News outlets struggle to generate online revenue

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As the second most popular source of news in America, online news is an important product for any successful news outlet to generate. Like any business, news outlets face a simple question when it comes to online content: How do you make money?

The Columbia University’s Graduate School of Journalism released a report in May of 2011 in regard to the business of digital journalism. The nine-chapter report covers topics ranging from news aggregation sites (citing the Huffington Post as a prime example) to newsroom budgets. Their conclusion was simple: It’s not easy to make money with digital news.

In online journalism, there are two ways to generate revenue — advertising and online subscriptions. It’s obvious that, given the choice, consumers would choose not to pay for their news. But why can’t high budget news organizations rely solely on advertising revenue to fund their stories?

As an example, the MinnPost references the efforts of the Miami Herald, which invested “significant resources” into creating its own video reports, but ended up averaging only $4,000 per month in ad revenue. In the same article, the MinnPost suggests that media outlets are under the attack of news aggregators (mentioned above) because they are basically repackaging stories free of charge.

So what’s wrong with charging an online subscription fee? Frédéric Filloux at theguardian sums the dilemma up nicely:

“It’s a chicken and egg problem. You’ll be able to charge readers if you put yourself in a position to propose exclusive, unique content. To do so, you’ll have to put together a strong lineup of professionals, as opposed to a blogger army whose output no one will ever pay a dime for.”

Basically, it’s the decision between a subscription-funded staff of highly paid professionals or an ad-funded collection of less experienced journalists. Regardless of which road a news outlet chooses to take, the answer remains the same — it won’t be easy to make money.

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