Study: Online-only news sites 'struggling to cover costs'

A report looking at the successes and failures of online-only news websites in Europe has found that most are unable to cover their operating costs, meaning most survive for less than three years.

The study, "Survival is Success", published by the Reuters Institute for the Study of Journalism (RISJ), suggests that "surviving for more than a few years is a form of success in itself".

Out of nine start-up news sites analysed in the report, only two, Mediapart (France) and Perlentaucher (Germany) broke even. Mediapart is sustained by a paywall system, while Perlentaucher's low operating costs help its survival, combined with a "highly diversified business model" the report adds.

The rest of the nine have either shut down, been bought out by news magazines, or continue to operate at a loss, surviving only on support from external investors.

The report says there are two main challenges for online-only news websites: "firstly, the market for online news continues to be dominated by legacy media organisations like newspapers and broadcasters; secondly, the market for online advertising is dominated by a few very large players like Google, which undermines the ability of small and medium-size players to generate significant revenues."

Author Dr Rasmus Nielsen, from the RISJ, says that new media enterprises are "finding it just as hard" as newspapers and broadcasters to survive in the online media era.

"Many start-ups are inspiring in their journalistic idealism and impressive in their technical ingenuity, but they are struggling to find a business model that allows them to break even.

"Finding functional funding models is crucial for the future of online journalism", Nielsen added.

Co-author Nicola Bruno criticised European journalism start-ups looking to model themselves on American sites such as The Huffington Post or Politico.

"Although these models may work in a very large media market like the US", she said, "they won't necessarily work in smaller markets in Europe."

The report goes on to suggest ways that news websites can increase their chances of survival: "Online-only news websites need to avoid head-on competition with news websites backed by old media that often have stronger brands and more content to offer", a press release from RISJ, which is based at the University of Oxford, added.

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