One thing the news and media industry needs is new ideas for making money – so that people can launch their own businesses or help existing ones do better.
Which is why the conversation surrounding entrepreneurial journalism is such a healthy one. Pioneered by the likes of Jeff Jarvis at his City University of New York course, the trend is spreading in the UK – with London’s City University, where I’m a visiting lecturer, running its own EJ course for postgraduates this year.
Tonight was the open evening for students to showcase their ideas for viable startups to a selection of industry folk and I was invited to come along and critique their proposals. There was a quite a range on show – from mobile apps with an ecommerce model (getting in on the social, local, mobile trend), a pro-amateur video agency and a fully formed customer publishing idea with a real-life client already interested in the context. It would be unfair to give more away about the ideas with them being so early in their gestation.
But when asked for me advice, this is broadly what I said:
- Renewable revenues: It’s fine to sell an iPhone app – Angry Birds does OK from it, as do lots of others. But for content-based apps it’s not quite so easy to make a living from one-off payments, especially for new launches. For publishers, the key is to have renewable revenues – things that can give investors and creditors an idea of visibility, which is when a business can see how much revenue it will make in the future. Subscriptions can work very well – but they take a huge investment in marketing to ensure customer acquisition and renewal. This is why events have grown so fast in the consumer and B2B sectors: they are highly renewable and give unparalleled visibility.
- Scalability: One shop in a high street might make a profit, but 10 shops in 10 high streets across the region will make far more and at a better profit margin – the same is true of online publishing. Some of the students had formulated very interesting ideas for apps and sites that might work in a specific sector – but few had made the ambitious step of thinking about launching it into adjacent sectors or industries, so to benefit from economies of scale.
- Understand your market: A good question to ask about your business is: what’s the total audience and what’s happening to it? One group I spoke to were targeting a specific sector of higher education that is in fact shrinking year on year. That doesn’t bode well for your profit growth. That’s why so many media businesses are keen to invest in emerging markets where growth is so much higher than the UK, which is a mature, developed market. That same group with the shrinking sector could, however, use the technology they want to develop to launch into many different sectors. Which ones have the most growth?
- Vendor relationships: It’s vital to think of the user and how he or she will use the product but – especially if something hopes to be funded by advertising – the relationship with vendors, or advertisers, is just as important. So much of the ad agency world is driven by personal ties and relationships as well as price and audience. Particularly where students had thought of an agency model, selling to a media organisation mostly, they hadn’t thought through enough what that pitch would be.
- It’s not about news: What I found very interesting and a real sign of the times is that not one group I spoke to based their startup idea on news creation (although a couple suggested they would aggregate and curate it). If no one in the next generation thinks they will get rich by doing news, that says very much the industry today.
But all in all it was a great event and I was genuinely impressed by the ingenuity and business sense the students had. It’s not patronising to say that at least a couple of the ideas could well see the light of day and certainly hope that one day they do. I’m sure City will be running the course again next year and I’ll be interested in seeing where it – and its alumni – go from here.
- US university offers MA in entrepreneurial journalism (guardian.co.uk)
- Teaching entrepreneurial journalism: the elephant in the room – editorial independence (onlinejournalismblog.com)
- Jeff Jarvis: Be In The Relationship Business Just Like Facebook (psfk.com)