Financing Online: Where’s the Money?

Vin Crosbie, senior associate of the consulting firm Borrell Associates, spoke Friday at the 7th International Symposium on Online Journalism at the University of Texas about business models in online journalism. He questioned whether there is enough revenue in the market to maintain profitable, quality journalism.

“There is a lot of money out there, and newspapers are doing quite a good job of going out and getting it,” Crosbie said.

According to data gathered by Borrell Associates, a consulting firm that offers management strategies for local online media, newspapers with online websites are gaining large revenues in online advertising. He spoke of projections that online advertising will soon surpass radio advertising in 18 months and has already surpassed magazine advertising.

“A lot of this advertising growth is coming from local newspapers making a push into online advertising,” Crosbie said. “That is what is driving these growth rates.”

However, Crosbie was quick to point out the fundamental differences between traditional and online advertising models. Because of the vast choices offered by online journalism, value is driven down and people are less willing to pay for content.

Frequency is also a problem because readers tend to read print papers much more often than they visit online newspaper websites, he said.

“Readers may read the newspaper five to six times a day in print and maybe only visit these websites six to eight times a month,” Crosbie said.

These trends, driven by online journalism’s dependency on traditional newspaper advertising, could eventually lead to online advertising’s downfall, Crosbie said.

“There is much less revenue in online journalism than print and down the line,” he said. “If newspapers have a downward trend in readership, then online journalism could follow.”

ISOJ 2006: Citizen Journalism and Social Media, from Knight Center on Vimeo.