Acquiring multiple sources for revenue is usually good for a business. Looking at independent online news services in the United States, a study by Brian L. Massey of East Carolina University found quite the opposite results. Massey conducted a survey on 127 stand-alone news sites in 2014.
For-profit news sites performed the best with a low number of revenue sources. The most financially distressed for-profits were also the most diversified. With non-profits, from the best financial performers to the worst, they were all moderately diversified, the study states.
Successful for-profits showed a heavy dependency on local ad sales, the author writes. The average for-profit used 2,4 revenue sources. Local advertising was the most common revenue source across for-profit sites, accounting for a mean 68.8 % of their income. National advertising accounted for 12,8 % of an average company’s income.
The average non-profit site had a mean 3,8 revenue sources, with grant funding bringing in a mean 47,7 % of income. Non-profits with budget surpluses showed the highest dependence on donations.
Advertising, donations and grants are often seen as troubled legacy revenue sources, the researcher writes. Still, successful sites in the study depended on a great deal on these. It might be that for example local advertising can be the only realistic option in some small markets.
The article “Testing the Revenue Diversity Argument on Independent Web-native News Ventures” was published in Digital Journalism and is available online (free abstract).
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