What Business Models Work for News Sites?

December 15, 2020

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One of the reasons that Epilocal exists is that increasingly it is up to the editors and publishers of local newspapers and digital news sites to figure out a new business model on their own.

The traditional newspaper business model is a thing of the past and it isn’t possible to just replicate that online.

But figuring out what comes next for journalism and what new media business strategies actually work is no easy task, especially for journalists who are more used to getting to the bottom of a story than worrying about the bottom line.

We are here to help fill that gap between journalism and business strategy, and to show the way on new digital business models that actually work for independent and local news media.

The pieces of the digital newspaper revenue puzzle

In our recent “Local News Digital Review”, we looked at 100 different local news sites to examine not only the technology they were using, but also the digital strategy they built their business model around.

Before we look at what business models are the most popular, let’s first understand the key pieces of the news media business model. These are the 3 most common sources of revenue that we observed in our review:

  • Advertising - does the news site have digital ads? What type of ads do they have, local or programmatic ads like Google Adsense?
  • Memberships / Subscriptions - does the online newspaper sell premium or subscription content in some way? Either through print newspaper editions, paywalls or members-only benefits such as special newsletters or Facebook Groups?
  • Donations - does the news site accept direct donations?

All of the business models that we observed revolve around different combinations of those sources of revenue.

The most common business models in online news media

Based on our review across the above revenue categories, we summarized the different combinations of online business models that are working right now for local news media - here they are counting down from the least popular to the most popular:

6.) No Monetization at All (2% of sites)

Coming in last place is a strategy that we would not recommend over the long-term, which is to give away your journalism for free with no way to monetize at all - so no ads, no way to take payments online, and no links to donate.

The only sites that fell into this group were either supported by grants and large foundations or attached to a university with journalism students contributing content.

This could be a good initial strategy for getting traction, similar to what successful publications have done by launching on Substack for free - but be sure to have a newsletter to capture email subscriptions.

5.) Membership only (3% of sites)

Next up are the online newspapers that are ad-free but offer premium subscription content of some kind. This is a small number of sites but we expect that it will grow - and the sites we observed in this category are clearly digital savvy publishers who have put their newsletter and membership at the core of their website.

By stripping away the advertising from their site, they have kept their journalism content at the highest quality with the hopes that this will bring more value in the form of memberships.

This might not work in all areas, but when you have a niche that is big enough with enough people willing to pay for news subscriptions, it can be a very viable way forward.

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4.) Donations only (13% of sites)

About 13% of news sites depended on donations only. This means that there are no advertisements on the site and no subscription content that you have to pay for - instead they are providing journalism for free with the hope that people will donate to support it.

This can be a risky way to go and during our review we saw one publication that was in the process of shutting down due to shortage of funds. If you are going to go with this strategy, you you need to be very good at selling the value your journalism provides and continually remind your readers to support you.

3.) Membership + Ads (14% of sites)

Slightly more popular at 14% were sites that had paid subscriptions as well as advertising. The main difference between this group and the membership-only group, is that advertising seems to crowd out the premium content.

What we mean by that is the membership value was much clearer in the group without advertising, while the news sites that also had advertising tended to have a subscription service that feels like an afterthought.

Still, this can be a very viable business model and with a little more focus on the membership piece it should be a sustainable way forward for many local and independent media businesses.

2.) Ads Only (24% of sites)

One quarter of the sites that we reviewed were supported only by advertising, with no premium content or prompts for donations. Digging a little deeper, 5 of these newspapers used only Google Adsense, 6 used a mix of Google Ads and local ads, and 13 used local advertising only.

It’s not really surprising that Google Ads on its own is not enough to support local newspapers and the sites we observed with only Google Ads were smaller publications that might have just 1 or 2 people with small overhead.

In order to go forward with a really sustainable business model based only on advertising, you need to have some local businesses in the mix or supplementary revenue from subscriptions or donations.

1.) Donations + Ads (44% of sites)

Which brings us to our most popular business model for local news sites: donations and ads together. Again, the majority of these 32 out of 44 had some sort of local advertising in the mix. Additionally all of these news sites were actively soliciting donations on their pages.

If you have strong local businesses in the community that are able to drive your advertising revenues, this can be a very viable business model, especially for non-profit publications who are typically able to raise more in donations than for-profit papers.

But we also foresee that many of the newspapers in this group will move to group 3 in the coming months, as they come up with more ways that they can provide value to their readers and offer this in the form of memberships.

Wrapping Up

We hope that this article has been helpful for you to think about different business models that may work for you when launching or growing a news site. Also, be sure to check out our NewsCloud platform that gives you everything you need to run a sustainable membership site at an affordable price.

Launch your news site with NewsCloud

Everything you need to build a sustainable and scalable news business. Web hosting, publishing, analytics, newsletters and memberships for $50 / month

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