Sound Businesses: Profiles of companies and business models we are keeping an eye on.
As business models for news continue to evolve, the pursuit of a lasting and profitable model for digital content publishers continues to quicken.
Philip Balboni has long been an innovator in quality journalism and continues to keep his finger on the pulse of ever-changing trends. In 1994, Balboni founded the trailblazing regional news outlet New England Cable News (NECN), which earned a national reputation for excellence [by] winning many of the country's major journalism awards. In 2009, together with former Boston Globe foreign correspondent Charlie Sennott, he launched GlobalPost, a digital news organization devoted to filling the void that was opening internationally as newspapers cut costs and shut down overseas bureaus.
Though GlobalPost’s ad-fueled model struggled, its journalists won many awards and its alumni, including Sennott and Balboni, continue to innovate. Balboni’s latest project is DailyChatter.com, a subscription service meant to pick up where GlobalPost left off.
Balboni, who began his journalism career as a reporter for the Richmond Times-Dispatch, spoke with Karma Network Contributing Editor Michael Moran about the future of advertising in today’s media space.
(Full disclosure: Moran was a GlobalPost columnist from its launch in 2009 to 2014).
Michael Moran: You are something of a legend among journalists and media entrepreneurs after founding New England Cable News, which in turn spawned many regional copycats. Then you changed tack, moving away from local news and into international, with GlobalPost. Your new endeavor, Daily Chatter, seems like an update of the GlobalPost mission. What’s Daily Chatter all about?
Philip Balboni: It was a combination of several things. First of all, international news is a niche that is still rather uncluttered by competitors.The providers of world news — in America, at least — are very few and the numbers haven't grown.
Some of the entrants, such as GlobalPost, BuzzFeed, The Huffington Post and so on, have run into the buzzsaw that all digital media encountered, which was that their business model of advertising —coupled with rapid growth and scale of audience — has cratered. Facebook, Google and others are taking all the advertising. You don't sell ads anymore because they are all programmed,so the whole advertising ecosystem basically has changed in a way that is extremely hostile to journalism and news.
What this has provided is the second leg for DailyChatter. After years of struggle at GlobalPost, I realized that you can produce all the best reporting in the world, but if people don't have time to read it, it's just like the proverbial tree that falls in the forest. So you really have to make it easier for people if you want to help them know the world better. So what we wanted to build was a product that was substantive, high quality, original but easy to consume. I think we've succeeded significantly in that regard.
There is no advertising, and that's of course deliberate. There will never be advertising on Daily Chatter. People hate it. It clutters the environment. You get mucked up with all kinds of intrusive data-monitoring things. You also don't have to go to the web because Daily Chatter is designed to be consumed in its native form, which is e-mail. It’s a newsletter. We do have source links if you want to learn more, but you don't need to follow them.
The number of articles is also limited to five per day. So we're very selective in what we write about.
Michael Moran: The back and forth over whether to charge for news content seems to be coming back again to subscriptions. How did you arrive at the decision to charge, and at what price?
Balboni: Because we don't have advertising as part of our business model, we want to make this the best possible environment for our subscribers. We decided this had to be a subscription-based business, as opposed to a nonprofit. I do believe that journalism needs to be a business and it needs to be a self-sustaining one.
There are lots of interesting experiments going on in nonprofit journalism, and there are perhaps segments of the journalism ecosystem where nonprofit makes more sense than others. But I don't think here's enough money in the world of philanthropy to pay for all the public media that would be needed.
In any event, we felt that a subscription model was the one that we would choose. We started with a price of $12 a month. After less than a year, we raised it to $15 a month. On April 1, 2019, we’ll be raising it again to $25 and we'll probably hold it there for a considerable period of time.
Michael Moran: So Phil, you and I have been through the business model wars in our journalistic careers. Remember “News Wants to Be Free?” I always answered, “Maybe it does, but my wife, my kids’ college and my mortgage banker disagree.” So now we’re seeing this all come full circle. Condé Nast recently announced it's going to put everything behind the subscription wall. Some of the digital native stars, like Vice, HuffPost and BuzzFeed—have also hit the wall. What do you see in terms of the development of the models in the wider media space?
Balboni: I think we're still evolving, but what seems clear for now is that the sites that depended heavily, or exclusively, on advertising will not be able to make a go of it. BuzzFeed has almost 700 million monthly unique visitors — a massive audience — and they are not profitable. . If you can't be profitable with that many unique visitors [running a native advertising business model], ., you will have great trouble transitioning to a subscription-based one.
They also have a type of offering that involves lots of fluffy, entertainment-type stuff alongside some news, but it's not the news that generates the traffic. So I think I think we'll see more failures of these kinds of entities — even the ones that that have been flying high.
But if we go to the other end of the spectrum, we find we find that the elite media — The New York Times, The Wall Street Journal ,The Economist, The Washington Post, Financial Times —are all doing very well, particularly with subscription revenue.
The New York Times is a trailblazer among them. They have over three million digital subscribers, and [because their digital revenue accounted for just over 40 percent of the total in 2018], their future looks bright. Now, they're not a giant business. They are still a very small business with annual revenues of [less than $2] billion. But they've gone from having a future that looked highly problematic five or six years ago, to having a future that looks really quite bright. They have 1,500 journalists and they keep adding to the payroll. They produce superb product. It is a great success story but there's only one The New York Times.
The Washington Post is also doing well, although it has a much more forgiving paywall than The Times. But they both continue to tighten up. It’s very difficult these days to get The New York Times for free.