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Oct. 18, 2016, 11:43 a.m.
Business Models

A changing of the guard at nonprofit MinnPost, a bright spot in sustainable, online local news

After nine years, Joel Kramer reflects on the state of the site he cofounded with his wife Laurie and looks forward to its next era under new leadership.

After nine full years dedicated to the site, MinnPost founders Joel and Laurie Kramer are officially handing over the reins today. The steadfast Minnesota-focused nonprofit, often named by observers of digital local news efforts alongside other success stories like The Texas Tribune and Voice of San Diego, has taken a cautious path to sustainability, through a mix of memberships, major donors, corporate sponsorships, advertising, and, to a lesser extent, foundation funding.

putzkramerswallmeyer640Andrew Wallmeyer will become the new CEO, and Andrew Putz is taking over as editor, a transition first announced last spring (both Andys joined MinnPost two-and-a-half years ago). MinnPost now also has seven full-time reporters, including a data journalist, and a stable of contract writers. (It’s moved further away from being freelancer-supported, as it was in its earliest days.) In January, it brought on a full-time development director. Its membership program MinnPost+ has passed 2,600 member households, with a retention rate of 67 percent, according to Wallmeyer. The membership program is now supported by solid customer management infrastructure to streamline processes like renewals.

“It’s hard to imagine it’s been almost a decade that MinnPost has been around, and it speaks a lot to Joel and Laurie and what they’ve built, and to the editors who’ve come before me — their ability to evolve with the challenges that came up, some of which were based on what their original model was, some of it was because the media landscape had changed, and changed nationally,” Putz said. “One of the things that is sort of underappreciated is how much MinnPost has changed over time to confront those issues. In a very short time period it became a thing, at least locally — it became this fixture of this media universe here. I was not a member of MinnPost when it started. I remember wondering at the time: Huh, I wonder if this will work. And here we are, 10 years later.”1

As the organization evolves, its core news mandate — serious analysis of all things Minnesota, striving for minimal fluff — remains unchanged. It’s looking to grow corporate sponsorships (“Minnesota has an unusually healthy set of large companies,” Wallmeyer said) and is always thinking and rethinking the potential of reader memberships.

“Going into our board meeting, a big strategic question we’re queueing up for conversation is, to what extent do we dedicate our staff resources to audience development, versus membership, versus major giving?” Wallmeyer added.

In addition to the Andys, I spoke with outgoing CEO Joel Kramer about the state of MinnPost as he moves out of his management role, looking both back over its near-decade of existence and forward to MinnPost’s next era under new leadership. Below is a transcript of our conversation, slightly edited for length and clarity.

Shan Wang: As you look to the formal transition, I was hoping to cover a few areas with you. First is the state of MinnPost as you leave it, and then the state of nonprofit local-focused digital news sites, and also your hopes and fears around the world of digital news more generally.

I think last we’d talked, there was some activity around you guys launching a MinnPost+ subscriber program. How is that going, and what benefits have been built out since? What else are you looking at in the membership area?

Joel Kramer: Andy Wallmeyer has pretty much been running that ever since he arrived, and he can go into more detail about that if you’re interested. We did build in a set of benefits. Some of these benefits were around events — first dibs on paid events, certain events that were free to members, or lower-priced for members — that was one dimension of it. We created a benefit of the free yearly subscription to The Atlantic, for people who were giving over a certain amount.

Then we had some benefits around content that only members can see. You can see the headlines on the site, but you have to be a registered member to read them. One of those is stories from other nonprofit sites around the country that we curate, and the other one is a weekly roundup of things our staff members have been reading and want to recommend to people.

There’s also a monthly giveaway of tickets that are provided by our advertisers and sponsors. We give them on a first-come, first-serve basis. We send an email to our eligible members and they can sign up to get tickets to things.

Then we have another benefit we recently introduced for our larger donors: a chance to vote on which nonprofits should get free advertising on MinnPost.

We’ve invested a lot, and maybe even more than in the benefits, in building out the infrastructure of membership — to build out a much more sophisticated database, so we can automate processes like renewals. What we’ve seen in the last in the last two-plus years is we’ve gotten about 25 to 30 percent growth in the total number of members, but a bigger growth, 65 or more percent, in the number of sustaining members. This is where the targeting efforts have been put: on looking at the people who give every month, on an automated basis.

That’s the story of the membership program. It’s still ongoing, but the infrastructure is now built.

Wang: Throughout the years, you’ve said your focus has been to turn the organization into a self-sustaining, member-sustained organization rather than relying on big grants from foundations. As you transition leadership, how do you feel about where things are now? Has that been achieved? How do you feel about where things are headed financially?

Kramer: Sustainability is still a work in progress. That hasn’t been totally achieved. But what has been achieved is we’ve done well over these nine years without heavily relying on foundations, and that was always our goal.

We’re still not heavily reliant on them. We tend to get in the neighborhood of 15 to 20 percent of our funding from foundations, and we have wonderful foundation support, including from several local foundations in the Twin Cities. We’re very appreciative of that, but we continue to build our model not to depend too much on foundations.

In that sense, we’ve achieved our goal of being more reliant on business-related revenue streams, which are mainly memberships and major donors and advertising and sponsorships. Those together account for 80 to 85 percent of our revenue.

The reason I say it’s still a work in progress is my wife Laurie and I cofounded and have run the organization for nine years, and for the first six-and-a-half or so, we were the top management, and we never took any pay. So we were doing a couple of hundred thousand dollars or more of work and not getting paid. So we were running surpluses during that period, but we would’ve been running deficits if we had paid ourselves the way executives are paid.

Starting two and a half years ago, after having adopted a succession plan with our board, we went out and hired new people. We hired Andy Wallmeyer, who’s now CEO, and we hired Andy Putz, who replaced the previous part-time editor. Finally, in January, we hired a new development director, and she does membership and major donors, foundations. Those positions added quite a bit of payroll, and we’re not back to break-even with all these additional positions.

But we’d planned for this. The board approved a three-year plan, and it called for us to lose money in 2016 and 2017. The goal is to get back to break-even in 2018 by generating more revenue. It’s still a work-in-progress for complete sustainability. Our new leaders have to pay their salaries along with the rest of the organization’s.

I’m optimistic we’ll get back to break-even, or a small surplus. We’re working on major donors, and we’re working on corporate sponsorship. Those are areas we see as having significant growth potential.

Wang: Is there a main area MinnPost will be pushing harder on in the coming years, or is the focus spread pretty evenly across all these revenue streams?

Kramer: We have four revenue streams — five if you count foundations. Memberships, major donors, advertising, corporate sponsorship, and foundations. Advertising has been stable but not growing. And not so much foundations either, though these are both important. The other three are all growth opportunities.

Online advertising is, as you know, a difficult business, so it doesn’t seem to offer the same growth potential as the other areas.

Wang: And how about growing coverage areas, as you grow revenue opportunities?

Kramer: The big change in editorial over the years is when we launched, we were almost exclusively a freelance organization. And now stories are overwhelmingly generated by staff reporters. We started making this change pretty early, but we kept moving it, and our new editor Andy Putz has moved it significantly more in the direction of putting resources into full-time or mostly full-time staff.

You get more ability to develop expertise. Relationships are more stable — they last longer. And that has kept increasing over time. Most recently for example, we’ve added a data reporter, and now we’re now on our second one. We’ve added a Somali reporter to our staff who covers immigration issues and the jobs market and how the community is trying to create more good jobs. That’s been a change over the years, to add more staff writers.

In terms of the journalism itself, the style or tone hasn’t changed much since we launched. Our focus has always been primarily on analysis. We don’t do as much investigative work, and we wish we could do more, but it takes a lot of time to do it well, and it takes a lot of resources, and we’re already trying to put out a high quality site every day. That’s part of our business model — we’re not a site that publishes a story every week or two.

In order to sustain that model, which is very important to our readership, we find that our sweet spot is analysis. It adds value beyond the reporting. We’re not focused so much on breaking news as we are on explaining what things mean, what’s going on behind the scenes.

That’s pretty much always been true, but we keep getting better at it, because we’ve moved to a more staff-driven model.

Wang: How many staffers are you at now?

Kramer: Hmm, let me do the math here. We have seven staff reporters, and four editors, counting design and web. The newsroom also has a technology person. In addition to staff writers, we have more than a dozen contract writers. Contract writers are on a regular contract: our environment writer, for instance, always writes two pieces a week.

Wang: Are you still pushing forward with member-funded beats, beat writers?

Kramer: We currently have three beats with varying degrees of reader funding or major donor funding. These beats all have contract writers, not staff writers. The first was environment. The second was mental health and addiction, which wasn’t getting much coverage elsewhere in town. The third was for an arts writer, who writes four times a week and does a roundup — it’s quite an amazing roundup, as she seems to be everywhere and goes to every cultural event in town.

Those three beats all have varying amounts of reader funding. The first two are fully funded by readers. The arts one is partly funded by readers.

Wang: Is there anything that with more money, you’d for sure want to add into your coverage that you aren’t doing yet?

Kramer: I’d love to see us finally crack the code of how to make time for more quality investigative work. Our new editor is very interested in that, but it’s challenging to pull it off.

We are doing interesting work in that direction with our data reporter. Since they don’t have a beat they cover on a regular basis and their beat is really their skill, they have more of a chance to do investigative work.

Wang: So that’s the first thing you’d love to do with more funding? It’s a matter of getting more funding —

Kramer: More funding has to do with everything. One of our principle commitments is that we pay for our reporting. We may not pay as much as the highest-paying places — we don’t pay as much as, say, the Star Tribune, but the Star Tribune also has fewer people working there than they had six or seven years ago. And we pay a good living wage. Journalism is expensive, and more money is the key to every kind of editorial growth.

Wang: Any other local sites that have popped up recently that you’re paying attention to, that are filling in gaps in coverage?

Kramer: There’s a tremendous vitality of nonprofit sites around the country. The Institute for Nonprofit News has more than 100 members, and many are locally based, though not all. But many are heavily reliant are foundations. For them to succeed long-term, many of them I think know they have to build more of a broad, business-style base of revenue.

The ones doing this well at the local level, that I’m aware of, are the Texas Tribune, the Voice of San Diego. And then there’s us. There may be other purely local sites I don’t know about? Among the local ones, those are the ones I know about, and those are the ones that have developed very diverse sets of revenue streams. I’d like to see more sites like that.

Wang: Any in Minnesota popping up that you’re aware of, beyond you guys?

Kramer: No, there really aren’t.

Wang: Are there new audiences, new communities you feel MinnPost hasn’t yet reached and could reach and then be converted into supporters, and maybe even sustaining members?

Kramer: Our audience self-selects to a great degree based on the content we’re providing. The dominant characteristic of our audience is that they’re college-educated, and I don’t really see that changing a lot. There’s growth potential in the fact that more and more people in the state are becoming college-educated over the years.

Our audience is people interested in public policy and public information. We’re not really trying to broaden out beyond those characteristics. What we’re interested is, there are huge numbers of people who are college-educated, and there are people out there interested in public policy and public information, who still don’t read us yet. So we want to reach those kinds of people.

We want to reach more into the rapidly growing diverse communities, like immigrant communities. Even in those communities, our audience is going to be those interested in public policy and those who have gone to college.

Wang: What are you going to do after you transition away from the role you have now? You and Laurie have been with the site for such a long time.

Kramer: First of all, I’m remaining active on the Post board, as is my wife, who’s going to chair the development committee. I am not taking on a committee, but will be coaching both Andys, the editor and CEO. I expect to remain active, particularly on revenue, which is a big thing the board is involved in.

Beyond that, my interests in the short-term are private interests: I’m hoping to improve my bridge game. I’ve been playing the piano again after having not played since I was 12 years old. I’ve got a lot of books I want to read, particularly history, which I’ve not had much time to read. These are all very personal goals, and they’re all on my agenda, along with continuing to help MinnPost.

I’m very optimistic about the future of MinnPost. We’ve built a strong model. It’s hard to know exactly how many readers we have who we could call regulars, but it’s in the range of 75,000 or so. We get over 1.2 million pageviews a month. We’ve built an audience, and we’ve demonstrated we can get a portion of that audience to be donors every year, and we’ve demonstrated we can get advertising and sponsorship that is based on that audience that we’ve built. The core strengths are there, and now it’s just building on those things.

I’m confident the new generation of leaders will have no problem building that up. In the short term, as I mentioned, they’ll have the problem of building the revenue to cover the added salaries. But I fully expect they’ll be able to do it and for MinnPost to be around for a long time.

Photo of Greetings from Minnesota by Bjorn, used under a Creative Commons license. Photo of Andrew Putz, Laurie Kramer, Joel Kramer, and Andrew Wallmeyer by Corey Anderson, used with permission.

Notes
  1. Joel was publisher of the Star Tribune in 1998 when it was sold to McClatchy, reportedly leaving him with $8 million. The Star Tribune was sold again in 2007, and declared bankruptcy in 2009 (it’s now owned by Minnesota billionaire Glen Taylor). Both the Star Tribune and the neighboring St. Paul Pioneer Press had been beset with cutbacks. This was the landscape in which MinnPost started.
POSTED     Oct. 18, 2016, 11:43 a.m.
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