I spent last Friday at journalism.co.uk's excellent News Rewired conference in London, and a month ago I attended the also excellent JEE Camp in Birmingham. Both events were aimed at journalist entrepreneurs and included sessions on business models from the perspective of both mainstream media (pay-walls, print legacy issues) and entrepreneurial, digital-only journalistic ventures. These subjects are very close to the work that I've been doing for the last year, and I enjoyed listening to other people's views and exchanging thoughts.
One thing struck me from both conferences. Apart from one or two notable exceptions, all of the people I heard were journalists, speaking as journalists, in a journalistic way, about a business problem. Discussions about the case for launching a start-up, erecting pay-walls, relationships with advertisers, product direction, etc were all cast as journalistic stories, as matters for debate, with opposing sides relying mainly on ethical arguments (entitlement to just rewards, social importance of one's work, "value" of one's content, etc).
Unfortunately, these considerations have little relevance. The success of journalistic start-ups will hang on whether they can optimize their ad yields, enter into innovative value chains, and erect some sort of barrier to entry into their beats; focusing on quality journalism is far for sufficient for this, and may not even be that important. Investors won't invest in a journalistic startup that just makes enough money to run itself; they will invest only if they expect to get back much more than they would if they go to the stock market - anything else is charity. The success of pay-walls will likely depend on a mixture of audience segmentation, audience behaviour, willingness to pay, advertising rates and subscription pricing - and not on whether news sites lose most of their reach or their readers' "engagement".
None of this is meant as criticism. Journalists are not supposed to know about business strategy. And the right model will be found by natural selection, not by MBAs. But as thousands of newly graduated or redundant journalists jump into brave new ventures with little more than editorial skills, it's hard not to expect a bloodbath. Yes, some will thrive, and over time the space may grow to rival established media. In the meantime, you may want to look away.