Business and Revenue Models
Arguably the two most important issues facing small-market newspapers are their revenue model and the business structure which supports it. There is considerable diversity in this space. Small-market newspapers, for example, encompass everything from “mom-and-pop” weeklies to daily products from large groups such as Gannett and Hearst.
Despite this diversity, all outlets—large and small—are grappling with many of the same issues. In particular, that means how to ensure their financial survival and future prosperity. Income diversification is fundamental to this, even if the long-term potential of some ideas are, at present, unproven.
Our research identified a number of ways in which small-market newspapers are seeking to diversify their income streams and secure their futures. Publications will have to determine which of these options might work best for them, accepting that what works for one title in one market might not work for a similar paper in a different environment.
We hope, nonetheless, that these ideas and case studies can provide valuable inspiration and reaffirmation for newsrooms embarking on this journey.
Context the revenue challenge
Business and revenue models often get conflated, but for the purposes of this report we delineate between the two by separately analyzing the income streams flowing into a newspaper (the revenue model) from some of the larger structural questions (the business model) small-market newspapers are addressing.
As Josh Stearns of the Democracy Fund reminded us, “A revenue model is not a business model and to get [an] actual, sustainable business model you have to figure out which of these [revenue models] work given your capacity and your community needs.”
Across the industry, print revenues continue to dominate the income ledger, accounting for seventy-five to eighty percent of income at most small-market newspapers, just as they do at larger outlets.61
This is potentially problematic in the long-run, given the impact of changes to local advertising, which are reducing the revenue pool that local newspapers can draw on. As Kevin Anderson observed, as retail moved from local to regional to national, so too did advertising: “Looking back at old editions (of the Sheboygan Press in 2015), it’s not just the volume of the ads that’s striking, but also the variety—the number of local businesses that used to advertise with us . . . hundreds of small, local businesses that would have advertised with my newspapers simply no longer exist.”62
Because of this, it is incumbent on small-market newspapers to broaden their revenue base, and to reduce this dependency on traditional income streams. Our research found that publishers are very aware of this need, but also recognize that this transition cannot be achieved overnight.