EU Media Wallet - Costs, Funds and Sustainable Revenues

The EU Media Wallet, a platform that brings eligible and trustworthy news outlets together with readers from all over the Europe, offers a big solution to aid the polluted information space. The project aims to help younger readers build news-following habits with its Youth News Pass feature, offer additional exposure and revenue streams to smaller news outlets, as well as a trustworthy news hub to the news-followers of Europe.

A project of such scale requires substantial financial backing and sustainable revenue streams to become a long-term solution. In this post, we explain the financials behind the project, with a breakdown of expected cost items, potential funding and revenue streams. Let's start with the costs of the project.

Costs

The EU Media Wallet program has three main cost items being, 1) upfront costs to set up the platform, 2) expansion costs of the platform to different regions and 3) running costs of the platform on a yearly basis.

• Set-up costs and Upfront Costs (Minimum Viable Product)

Set-up and upfront costs include front and back-end software work of the website and mobile application, user interface and user experience design and user testing costs, as well as the integration of the platform to payment and identification systems and launch and marketing costs.

These cost items are required to create what essentially is an Minimum Viable Product, a version of the product that can be used as a core-module to be expanded later d different regions, in wihch early-adopter users can already find the main value offer of the platform.

As these costs are covered before any revenue generation, they are covered by funds from bodies such as the European Union or its subsidiaries.

The pilot project is estimated to cost 195 thousand euros to launch both a website and a mobile app. This number includes the 35 thousand euros for initial marketing and reach. 

• Expansion costs

The EU Media Wallet project offers an essentially modular program that can be rolled out to different regions and languages of Europe slowly, to be added to the already existing platform. This means with smaller marginal costs, local outlets from different countries can be easily integrated to expand the coverage of the program.

The expansion costs include localization costs to prepare the platform for a new region in a new language, legal and market consultation to improve the understanding of the new market, local partnerships, coordination and linguistic localisation, marketing and launch costs of the platform, as well as the alignment with the EU-wide and the global network and training local news media outlets. 

The expansion costs are estimated to be 63 thousand euros per language or region.

• Recurring costs

Recurring costs are calculated on a yearly basis to maintain and moderate the platform, marketing costs to increase its reach, assess the performance of the platform based on different metrics and the staff costs, the latter being the biggest expense item.

As expected, after the initial set-up of the platform, the majority of the cost is the staff salaries per year. For instance, 200 thousand euros of the 237 thousand euro maintenance costs is the salary of staff, calculated for 4 employees, expected to consist of a project manager, software developer, public/local partnership engagement officer and a legal compliance officer.

The financial cover for the recurring costs evolve over the maturity of the project. While the first years of the project are covered by funding by bodies such as the European Union, eventually the costs will switch to commissions from pay-per-article and ad-revenue through referrals.As the platform and the project matures, recurring costs could be covered by alternative revenue streams that become available. 

These estimations are calculated based on the expenses of companies in comparable industries and earlier public-funded projects with available financial statements and funding information. For the services that will be outsourced, the publicly-available pricing information of well-known service providers are used. The detailed costs of items can be seen in the table below.

Expense Item	Expense Sub-Item	Amount (in 1000€)
SET-UP COSTS
App Set-up in One Language
	Front-end development	30,000.00€
	Back-end/Admin Panel	30,000.00€
	Design of UX/UI	10,000.00€
	User Testing	5,000.00€
Website Set-up in One Language
	Front-end development	20,000.00€
	Back-end/Admin Panel	20,000.00€
	Design of UX/UI	10,000.00€
	User Testing	5,000.00€
Total Back/Front-End		130,000.00€
Payment Integration		10,000.00€
EU ID Integration		10,000.00€
Legal Framework		10,000.00€
Marketing
	Brand/Project Identity	10,000.00€
	Marketing for Awareness & Reach	25,000.00€
Total Marketing		65,000.00€
TOTAL SET-UP COSTS		195,000.00€
EXPANSION COSTS P/ REGION
Front/Back-end work		20,000.00€
Local partnership and coordination		8,000.00€
Localization
	Local consultation	5,000.00€
	Language localization	5,000.00€
	Outreach to local outlets	5,000.00€
	Marketing for local users	5,000.00€
Total Localizaton		48,000.00€
Global/Local legal framework alignment		5,000.00€
Training Local Outlets		10,000.00€
TOTAL EXPANSION COSTS P/ REGION		63,000.00€
RECURRING COSTS P/ YEAR
Servers and Maintenance		10,000.00€
Marketing and outreach		10,000.00€
Staff costs		200,000.00€
Moderation and safeguard improvements		10,000.00€
Performance analysis		7,500.00€
TOTAL RECURRING COSTS P/YEAR		237,500.00€
TOTAL*
*Initial set-up +1yrs maintenance		437,500.00€
*Initial set-up, +2 regions, +2yrs maintenance		796,000.00€

Keeping the expansion and recurring costs for the EU Media Wallet as stated in the table above in consideration, it is possible to calculate the costs for different roll-out scenarios for the program. You can find the costs for different scenarios we calculated based on the costs, in the table below, with different initial launch, expansion and length-of-maintenance options.

Scenario	Total Cost
Launching only mobile app with marketing in one region	140.000€
Launching only website app with marketing in one region	120.000€
Launching both website and app with marketing in one region	195.000€
Expanding to 1 additional region	63.000€
Maintenance of the website and the app for 1 additional year with recurring marketing	237.500€
Launching both website and app with marketing in one region + Expanding to one additional region	258.000€
Launching both website and app with marketing in one region + Expanding to two additional regions	321.000€
Launching both website and app with marketing in one region + Expanding to one additional region + 1 year maintenance	495.500€
Launching both website and app with marketing in one region + Expanding to two additional region + 2 year maintenance	796.000€

Of course where feasible, the project might opt for open source alternatives, or cheaper alternatives that become available down the line. In the long run, the platform might consider revenue sharing schemes with the media outlets to cover its recurring costs.

Funding and Revenue Streams

• Public funding

The EU Media Wallet is planned to start as a public funded project for its roll-out. Public funding seems to be the only feasible method of financing a project of this scale for a healthy start.

Luckily, the European Union has consistently funded projects supporting news organisations and independent journalism through different instruments. Currently spending €50 million a year on support for news organisations and ex- pected to spend more, , two of the largest streams being the CreativeEurope EU Programme, and the Multimedia Action Plan of EC

The EU Media Wallet is planned to start its journey through one of these funding schemes, or a similar funding as well.

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• Subscription / Pay-per-article / Ad-Revenue Referral Commissions

After reaching a certain level of maturity, the EU Media Wallet will use commissions as the main financing mechanism to cover its yearly recurring costs. The EU Media Wallet keeps different revenue stream models of media outlets in mind. As the media outlets on the platform might choose to offer their content freely, charge for subscription or per-view, the commissions work differently, beneficial for the media outlets, while supporting the platform sustainably.

The EU Media Wallet provides a platform to its news media outlet partners the necessary payment platform to charge their audience per article to access their content for a price of their choosing. When a customer is willing to pay for an access to a particular content and pay the price set by the news outlet, EU Media Wallet charges a commission for the transaction to generate revenue. The commission percentage is set progressively in brackets, meaning that media outlets pay a higher commission the higher pay-per-view revenue they generate through the EU Media Wallet.

In addition to direct revenues via subscriptions through the EU Media Wallet, the platform also generates external traffic for the media outlets that offer their content for free, helping their bottomline through ad-revenue. The EU Media Wallet charges a commission for the advertisement revenue that is generated from the linked content, through the referral code. The advertisement revenue commission is set to 0% for the smallest news outlets. For medium and bigger outlets, the commission rate is set progressively in brackets, meaning that media outlets pay a higher commission the higher traffic they generate through the EU Media Wallet reference.

Finally, the EU Media Wallet offers a payment platform for the news media outlets that operate based on a subscription model. News media outlets pay a commission from the subscription fee in exchange for publicity and referral provided by the EU Media Wallet. The commission percentage is set progressively in brackets, meaning that media outlets pay a higher commission the higher subscription revenue they generate through the EU Media Wallet.

All in all, the EU Media Wallet is designed with flexibility in mind, to accomodate outlets with advertisement revenue as the main revenue model, pay-per-article, or subscription model. The flexibility grants suitability for different revenue models according to the different needs of media outlets of varying scales, while increasing the reach of the platform.

• Additional Revenue Streams

We are living in the information era. The EU Media Wallet will generate a lot of know-how for its team, insights, and data knowledge the news consumption habits of readers as it matures. This knowledge accumulation only grows as the user base exbands in addition to the member news media outlets, bringing their creative solutions, knowledge and value offerings to their audiences.

The insights the EU Media Wallet accumulate over time might prove invaluable to many stakeholders. As an additional revenue stream, the EU Media Wallet might offer its deep insights and knowledge to the policy makers for better decision making and policy design. This would not only make the EU Media Wallet financially more sustainable, but help the policy makers better understand the problems in the polluted information space of the modern day.

Similarly, many of the smaller news media outlets struggle in their infancy, as they lack the know-how to gain visibility on social media, manage their financials with sustainable revenue models, understand their audiences needs and expand their reader base. The EU Media Wallet team might offer training to local news media outlets as it expands to different regions. This not only helps the EU Media Wallet to become more sustainable, but it also boosts local media pluralism by helping its local news partners.

Finally, the insights from the platform would help bigger news outlets that choose to post their content on the EU Media Wallet to increase their audience base, and understand the content their current readers want to see more, all the while helping news-readers of Europe to reach trustworth news.

What does this all mean?

As we started working on the EU Media Wallet and the Youth News Pass, we always kept sustainability of the project in our minds, as well as the value we offer to different stakeholders such as the EU, policy makers, small and big news outlets, younger audiences, as well as the older audiences. We believe the EU Media Wallet is a feasible and sustainable project that offers value to all its stakeholders to improve the information space in the EU.