California Watch’s revenue model: Charge news outlets, target donors
ProPublica invites publishers to “Steal Our Stories.” John Thornton, founder of The Texas Tribune, asked newspapers to pay for stories, but concluded the effort was hopeless. But another new nonprofit news organization, California Watch, the Sacramento-based reporting initiative to be launched next month by the Center for Investigative Reporting, is barreling full speed into the syndication-fee model.
What makes California Watch different? Robert Rosenthal, CIR’s executive director, says California Watch has built something of a reputation even before the official launch of its website (now set for December), getting stories onto front pages across the state, and wants to leverage that position. “Our goal is not to give it away,” Rosenthal said in a telephone interview Monday.
There’s no way to know in advance whether the strategy will succeed, Rosenthal acknowledged. But that’s how it goes these days in the news business, whether nonprofit or for-profit: Every new project is so much spaghetti thrown against the wall. Whether it sticks is left to the vagaries of economics, social trends and, of course, luck.
But one thing is certain, Rosenthal says. California Watch, like so many new nonprofit news organizations, is under tremendous pressure from funders to find a model that works in the now and creates sustainability for the long haul.
So far, California Watch has lined up $3.7 million in nearly equal donations from three foundations — Knight ($1.3 million), Hewlett ($1.2 million) and Irvine ($1.2 million). But Rosenthal said they all want to see California Watch pursue a business strategy that generates significant revenues from royalties, advertising and other activities that typically are reported as program service revenue on a nonprofit’s Form 990 federal tax return.
How much is still an open question, Rosenthal said, but a reasonable range might be anywhere from 25 percent to 40 percent of total revenues, he said. And the more, the better to create a virtuous cycle in fundraising. “That makes it easier to get funding from the foundations or wealthy individuals,” he said, adding that $120,000 of the Knight grant is earmarked for development of a business strategy.
California Watch also plans to adapt standard nonprofit strategies to the digital age. Like his peers at ProPublica, Rosenthal hopes to pursue smaller donors, perhaps with a strategy built around communities organized on Facebook or Twitter. Rather than ask for donations up front, California Watch plans to demonstrate its good works to community members and then solicit their support. “I can go to you and show you ‘we did this, and it made a difference — help us,’” he said.
Looking to the challenges ahead, Rosenthal, a former executive editor of the Philadelphia Inquirer, said he was confident that California Watch could do great journalism; building a successful business model will be the bigger challenge.
“The landscape is moving so quickly,” he said.
To clarify, the pressure that CIR and California Watch are under to create revenue models is largely of our own making. When we submitted our proposals to the California Watch funders, we presented sustainability as one of our goals and they all concurred that it will be important that we find multiple revenue streams so that we can alleviate our reliance on foundations. We are journalists and not business people, so we need to find partners, or hire people, who believe in our mission and also see opportunities that we might not see to bring in revenue. In our model, and I think this will be crucial for other new media models, the business side and the creative side (the journalists) have to have alignment when it comes to values and goals. We will be producing unique, high quality stories.
We know we can do that. What we don’t know is if we can help create a sustainability model that can be emulated. The goal is to turn revenue back into the work, and increase our ability to hire more journalists and support them. And, as I wrote earlier, reduce our reliance on foundations, who may or may not be there for the long haul. As we all know, this is a challenging task. We plan to take risks and try new things. We know we may fail with some of them. For our funders one element used to measure our success will be revenue we are able to generate. The major measure of our success will be our work and its impact on the people of California. But all that we do will be shared with other journalists so that they too can learn from and share our experiments, those that succeed and those that fail.