News media need a new business model

Dr. Santosh Kumar Tewari*

At first, the question is: why should news media have a new business model? Or one can ask: what is the problem with the current model? These days many problems are resolved through new communication technologies. Could the problem with the current business model be resolved through the new technologies? Why do new media technologies fail to resolve this problem? The objective of this article is to provide answers to these questions. The answers are based on some personal experiences of this writer, as a professional journalist and review of relevant literature.

When this writer was working in newspapers, he brought a news story to his editor exposing corruption in a state lottery. The editor refused to publish on the ground that it might stop the advertisement of the lottery in the newspaper.

This writer also brought a news story about the corruption in Lucknow Development Authority, but that was also refused on the same ground.

During 21 months of internal emergency (June 1975 to March 1977), newspapers were the major targets. Mrs. Indira Gandhi’s government increased the advertisement rates of those papers which were favourable to her. She withheld government advertisements from those papers which were against her.

Newspapers and periodicals whose advertisement rates were increased by the government during the internal emergency

Name of paper Original rate
(in Rs.)
Enhanced rate
(in Rs.)
Hitavada, Bhopal 3.00 4.00
Newspaper of Hindustan Times Group
Hindustan Times, New Delhi 23.49 31.50
Hindustan, New Delhi 19.10 24.50
Paper/Magazines of Times of India Group
Economic Times, New Delhi 1.90 6.90
Economic Times, Bombay 3.18 16.20
Youth Times, New Delhi 3.18 12.18
Youth Times, Bombay 3.18 12.18
Femina, Bombay 20.00 25.00

Source: ‘Report of the Second Press Commission of India’ Vol. II (1982) Delhi: Manager, Publications, Government of India, pp. 153-154

Dailies from which advertisements were withheld during the emergency:

Indian Express Group:

English Dailies: Indian Express (Delhi/ Bombay/ Ahemadabad/ Madras/ Banglore/ Vijayavada/ Cochin/ Madurai)

English Dailies: Financial Express (Delhi/Bombay)

Kannada Daily: Kannada Prabha (Banglore)

Telgu Daily: Andhra Prabha (Banglore/Vijayavada)

Statesman Group:

English Dailies: Statesman (Delhi/Calcutta)

Hind Samachar Group:

Hindi Daily: Punjab Kesari (Jallundhar)

Urdu Daily: Hind Samachar (Jallundhar)

Source :‘Report of the Second Press Commission of India’ vol. II (1982) Delhi: Manager, Publications, Government of India, p. 153

Advertisements are key to the survival of news media, whether it is print or audio visual.  When ‘The Bombay Times and Journal of Commerce’ started its publication on 3  November 1838, its front  page was carrying only classified advertisements. The same paper in 1881 was renamed as ‘The Times of India’. Similarly, ‘The Hindu’ of Chennai was carrying only advertisements on its first page for a number of years until 1958.  According to George (1989:22) the world famous newspaper ‘The Times’, London, published advertisements only on its front page until the end of World War II.

What has changed since the days of internal emergency in India? Nothing, except that government has no longer been that big an advertiser. Private companies have also become big advertisers.

All of you must have noticed that news media, whether it is print or audio visual, usually do not carry any news story against private universities, though they publish stories against government universities. This is because of the fact that private ones are now becoming a bigger advertiser than the government ones.

Even today, our big newspapers often need to provide front page space to some big advertiser. If they won’t provide, they would lose their advertisement revenue. The above discussion clearly indicates that advertisements are key to the survival of the news media and they also influence its contents. J. Herbert Altschull (1984: 299) said: “The history of the press demonstrates that newspapers and the more modern variations of the press have tended to serve the selfish interests of the paymasters, while at the same time perpetuating the image of a press operating in the service of the consumers of the news.”  Altschull (1984: 298) said: “The men and women of the press – the merchants of news – are crucial figures … for it is they who paint the pictures of the world on which decisive human actions are based.”

Altschull (p.298) gave seven laws of journalism:

  1. In all press systems, the news media are agents of those who exercise political and economic power. Newspapers and magazines, and broadcasting outlets thus are not independent actors, although they have potential to exercise independent power.
  2. The content of news media always reflects the interests of those who finance the press.
  3. All press systems are based on belief in free expression, although free expression is defined in different ways.
  4. All press systems endorse the doctrine of social responsibility, proclaim that they serve the need and interests of the people, and state their willingness to provide access to the people.
  5. In each of the three press models, the press of the other models is perceived to be deviant.
  6. Schools of journalism transmit ideologies and value systems of the society in which they exist and inevitably assist those in power to maintain their control of the news media.
  7. Press practices always differ from theories.

(In point 5 above the three press models have been referred to. According to Alschull (p. 286) “The three movements … of the press are systematic, that is to say, they combine all the elements that make up the realities described here as market, Marxist, and advancing. These elements include not only the political structure and environments and the economic forces and the paymasters of the press, but also the other ingredients of life, both public and private.”)

J. Herbert Altschull gave these seven laws of journalism in his book ‘Agents of Power’ (1984). The seven laws of journalism didn’t occur to him in a dream. Before writing the book he played a long innings in the thick of journalism, and his seven laws are the result of that long experience and observation. Previously, Altschull was a reporter and editor of the Associate Press, ‘The New York Times’, NBC, King Broadcasting Company, Seattle, and ‘Newsweek’. He was also a reporter and analyst in Washington and Western Europe covering leading stories in the 1950s and 1960s. Altschull  Then he earned his doctorate from the Washington University, and later became full professor of journalism at Indian University, USA. (Altschull1984: Back Cover Page)

The current business model of news media including newspapers is heavily dependent on advertising revenue or government subsides. Newspapers get their revenue primarily through advertisements or circulations. In Britain, for tabloid newspapers it is necessary to keep very high circulation, because they depend more on their circulation revenue than on advertisement revenue.

Advertising revenue as a percentage of total revenue: National newspapers (1960-75)

Popular (Tabliod Newspapers) Quality (Broadsheet Newspapers)
Daily Newspapers Sunday Newspapers Daily Newspapers Sunday Newspapers
1960 45 46 73 80
1964 43 44 75 79
1969 38 40 72 76
1970 31 38 69 73
1971 31 36 63 71
1972 34 36 67 72
1973 36 38 70 74
1974 32 34 65 71
1975 27 31 58 66

Source: ‘Royal Commission on the Press Interim Report: The National Newspaper Industry’ (1976) London: HMSO, p. 99

In 2011 the publication of the British Sunday national tabloid ‘News of the World’ stopped. It was 168-year old national newspaper published from 1843 to 2011. It was at one time the largest selling English language newspaper in the world. In April 2011 its average per week sale was 2,606,397 copies.

In June- July 2011,  the paper was found involved in the phone hacking scandal. In a story ‘News of the World loses adverts over Milly Dowler scandal’ published in 5 July 2011 issue of  ‘The Telegraph’, London, it was stated that due to phone hacking scandal, the paper’s reputation fell down to the level that  some leading companies, such as Ford withdrew its advertisements from it by making a public announcement. Some other big companies, such as Currys, PC World, T-Mobile, N Power and Halifax etc. were also planning withdrawal. The move reflected fears of a public backlash from the companies’ customers against the paper over its involvement in phone hacking scandal.  Flight of advertising revenue from the paper led to its closure in July 2011, though its circulation at the time of its closure was highest among all Sunday newspapers in Britain.

The 168-year-old British tabloid ‘News of the World’ was closed down, because the paper was losing money on each copy sold and it failed to make-up the short fall through advertising. There was an outcry against the paper in corridors of power as well as in social media. Advertisers were shying away from it. Had it not been closed down, its deadly virus might have adversely affected the survival of its sister dailies ‘The Times’, London and ‘The Sun’, London. The public backlash might turn against ‘The Times’ and ‘The Sun’  too.

Online technology and news media:

Positive hopes were expressed that the fast growing new communication technologies applied in the media would revolutionize the news system in the world. These hopes were largely based on the fact that communication revolutions lead to social revolutions. However, latest researches indicate that these expectations may be dashed so far as news media is concerned.

The fourth annual Reuters Institute’s Digital News Report (2015), available on http://www.bbc.com/news/business-33106992, indicated people’s frustration with sponsored contents being disguised as news.  The report, with the backing of Google, Ofcom and the BBC, surveyed the online news consumption habits of about 24,000 people from 12 countries, including the UK, US, Australia, Japan and Brazil. Almost half of the respondents said they accessed news on their smartphones. This is a significant increase in comparison with the last year’s study. However, the respondents revealed they usually accessed just one or two news sources on their devices.

The report also indicated considerable growth in sponsored contents, paid for by advertisers, but presented as news stories. About a third of respondents said they felt disappointed, disgusted and deceived after knowing that they had read a sponsored article.

According to Reuters Institute’s director of research, Rasmus Kleis Nielsen: “. . .(Most people like news and use news, but they don’t want to pay for it, don’t want to see advertising around it, and don’t want to see it mixed up with sponsored content . . . This means sustainable business models remain elusive even for those who succeed in building an audience.” More than half of the respondents said they read the news through an established brand, not digital only news websites such as Buzz feed and Huffington Post. Just 16% use digital-only news sites.

From the above discussion this may be easily concluded that advertisers influence news contents; and like traditional news media, the online news media are also dependent on its advertising revenue. Also, despite the emergence and developments in the field of new communication technologies, until now it has not been possible to develop a sustainable business model free from advertisers’ influence.

References

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