Hi there, these are challenging times for business models. For the last few weeks, I’ve been thinking intensively about the implications of Covid-19 on the business of news. Partly, because I had to write a research activity on business transformation, and partly, because I’m affected in my daily work life.
In this issue, I’d like to share some of my thoughts on the subject. And be warned: This is going to be a long one.
First, Some Definitions
In the book The Business Model Navigator, you can find a simple definition of the term business model.
A business model defines who your customers are, what you are selling, how you produce your offering, and why your business is profitable.
The authors claim that business transformation requires modifying two or more of these four dimensions. However, the question is: At what point should you start rethinking your business?
Of course, there’s already a list of six situations by Nabila Amarsy:
- You don’t generate enough traction from the customer
- Your value proposition doesn’t resonate with customers
- Your acquisition & retention strategy doesn’t generate the growth you hoped for
- Customers are not willing to pay the price
- You can’t build the product and/or your costs are too high
- External forces are threatening your business model
So, it seems quite straightforward: If your business model doesn’t work anymore, change it. Of course, that’s easier said than done. But for journalism, in particular, the situation is even more complicated.
Journalism: The Special Child
“The purpose of journalism is not defined by technology, nor by journalists or the techniques they employ,” write Tom Rosenstiel and Bill Kovach in The Elements of Journalism. They define the purpose and principles of journalism in a more fundamentally with the function news plays the lives of people.
For Swiss journalism professor Vinzenz Wyss, journalism synchronizes and connects the communication of the political, economic, religious, educational, and cultural systems. Therefore, journalism fulfills the function of self-reflection and synchronization in society.
The American Press Institute defines the purpose of journalism as the provider of information the citizens need to make the best possible decision about their lives, their communities, their societies, and their governments.
Our newspapers and magazines – whether printed or digital – register new records. However, revenue is historically low. — Marc Walder, CEO Ringier
There’s a significant field of tension between the purpose of journalism and its existence in the economic environment. As journalism is seen as crucial in democratic processes and societies, it finds itself in a constant conflict of goals with the business side.
With the pandemic of the Coronavirus, the failure of advertising revenue reveals itself. It is a standard procedure for companies to dial down their marketing spendings during a crisis.
In the past, media companies largely benefitted from newspapers because they solely had the means to reach a mass audience. The internet democratized this power – at least to a certain level.
Astonishingly, the TX Group and Ringier, two of the four big, privately-owned media companies, are relatively stable. They diversified their portfolios with digital marketplaces. However, their journalistic branches do not particularly contribute to their financial gain.
Furthermore, there is no subsidization of journalism by the profitable parts of these companies. Therefore, concentration and dismantling have been the main course of action with the editorial teams.
From an economic point of view, it makes no sense for these companies to keep their journalistic assets up and running. The only motivation has to be a particular pride in the societal function of journalism.
From Profit To Purpose
“I don’t believe in publishers anymore. That doesn’t mean journalism is dead,” a colleague who remains anonymous here wrote to me a couple of weeks ago. And I tend to agree with him.
No current business model seems to lead towards a reliable future of journalism – not advertising, nor paywalls, nor even memberships. Is it because the Swiss market is just too small? Or because the models themselves are broken?
I believe none of the above is true. The problem lies deeper within that twisted relationship between commercial and journalistic purposes. For journalism to succeed sustainably and build a resilient system, we have to exclude journalism from the profit-driven mindset.
Alright, that’s enough for one issue. As the subject line indicates, there will be a second part to these thoughts. There, I’ll dive a bit deeper into the meaning of a new mindset for journalistic entrepreneurship.