Risks and benefits associated with merchandise as a revenue-generating strategy

by Maurice Banerjee Palmer

Authors: David Floyd, Kera Sultan, Kristina Stipetic

Problem: It’s difficult for News Media Outlets to be profitable

Background

Print advertising has collapsed as a revenue stream for News Media Outlets (NMOs), and although online advertising has grown, it doesn’t generate the same level of income.

We ask how NMOs can generate additional revenue without adding a lot of additional work? We found that merchandise is one potential avenue for profit.

We formulated this problem with the help of an expert in local journalism.

Decline in advertising revenue

Advertising revenue has declined massively. According to 2018 research for the Department of Digital, Culture, Media and Sport, newspaper print advertising brought in £4.62 billion in 2007 and £1.43 billion in 2017.

During that time digital advertising income went from negligible to £0.48 billion — nowhere near enough to cover the losses from the decline in print ads.

Specifically at a local level, total advertising income dropped from £2.74 billion in 2007 to £1.27 billion in 2017. And this situation has only worsened since then.

Stakeholder groups:

Businesses

  • Large NMOs
  • Local NMOs
  • Individuals (YouTubers, Twitters, etc)

Customers

  • with disposable income
  • without disposable income

1. Large NMOs

Risks: High costs at the outset. Maybe nobody buys it. Brand damage is possible if merchandise is conflicts with the brand’s stated values (produced in sweat shops, etc)

Benefits: Generates revenue. Market segmentation associated with branding leads to higher profit

2. Local NMOs

Risks: High costs at the outset. Maybe nobody buys it. Even if people are buying it, stock takes up space and is costly to store and send. Distraction from the main business of doing good journalism. Customers potentially getting more value from the act of supporting local business than the utility of the product

Benefits: Creates awareness/acts as advertising. Generate revenue.

3. Individual NMOs

Risks: High costs, storage, risk that nobody will buy it. Brand damage is possible if merchandise is conflicts with the brand’s stated values (produced in sweat shops, etc)

Benefits: Create a sense of community among the customer base

4. Customers:

Risks: Cost stratification of the merchandise can lead to customer bases also being stratified by income level, so that more wealthy readers will gravitate towards certain NMOs and the type of news that a person reads will be more influenced by their income level.

Benefit: Can create a sense of belonging to a group through recognizing others with the same merchandise. Creates meaning for the individual by supporting journalism.

AI angles

AI-generated merchandise, for example, a personalised news article which is based on the customer and generated by AI in the style of the paper. Limited upfront costs, high branding value, no physical stock to store, limited staff costs.

Editor’s note: A team at Hack the Press June 2023 built this idea; find the demo here: https://htparticle.fly.dev/spectacular-storyteller and the slides here Spectacular StoryTeller.

Customer data to recommend what kind of merchandise the NMO’s specific customer base is most likely to buy. Doing the market research so that the business can make a decent profit and limit the risks associated with creating products