Posted by Kevin Anderson

Reuters Institute fellow Rasmus Kleis Nielsen has a great post on the blogs at Reuters warning European journalism start-ups to avoid surviving on advertising alone. He backs up his warning with some stark examples of start-ups who have failed due to meagre revenue they were able to earn on ads:

Advertising-supported online news production did not work for Netzeitung in Germany (which in 2009 shut down its newsroom after nine years of consecutive losses), did not work for Rue89 in France (impressive and innovative as it was, the site never broke even and was bought by the weekly newsmagazine Le Nouvel Observateur in 2011), and is not working for Il Post (widely considered one of the most promising startups in Italy, the site generated revenues of just 35,000 euros in its first year of operation, resulting in an operating loss of more than 150,000 euros out of a total budget of little more than 200,000 euros). Why should we expect it to work for other startups when all these widely praised ventures, and many more besides, failed to pull it off?

Ouch. Nielsen makes the broader point that the journalism start-ups are simply mimicking US models, when the US market is massive both in terms of population and ad spend compared to European markets, but he also makes some excellent points about how a glut of digital content has pushed down ad rates and kept them low. Those low rates aren’t just hitting start-ups but even established players. 

A lot of journalists are trying their hand at start-ups as they leave or are pushed out of the stable of big media. When I left The Guardian two years ago, Suw and I thought about pursuing a journalism start-up. We decided not to do it for several reasons, with the major one being, our start-up dreams were over-taken by media consultancy work. However, we thought long and hard about the revenue streams that would fund our start-up. We knew that ads alone wouldn’t cut it. 

Nielsen suggest that journalism start-ups look to how other non-content start-ups are diversifying their money mix by adding “digital subscriptions, donations, consultancy services, live events, event planning and e-commerce”. Honestly, I think for certain types of content, you could even mix consulting and content, although I know from personal experience that gets sticky. Journalism quickly meets the requirements of client confidentiality.

Regardless, if you’re launching a journalism start-up, make sure your content dreams are leavened with some thoughts of business reality. If you don’t have business planning experience, get some. Freelancers have always had to learn about marketing and the business side of journalism. It might feel a little weird at first. Just remember, you’re not working for the Man. You’re fighting for your own survival. 

Tags: revenue, start-up