In an effort to add to the paid-content discussion, we’ve built two versions of a paid model. The first is a “pure” paid content model where 100% of the main news site sits behind a pay wall. The other is a hybrid model that envisions keeping up to 80% of the content available for free. Both models have four scenarios with varying subscriber and fee levels (the hybrid model has additional variables for the level of free content, set at 50% and 80%). As with most of our models, Jeff Mignon and Nancy Wang at Mignon Media helped us build these paid versions and provided invaluable guidance and insight throughout.

Download the full paid version here and the hybrid here.

If you’ve taken a peek at any of the other models we produced and presented to the Aspen Institute you’ll see many of the revenue and expense components are repeated here. We’ve kept our staffing assumptions roughly the same and this news organization can take advantage of some of the same revenue opportunities (like events, coupons, and a range of services to local businesses) that are open to a free metro-wide publication.

Here are a few take-aways on the paid models:
- According to our assumptions, the main site of the fully paid model loses millions throughout the 3-year period.
- In three out of four scenarios, the main site in the hybrid model is profitable in year 3 (with the B-to-C and B-to-C services, it could be profitable in year 2).
- Profitability rises along with the level of free content.

To account for the impact of a paywall on advertising, we have made some notable adjustments from our New News Organization model:
- We’ve reduced the average sponsorship revenue assumption to $100 per week from $1500.
- We also reduced the commission the organization takes on ads sold into a metro-wide ad network to 2% from the 20% estimated in the free version.

I’m guessing that some folks will take issue with a few of those assumptions. As always, we hope you will tell us where exactly we’ve gotten it wrong. Plug your own numbers into light-blue cells on the “Paid Model Options” page and then send your spreadsheet back to us. If you prefer to work in Google Docs, the full paid model is here while the hybrid model is available here. (The New Business Models for News Project has been funded by the Knight Foundation.)

In that potential dust-up, it’s notable that the Journalism Online plan calls for taking a 20% commission on subscription revenues (plus a 3% commission on credit card transactions), while Google says it would charge 30% for clients using its revamped Checkout platform. The plans were a response to a request for proposals from the Newspaper Association of America that published them in a report to its members this week.

Here are a two items that have been largely overlooked in the coverage so far:

First, the Journalism Online e-commerce model (available at the Nieman Lab) will let publishers change variables like the price of subscriptions or micropayments to fit their own markets. Publishers will also be able to turn the knob on advertising, apparently, changing settings so that “paid subscribers see fewer, different or no advertisements.”

Could this finally lead to the ad-free news that some consumers have sought for so long? The Journalism Online model does not aim to replace advertising revenue with subscriptions. Instead, the model says advertising revenue lost to the pay wall (and subsequent decline of unique visitors) by commanding a 30% cpm premium on the subscriber base that remains. Clearly, a no-ad product would come at a premium, but how much would publishers have to charge subscribers who want to turn that knob all the way down?

Second, Brill et al. say their platform will let publishers sell products against content. The 15th and last item on a list of product capabilities is the “ability to sell related goods via participating retailers (such as books within book reviews).” As we noted earlier, the UK’s Telegraph has developed an e-commerce platform that now accounts for roughly 30% of all revenues. They sell everything from home gardening products to panama hats. And, instead of erecting paywalls around general news content, they have subscriptions and micropayments for secondary products like fantasy soccer and puzzles.

Sadly, the Journalism Online plan does not provide an estimate of how much money news sites could make by selling products through a contextual e-commerce platform. But, if the Telegraph’s experience is any guide, what seems to be an afterthought here could become a significant revenue stream for the group that can pull it off.

New Advertising Units (Sponsor Posts, Coupons & Deals of the Day, Video)
E-commerce
Paid Content
Lists & Databases
Mobile
Premium Products
Niche Websites
Donations
Print Editions
Special Reports
Memberships
Specialized Advertising Services
Business Marketplace
Events Hosting & Promotion
Cafés

Thanks for all of the comments and suggestions. Please keep ‘em coming.

From this first list, I was surprised by how many of the folks pointed to the value of a printed product. It is the most noteworthy area, of many, where my early assumptions were proven incorrect.

Jeff Mignon and Nancy Wang of Mignon-Media have been helping us with this project and were instrumental in developing this list of revenue opportunities.

The project is researching best practices in the business of journalism online, gathering new ideas and experiments in revenue for news. We will build complete business models to share with the industry and with the journalists, communities, entrepreneurs, technologists, and investors who will create the future of news.

The project is funded by the Knight and McCormick Foundations. Two earlier conferences leading up to the work of the project were funded by the MacArthur Foundation. The work of the project’s first phase will be presented at the Aspen Institute in August and will be shared, publicly and in progress, on this site.

Our work begins with the assumption that there will be a market demand for quality journalism, watchdogging those in power, and that the market will find a way to meet that demand. The question so many are asking is how. We will attempt to answer that by projecting the future of news in a metropolitan area, concentrating on four perspectives — hyperlocal, the new news organization, publicly supported journalism, and the framework to support this new news economy as a whole.

We will use as our model market a hypothetical top 25 metro area in the U.S. where the sole daily newspaper has ceased publication. In short: We are asking what will fill the void. We posit that no single company or product will do that. Instead, an ecosystem made up of many players operating under many models and motives will emerge. In all cases, we are agnostic as to who owns and operates these entities: legacy or new companies, large or small. In that context, we will examine:

* The optimal hyperlocal (town or neighborhood) blog or site. We will look at how to maximize revenue to such sites, whether they are run by sole proprietors, larger startups, or established media companies. This will include helping sites provide the best and most valuable service to local advertisers; establishing local networks of fellow hyperlocal sites to increase sales and revenue opportunities; larger metro-wide networks; and exploring other revenue opportunities, such as paid models and commerce. We will look at what these sites need to succeed, such as networks, promotion by aggregators, and technology.

* The new news organization. Even after a market loses its daily paper, we believe there is an opportunity for a new news organization to be reconstituted around key journalistic roles serving the metro-area. We will project the scale of such an enterprise: its audience and revenue yielding its resources and functions: reporting, aggregation/curation, perhaps organizing the broader community and its news efforts. How many employees can a profitable, journalism-centered business support and what can and should they do? What is its relationship with other players in the ecosystem?

* Publicly supported journalism. We do not believe that any single savior– foundation, government, device, or massive public contribution — will rescue an existing news organization as it operates today from the crush of the market. But we do believe that publicly supported journalism — that is, from individuals, foundations, and perhaps companies — can play a role in this model city’s news ecosystem. This could take the form of a local Pro Publica or of crowdsourced funding through a platform such as Spot.US or of an expansion of public broadcasting’s role. The key question we will answer is what level of support will likely be available — projecting from current efforts locally — and what those resources could provide.

* The ecosystem’s framework. We will examine the supporting infrastructure this ecosystem will likely need, bringing together independent players to reach critical mass so they can recognize greater market value (in, for example, advertising networks and in mutual promotion) and greater efficiency (in, for example, technology platforms, the ability to create collaborative projects, training in journalism and sales, search-engine optimization…). Once again, we are agnostic to ownership: These functions could come from a single company (which is how we will present the model); they also could be provided by a legacy player or they could be offered by various players. To quote Mark Potts at one of our CUNY conferences, “You may want to be small, but to succeed at being small, you probably have to be part of something big.”

In addition, the project will gather and also propose a catalog of revenue models, working with those who are building systems to support paid content; interviewing local advertisers to learn more about their needs; talking with sites in the U.S. and elsewhere to learn what is working and not working for them; examining the possibilities for more unusual revenue streams such as e-commerce.

After this work is well underway and after the Aspen report in August, we plan to extend the project’s work to examine more business models, such as national and international content exchanges; interest-based sites and networks;

The project is headed at CUNY by Prof. Jeff Jarvis, head of the interactive program. Peter Hauck is project director, working with Jennifer McFadden, business analyst; business researchers Kate Albert, Gary Frangipane, Noah Xifr, Darshan Dedhia, Frank DiBartolo, and Senem Coskun of Baruch’s Lawrence N. Field Center for Entrepreneurship at the Zicklin School of Business; and reporters Matthew Sollars and Damian Ghigliotty, both graduates of the CUNY Graduate School of Journalism. We are grateful to the Field Center’s Edward Rogoff and Monica Dean for their support.