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The disruptive power of the internet has produced a new ecology of information. As outlined in the first post of this series, this is the inescapable big picture for anyone engaged in creative practice. #

This new ecology of information incorporates some hard realities for those of us seeking to support creative practice. In the second post of this series, I argued that community is now an essential concept in the new media landscape. #

Throughout I have drawn inferences from what is happening to large media organisations in this revolutionary environment so that independent photographers and visual journalists can understand the challenges they face. #

In this third and last post of the series, I want to discuss how some media companies are pursuing different sources of revenue. While their strategies are not easily replicable, they show how the dynamics of the new media landscape are playing out when it comes to the nitty-gritty of business models. #

The end of distribution supporting scarcity

The past profitability of many media companies was based on controlling the mode of distribution so that scarcity prices could be charged. What the disintermediation, disruption and disaggregation of the media economy exposes is that this control was unique to a particular historical moment, resulting in prices that were artificially high. #

As Google argued in a submission to the US Federal Trade Commission, this certainly applied to newspapers: #

The large profit margins newspapers enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers. With the Internet, that scarcity has been taken away and replaced by abundance. No policy proposal will be able to restore newspaper revenues to what they were before the emergence of online news. It is not a question of analog dollars versus digital dimes, but rather a realistic assessment of how to make money in a world of abundant competitors and consumer choice. #

It also applies to television, movies and music, because “the very model of the traditional entertainment industry is predicated on the inefficiency of distribution” – that is, control over broadcast networks, cinema chains and record companies. Once that content has been digitised and streamed, centralised control and high prices is much harder to maintain. #

The hard reality, then, is that business models have to be decoupled from modes of distribution. In a context where publication and broadcasting have become easier and cheaper, running printing presses and managing TV networks are no longer licenses to print money. No business model predicated solely on control over a mode of distribution can succeed in the long-term. #

Of course, existing media corporations can go on for some time. Legacy industries don’t grind to an instantaneous halt just because the central principles of their operating environment unravel. But if they fail to innovate, they tend to decline slowly before becoming unsustainable. #

Diverse and indirect approaches

If a business model predicated solely on control over a mode of distribution cannot succeed in the long-term, another casualty will be the idea of the single business model behind visual journalism. The new approach will be a series of diverse models producing revenue indirectly. #

As John Temple, the last editor of the Rocky Mountain News declared, news organisations do not make money from news; news is the ‘brand’ for the organisation and the money comes from relationships and services only indirectly related to journalism. #

There is nothing new in this. Advertising has been the main source of revenue for mainstream media, with a contingent and indirect relationship to the journalism we (mistakenly) assume is the raison d’etre of media companies. #

While it seems shocking to say news is a ‘brand’, that is how it has functioned. Oliviero Toscani, who was behind the controversial Benetton campaigns of the 1990s once remarked that we should understand that in a capitalist media economy “editorial was always the advertising of advertising.” #

Although advertising will remain important for media companies, and new ways of garnering subscriptions might offer small revenue streams, what are these indirect approaches going to comprise? #

The community that pays

That is where the idea of community comes in. Those engaged and loyal people – readers, viewers, listeners, fans – who identify with and congregate around their chosen content streams are where revenue comes from. #

It’s fashionable to say nobody wants to pay for anything anymore, and there a plenty of online comment threads that can be mined for anecdotal evidence to support this rather glib generalisation. But if we think about the hundreds of millions of TV episodes, 10 billion songs and 10 billion apps sold via iTunes, or the 23 million Netflix subscribers in North America, or Spotify’s 1 million subscribers in Europe, plenty of people reach into their pocket for quality content. If providers offer availability and ease of use, direct payment for something that is not fungible is forthcoming. #

If we look at indirect revenue from communities, then transactions are key. Fairfax (publishers of the Melbourne Age and the Sydney Morning Herald, and the largest media company in Australasia) has seen digital grow into its second largest revenue stream. 60% of their digital revenue comes from transactions, with readers using companies that Fairfax purchased, including a dating service called RSVP and a holiday home rental service, Stayz.com. #

Transactions are one way that social networks can be leveraged for revenue, with social recommendations leading to commissions. As one Deloitte analyst predicted, #

the next phase of social commerce is about extracting commissions from products which are sold directly as a result of recommendations made…So rather than selling advertising, what you’re doing is taking a commission against a product sold. #

A 2011 report by the Columbia University Graduate School of Journalism on the business of digital journalism pointed to a number of indirect transactions supporting editorial content, such as The Atlantic magazine’s events business with $6 million/year in revenue. In a similar vein the Washington Post is running online courses and The Guardian is organising weekend masterclasses. #

None of these constitute the holy grail that will replace the unending decline in print advertising revenue. But they are good examples of creative approaches that don’t fight the disruption of the internet and work with the contours of the new media landscape. #

Can an indirect approach work for photography? When I reviewed the New York Times paid content scheme at the end of March, I painted a different scenario using transactions rather than subscriptions: #

The Lens blog is a high profile site with some 750,000 users visiting each month. Instead of raising money by hoping some of those subscribe on their 21st visit each month, consider the monthly visitors as a community of interest around photojournalism and offer goods and services to that community. There could be Lens-sponsored master classes, special events and workshops for both professionals and the general public; print sales; discounted equipment and photographic services via business affiliates; photo tours and themed travel; equipment, medical and travel insurance for practitioners; logistics and visa services for photographers having to travel at short notice…you name it, anything that interests a broad photographic community, amateur and professional, could be offered by negotiated deals where Lens’s earns a percentage on each transaction. #

This strategy would leverage the Lens blog Twitter feeds and referrals providing unlimited free access. It would be based on growing the community that comes to the site, thereby underscoring the value of having quality photojournalism distributed globally and the benefit of having it accessible to as many as possible. It could raise more revenue than subscriptions could achieve, and the revenue could go directly to photojournalism. #

This is the emerging logic for media companies. Might it work for independent documentary photographers and photojournalists? Even if the scale is different, why not? This logic comes from the dynamics in the new media landscape affecting everybody. #

Paul Melcher claims “photographers, photo agencies and related have no experience in building value around their images.” That has to change. Value will be created indirectly more than directly. It begins with the six steps towards building your own community. #

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Related posts

The new media landscape (1) #

The new media landscape (2) #

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Photo credit: Enol/Flickr, used under a Creative Commons license #

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