How Media Make Money 1: Newspapers

Hour 1

One story, many people

Journalists are sent all over the world to do their work. Of course, they have to get paid. But a front page news story is more than just a text. There are many people involved in the process of creating the news.

Editors work with the writers to make the story better, and illustrators or photographers provide a visual to catch the readers’ eye. Social media managers do their best to make the story go viral online, while marketeers try to convince people to become a newspaper subscriber.

Whether media companies publish newspapers or websites, TV news, podcasts, or radio shows. It takes a great effort by many people to get a story ready for publication.

Depending on the type of story and the people involved, one story can cost anywhere from 100-200 euros for an article, up to tens of thousands of euros for investigative multimedia projects. So, when you read an article for free online, it begs the question. Who paid for it?

The media industry employs different methods to finance its operations. For the longest time, their strategies relied heavily on sales and advertisements. But the internet has changed the media landscape like never before, challenging media to change their ways up to this day.

History of newspapers

The classical model for financing the news dates back to long before the internet. Although there are some early examples of newspapers, starting in 59 BCE with the Roman “newspaper” Acta Diurna, or “daily doings”, the newspaper as we know it took flight after the invention of the printing press.

Moveable type, a technique where individual letters can be arranged and rearranged to print an entire page of text like a stamp, was invented in China around 1040 CE. In 1404, almost 400 years later, the mechanical printing press built by Johannes Gutenberg continued to revolutionize the reproduction speed while making it much cheaper.

The first weekly newspapers came around in 1609, almost 200 years after Gutenberg, and were written in German. Newspapers would spread out in Europe and even to the US in the century that followed. They were, however, still very expensive and reserved for the elite.

Until Benjamin Day created a publication called The Sun, which he first published in New York in 1833. New printing press technologies created during the Industrial Revolution sped up the printing process by more than a hundred times. Nicknamed “The Penny Press”, The Sun was sold for only one penny. The newspaper would sell advertising space to businesses that wanted to promote their products and services.

• Advertisement
  an announcement online, or in a newspaper, on television, or on a poster about something such as a product, event, or job.
  Collins Dictionary

The more newspapers that were sold, the more money would come in from sales and advertisements (advertisements become more valuable when the circulation becomes greater!). Once more newspapers appeared on the scene, they started competing for customers by publishing the latest news and most exclusive (and sometimes bizarre) stories.

This arms race for readers would eventually lead to “sensationalism”. Publishers discovered that their sales went up when they put a crazy or extreme story on the front page. Ironically, it was Joseph Pulitzer—after whom the most important prize in journalism is named—who invented the strategy that would lead to tabloids.

• Sensationalism
  (especially in journalism) the presentation of stories in a way that is intended to provoke public interest or excitement, at the expense of accuracy.
  Oxford Dictionary

Business models

Selling advertisements has long been the backbone of news publishing. A newspaper or news show has something that businesses are very interested in: a large audience. If you want people to buy your products or services, they need to know that you exist, first!

You can put a big billboard on the side of the road and reach people that way. Or you can appear alongside the articles read by thousands of people while they are drinking their morning coffee.

In turn, companies pay good money for a premium spot, especially to appear on the front page or during the break of the evening news when most people watch. The more people that get to see the advertisement, the higher the price a media company could ask for it.

An important concern for news media when it comes to selling advertisements is “editorial independence”. Because advertisers are responsible for a large chunk of their revenue, media run the risk of being influenced by these advertisers. A media company that is editorially independent is dedicated to not let financial or political influence by their advertisers or leadership change their journalism.

• Editorial independence
  when editors are free to publish what they choose without being pressured by the media company’s leadership (or other stakeholders).

As was mentioned, sales have also been essential to traditional news publishing. Even when a newspaper, like The Sun, only charged one penny per copy, the goal was to sell as many copies as possible. This would drive up the sales revenue while making advertisements more valuable too.

• Sales
  the number of items sold.

One way to ensure you will sell plenty of newspapers tomorrow is by trying to bind readers to your publication. Publishers have always been looking for different ways to keep their readers coming back to them. Of course, they tried to convince readers that their news was the best, and the most interesting. But they also worked hard to appeal to specific audiences and by selling subscriptions.

When selling subscriptions, readers are paying in advance for a number of newspapers to come. The longer they commit, the higher the discount they usually receive. This way, the reader doesn’t have to visit a kiosk every morning, and the publisher knows that this reader will stick around for a while.

Bring three print newspapers and discuss them with the students using the discussed theory. Without print newspapers, use online newspapers instead. Some discussion questions could be:

• Does the newspaper run ads?
• Does the paper use sensationalism as a strategy?
• How is the newspaper financed?

You can use any newspaper, but examples are The Sun (a tabloid), The New York Times (a newspaper), or Delayed Gratification (a slow news magazine)

Preparation

1. Each group of 4-5 students will develop a media company.

Exercise

1. Groups give their newspaper a name and a slogan (e.g. The News Cruise: Whatever Floats Your Boat).
2. Next, they will decide on their business model using a finite number of resources represented by twenty stickers or sticky notes.

Exercise instructions

Each group receives twenty stickers. On the printout, there are five categories they can “invest in” for their media company.

To do this, and to determine their business strategy, groups will divide their twenty stickers among five different categories as “investments”. The more stickers a category receives, the more important the category is to the company.

The categories are:

• Cover price (more stickers means a cheaper price, since the company loses revenue)
  • A higher cover price results in fewer sales
• Advertising
  • More advertising results in more revenue, but less editorial independence and news credibility
• Sensationalism
  • More sensationalism results in more sales, but less news credibility
• Specialisation
  • More specialisation leads to fewer sales, but more reader loyalty
• Production
  • Higher production costs result in better treatment of employees and a higher quality product, but less revenue per sale

While discussing their strategies, companies have to consider that each of these investments impact all kinds of variables:

• Sales
• Revenue
• Product
• Editorial independence
• News credibility
• Reader loyalty

Some examples

Company X is hyperspecialized to engineers and manages to attract very specific advertisers. This allows them to provide a high-quality product to a relatively small audience while keeping the price reasonable but not cheap.

Company Y is cheap, sensationalist, and full of advertisements, aiming to outsell every other newspaper, possibly at the expense of news quality and editorial independence.

Hour 2

Once every company’s strategy has been decided, groups pick a CEO who will present a short elevator pitch to the class about their news company to the class. After the pitch, other groups can ask questions. Every news company name will be written down on a white- or smartboard

When all CEOs have presented their companies, it is time for our readers to start reading the news. Every student can buy one newspaper (except for their own).

The teacher points at the name of a news company on the board, and students raise their hand if they want to “buy” that newspaper. Sales are tallied on the board.

1. What is the most important objective of a media company?
2. What makes a media company credible?
3. Why is sensationalism good or bad?
4. Should the news be free?
5. What kind of newspaper would you like to read?