Global Economics

Korea's OhmyNews Seeks a Fresh Business Model


The pioneering citizen-journalism site was an innovation in the news business, but it's losing money. Can it goose subscriptions to pay the bills?

Earlier this decade, Seoul Web site OhmyNews represented one of the most exciting concepts on the Internet. An online media pioneer of "citizen journalism," it created a sensation in the 2002 South Korean presidential race by playing a crucial role in the election of Roh Moo Hyun. Many young, liberal OhmyNews readers, prompted by amateur writers' reports that Roh was behind in the vote, sent out a flurry of text messages urging friends to vote for Roh, and he prevailed by a narrow margin.

Seven years later, the news Web site still boasts millions of daily page views but its business model appears to be going nowhere. OhmyNews founder and CEO Oh Yeon Ho says his site has been in the red for three years and lost $400,000 in the first six months of 2009. "We have made significant experiments so far," says Oh. "Now we have to introduce a sustainable model."

Last week, Oh urged readers to start making financial contributions to help make OhmyNews a going concern. "For a news media to remain healthy, it will have to earn at least 50% of its income from the sales of content or paid subscriptions," he said in an open letter carried by his site on July 8. Company executives say advertisements accounted for 75% of OhmyNews revenues totaling $4.7 million in 2008, when it lost $540,000.

Hard Slog

The goal is to create a 100,000-member supporters' club with each member paying $8 a month. Oh expressed confidence, saying some 3,000 supporters have so far signed up as paid subscribers, although the site will continue to be open to the public free of charge. The 3,000 new supporters are in addition to 1,000 existing contributors, who have been paying the same amount to subscribe to a weekend print edition.

Observers call it a hard slog. "It's unrealistic to expect people to pay for online content that is freely available," says Yoon Youngchul, dean of Yonsei University's Graduate School of Journalism in Seoul. "There have been lots of attempts by social workers to raise funds through donations to finance their movements that have failed in Korea. I don't see OhmyNews being an exception."

Many media watchers also see OhmyNews as a waning voice of influence. Internet marketing expert Shane Park at Cheil Worldwide, Korea's largest advertising agency, points out that OhmyNews' citizen journalism emerged as a significant media outlet early this decade, when it served as a rare alternative to conventional news organizations that largely reflected conservative views and portrayed Roh as a dangerous leftist. "We live in a different environment now," says Park. "With numerous blogging sites and social media catering to a wide variety of viewpoints and values, OhmyNews is no longer a novelty."

Oh defends the value of his brand of journalism, which mixes the power of the participation of ordinary people in the news-gathering process with the credibility provided by professional journalists who screen, edit, and fact-check the citizen-reporters' stories. OhmyNews, set up in 2000, now has about 70 full-time staffers, including 46 journalists, and a pool of some 65,000 citizen contributors who write more than 200 articles daily.

Dwindling Ad Revenues

The problem is the financial burden to run the system. OhmyNews executives expect the site's revenues to fall by some 25% this year because of the recession. It can no longer rely on advertisers for its survival even as Korea's online ad market keeps growing. That's because local portals, which buy news from OhmyNews and other media outfits to offer them to Net users, account for well over 90% of the country's overall online ad revenues. The amount spent on online advertising rose from a mere $150 million in 2002 to about $1 billion last year, but it is expected to stay flat in 2009.

Oh's experiments overseas aren't panning out, either. In the summer of last year, OhmyNews shut down its Japanese-language service that it started after it secured an $11 million investment by Japanese media giant Softbank in 2006. Oh concedes he lacked support for citizen journalism in Japan, and OhmyNews has put on hold its earlier plan to start joint ventures to replicate its citizen-journalism model overseas. "Given that advertisements and donations aren't likely to stop the red ink at OhmyNews, it will have to keep looking for a credible business model to stay afloat," says Wayne Lee, Internet analyst at brokerage Woori Investment & Securities in Seoul.

Moon is BusinessWeek's Seoul bureau chief.

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