Survival is Success

May 2, 2012 • Digital News • by

The Reuters Institute for the Study of Journalism recently released a study focused on nine different digital startups from Germany, France and Italy.

Conducted by Nicola Bruno and Rasmus Kleis Nielsen, the report is aptly titled “Survival is Success: Journalistic Online Startups in Western Europe.”

Focusing on nine “pure players” (i.e. Netzeitung, Mediapart and Il Post), research indicates that for digital startups dealing with information, surviving is already a success in this phase of the market. Among the nine online news outlets analyzed, only Mediapart and Perlentaucher broke even with a balanced budget while others, the Italian Il Post, Linkiesta and Lettera 43 included, are in the red and only surviving thanks to external contributions.

The analysis of different business models and placements of media outlets is also very interesting. In France, Mediapart publishes high-quality niche content for a specialized readership and adopted a paywall with very low subscription fees. The German Perlentaucher is the other outlet with a balanced budget, surviving due to savvy attention to costs a highly diversified business model.

The report also suggests there are two core issues driving the struggle of digital news outlets. One is that the market is dominated by online editions of major traditional newspapers which can rely on pre-established brands and investment capability, and the other is the problem of ad revenue generated by a few major players like Google. It is still very difficult for smaller companies to gain significant income from online advertising in this scenario.

According to Nicola Bruno, research co-author and journalist for Effecinque, “European newspapers should look beyond American models like 2012 Pulitzer Prize winners the Huffington Post or Politico. Those models seem to work pretty well in huge markets like the U.S. but it is not proven that they can be applied in Europe.” He goes further, saying, “Even in France, where an explosion of digital-only newspapers occurred, the majority of digital journalism startups still struggle to survive.”

In order to thrive, the newcomers must avoid direct competition with online editions of mainstream media, trying instead to differentiate like Mediapart did in proposing high-quality investigative journalism. This newspaper has no competitors in the French media landscape.

 

For the full report, visit Reuters.

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