Blog Post

The unfortunate fact is that online journalism can’t survive without a wealthy benefactor or cat GIFs

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

As the traditional media industry has struggled with the ongoing decline of its traditional business and the emergence of new competitors like The Huffington Post and BuzzFeed, a number of different business models have taken shape, from paywalls or metered subscriptions to native advertising. But it is becoming increasingly clear that journalism — which in a sense has always been a subset of media — will never be able to survive without assistance from some other entity, whether it’s a rich benefactor or a non-media business.

In fact, there’s a case to be made that “serious” journalism has never really been able to survive on its own, but has always needed something to subsidize it. Reuters media writer Jack Shafer made that point recently in a post about how online news has never really made money — and likely never will. There is a universe of things that large quantities of people are willing to pay directly for, but the news doesn’t seem to be one of them (although some recent crowdfunded efforts are worth watching). Says Shafer:

“Were harder forms of news ever commercial? Gerald J. Baldasty’s book, The Commercialization of News in the Nineteenth Century, makes a case clear as spring water that hard news has almost never been a mass commercial enterprise.”

News has always been subsidized somehow

newspaper boxes

In the good old days, the journalism business was subsidized by all of the other things a newspaper contained apart from the news. This included classified ads, obviously, but also horoscopes, gardening columns, the comic page and other add-ons that had little or nothing to do with news or journalism. Gradually the internet has taken most of these pillars away, and left newspapers with just the hard news — in other words, the only thing no one wants to pay for.

Obviously, some media outlets charge for their news and are still in business — the Wall Street Journal, for example, or the New York Times or Financial Times. But even they are not pictures of financial health: they have all had to cut staff, and to some extent the NYT and WSJ are subsidized by the largesse of their owners, people who became wealthy back when media businesses still spun off large amounts of cash. Rupert Murdoch pays for the New York Post‘s estimated $100 million or so per year in losses, for example, even though they don’t show any signs of stopping.

Until it was acquired by Amazon CEO Jeff Bezos, the Washington Post was subsidized not just by the Graham family, but also by the Kaplan education business (until it began to fail as well). In Canada, the largest national paper — the Globe and Mail — is owned by the Thomson family of Thomson Reuters fame, while the Toronto Star has been subsidized by both a family trust and the Harlequin romance business. The parent company of the Guardian in Britain subsidizes its journalism through a family trust but also through the ownership of the Auto Trader group of companies.

Even online-only entities have had to find ways of subsidizing their journalism: the Huffington Post is part of the shrinking AOL empire (s aol), and until recently All Things Digital was subsidized by its parent the Wall Street Journal — which both drove traffic to the site and helped sell ads on it. Now, the team behind the business has to find another large media partner to fill that role, presumably because relying on advertising alone isn’t going to pay the bills.


Sites like BuzzFeed and Business Insider aren’t really standalone businesses either: although the former says it is profitable (a claim that remains unproven), and BI owner Henry Blodget says his site turned a small profit earlier this year, both are clearly subsidizing the serious journalism they do — BuzzFeed’s political and foreign reporting, for example — through various forms of entertainment, whether it’s cat GIFs or slideshows of beauty-contest winners. BuzzFeed is also betting heavily on the value of sponsored content, although it’s not clear whether that will generate enough growth to support its market value.

A wealthy benefactor or cat GIFs and slideshows?

At this point, the options that media companies have when it comes to supporting their journalism break down into several categories:

Find a rich benefactor: This is the road the Washington Post took by selling to Jeff Bezos, and it has been taken by others as well — including the Independent, which is owned by Alexander Lebedev, a Russian oligarch. The Boston Globe was recently acquired by billionaire hedge-fund owner John Henry.

Ask for donations: Some sites that do valuable public and social journalism, such as ProPublica and the Texas Tribune, are based on a non-profit model that relies on charitable donations from the wealthy. This is a more established version of the Kickstarter model.


Have another business: This is what the Post did before it sold to Bezos, and what some other publications also do. Arguably AOL and the Huffington Post fall into this category as well — and so do Bloomberg and Reuters to some extent, by selling proprietary market-moving content through their corporate terminal and subscription businesses.

Focus on entertainment: BuzzFeed and Business Insider have clearly taken this route by using lighter content, which tends to appeal to advertisers, as a way of subsidizing their more serious journalism. But is that enough to build a sustainable business or will they also have to sell out to a larger entity eventually, as the Huffington Post did?

All of the above: Some media companies have taken an agnostic approach to the problem, including the the Economist and Atlantic Media. The former has a valuable proprietary research arm as well as an  events business (a similar model to the one Gigaom uses), while the Atlantic is owned by a wealthy benefactor but also does events, and is trying to build a digital subscription business.

Which of these models will ultimately be more successful? That’s almost impossible to say. What seems clear is that a media entity that focuses primarily on hard news or serious journalism can no longer be viable by itself, let alone become a massively profitable business like the media giants of old. Whether that is that a good thing or a bad thing for society is a topic for another post.

Post and thumbnail photos courtesy of Shutterstock / Photobank gallery and Flickr user George Kelly

23 Responses to “The unfortunate fact is that online journalism can’t survive without a wealthy benefactor or cat GIFs”

  1. Lots of interesting points made by the writer and in the comments. Meanwhile, Yahoo News, CNN, Reuters, TechMeme all provide news (or news snippets) for free. In this age of information overload, I often feel I can get by on news tidbits.
    On the other hand, I do subscribe to Barrons (in print) and I like to buy the Sunday NY Times.
    I publish two niche news/information/resource websites and it is a challenge to get companies in my niche to advertise – even though it is a 20 billion dollar niche. After 4 years the sites are profitable, but not by much. Each year HAS been better than the last.
    Not sure what my business model will look like in 2014.
    Convincing companies that a person hanging out on a niche technology site is just as qualified a prospect as someone they get from Google PPC is time consuming. I do think the tide is turning in my favor though. More companies are buying my ad space and finding value and renewing their ads. Time will tell.

  2. Strange that, even though we pro-paywall types have never claimed it’s all of the solution, that Mathew never uses that word, and never even discusses the idea behind it, other than to say: “Obviously, some media outlets charge for their news and are still in business …. ”

    Actually, it’s not at all “strange,” knowing Mr. Ingram’s general opposition to them.

  3. Talleyrand

    The whole news business is in a process of changing. But it’s not only the gathedrers, but also the receivers. The Internet — and the global coup by ocd accountants — has literally destroyed old-fashioned journalism. Business journalism in particular is down the tubes, what with companies paying their way into “print” or should we call it “upload”…

    I agree with many of the comments above. But “crisis” means turning point and given a few more years, the news biz will probably find some other kind of model altogether. Print may continue existing for high end stuff, maybe not news though. Fashion, specialty news, etc… The Internet will have to continue creating niches and tribes, it is great for pushback (some of the staggering BS that comes out of politicians’ mouths is often rapidly pushed back on the web… But I also believe that the hectic quality of web news, and the frantic work rates, will exhaust our society and lead to a return to quieter, more reflected news-receiving…

    (Train leaving soon, gotta run)

  4. Martin Wright

    There are always exceptions and The Ecoonomist is one of them. Misreported here, it thrives in the tablet era with growing paid for subscribers and reducing print waste. And when agencies manage to convince their clients that the “dwell time” for tablet ads is very similar to print then profitability may even get better.

  5. Tom Mallory

    What about different forms of monetization? We have found great success in the deals business, and are now getting into rewards. What’s clear is relying on traditional display advertising is not a good bet.

  6. scottbrodbeck218444332

    So the article assumes that the news business, which has been undergoing rapid change due to disruptive innovation, will not be able to come up with any new business models than those that currently exist?

    Pretty sad state of affairs for the news biz, considering this is coming from one of the most prominent writers covering the business of media.

    The good news is that most people who have bet against further innovation in rapidly-changing industries have been dead wrong. New models will emerge, whether media writers and executives can currently imagine those models or not. I’m sure we wouldn’t have to go back that far to find a time where most would laugh at the idea of subsidizing foreign coverage with animated GIFs.

  7. Honestly, it’s risable that after a few half half hearted attempts at alternative business models you come to the conclusion online journalism simply can’t be profitable. All we’ve seen here is an old media, under the original vanguard, make some half hearted and largely futile efforts to impose their views and opinions of what news should be to an internet public which couldn’t care less what they think.

    I’m 100% sure it’s possible to produce news online commercially. You simply need to do it under a democratic system which readers have a real stake in. The problem is that ‘benefactors’ always have an agenda and clearly most people don’t seem to think it’s worth paying for.

  8. But is everyone convinced that advertising will have no effect? I’m dying to hear a clear case be made for the value of field reporters, fact-checkers, and editors who add some history and wisdom–and on the flip side, some publicity for how much the little real reporting gets cut and pasted in this massive internet echo chamber.

    People will pay $4 for a latte or Angry Birds, but not a reporter who risks their life to cover Syria? Many people might reconsider their priorities with a relatively small nudge. I think it can be done. The NYT should crowd source a big campaign.

    • “People will pay $4 for a latte or Angry Birds, but not a reporter who risks their life to cover Syria?”

      Wounded outrage won’t fix the MSM’s mess – reasoned analysis of the underlying economics might.

      Why do people pay for that $4 latte?

      A) They actually get a coffee – which has direct utility to them

      B) They get it semi-conveniently (store on every corner – but no delivery…)

      C) There is some hipster doofus cache that redounds to Starbuck’s benefit…less so to Dunkin’ Donuts.

      The MSM?

      A) Who knows what amalgam of truth, opinion, lies, and propaganda I might actually receive from an ideologically lopsided MSM once I’ve ponied up their expensive annual subscription price?

      At Starbucks, I end up with a coffee and a croissant – at the NYT I might end up with a Krugman.

      Monthly payments mitigate the risk but the MSM’s multi-decade record of self-important self-delusion (sustained in reality only by ruthlessly obtained monopolies/oligopolies) isn’t encouraging.

      Result – the giant sucking sound away from the MSM.

      B) But at least there is still the self-satisfied hipster, true-believer. doofus base – otherwise known as paywall payees…

  9. Thanks for the very interesting report.

    One perfect counter example comes from France where the digital newspaper Mediapart has convinced more than 60’000 subscribers to pay every month between 4 and 9 euros to read its content. And without extra money from whatever benefeactor…

    Such a success story cannot be accomplished without a strong belief and investment in journalism making.

    This is still the old key: what do you deliver to your reader? We publishers cannot sustain on “people”, “press releases poorly edited”… We must have the courage to speak truth to ourselves.

  10. paulmartin42

    It depends on the customer. The online versions of newspapers are essential for certain market segments as they enable (a) interaction (b) persistence of brand. When I buy a newspaper for the train I don’t purchase X or Y as I have never mounted their paywall, and I do not buy a magazine I do subscribe to as I already have access to their content I actually purchase the one which either gives me my daily fix or, if its the weekend the one which has Jeremy Clarkson.

  11. Nick Davison

    Hasn’t Gawker Media been profitable for awhile? I understand their not strict journalism but am curious how their business model would be interpreted.

    I find they have an interesting business model of using multiple sites with consistent formats, targeted at niche audences. I wonder how strong the synergies are with that. It seems that targeted multi-site strategy should help save costs in terms of tech developments, capture more visitors, and secure more advertising.

  12. peter evans

    It’s been five years since the trust that owned the Guardian spun out a regular company to do the job. The Guardian newspaper itself is one of the company’s assets, but rumored to be doing poorly and it’s not a certainty that a print version will survive.

  13. Wouldn’t it be more accurate to say that the traditional big media company’s approach to supporting journalism is failing, not the profession?

    There are lots of small niche news sites that don’t require subsidies — because their operational costs are more in sync with their sources of revenue.

    Granted, the traditional news media has proven that it’s easier to run a lean 21st Century digital media business from scratch, rather than attempt to adapt a legacy print newspaper or magazine business model. Clearly, that’s been a failure of their leadership.

  14. Journalism is largely dead. It doesn’t pay to present unbiased fact based information anymore. Modern ‘journalism’ is about bending the truth and angering people to get their attention so your page views go up or your advertising numbers go up.

    Critical thinking skills are now far more important than they ever were. Unfortunately very few Americans use any critical thinking skills whatsoever, they parrot back what they heard on television.

  15. Michael Pinto

    People always look down at cat GIFs but they tend to forget that “silly things” like comic strips really helped power newspapers in the early days. In fact there were even early publications like Puck which were famous for their cartoons which were the memes of their era. Journalism is about storytelling at the end of the day, and if you tell stories that people are interested in you’ll find an audience that may be willing to pay for that.