HOME
          
LATEST STORY
Open-mic journalism: How The Arizona Republic found success with storytelling events
ABOUT                    SUBSCRIBE
Sept. 10, 2009, 8:37 a.m.

Journalism Online’s charging clients a 20% commission

If you’ve been following our coverage of Journalism Online, the pay-for-news venture founded by Steve Brill, Gordon Crovitz, and Leo Hindery, you know how they plan to generate revenue for news sites. What hasn’t been clear is how the firm itself will make money.

But in a document submitted to the Newspaper Association of America, which was just made public, Journalism Online reveals its business model: They’re asking for a 20-percent cut of subscription revenue (after credit card fees).

I checked with Cindy Rosenthal, the firm’s spokeswoman, who confirmed the information and said they weren’t charging clients anything beyond the commission. Journalism Online says it has signed letters of intent with media companies representing 176 dailies but won’t disclose their names. Guardian News and Media and The Milwaukee Journal-Sentinel are the only known clients, and most major newspaper companies have said they aren’t on board.

[UPDATE: 10:36 a.m.: In a brief chat with Brill as I waited for the bus this morning, he said, “What we tell publishers is, we only do well if you do well.”]

Journalism Online had been the highest-profile of several firms known to be shopping paid-content solutions to news sites. But yesterday we revealed that Google is also making a play in that area, and much of the ensuing coverage suggested a new, if wildly imbalanced, rivalry between Google and Journalism Online. That will depend on how serious Google’s intentions are.

The basic pitch from Journalism Online involves news sites signing up 10 percent of their monthly visitors for some kind of subscription plan. (That figure has been floating between 5 and 15 percent.) But lots of content would remain free so news sites could continue to reap advertising revenue from non-paying visitors. Net profit, in Journalism Online’s models, emerges from subscription revenue, a slight increase in print circulation, and cost savings.

We’ve been through those models before, but the new document that Brill and his colleagues submitted to the NAA includes, for the first time, a model with all of their math in one place, including their commission and an abbreviated balance sheet. So for those following this really closely, here you go:

Below is an excerpt from the business models we have presented to five different-sized newspapers in five different markets based on assumption related to the options outlined above.

Print circulation of 1,000,000.
Total home delivery paper subscribers of 800,000.
Monthly online unique visitors of 20 million.
Annual online subscription price of $75.00 and month-to-month price of $7.50.
Micropayments per article of $0.25 with a total of 6 per subscriber per month.
Online advertising revenue of $175 million per year.
Print circulation revenue of $600 million per year.
Print subscriber retention and acquisition cost of $75 million per year.

Bottom Line Benefit:
$33.6 million in Year One; $86.0 million in Year Two

Assumptions:

  • Assumes a significant amount of continued free access, but with selected content offered to the most engaged online users on a paid basis. This approach optimizes advertising inventory alongside high-margin subscription revenues.
  • 10% of monthly uniques subscribe within two years.
  • Subscriber conversion breakdown assumes 47.5% annual, 47.5% month-to-month and 5.0% micro payment.
  • Total online subscribers of 2.2 million subscribers in year 2, counting people who buy annual or monthly subscriptions or a single article through micropayment.
  • Assumes a 90% subscription renewal rate.
  • Overall page views decrease by 12% at the end of year 2.
  • A 15% decrease in non-subscriber page views is offset by paying subscribers having 25% more page views per user than non-paying users.
  • A 30% higher CPM for pages viewed by subscribers produces overall online advertising decline of 9%.
  • Cost of sales for advertising is 20%.
  • Journalism Online commission of 20% of subscription revenues net of credit card fees of 3%.
  • Adding a paid strategy for selected online access, then bundling online and print subscriptions (offering a “discount” for those who buy both) yields a 3% increase over two years in print subscription circulation revenue.

You can download the 12-page document that Journalism Online submitted to the NAA or view it below (click in the top-right corner for full screen).

POSTED     Sept. 10, 2009, 8:37 a.m.
SHARE THIS STORY
   
Show comments  
Show tags
 
Join the 15,000 who get the freshest future-of-journalism news in our daily email.
Open-mic journalism: How The Arizona Republic found success with storytelling events
The four-year-old program has helped boost the newspaper’s events business and helped strengthen relationships with the community through nights of storytelling.
Newsonomics: Buying Yelp — and making it the next core of the local news and information business
The pricetag would be high, but it might be worth it to reassemble one part of the old newspaper bundle — tying together local news and local services.
Crossing the streams: Why competing publications are deciding to team up on podcasts
Low financial risk and a desire for word-of-mouth sharing have led news sites to collaborate, sharing audience and infrastructure.
What to read next
953
tweets
The State of the News Media 2015: Newspapers ↓, smartphones ↑
The annual omnibus report from Pew outlines a story of continued trends more than radical change.
561The Upshot uses geolocation to push readers deeper into data
The New York Times story changes its text depending on where you’re reading it: “It’s a fine line between a smarter default and being creepy.”
422Knight Foundation invests $1 million in creator-driven podcast collective Radiotopia
The money will help PRX’s collective of public media-minded shows develop sustainable business models and expand with new shows and producers.
These stories are our most popular on Twitter over the past 30 days.
See all our most recent pieces ➚
Encyclo is our encyclopedia of the future of news, chronicling the key players in journalism’s evolution.
Here are a few of the entries you’ll find in Encyclo.   Get the full Encyclo ➚
The Weekly Standard
Gotham Gazette
National Review
Current TV
The Atlantic
The Guardian
The Ann Arbor Chronicle
Upworthy
The Economist
Creative Commons
New Jersey Newsroom
NewsTilt