On Wed, 20 Jun 2012, Jason White <jason@jasonjgw.net> wrote:
Brent Wallis <brent.wallis@gmail.com> wrote:
A start up doesn't have to hold on to their profitability like the incumbents do. Starting a news site in competition with an on line only Age would not cost much. All that would be need is good content born of good journos.
It needs to make enough revenue to be sustainable, from advertising, subscriptions or another source. The main costs would be:
1. Employment of journalists and covering of their work-related expenses.
2. Server capacity and bandwidth.
http://www.hetzner.de/en/hosting/produktmatrix/rootserver-produktmatrix-ex Server cost is nothing. The EX servers from Hetzner seem to provide the best value for money for dedicated servers. CDN and scalable cloud options such as EC2 can be cheaper depending on what you do. But at the low end Hetzner are really good. As an aside if anyone knows of an option that they think is better than Hetzner then please let me know. Anyway my blog is using a fraction of the resources of a Hetzner server and the Google advertising gives revenue equivalent to two Hetzner servers - even though my blog is relatively resource intensive (I haven't implemented caching) and not particularly profitable.
3. Web development, system administration, etc.
Again that's not a big deal for a site of any reasonable size. Let's assume that the lead sysadmin gets a salary comparable to an editor and web developers get paid a bit less than journalists. For a site of any reasonable size journalists would have to outnumber web developers. You would maybe have 3 people in a sysadmin team for something like Crikey, two of whom would get paid a lot less than journalists. As the business scales up the ratio of journalists to IT people would improve. For a small organisation you could have one sysadmin working part-time with occasional contracts for web development work.
As to income, the online advertising market is significantly in favour of targeted advertising - Web search, social networking sites, and so on. I don't know how successful a new media outlet could be in this environment. Subscription revenue would also be available, however, according to a variety of models (e.g., the first n articles that you retrieve from a given IP address are free, but you're asked to pay thereafter, just to mention one possibility).
Has online subscription ever worked though? Crikey didn't seem to be particularly profitable even though they always had good content. Paper can be restricted easily. You sell someone a paper for $2 and they can give it away to others, but after a few dozen people have read it there's not much left (think of what happens to a paper left on a train or at a bar). Restricting digital information doesn't work so well, there's no good way of handing something to one person but restricting others. You can make it login based (so it can't be read easily on the train) or downloadable which can be shared.
The requirement here would be to gain enough subscribers to keep the prices down to a level that would sustain a readership. The quality of the content would also influence the subscriber count.
What would people pay per year? If they pay $50 per year then you would need 2,000 subscribers per journalist (the salary plus incidental expenses of a journalist couldn't be less than $100K). How many journalists are needed to make something that's worth $50 per year? -- My Main Blog http://etbe.coker.com.au/ My Documents Blog http://doc.coker.com.au/