On media business models, old and new

Bloomberg News’ editor-in-chief John Micklethwait wrote a great piece recently with a series of predictions of the main changes AI will bring to journalism. I think he actually missed one important thing that’s rather dystopian — but I’ll try to write a longer post about it tomorrow.

For now, I was thinking about a point he made at the beginning as he was listing the historical reasons of why the media market is the way it is today:

Far too many quality media brands fell for the tech-rhetoric that “legacy media” was dead and that content should be free. Soon they were stuck in a vicious circle of chasing clicks, cutting costs and gradually handing over their business to the tech giants.

But eventually sense prevailed, people started to charge for journalism and legacy media began to recover. The New York Times, which had only 500,000 digital subscribers when Mark Thompson arrived in 2012 and focused the Grey Lady on selling subscriptions, now has more than 10 million paying customers. The “content is free” sirens who lured so many great names onto the rocks have shut up; the new challengers like The Information, Puck and (despite its name) The Free Press make sure people pay sooner or later.

As I was thinking why the legacy media publications went for the “free content” model, I realised something I didn’t quite think about before: that is actually something they had been conditioned to believe since long before they made the shift.

Correct me if I’m wrong, but had it not been the case for most if not all publications back in the 2000s that the revenue from subscriptions and newsstand sales was almost negligible compared to that from classified and display ads? I guess you could see that part of the income as a way to cover the printing costs.

And if that’s the case, then it wasn’t really such a big paradigm shift for legacy media moving into the online realm to dismiss the idea of introducing digital subscriptions right off the bat.

Conversely, it is only now that we’re seemingly entering a new era of media monetisation that prioritises subscription revenue, while in the past 15-20 years most publications have been trying, to a varying degree of success, to replicate the old model.

(It could seem an obvious thing — but I’ve somehow been considering the rise of subscriptions as a “return to the old model,” which it actually isn’t — at least not from the business standpoint.)

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