ONA takeaway – Dear news company: Your ad model is dead.

The Online News Association annual conference in Boston this past week has already been analyzed by a billion of its thousand attendees, and it’s been interesting to see the various takes.

Many posts have been very positive, filled with excitement, inspiration and idealism for the future.

This is not really one of them.

That’s not to say I didn’t leave with a lot of inspiration and excitement. Ethan Marcotte, who helped the Boston Globe build its responsive design for the new bostonglobe.com website, gave an inspired and brilliant talk. I saw cool new augmented reality apps, one of which, Aurasma, rocked my world when it comes to creating new ways to distribute journalism to commuters, etc. There was lots of talk about the changing role of brand which big media companies should be paying attention to. And I may get to writing all those posts later.

But my initial takeaway is that the ad-driven model for web news content is dead, and it’s not coming back. Ever. For anyone except the broadest of aggregators, it’s a non-starter, and the companies who can profit are the kinds which can drive 10 million monthly pageviews with a staff of 5. In other words, they aren’t journalism organizations.

I’m not the first person to write this, or even close. But in a two-week period at the FutureM conference and ONA11, here were some key takeaways.

At a FutureM retail media panel, this: Major retailers are creating their own media and ad networks for the products they carry – and getting results because they reach the consumer right at the point-of-purchase. Those efforts and dollars come straight out of current media buys.

At the all-day ONA “News Entrepreneuring 3.0″ session on Thursday, the predicament of the local online news site was illustrated all too clearly. Even some of the best-known local online news sites – barista.net in New Jersey, the Next Door Media network of sites in Seattle, and others, are paying low wages to freelancers and may or may not be paying their owners because they just can’t generate the revenue. They are often profitable, but they are far from rich. (And let me be clear – they are doing awesome work. This has nothing to do with the quality of journalism.) The most optimistic view of the hyperlocal online news world came from the New Haven Independent, but there, their $575,000 budget is not ad-supported. It uses donations, grants and fundraising to cover costs.

And later in the conference, the online ad dilemma was illustrated further by examples from the tech blogs “Silicon Prairie News” and “Technically Philly”. Both of these organizations derive less that 3 percent of their revenue from online ad sales.

For these small companies – two things of note. The lack of ability to pay good salaries is scary and not sustainable in the long run. That’s the bad news. On the plus side, these small firms are much more likely to be nimble, know their communities and tolerate the discomfort than larger companies in the same predicament. Each of the companies I mention above had speakers who unquestionably believe in their missions, have new and innovative ideas and see opportunities for growth.

And let me be clear. News isn’t dead. Far from it. But I can’t help but think if I was currently at a big traditional news company, it would be budget time. And I would be trying to estimate my traffic for 2012 and making that the centerpiece of my annual budget. The numbers would be ugly, and we’d be trying to figure out how to make them look better. I wouldn’t be looking at conferences (like Silicon Prairie, which generates “90 percent” of its annual revenue from the annual ‘Big Omaha’ conference), or whether we could create an events business (like the Texas Tribune) or if we had a web consulting practice we could set up (like Technically Philly). We wouldn’t be able to seek donations (like the New Haven Independent), and I don’t see a TV station in the country with the power to set up a paywall of any kind (like┬áthe Boston Globe – and who knows what that will actually do for revenue).

But these last questions are the ones we need to have – where we break away from “How do we build traffic so we can sell more CPM ads?” and discuss “How do we build real value for consumers?”

Most big news companies still may not be ready to have that conversation. And until they do – it won’t be pretty.

 

Leave a Reply