To keep online news websites and portals afloat is a big struggle and it is even a greater challenge to make it a profitable business venture.
THE reality bug is beginning to bite in the brave new world of online news providers as start-up capital dry up, bills pile up and profits, if any, fail to match earlier enthusiasm and expectation.
The bug bit the The Nut Graph, a smartly packaged, pastel-coloured, year-old venture designed to give the story behind the headlines, is appealing for public donations and might fold up by mid-2010 if no new funds come by.
“We were naive,” said The Nut Graph founder-editor Jacqueline Ann Surin in a comment posted on the portal answering criticism that their journalism was muddled; their business model off beam and that donation would only delay the inevitable.
“But we were idealistic and excited about setting up an independent news site that the Government could not control in the way that it does the traditional media,” she said, explaining the thinking behind the news website.
Surin and another former journalist Cindy Tham had given up sterling careers to put together and launched The Nut Graph in August 2008.
They were given seed money by investors to set up an independent news website that would excite, entertain and enlighten.
However, the investment ended in May, forcing the duo to appeal for public donations to buy time, come up with a better business model and survive the crisis.
Their appeal brought them sympathy, unsolicited advice and cash but for The Nut Graph or any online news provider for that matter, staying afloat might be a losing battle.
Other online news portals including even some start-ups in the Tamil language are struggling to make ends meet after using up the seed capital.
It takes between RM80, 000 to RM100,000 a month to run a decent online set-up and there are not that many “investors” out there willing to throw that kind of money on a inherently risky venture.
Additionally after the dot-com bust in 2000, few investors have the appetite for online enterprises.
Most online news organisations like the year-and-half-old Malaysian Insider and the newly-launched Malaysian Mirror are supported by “investors” who are often shy to be identified.
The Malaysian Insider has built up an impressive readership but revenues have not surged – a bane in the online industry that also afflicts global giants like Twitter or Facebook.
Malaysian Insider, however, has no plans to charge a fee.
“Our advertisement revenue is growing and therefore we will not charge a fee,” said consultant editor Leslie Lau. “Like all business we have targets, projections and revenue graphs and we are gradually meeting these targets.”
“It is a constant battle though,” he said.
Even the decade-old Malaysiakini, which had struggled to break even before, is not “financially comfortable.”
“We are profitable with some reserve cash … that’s all,” said Malaysiakini CEO Premesh Chandran. “I cannot use the word comfortable to describe our finance.”
“It is a challenging world out there and new players enter the arena and competition is always fierce. It is not a place to feel comfortable,” he said.
It is indeed a lonely world out there sitting behind the computers in rented premises while trying to build a readership with an eye on dwindling finances.
Turning readership, once achieved, into cash is another hurdle.
The world over, mainstream newspapers are adding to the fierce competition by going online to create and expand new readership, build brand loyalty and possibly raise revenue.
It is a constant battle in cyberspace and although it is hip to start online news portals, success depends on whether idealism is matched by gumption and a keen business sense.
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