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Sept. 10, 2015, 10:30 a.m.
Business Models
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Beacon finds partnerships and matching donations work better than subscriptions and paywalls

Two years ago, Beacon was focused on recurring payments and exclusive access. But it turns out that most donors prefer one-time payments and want the projects they fund to be widely available.

When Beacon launched in 2013, its founders saw a lot of promise in subscriptions and paywalls. Readers would pay $5 a month for access to about a dozen stories each week, with about 60 percent of that amount going to one “favorite” writer and the rest split among a network of 28 writers.

Surprise: Most people weren’t willing to pay for access. “We have almost completely done away with the notion of subscriptions and the paywall,” cofounder Dan Fletcher (a former managing editor at Facebook) told me this week. Turns out that Beacon’s users didn’t care much about exclusive access to content posted on Beacon’s site. “People were funding journalism either because they believed in the journalist, or they believed in the topic and wanted it to be as widely read as possible.”

Beacon’s original model also depended on recurring payments, but “most people want to make one-time payments to support journalism,” Fletcher said. The site still allows recurring monthly support, but 70 percent of donors choose to fund a one-time story — the old Spot.us model — rather than sign up for an ongoing subscription.

fatal encounters beacon

With all of these shifts in payment preferences, the Oakland–based Beacon has changed the way it works over the past few months. It’s partnering with outside news organizations — The Huffington Post, ProPublica, Techdirt, The Texas Tribune — to fund articles that will appear on those companies’ own sites (and might never be hosted on Beacon’s platform at all). And, in a model reminiscent of public radio pledge drives, it’s matching donations one-for-one on some stories.

The shift toward partnerships and matching funds has been gradual, but on Thursday, Beacon is formalizing it with the launch of a nationwide initiative to fund stories on U.S. immigration. To begin, Beacon is working with The Nation, which will send reporter Julianne Hing to meet with immigrant communities along the 2016 campaign trail. From there:

You’ll see projects from the San Francisco Chronicle, Texas Tribune, Fatal Encounters, the Los Angeles Times, NJ Spotlight, the Boston Institute for Nonprofit Journalism and more. We’ll be diving into the intersection between immigration and entrepreneurship, building databases of immigrants killed through interactions with police officers, exploring the plight of LGBT refugees and photographing items lost at the border — so stay tuned.

In addition, starting Thursday, “every project submitted on Beacon and tagged ‘Immigration’ will receive one-for-one matching funds,” the company said, matching up to $3 million.

“Matching funds took a workable crowdfunding business and amped it up,” Fletcher said. The site first experimented with matching funds on climate change stories and raised more than $90,000. “We’d like to do matching funds in other areas, like health and education.” Beacon is focusing on immigration now because people who’d funded projects on the site in the past consistently said that they wanted to see more coverage of the issue, beyond the usual focus on border walls and presidential candidate soundbites.

Matching donations will come from readers who’ve backed Beacon projects before, as well as from companies and foundations that Fletcher didn’t want to name yet. “We’ll still be your go-to experts on crowdfunding,” the company said on its blog, “but we’ll also be bringing in bigger backers to match reader dollars.” (In the case of the Techdirt net neutrality story, for instance, Imgur, Twitch, and Namecheap matched funds.)

Beacon itself is venture-backed, and raised a seed round from funders including Y Combinator in 2014. The company won’t disclose how much money it has raised, but says it’s worked with more than 300 journalists and newsrooms on projects, paying out $1.1 million since 2013. Its business model is to take 10 percent of each successfully funded project.

In addition to expanding its mission, Beacon also plans to expand its team, which currently has six people. “We finally feel like we have a good enough model that attracts a variety of partners,” Fletcher said. “We need a couple more people to work with me on getting publications to use Beacon. I hope crowdfunding can be a part of what a lot of magazines and newspapers around the country do.”

Photo of a donation box by Kathryn Harper used under a Creative Commons license.

POSTED     Sept. 10, 2015, 10:30 a.m.
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