This article is part of our special report #Media4EU: Can innovation beat the crises facing the EU and media?.
After the death of the print advertising model, news outlets are struggling to find sustainable solutions to fund quality journalism. Most publishers now diversify their activities by organising events, trying out new formats and forging long-term partnerships with the private sector.
The internet revolution and the 2008 economic crash have significantly decreased the amount of media funding that is available. Newspaper sales have dropped, and with them revenues from traditional print ads, as more and more readers access information online instead.
José Manuel Sanz Mingote, international director of Spanish news agency EFE explained that “the recent crisis has broken some taboos inside the company. […] we realised the necessity of being present on the web with new contents apart from those reserved to our traditional wire”.
Yet the move to the online world proved to be less profitable than expected. News outlets are now confronted with a dilemma: What business model can you implement to keep providing your audience with quality journalism?
Google and Facebook’s advertising duopoly
While debates concerning the ethics of public subsidies, corporate sponsoring and the feasibility of paywalls divide the industry, most online advertising revenue gets absorbed by tech giants and social media platforms such as Google and Facebook.
According to a 2016 report by OC&C Strategy Consultants, 71% of the entire UK online ad market will be taken over by the pair by 2020. Although internet savviness varies greatly across different European countries, the trend is clearly laid out, and the clock is ticking.
Class Editori Executive Editor-in-Chief Gabriele Capolino explained that “now, the old ‘advertising on the page’ is no longer a value proposition that you can rely on. More and more companies have a more profiled way of communicating and there is money in this. I know this is very difficult for journalists like me who remember the old-fashioned way to print on paper”.
Quality web content: free?
Mediapart in France is a successful “pure player”, whose quality investigative journalism relies entirely on subscriptions. Opposed to advertising and public subsidies, founder Edwy Plenel maintains that “there is only one business model that can be based on free content combined with ads, and that is the entertainment model, which can also entail an information component”.
“This is the model used by radio and commercial TV. But for the democratic press, I don’t believe it can work. […]The ‘free, ad-based’ model forces you to adopt a journalistic style that leans towards entertainment, superficiality and ‘tabloidism’,” he warned.
But how long can media organisations, so reliant on subscriptions, survive? The new generation is used to free content on the web and today only about 12% of online news consumers pay some form of contribution, according to the 2016 Digital News Report by the Reuters Institute for the Study of Journalism.
Spanish website El Confidencial is built on an editorial concept similar to MediaPart, specialising in online investigative journalism, but they offer their content for free. Their business model is mainly financed by online advertisement and branded content (90%), together with some diversification in event-organising and ad-hoc partnerships with the public sector.
Director Nacho Cardero defended this model and insisted that “It’s very hard for us when we see that for others advertising, including online, is going down. That’s why we are searching for new ways to monetise our audience, for example with instant articles on Facebook.”
Social media: distribution channel or content freeloader?
The opportunity to reach lager audiences through social media appeals to many in the industry. Pùblico is a Spanish left-wing news outlet which has recently undergone a drastic transformation by transferring all its content online and cutting its print edition.
Editor-in-Chief Virginia Perez Alonso said: “At the moment you cannot close the door to any visibility. Obviously we would want readers to access our content directly on Pùblico’s website, but people are going to do what they want, so you have to reach out to them rather than wait around.
“In our commercial proposals we actually talk a lot about our Facebook community because it is quite sizeable and advertisers want to be visible on as many channels as possible.”
However, many oppose an alliance between the media and social networks. For instance, Bruno Jauffret from La Voix du Nord warned against the risk of the media becoming “content providers for Facebook”, in an interview with the Reuters Institute for the Study of Journalism for the “Digital News Report”.
How to keep the media independent
Former EURACTIV.it and ANSA editor Giampiero Gramaglia argues that “Quality information has a cost and people have to be ready to pay for it. They can either buy the information products directly online or accept that there is some form of sponsorship or of public subsidies behind them.”
Making the case for public support is Jean-Michel Bos, editor-in-chief of Euranet Plus, a radio network funded by the European Commission whose continuation is now at risk. Bos said, “I believe that public funding of the media is still crucial, as public service content is often not necessarily profitable but essential in a democratic setting.”
Drawing the line between branded content and journalistic integrity
Native advertising based on long-term partnerships for specific sections seems to be one of the most popular among new revenue solutions.
Deputy Editor of The Times, Emma Tucker, explained that “the old-fashion model of displaying advertising is changing, so like most newspapers, we have set up a unit that works with partners looking for longer term relationships, who want to use some of our expertise to help get their message over.
“It’s completely separate from the newspaper but we want to deliver material that’s of a quality that we would demand of ourselves. […] That’s why labelling matters a lot to us, but to my mind it’s not too complicated.”
By now branded content is accepted by most modern media outlets, although to varying degrees. While digital natives like Buzzfeed have specialised teams that create commercial content following a process similar to agencies, other publications whose reputation is based on rigorous fact-checking have more reservations.
Fabio Carducci, deputy editor-in-chief of Il Sole 24 Ore explained that native advertising “can be appropriate only if we set strong rules, because I think that mixing advertisement and news would disappoint many readers. But if the line is clear, it could be a good way to finance the news”.
As for future developments, many countries are experiencing movement towards media concentration which threaten journalistic plurality and independence, especially in Southern Europe where the crisis has been the toughest on the industry.
Ultimately, academic media analyst François Heinderyckx suggests that this transition phase will not be solved with short-term strategies targeting only money and technology: “The industry […] is locked into a certain way of approaching the media market, trying to cut down on costs, invest heavily on technology and find new business models.
“All that is fine, but it’s a sort of a panic strategy that doesn’t seem to have much of a vision in terms of how you come back to a balanced situation.”