On the 5th of March a small contingent of bloggers and social media influencers, including myself and the editor of this fine website, were invited to an evening event at the Herald and Weekly Times building in Melbourne. We were given a sneak peak of the new website and digital offering the Herald Sun newspaper was launching the following week. Naturally enough the idea of the event was to show off features and highlight some of the content the team that had been working on the project thought would pull the audience in. What intrigued me more, however, was their business model. Knowing that many of the overseas News Corp papers were putting up paywalls and charging the viewers for access I was very keen to know how were they planning on making money.

There are really four broad online business models for newspapers. Understanding how they work has a good chance of helping other business formulate a digital strategy, so let’s explore them.

The first strategy is replicating the newspaper experience online and sell display advertising and classifieds. This is what many newspapers tried first. They had the systems and processes in place to do and it was what they were used to so it made sense. The problem is that it simply does’t work. Online is a very different medium to print and the way information is consumed is drastically different. The advertiser is looking for results and thinking about online in print terms will not work.

Strategy number two is the paywall. This strategy is very much focused on the idea that the newspapers are creating valuable content, which in most cases they are, and that the general public will be willing to pay to access this content. People have been doing this for years as far as pay TV goes so why not written news content? Paywalls have been experimented with over the last few years. The only real success has been in highly specialised publications. Even then the model struggles. Again, this points to the media outlets thinking of the online channel as an extension of print. Simply adding a bit of interactivity and replacing some images with video is not usually enough for most people to part with their money.

The third strategy, and the one the Herald Sun is currently employing, is the ‘freemium’ model. This is a common online software model where the user is given limited access to the sites features and asked to pay to gain further access. Start them off with something free and get them hooked. This model has a chance of working, but only if the media companies quickly learn what is important to the end user and what is not. The event I attended in early March focused on crime and sport as the driving factors getting people to pay. I’m not convinced that this is going to convince enough people for this to be a viable option long term. People read slower on screen than they do reading printed material. Without getting into details it’s all to do with the light so it’s not something that is likely to change while we use screen as our access point to the internet. This means that information online is skimmed more frequently. I’m not sure what the long term appetite for ‘more in depth’ content will be.

The fourth model, and the one that I would put my money on long term, is to reinvent advertising. Advertisers want results and access to a wide audience. Newspapers have access to that audience but simply don’t know enough about who that audience is to create the results the advertisers are looking for. If the newspapers collected data on every user, demographic and psychometric, and the types of content they interacted with, they could use this information to provide the insights and tools necessary to create very successful advertising campaigns. This is what Google, and now Facebook, realised and why they are beating newspapers in the ‘information advertising’ space. Give the advertisers access to an large audience, let them target the audience they want to communicate with, then give them the tools they need to do that successfully. And not just for big advertisers but for the small guys too.

Mainstream news organisations are having to face up to the fact that their content is transient. It’s not something the public wants to ‘own’, but read and discard. The news outlets themselves need to face the fact that the public simply doesn’t put the same value on the content as the creators do. However, people are prepared to give up information for access to content. The more information they give up the more they become embedded into the company they are giving it to. Think of it this way, most people will never leave Facebook for another social network, not because they love it but because a record of everything they have done for years is there – all their images, interactions, and thoughts. Newspapers need to become this ‘sticky’, and they need to start putting a much higher value the user data they can generate.

Developing a whole new business model for newspapers that actually works can be done. The organisations who get it right first will see financial returns that dwarf what has been seen in the industry so far.