What should the new business model be?

The digital ecosystem promotes the same values across all industries-transparency and collaboration. How does a new media business model reflect this dynamic?

Traditionally, advertising was the major revenue stream for newspapers. But on the Web, where businesses can directly reach their customers base, the cost of ad revenues has decreased. So in order to maximize profits media organizations have to become, as TechCrunch's Michael Arrington suggested, factories of fast food content. In other words, produce as much articles and videos as possible to attract maximum ads. Only the scale will make a difference.

This is, of course, unfair. Readers won't (or shouldn't) put up with low-quality content determined by business interests. So, what other revenue streams are there?

Ah, yes-the non-profit model. This works great before you look at the list of sponsors (of the Texas Tribune, for instance) and see the political contributions. Then you are not sure whether to trust the newspaper and its editorial judgement, or to dismiss it altogether and flee to another source. Naturally, there are some great foundations like the John S. and James L.  Knight Foundation that offer nonpartisan funding. But how many newspapers can be funded that way? 

Make readers pay? First, it is not sure how much a newspaper will profit from such a move. (As Felix Salmon recently noted, limiting the reader base will undoubtedly lead to drop in ad revenues and such loss might be more expensive than getting new subscribers.) Second, pay-walls have to be adopted in sync with other media organizations. Even the most loyal readers will flee to another source if they know that the same content is available elsewhere for free. (Naturally, quality of reporting and writing makes a big difference.)

A mix of different revenue streams, I was almost certain, might work to sustain print and online journalism. But a thought by Marcus Carab about the New York Times recent pay-wall decision weakened my confidence. He writes, "They've saddled themselves with two opposing business models: the old one, where the audience is the product and the advertisers are the customers, and the new one, where news is the product and the audience is the customer."

I had never thought about it that way. No economics major, I discussed the subject with a more business-savyy friend. He recognized the above mentioned conflict but also pointed out that the newspapers' quality will ultimately reconcile it. In the end, everyone wants good content.

Thoughts?