New Revenue Sources in Internet Age

By: Rebekah Baldwin
Edited by: Rachel Bunn
10/7/09

The Internet has made the dissemination of news hard to control and even harder to charge for.

When the Internet first started becoming a source of media, the industry didn’t have a model to charge for online content. As a result, illegal downloading flourished, and newspapers, knowing they had to create an online presence, started putting their stories up for free. Paying customers began to expect their music, news, and other online content free of charge.

In response to this, the music business has started to exploit other revenue sources. Ringtones, merchandise sales and song placement in movies, TV shows and commercials, have all become more important ways to generate profit than ever before.

Some in the music business have even learned to take advantage of the benefits that free music has to offer. Lindsey Epperly, a third-year music business certificate student at the University of Georgia, is the street team director for a band called the Dirty Guv’nahs. She is also an advocate of using free music as a promotional tool.

“I think it allows the artist to build a growing relationship with their fans, helps them connect, and often promotes their group, pages and mailing lists by directing them to the site where they're giving away music,” said Epperly.

The music industry might be able to replace some of the loss of recorded music sales with other revenue streams, but it will be harder for the news industry to survive without their traditional 3-legged stool: subscriptions, newsstand sales and advertising.

With both subscription numbers and newsstand sales down, newspapers and magazines have to rely more and more on a single source of income- advertising.

Not all publications are ready to abandon circulation and newsstand revenues, however.

“Marketing for circulation is an ongoing strategic part of the newspaper business, even though we recognize that the internet is a viable way to get our product out there,” says Jenna Wages, Strategic Innovative Director of Marketing at the Athens Banner-Herald. “We’re not going to just give up one one area of our business because its not doing well.”

For The Fayette Citizen, a local paper that covers Fayette County, Ga., a single source of income is nothing new. The paper has always been free, and survives on advertising revenue alone.

A publication that survives solely on advertising could potentially be a source of ethical conflict, but Joyce Beverly, the Fayette Citizen’s publisher, says she has no concerns on this issue.

“I don’t have a single ethical problem with it. Really, we don’t run into many problems. If you want an advertorial, I’ll sell you one,” Beverly says.

Even if the ethical issues are taken out of the equation, there are other problems associated with relying on a single source of income. If advertising dollars dry up, the publication has no other revenue source to back it up.

This has become a problem in the current economic climate, as total advertising expenditures were down nearly 17 percent in 2008, and internet advertising fell for the first time since its introduction according to a report by the Newspapers Association of America. Additionally, the competition for classified ads with Craigslist has significantly reduced newspapers’ advertising revenue.

But Beverly believes it is still possible for publications to survive on advertising alone.

“I really believe that you can survive on ad revenue. Google’s the biggest company in the world, and they get their revenue strictly from advertisements,” she says.

While there has been a shift of focus to online, advertisers still consider print media an important outlet, according to Laura Rhachard, Media Coordinator for Sliced Bread advertising agency.

“[Clients] have definitely shown more interest in going to the online advertisement,” but more traditional clients still want to stick to print, said Rhachard.

“I think there will always be a market for that, but it might get smaller.”