The news has always been subsidized; it has never been a money maker. Print newspapers were mechanisms that bundled content and the lucrative parts – automotive, home and garden, classifieds – subsidized the difficult to monetize but incredibly socially valuable national and international news sections.
According to a 2010 presentation by Hal Varian, classified ads once accounted for about 32% of total newspaper revenue. Craigslist, monster.com, and other online venues have removed this revenue source for newspapers – even in their online manifestations. Total classified ad revenue declined over 70% between 2000 and 2010 industry-wide, from a robust $19.6 billion to a paltry $6 billion. This decline was most pronounced in recruitment advertizing: 2010 revenue was 10% of what it was in 2000. But the declines are apparent across the board.
This leaves the question, what will subsidize the news?
I offer the HuffPo business model for your consideration. The Huffington post has made some significant strides in countering criticism – often coming from the likes of The New York Times’ Bill Kellar – that it is little more than “celebrity gossip, adorable kitten videos, posts from unpaid bloggers and news reports from other publications.” Indeed, around the time of the AOL deal last year they hired several prominent reporters, including Tim O’Brien and Peter Goodman from NYT.
Yet despite the fact that Arianna has beefed up her staff engaged in actual reportage and gotten some seriously credentialed folks on board as senior editors, Kellar is not totally wrong. The site is still full of linkbait. Here are two examples that I came across today:
I would wager that either these are some of the most egregious examples of linkbait you have ever seen or you are a regular HuffPo reader. Because at HuffPo these are standard fare.
So, how can we explain the blatant trashy linkbaiting and serious journalism and analysis that co-exists at the Huffington Post? The linkbait pieces are the classifieds of old. They subsidize the real journalism that doesn’t make anyone money. Of course then we have to wonder, why not cut out the non-revenue producing part of the model all together and make more money with a site that is entirely cat videos and celebrity gossip? Well, as my insightful friend Nicolas Mendoza pointed out in a conversation about this with me, it probably boils down to the same thing that motivated the old-school newspaper families to keep the news in their papers: prestige and vanity. Keeping real journalism at Huffington Post may be largely a vanity project of Ariana Huffington; but, as long as there are people who are willing to take on ego projects that serve the public good, we might be alright.
Edit: The original text of this post never actually mentioned: linkbait makes money by driving lots of traffic so they can charge for ads.