Reply to post: How do we pay for it? THIS.

Twitter's motto: If at first you screwed developers over, try, try again, eh?


How do we pay for it? THIS.

Ah. The perennial debate whenever 'how do we pay for it' comes up regarding social media, journalism, fake news, etc. It does indeed all reduce to that question, and Twitter, as big and well-known as it is, hasn't learned the lessons of previous generations of mass media.

Let's take El Reg as one example -- According to their own statistics, 9.5 million people read it. Let's say they have a staff of 150 people or so, most of them support (not writers/journalists). For comparison, the NY Times has a staff of about 3,400; I figure for a very focused niche website that mostly does analysis of other news sources -- ie, not much investigative journalism, that's not an unreasonable figure. At an average pay of $36k USD (for all employees, not just journalists), and assuming labor makes up about 1/3rd of total costs -- a typical business figure, we'll round up to $100k of resource need for the organization times 150 people... that's an operating budget of about $15 million per year. So those 9.5 million people could contribute *** $1.57 per year *** and support the organization. Now in practice, most people don't -- We'll say only 5% (a high end figure for advertising responses) do. That 5% of the readership could flip $31.58 per year and cover everyone, or $2.63 per month. To be clear: These are estimates, not actual figures. An actual staffer can (and maybe will?) step in with better numbers, but let's start here.

It's not unreasonable to expect $2.63 per month from the top income earners in the field who would be reading this site, and the remaining 95% of slackers who get it for free could keep doing so, but more to the point excerting influence on their peers which increases eyeballs and 'mind space'. By becoming the de facto go-to for IT news through word of mouth, readership grows and revenue grows as well.

That's not an unreasonable business model; There's just one problem -- the people most likely to donate are the ones with the lowest incomes. Those with high income proportionally donate less. A lot less. So we obvious need some kind of tiered system; A combination of one time donations, recurring income (subscriptions), but also a need to keep content free. Top income earners often do recurring donations, but the rank and file opt for one-shots (often after tax returns).

When you look at how the news industry has approached this problem, the varying methods from paid-only viewing to donations-only, to premium content, it becomes clear these numbers -- while perhaps not completely accurate -- are illustrative of the overall picture.

Now, me personally... I think the best thing to do, if we take online advertising out of the picture, is to fall back on a tried and true method: Tiered donations with varying 'prizes'. People are much more likely to donate (and in larger amounts) if they get something in return, even as a token. A t-shirt, hat, etc., are all commonly done, and also help fulfill advertising objectives *but with explicit engagement and consent of the consumer*. Wearing an El Reg shirt is both a statement, and a choice. It's not shoved down people's throats and as a result those people become good sources of word of mouth, both actively and passively.

In the United States, we have the Public Broadcasting System, or PBS. It's a television channel and network, supported by tax dollars and donations. They have donation drives bi-annually. Roughly 50% of their revenue is generated through donations, which brings in $220 million (donations only); About 95 million unique people watch it each year. It is a rough analog to the BBC, but with much poorer funding and support at the federal level or the general public. But remember, the internet is global, while television is not. PBS has a market cap of about 320 million people -- the current US population. Europe has nearly 800 million; About 854 million people speak/read english worldwide. That's your market cap for a website that speaks/writes only english. The tech industry in the US weighs in at about 6.5 million people; So if Europe is similar, that's another 16 million on the top, or about 22.5 million people in the industry, of which El Reg has tapped 9.1 million, or nearly half. Aggressive advertising could top that in 5 years to majority; ie, they could expect to grow to another 20% of current size in good conditions with proper investments. Will that happen? Probably not, but it's a goal to shoot for. 20% more El Reg also means they could take a proper run at investigative journalism, maybe enter new markets like video and mass media (television).

As you can see, the numbers for donations-only support and what it would take for El Reg to make rent are roughly the same -- PBS gets about $2.30 per viewer per year. I estimated about $1.57 or so for a typical business -- not a media business, but the average across all markets as a business entity. El Reg could operate with significantly less overhead (ie, more of its budget would be labor) because it doesn't need all that equipment, transmitters, etc., but conversely wouldn't benefit from any advertisements (commercials), so it would probably break even on this figure, worst-case.

So there you have it: The donation model is viable for journalism, it just requires a radical re-thinking of how to engage its readers/viewers. The most visible problem in the field right now is that the internet generation and the people trying to engage them have forgotten the lessons learned by previous iterations of mass media: Namely, you can't ask people for money without giving something tangible back. A faceless static form asking for credit card information is neither engaging nor effective. Donating needs to be a center-piece of the organization, not a bag hung on the side, with proper care and attention paid to cultivating it. Patron may be successful as a whole, but many of it's content creators are simply clueless on this because they don't have an organizational support or backing from a knowledgable and dedicated staff who handles the donation side of things and promoting it. They are, in effect journalists trying to be marketing directors. Obviously, it's had limited effectiveness, popular opinion notwithstanding.

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