There´s a high chance that more than one of the 5.000 or so journalists unemployed in Spain has thought the same question: can I set up my own media business?
Some of them might already have some projects in mind, ideas for news media start-ups, micro-media or one-person-media ventures… you name it.
But that´s not the point. As always, one question leads to another: who´s paying the bill? Are there any investors ready to fund new media projects in paper, online, or on whatever format they are? History tells this is a hard one.
To understand what a real investor, a professional one, thinks about this, I asked Luis Martín Cabiedes. No need for introduction, I think, but just in case: Cabiedes belongs to the family owner of Europa Press, firm in which he´s an advisor, and he´s also one of the most well-regarded business angel in the Spanish Internet sector. If this doesn´t tell you much, names such us Ole, Privalia, Rockola, Bubok or Trovit will tell the rest. He´s investor in all of these start-ups.
Question: Would you invest in a news media project?
Answer: The honest answer is no. And the reason is simple: content has not yet found a business model in the Internet. More than 15 years of history show that content has always been a bad business in the Internet and for an investor to put money on the table, you have to convince him first that there´s a business model behind.
Having said that, I do believe there is a place for journalist-entrepreneurs. There´s a place for specialized online publications that can end up being a good one-man company or 3-4 employee viable firm. Those are what we call viable projects, but not investable, so not scalable and without any possibility of being sold.
Q. Why not?
A. A professional investor always looks for start-ups that could end up with 10 to 12 million euros revenue in three or four years. A project about online content just doesn´t have that profile. Moreover, an investor is never going to buy something that doesn´t know who to sell it to later. Nowadays, the ones that could potentially buy those projects, the traditional media companies, just can´t do it because they are having a really hard time.
Q. No one is willing to pay for news online. The way out doesn´t seem to go that way, does it?
A. When we buy a newspaper, we don´t pay for the news, we pay for the paper. We have never paid for the news but for the platform, not for the content. The same happens in the music industry, we used to pay for a CD, not for the music. The Internet is not a platform, is the disappearance of the platform, and if the platform disappears you can´t continue charging for the same you were selling before. The problem is that online ads have a limit, they can´t support everything.
Q. So what would it work in the Internet: a combination of high quality content, analysis, together with the new platforms like tablets or smartphones?
A. I don´t think the solution is in the new platforms. There´s little paid content in the iPhone or the iPad, where the free of charge model of the Internet has won too. As consumers we are happy with that, it´s a feast; as companies, is a challenge. The ones who are losing out money are the media firms.
Q. What advice would you give to a journalist-entrepreneur wannabe?
A. The bad news is for the news media businesses, not for journalists. It´s the same as in the music industry, the problem is for the labels, not for the musicians. Journalists, the same as musicians, will have to do gigs. And I don´t mean it in a negative way, there are good opportunities there. There won´t be news media firms where to work, or it´ll be really hard. That´s why the best they can do is to find their niche, look for readers, become strong there, write content that people want to read, which is what this was always about, and keep the project to 4 or 5 employees. The same as a music band.
Q. And what about large traditional media, will they be able to profit from their online presence in the future?
A. No media organization, be it a TV or a newspaper, will ever make as much money as they were making before. It´s over. And the online content will never generate more than 10% of the advertising business of the old model. It won´t be enough. It´s naïve to think that the Internet and the iPad will keep them afloat. They´ll have to look for new business models.