

The most critical issue posed by this shift in consumption patterns and expectations is whether new business models can deliver the kind of financial results traditional media have relied on to fund worldwide newsgathering. If the financial underpinnings of the business give way, resources may dry up for deploying credible and reliable journalists wherever they may be needed to keep the world informed. To avoid a “Gresham’s Law” outcome, where bad information actually begins to crowd out the good, credible news and information providers should rally around common standards for categorizing news. By collaborating on standards, news providers can prepare the daily output of professional journalism for relevant search and discovery applications. A common “taxonomy” for news, provided by a single organizing agency, or by a consortium of respected authorities, could position reliable news sources to become “market leaders” in the new world of personalized information delivery. More relevant search results also could become the basis for new pricing models to bolster sagging revenue streams from traditional platforms.

Challenge and Opportunity 2 – Responsible Journalism

A related threat, if bad information were to crowd out good, is that responsible journalism will suffer. The difficult financial demands of public media companies have already exacted a toll in this regard, particularly during the most recent recession. Separating the measurement of good journalism from the metrics of quarterly financial performance is critical to maintaining a steady flow of support to news operations. Major news organizations that are public companies or part of public companies need to take the lead in demonstrating that good journalism and good business are not mutually exclusive. This can be accomplished by promoting the results of good journalism in conjunction with quarterly or annual reports to market analysts and shareholders.

Challenge and Opportunity 3 – Profitable Partnerships

The solution to driving revenue in a personalized information market is to achieve great scale in delivery. Traditional media franchises, even the largest newspapers or broadcasters, may be unable to do this alone, as information flows freely beyond the bounds of the established franchises. Harnessing the power of new delivery channels is essential to achieving scale in the new environment. Search engines, mobile networks, and hardware and software providers are among the technology players that could be valuable new partners for information providers, much as the early telegraph operators were for news organizations in another bygone era of “new media.”

By Team Biz members:

Mike Bloxham, Director/Testing & Assessment, Center for Media Design, Ball State University
Judy Faber, "Little Judy,” Executive Producer, Spanish Broadcasting System
Michelle L. Horowitz, Vice President/Content Development, PR Newswire
Jim Kennedy, Director of Strategic Planning, Associated Press
Rebecca MacKinnon, Shorenstein Center Media Fellow, Harvard University, Kennedy School Of Government