Umair Haque on charging online and a new business model

July 29, 2009

Via the Online Journalism Blog, Umair Haque, Director of Havas Media Lab, has a post on why charging online won’t work for papers, and why ‘nichepapers’ are a viable root out of the financial crisis for those wishing to provide news:

Nichepapers are different because they have built a profound mastery of a tightly defined domain — finance, politics, even entertainment — and offer audiences deep, unwavering knowledge of it.

Nichepapers aren’t a new product, service, or business model. They are a new institution. They’re a living example of the institutional innovation that is the key to 21st century business. They’re not the same old newspaper, sold a different way. They are 21st century newspapers, built on new rules, that are letting radical innovators reinvent what “news” is.

Nichepapers are the future of news because their economics are superior. All the Nichepapers above are “real” enterprises, with staff, offices, and fixed and variable costs. Nichepapers offer more bang for the buck: greater benefits for far less cost. Readers get more, better, and faster content — while publishers realize lower capital intensity, lower distribution, marketing, and production costs, and less risk. What is different about them is that they are finding new paths to growth, and rediscovering the lost art of profitability by awesomeness.And that’s really the point.

Profitability can’t be recaptured from a commodity. Newspapers used to be yesterday’s most profitable industry. Warren Buffett made his fortune by investing in newspapers, yesterday. Yet, today, business model innovation, aka “monetization,” is the surest, quickest path to self-destruction. Charging once more for the same old “content” — as argued for by David Simon, in an impassioned CJR article — will inevitably lead newspapers exactly where it led banks investment “banks” and automakers: into economic implosion.

To reinvent the buying and selling of news, it’s necessary first to reconceive the making of news. The AP’s latest attempt at business model innovation, for example, is a heavyweight “rights management” system for the same old stuff. But protecting yesterday’s “product” is exactly what prevented the music industry and Hollywood from rediscovering the art of value creation.

Haque provides a convincing case: why is it, for example, that local papers give over a decent amount of their pages to national news, which their readers will be getting elsewhere and in more depth? Instead, as nichepapers, they could concentrate on covering those issues and areas which are neglected by other media. Does anyone really buy their regional daily to read about goings on in Westminster and celebrity gossip?

Of course, and this becomes clearer when exploring Haque’s whole post, he is not really talking about a print product. But ‘nichepapers’, especially in the form of hyper-local papers with smaller staff, a more active community and coupled with relevant, localised advertising, could well be a successful, new business model for local papers.