Forecast 2017 Q&A: The media business model

December 14, 2016
Greta Guest

S. SriramS. SriramThe 2017 election underscored the pressure on today’s news media. There’s a high demand for news from a public with a lower propensity to pay for it—at least with traditional subscriptions.

S. Sriram, an associate marketing professor at the University of Michigan’s Ross School of Business, explains why pooling news personnel might be the way of the future. His research focuses on brand and product portfolio management in several industries including consumer packaged goods, technology products and services, retail and newspapers.

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Q: News outlets are under constant pressure for accurate coverage. Yet business conditions remain challenging. How can news outlets improve the business model or uphold quality with fewer resources?

SRIRAM: The staff cuts at newspapers are bound to continue unless they can find a way to stabilize revenues. But television news—especially cable television outlets such as CNN, Fox News and MSNBC—have experienced some growth in the recent years. This has enabled them to hire additional reporting staff. I can see several possible scenarios developing. One possibility is that newspapers get absorbed by television outlets, which will enable them to share reporting staff. An alternative possibility is that even if newspapers remain independent in terms of ownership, they may still share reporting staff resources with cable networks. If this happens, many news outlets will end up sharing a common pool of reporters. Any differentiation will be in terms of local news coverage and editorials.

Q: There was a call after the election for people to support their local papers, and national papers, with subscriptions. Do you see any long-term benefit from this?

Sriram: I doubt it. I imagine there’s a segment of the population that cares about this. But they are probably already supporting their local newspapers. I do not see a compelling reason why people should change their behavior of increasing reliance on online news sources—the main reason behind the decline in the fortunes of newspapers. On the positive side, many newspapers are attempting to monetize online content by offering digital and print bundles. These will help in stabilizing overall revenues. But the stabilization is unlikely to be a consequence of the call after the recent elections.

Q: There’s a lot of talk about how we’re in the post-truth era. Do you think advertisers might start to take a harder look at what kind of media outlets they are advertising on? For example, if a story gets eight million clicks but it was false and inflammatory, would advertisers put their ads elsewhere?

Sriram: I think this goes both ways. There is also a market for fake native advertising that looks like news. Would media outlets refrain from accepting such fake news ads? Given the polarized environment, I guess there will be some principled stance on both fronts: advertisers rejecting news media that present views that they do not subscribe to, and media outlets rejecting inflammatory ads. My guess is that the latter is more likely to happen than the former.