Chasing Sustainability on The

CHASING SUSTAINABILITY ON THE NET THE ON SUSTAINABILITY CHASING International research on 69 journalistic Editors pure players and their business models Esa Sirkkunen Clare Cook This report outlines how online-based journalistic startups have created their economi- Writers cal locker in the evolving media ecology. The Esa Sirkkunen research introduces the ways that startups Clare Cook have found sustainability in the markets of Pekka Pekkala nine countries. The work is based on 69 case Mikihito Tanaka studies from Europe, USA and Japan. Johanna Vehkoo Nicola Bruno The case analysis shows that business Luchino Sivori models can be divided into two groups. The storytelling-oriented business models are still prevalent in our findings. These are the online journalistic outlets that produce original content – news and stories for audiences. But the other group, service-oriented business models, seems to be growing. This group consists of sites that don’t try to monetize the journalistic content as such but rather focus on carving out new functionality. The project was able to identify several revenue sources: advertising, paying for Esa content, affiliate marketing, donations, selling data or services, organizing events, freelanc- Sirkkunen ing and training or selling merchandise. & Where it was hard to evidence entirely new revenue sources, it was however possible to Clare find new ways in which revenue sources have Cook been combined or reconfigured. The report also offers practical advice for those who are (eds) CHASING planning to start their own journalistic site. ESA ESA S IRKKUN E SUSTAINABILITY N & CLAR & N E University of Tampere ( COOK ISBN 978-951-44-8966-2 On tHe nET E DS) Cover: Teemu Helenius Chasing Sustainability on the Net International research on 69 journalistic pure players and their business models Editors: Esa Sirkkunen, Research Centre COMET, University of Tampere, Finland Clare Cook, University of Central Lancashire, United Kingdom Database project lead: Pekka Pekkala, USC Annenberg, USA Contributing authors: Mikihito Tanaka, Waseda University, Japan Johanna Vehkoo, UK Nicola Bruno, Italy Luchino Sivori, Spain Leader of the project: Professor Risto Kunelius, University of Tampere, Finland Layout and graphic design: Teemu Helenius Juvenes Print Tampere 2012 ISBN 978-951-44-8967-9 (PDF) Abstract The SuBMoJour study maps sustainable journalistic startups in nine countries. It includes an online database detailing the business models of these entrepreneurial sites (www.SuBMoJour.net) and an accompanying narrative analysis. The study supports research to date that online environments offer the neces- sary market characteristics for niche journalistic sites and content production. There is a rich and diverse set of media case studies in the database, all with their unique interpretation of serving communities or reportage. The study maps the business models of journalistic startups firstly within national settings, thus allowing for a comparison between countries, and secondly in terms of revenue models. It includes 69 case studies gathered by semi-structured interviews over 12 months by an international team of researchers. In our findings the business models of the cases fall into two main categories: those which have storytelling-orientated business models and those which rely on a more service-orientated model. The sites whose business model is based around storytelling are still prevalent in our findings. These sites focus on making money from producing original content, news and stories, for audiences. The difference to the mass media model is that in the online world the target audience is smaller. Online journalism relies heavily on niche audiences built around targeted themes such as hobbies, neighborhoods or psychographic tendencies. In this niche journalism there is a tight triangulation between journalistic content and advertised products. The other group, service-oriented business models, seems to be growing. This group consists of sites that don’t try to monetize the journalistic content as such. For example citizen journalism sites are more like platforms that curate and moderate citizen-oriented content, or news aggregators compile stories form other outlets. Some startups have specialized in selling technology, information, training or diversifying to redefine what it means to do news. The project was able to identify several revenue sources used. In advertising, display was the most widely used source including cost per view, cost per click as well as weekly rates, ad networks and sponsorship. Paywalls, subscriptions and freemium models were evidenced as methods to charge for content. Less common were revenue sources such as affiliate marketing, donations, selling data or services, organizing events, freelancing and training or selling merchandise. Where it was hard to evidence entirely new revenue sources, it was however possible to find new ways in which revenue sources have been combined or reconfigured. As such, while there may be a lack of new revenue sources among startups, there is potential innovation in new business models by way of com- bining revenue sources in new and interesting ways to make sites profitable in the long term. Most of our cases are not challenging the legacy media, rather supplementing it by serving smaller niche audiences or finding a place in the media ecosystem as suppliers of niche content to bigger media outlets. Finding a new place in the supply and demand chain of news can become an important feature of some pure players. Grassroots product development is also an area of increasing interest. Cases within this study support a growing trend for innovative platforms, either within the app economy, multimedia or mobile. The project aims to increase the resources on which media entrepreneurs can draw acknowledging the growing likelihood for journalists to work alongside, within or indeed create such entities. The report also offers advice for those who are planning to start their own journalistic site. For example it is crucial to keep your costs low, team small and master many skills – including entrepreneurial thinking and building relationships with the advertisers from the start. It is also important to know the niche that you are serving and build the concept so that the site offers more valuable content or services for the users than competitors. Acknowledgments We want to thank the Helsingin Sanomat Foundation for funding this project and supporting us in various ways during our work. We also want to thank the Academy of Finland’s MOTIVE-program for supporting professor Mikihito Tanaka’s visit to Finland in Spring 2012. Research Centre COMET wants to thank USC Annenberg School for Communication and Journalism and Wase- da University Graduate School of Journalism for a fruitful cooperation in the SuBMoJour-project. Contents 1. Introduction 7 Esa Sirkkunen, Clare Cook and Pekka Pekkala 2. Diversified media landscapes 16 2.1. Overview of media systems 17 Esa Sirkkunen 2.2. USA: Moderate success after a long crisis 21 Pekka Pekkala 2.3. Japan: Journo-based and journo-oriented 29 Mikihito Tanaka 2.4. UK: Big media friends 42 Johanna Vehkoo and Clare Cook 2.5. France: Tensions and diversity 52 Clare Cook 2.6. Italy: An unfinished transition 62 Nicola Bruno 2.7. Spain: Enthusiasm and fragility 72 Luchino Sívori 2.8. Finland: Legacy dominates 80 Esa Sirkkunen 3. Revenue sources 88 Clare Cook and Esa Sirkkunen 4. Sustaining journalistic entrepreneurship 108 Pekka Pekkala and Clare Cook 5. Conclusions 116 Clare Cook, Esa Sirkkunen and Pekka Pekkala About the authors Appendices Chasing Sustainability on the Net • 7 1. Introduction Esa Sirkkunen, Clare Cook and Pekka Pekkala The media landscape is changing. The stranglehold of mass media over production and dissemination is loosening, and media entrepreneurs are increasingly taking up their place in a fragmented media ecology. New global actors have emerged as the production, consumption and distribution patterns transform (Wunsh-Wincent 2010; Newman 2011). And this new era of entrepreneurialism is not just about Silicon Valley: media entrepreneurs around the world are har- nessing new tools, ideas and platforms to flex their muscles and redefine what it means to do journalism. Change is constant. The old way of making money is broken and most organisations are facing an unstable economic future, especially for those profes- sional and legacy media in most of the Western countries. The rapid transition in media markets, which started to intensify in the USA after 2006, has more recently struck other countries. The fundamental stability of the industry as a lucrative business has been drawn into focus. Even countries like Finland and Japan with high newspaper density are facing a rapid shift in the media economy and production. There are several common factors being faced everywhere. Firstly, the legacy media business model is struggling to adapt to an online and networked envi- ronment. As Picard (2010) states, it should be remembered that journalism has never been a viable product as such. It has always needed some other source of revenue than just the money collected directly from the readers. The mass media model that has been so successful and predominant for more than a century has based itself largely on two revenue sources: small fees collected from the mass audience and selling advertisements to subsidise the production costs. Now this model has been challenged from various sides by new media uses, products, devices and technologies. Media organisations have been, on the whole, slow to adapt to the new unique capabilities of a social and online space, failing to push 8 • Chasing Sustainability on the Net new lines of business or grapple with the pace of change (Filloux 2012). Many are burdened with legacy operating costs and, faced with the worst recession of the post-war economy, have found it challenging to cope with the rapid business transformation needed to cope with new digital competition. There has been a lack of innovation in terms of finding – as well as conceiv- ing – new revenue models.

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