This is adapted from a recent tweet thread I shared.
Someone recently described to me the “dishonesty” of the two-sided marketplace business model of modern journalism — of selling both subscriptions and advertising.
The argument is that by having two “customers” (individual readers and company advertisers), a publisher can never do right by both at the same time. There was a reference to Chomsky’s “Manufacturing Consent.” I disagreed. Let me share why.
In my view, many (if not most )organizations hold the tension of multiple stakeholders: direct-service nonprofits balance funders and those they serve; publicly-traded companies have short term (share buybacks) and long term gain. More specifically a coworking space has daily and monthly members; a software startups balances user growth and paying users.
Every organization takes lots of inputs to make something great. Leadership and brand are determined by how these inputs are resolved. Having that tension isn’t bad, it’s about what you do with it.
Still, I’ve run a news organization for 10 years, so I understand the difference of media’s “double-sided marketplace.” We’re always running two simultaneous strategies — one to convert readers, and one to convert advertisers (or whatever we call our customers). This is ineffective at best, goes the argument, and “dishonest” at worst, as my recent dialogue partner argued. This criticism argues that newsrooms should fund themselves exclusively through direct consumer support (which my trade increasingly calls “reader revenue,” and our typically means either subscriptions or memberships, like with public media).
This is uninformed for (at least) two reasons, one historical and one philosophical, even moral.
First, for the entirety of the 1900s, subscriber revenue was never much more than one-third of newspaper revenue. The ad model was incredibly powerful and efficient. When most people lament the decline of “objective journalism,” they are almost certainly describing a period in which news organizations were at their very peak double-sided marketplace. Having two customers, then, didn’t make them worse, in this telling, but instead created enough cross-subsidy that considerable social good was generated.
That business model discovery and improvement transformed the world, which brings me to the second moral reason.
The 20th century two-sided ad model resulted in a happy circumstance: news was robust, low-cost and widely distributed. There were many flaws, but the newspaper ad model was at least as culturally transformative as public libraries, and a public good like public education.
B2B publishers have built savvy subscriber models around rare and important industry information. But if you want news and information to be accessible, to inform democracies and shape communal narratives, you need two-sided marketplaces to form subsidies. Building exclusively direct-to-consumer, subscriber business models will ensure inequality in the access to necessary information. (In the case of “memberships,” it is my experience that this simply does not sustain the work outside of rare cases of either highly specialized or widely distributed formats).
Two-sided models aren’t “dishonest,” they’re a compromise bringing together constituencies like any platform Today there are too few (local) news organizations competing in ~new~ industries to develop a new generation of two-sided marketplaces.
This won’t be solved in the near-term. I want to build what can last for the next generation, which won’t look like what has come before. This is what makes me so passionate about what we’re doing with Technical.ly and Generocity.org. We produce valuable journalism and connect our communities efficiently but I think our business modeling is perhaps the most important and under-told part of our work.
We know how ~content~ works. With resources, any professional can do incredible reporting (beats, community, local, national). That isn’t our problem. We need stories today. We need commercially-viable double-sided marketplaces for the future.