David Plotz, who recent stepped down as editor of Slate, just did a tweetstorm where he listed all the ways journalistic enterprises earned a living in the 1990s and the way they do so today. In the 1990s, Plotz says, there were four options: funding by a rich individual, funding by a rich company, banner ads, or subscriptions. Today, in contrast, there are dozens of options — 72 by his count. These include various types of advertising, various subscription models, foundation or university funding, sales of merchandise, events (either with an admission fee or corporate sponsorship), and so forth.
It's an interesting list, but I think its length somewhat obscures what's going on. Fundamentally, all of the business models on the list fall into one of three categories: (1) sell content to readers, (2) attract readers and sell something else (merchandise, event tickets) to them, and (3) attract readers and then charge sponsors to advertise to them.
It's true that people have developed a lot of interesting variations on these three basic themes since the 1990s, but these innovations are not the most important thing that's changed about the journalism business. Far more important is the simple fact that there are vastly more people online today than there were in the 1990s, and they spend a lot more time reading online news.
This is a big reason I've always been skeptical of predictions that the internet will lead to the death of high-quality journalism. The reality is that the United States is a nation where consumers spend trillions of dollars every year, and companies are always going to be willing to spend a lot of money to influence what they spend it on. It's hard to predict exactly what strategies successful news organizations will use or how much money they'll make. But it's a safe bet that some media organizations will figure out how to attract large online audiences and then convert those large audiences into significant revenues, just as television and radio stations and newspapers and magazines did in the 20th century.
This basic economic point has been obscured somewhat by the fact that large advertisers are conservative institutions. For the last decade, they've been consistently overpaying for ads in newspapers and magazines — leading to the saying that analog ad dollars are becoming digital dimes. But that can't last forever. More and more readers are getting their news online. In the long run, advertisers will have little choice but to take most of the money they've been spending on declining 20th-century media and spend it on 21st-century alternatives instead.