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Nieman Journalism Lab
Pushing to the future of journalism — A project of the Nieman Foundation at Harvard

The Newsonomics of membership

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

New journalism is hungry for new business models. Beyond millions in foundation start-up support, what will sustain these enterprises?

One answer: membership. The notion is borrowed from NPR (née National Public Radio), which we must remind ourselves is no “experiment.” NPR is now more than 40 years old, trying to fight off its own middle-age doldrums by reinventing itself as public media, as digitally oriented as it is radio-oriented — but that’s a topic for another day.

While the daily press is testing paywalls — some with big holes, some with small, some with rungs, some without — news startups are taking a different route, that NPR model. That divide of how best to get readers to pay may be a decisive one when we look back in five years.

For startups, membership is all the rage these days, as these new companies look to it to provide a vital leg in the new stool supporting new journalism. Texas Tribune CEO Evan Smith says his plan calls for a third of the site’s funding to come from memberships, aiming toward a goal of 10,000 members. The Tribune’s been a fast climber, signing up about 1,700 members at a median price of about $100, since launching in November.

MinnPost, though, claims the lead, having built to more than 2,000 members in its two-and-a-half year history. Within the next several weeks, GlobalPost, now one-and-a-half-years-old, will relaunch its own membership program, Passport. Perhaps significantly, GlobalPost built its new offer on the Journalism Online Press+ platform, and that, too, could serve as a model for others, if successful.  Those who run sites that have tested membership have fielded lots of calls from their news media start-up compatriots inquiring how to make membership work, and we can all expect to hear a lot more about it over the next year.

So let’s look at the very early Newsonomics of membership, talking to the architects about their building in process. In the second part of Newsonomics of membership, we’ll look at some public radio data that helps fill out the emerging online model.

MinnPost borrowed the NPR approach of letting readers determine how much they want to contribute, offering everything from a $10 “student” membership to a $5,000 “media mogul” one. Joel Kramer, CEO and editor, says that the most common gifts are either $50 or $100. In 2009, membership contributed to 30% of the site’s $1.2 million, bringing in about $360,000.

Importantly, Kramer is trying to figure out the metrics of membership, and he may be farther along there than others as well.

As the former Star Tribune publisher and editor has moved online-only, he’s studied the new business. One thing that he knows is missing is consistent, useful audience measurement, and it’s interesting that his comments there parallel those of new Newspaper Association of America incoming chairman Mark Contreras, a senior vice president of Scripps. Apples-to-apples audience measurement is key to building digital businesses, and both Kramer and Contreras will tell you it’s missing today.

So Kramer has figured out his own fledgling metrics to assess how well membership is doing. He uses Quantcast data, and here’s his logic.  It’s those readers who come to MinnPost at least twice a month — 27 percent of MinnPost’s visitors — who are most likely to sign up as members. The rest are fly-bys, referred haphazardly by Google and others. That 27 percent now accounts for about 40,000 visitors a month. So Kramer figures that at the current rate, he can expect that five percent of those more frequent visitors — 2,000 people — will become members. (Remember that five-percent number, when we move to part two on membership and look at NPR’s experience.)

For Kramer, the metric is a snapshot. Double the number of more-frequent visitors, and he would expect a doubling of membership. Maybe, though, five percent is just an early number, and that the percentage itself will increase as the site’s service to readers grows in time. If MinnPost could yield 10 percent of its more-frequent visitors, it could have 4,000 members today. That could mean that membership will pay for 60 percent of the bills, or that MinnPost could expand its staff and site.

MinnPost eschews giving members special perks, the kinds of gifts that often accompany NPR pledge drives. “The only perk a member gets is an invitation to core events,” usually staff-hosted affairs where members can mingle with the journalists. MinnRoast, an annual MinnPost event, brought in another $100,000 last year — so we see in this budding business model the link between membership and events.

Membership may all be about building relationships over time.

GlobalPost CEO Phil Balboni believes in relationship-building as well. GlobalPost’s new Journalism Online (JO) model gives it a third try to tweak the membership model. At launch, it went premium, charging $199 annually, but finding few takers. Then, it moved to a $49.95 price point, and has picked up 500 members.

When it launches with Journalism Online, it will offer two membership prices, $29.95 a year or $1.99 a month. Key JO-powered approach is the ability to pop up membership offers after a half dozen or so “content triggers.” When users hit certain parts of the site, or read a certain number of pages, the voluntary membership offer will pop up. That’s key to Balboni, who estimates that one percent or less of those who see membership offers will act on them. One of the current roadblocks, he believes, is that few people see the Passport membership page; increasing membership offer visibility, he hopes, will multiply membership. Key to the Passport offer: Members get to select some story assignments that GlobalPost will pursue.

A veteran of the news trade, Balboni realizes it’s a long-term build: “This is a five- to 15-year effort to get consumer behavior changed.” Balboni would like to see membership build into funding half the budget.

Texas Tribune’s Evan Smith is aiming to make membership pay a third of the freight by the end of Year 3, which would be fall 2012. He figures the site has so far converted less than one percent of its total unique visitors (compared to a little more than one percent for the older MinnPost) as it has burst out of the gate in Texas with lots of promotion. His end-of-2010 goal is 2,600 members, up from the current 1,700. Members pick their level of giving.

Good or poor current audience metrics, make no mistake that this membership business is a game of metrics. Three stand out for now:

  • What percentage of which part of the readership can news sites expect to contribute?
  • How much of their going-forward budgets — and if and when foundation money dries up — can be made up by readers?
  • What’s the median gift?

Those are three key questions, as news people try to inculcate (or as least borrow from NPR) a membership ethic. In the meantime, those who care about nurturing the new news can do something: Join the favorite new enterprise of their choice. Here are the links: MinnPost, GlobalPost, and Texas Tribune.

Photo by Leo Reynolds used under a Creative Commons license.

                                   
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  • Eoin

    “In 2009, membership contributed to 30% of the site’s $1.2 billion, bringing in about $360,000.”

    Should that be million? [Yep, fixed — thanks! —Josh]

  • http://westseattleblog.com Tracy @ WSB

    Great if you’re trying to cover an entire metro area or even state and maybe can muster a few thousand members. Does not seem to hold particular promise for those of us who have bootstrapped in neighborhoods, even one the size of our coverage area (about 70,000 people).

    We had our first and only “pledge day” three years ago, before going commercial and selling ads, and while we were very appreciative of those who contributed almost $2,000 that day (a quarter of it coming from the first, and very generous, donor), we ultimately determined that the 70 or so people who donated represented about 3% of our daily visitors at the time. We have since quintupled our number of daily visitors, yet even if we managed to convert 3% of the new number to pledgers or donors, and say they somehow all agreed to pay $10/month, that would provide us $3,000/month, nowhere near enough to run a site on. So as much as we get dinged for the alleged non-”scalability” of the small, hardworking news org model, in reverse, things like this that may work OK for those with bigger orgs do not seem “scalable” in the downward direction.

    If you say, “well, try that ALONG WITH your current model” – that would take time and effort that needs to be put into the content that people have come to expect us to provide 24/7. Back on our one and only Pledge Day, somebody even said “Look, don’t hound me for money. Just go sell some ads.” So we did.

  • Dick Tofel

    This is an interesting and important discussion. I note that you refer to the importance of the amount of the “median” gift, but you mean average, right? Any sense, Ken, of why Texas would appear to be getting $100 on average while Minnesota is getting $180 on average? Also, do you have a point of view on whether the much lower price point of GlobalPost is wise or unwise?

  • Ken Doctor

    Dick: You’re right. It should be average rather than median, in that reference.

    As to trends, here’s my sense:
    —First and most importantly, it’s early on all this. So clearly, in starting to survey practices, it’s clear that metrics and standards have yet to be established, and even counting systems differ from organization to organization.
    —MinnPost is about four times older than Texas Tribune at this nascent point and that’s meaningful. One thing I think we’ll learn from NPR is that the length of a relationship is an important driver of retention and donation size.
    —At this point, a few big individual gifts — as opposed to institutional/corporate gifts (and sometimes that boundary may be fuzzy)– may throw averages off.

    Most useful, I think, is for these sites to agree on similar standards for definition and counting, which can then serve as a foundation for best practices.

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  • amygoodall

    It’s time for journalists to stop trying to find some sort of magical new business model (there are none: the story notes “membership” is no different NPR’s so-called business model — which is supported by tax dollars, no? Which is really no different from charity or welfare?). It’s time for journalists to think like business people and write and market content in a way that would derive value. This isn’t an impossible concept. Movies don’t get made unless there’s an audience. Why should news stories get written unless someone cares about them? I’m not saying “don’t do investigative projects on public corruption.” I’m saying figure out what parts of your readership really, really want to know about public corruption and make a news product that appeals to them. THAT you can sell. You can’t sell general news to a general audience. But you can sell specialized news to a specialized audience. If you do it well. If you think this way, you may find that you write a lot fewer dull stories about school supplies and minor sewer rate increases. And this is really no problem at all, from my perspective.

  • http://www.countynewslive.com Brian Chorley

    Amy, I agree with you. There are a lot of ways to build a local news business. Our site has been around (this is our second version) for two years now, and we have built a great business based on ad sales and subscriptions.

    Our small town population of 3000 has been able to support an editor and ad sales person while also building a subscriber list of over 180. We will be testing the Daily Deal revenue stream shortly as well.

    I think the entrepreneurial journalist has to think in multiple streams of income, while also partnering up with an ad sales person. We think this is the key to success. Have two experts to make your site work; one in content and one in sales. It really works out well, especially for the small town or neighborhood market where businesses want to attract your local readers.

    Also, I would suggest farming out the initial IT tasks to get your site off the ground fast. I think there are too many people out there trying to put their sites together on the fly while they learn the basics of building a web site. You can get a professionally done Drupal news site started for about $500 now, which is worth every penny when you consider the time it saves you to learn it on the fly.

    Anyway, I think memberships or subscriptions can be a valuable piece of the puzzle, but it should be considered just one of multiple income streams.

    Thanks!

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