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Nov. 3, 2014, 10:29 a.m.
Business Models

The Texas Tribune is 5 years old and sustainable. Now what?

The Austin-based news nonprofit has success and a measure of stability with its business model, raising almost $27 million in its first five years. But now the Tribune has to figure out how it grows its audience outside the capitol.

The newsroom of The Texas Tribune is buzzing in the waning days of the 2014 election. Covering political contests takes a kind of muscle memory, something the nonprofit news site has accumulated since it first appeared in 2009 with the mission of covering politics, policy, and government in the capital of the Lone Star state. Back then, it was little more than a handful of reporters and developers; today, the Trib’s newsroom numbers around 22, the largest statehouse team in Texas, and on election day, reporters will be out covering it all — updating vote totals, livestreaming the end of the governor’s race, and tracking the down-ballot legislative races and issues. If you’ve worked in a newsroom on election night, it’s a familiar machine.

But seven days out from the election, the energy around the newsroom has less to do with campaign season and more with oil and gas. On Oct. 29, the Tribune launched The Shale Life, a 15-part series that looks at the drilling boom that is transforming the lives of Texans from Corpus Christi to the Permian Basin.

The Shale Life was six months in the making, with a dozen reporters and videographers fanned out across the state to tell the stories of new boomtowns, new jobs, and the potential environmental effects of gas drilling. The voice of Tribune editor Emily Ramshaw, who’s been there since day one, is slightly hoarse as she describes it, the likely cost of allergies and long hours leading up to launch: “The shale project is the first project for us with no traditional stories. It’s all visual.”

Indeed, The Shale Life is text-light. Where a traditional newspaper might have given a Sunday front-page splash and double-truck bursting with text for an investigation like this, the Tribune is relying on videos, slideshows, and data. The Trib put three developers on the project, building a news app outside its existing CMS. It was also funded in a new way for the Trib, crowdfunding over $6,000 from readers via Beacon. (Getting onboard a crop duster dodging oil towers over Midland isn’t necessarily easy to budget for.)

The Shale Life is a few steps away from the capitol-centered coverage the Tribune has become known for, but Ramshaw sees it as all a part of the larger mission. “If our readers can’t get a story somewhere else, that’s a story for The Texas Tribune,” Ramshaw said.

The Tribune was created to be different from the start. Combine the instincts of a reporter with the guile of a door-to-door salesman and throw in an appetite for experimentation — today, on the site’s fifth anniversary, it looks like those instincts have paid off. The staff has collected plenty of accolades for its journalism, having been recognized with the Sidney Hillman Award, Edward R. Murrow Award, IRE Award, and others. It’s averaging nearly 3 million pageviews a month. It’s on or atop any list of America’s most successful nonprofit news outlets. The reporting staff and coverage only continues to grow; it’s hiring a Washington correspondent, paid for through a $350,000 grant from the William and Flora Hewlett Foundation.

Grants like that are part of why the Tribune’s business is on sound footing. In five years, the Tribune has raised nearly $27 million to support its work. While the business of journalism today offers less stability than ever before, the Tribune has been able to build a measure of security through a mix of philanthropy, donations, and sponsorships. But success brings spectators, and the Tribune’s business model has many trying to clone it and others continuing to question it.

“The reality is we’re a going concern,” says Evan Smith, the Tribune’s CEO and editor-in-chief. “We’re past the point of being able to get away with not being able to execute at the highest levels because we’re a startup.”

Which is why, five years in, with the ledger looking good and the journalism running strong, the big question for the Tribune is: How do they find more readers?

The Tribune might be staring at a ceiling of its own making. Even as the nonprofit’s reporting staff has grown, the focus of its journalism has mostly remained bound to Austin’s biggest industry. That can be a cap for growth.

This summer, the Tribune commissioned a survey of more than 2,300 Texans, both current readers and non-users. According to the results, almost half of the Tribune’s readership works in the public sector; 93 percent said they have voted in a statewide election in the last two years. The audience is also physically close to the capital — 45 percent of the readers in the survey said they live in the Austin area — and by party line, they look a lot more like Austin than the rest of Texas: 42 percent of its readers said they were Democrats compared to 18 percent identifying as Republican.

In a state of 26 million people, the Tribune reaches only a fraction of Texans through its website and collection of live events held around the state. Distribution deals — both formal and informal — with in-state papers have broadened the Tribune’s audience, but they’re difficult to measure. (Last week, the Tribune announced its paid partnership with The New York Times was ending as part of that paper’s cutbacks.)

If you work at a state agency or the capitol, there’s a very good chance you already read the Trib. How much bigger of an audience is there for insider coverage of the legislature or analysis of the inner workings of the state transportation department?

Growing up is going to mean reaching out and deciding what the Tribune will look like in the near future. For its birthday, the Tribune is doing something not many five-year-olds do — making a strategic plan for growth. And they have a target. It’s not Texas’ 26 million. “We know we’re not going to get everybody, but it’s a very large pool from which to draw. And in that universe, we think there are 4 million people who, taken together, have attributes that make them likely, if not certain, Tribune users,” Smith says.

He adds, with the confidence that has opened many checkbooks: “It’s simply a question of getting in front of them and making the sale.”

Tribune staffers listen as editor Emily Ramshaw (foreground) speaks.

The Texas Tribune’s origin story shares similarities with that of many of the nonprofit news sites that sprung out of newspaper cutbacks during the recession in the late 2000s. A small cadre of editors and reporters from local newspapers, magazines, and TV would help fill the void in reporting left by, well, layoffs at newspapers, magazines, and TV. What separated the Tribune then is what separates it now: money. John Thornton, a general partner at V.C. firm Austin Ventures, was looking to create a news startup and asked Evan Smith, then running Texas Monthly, for advice. In a move that Dick Cheney might appreciate, Smith ended up with the top job himself. The venture capitalist raised enough funds upfront to give the Tribune a substantial runway: $4 million, with $1 million coming from Thornton himself.

“I’m not saying there isn’t a for-profit model out there” for journalism, Thornton told The Austin Chronicle in 2009. “It’s just not a good business, and it never will be again.”

So the goals of the Tribune would be two-fold: putting a sharp focus on the policy and investigative work that newspapers relinquished because of cutbacks and — perhaps just as importantly — finding a way to make it sustainable.

On the journalism front, the Tribune made an immediate splash through its use of data — namely, creating searchable (and SEO-friendly) databases of public records, the sort usually only accessible through FOIA requests. Or as Matt Stiles puts it: “What do reporters have on their desktops that they’re not sharing with people that have real value.” Stiles, now a data journalist at The Wall Street Journal, was one of the Tribune’s earliest employees, coming from The Houston Chronicle. The early databases, which allowed people to look up things like public employee salaries and campaign contributions, proved to be a quick success and traffic driver for the site, pulling in three times the pageviews as the site’s stories were. That use of data was a way to have an impact quickly even as the traditional newsroom work was growing. “If we tried to be everything to everyone in the state, we wouldn’t be successful,” Stiles said.

That focus on data, as well as the interplay between lobbyists, legislators, and bureaucrats, was met with skepticism in the Tribune’s first two years. Longtime Texas journalist Bill Minutaglio wrote in 2011:

What the Tribune needs is consistent, long-ball narrative and multipart investigative projects. It needs the 5,000-word drill-downs like Sy Hersh does for The New Yorker. It needs the huge packages that win Pulitzer Prizes for ProPublica, for investigative work and public service.

Sam Freedman, a New York Times writer and journalism professor, says the best stories exist on a temporal and eternal axis. You invest your stories with a legacy value — with huge context and sweep — so the stories have a longer shelf life, so the echo chamber resounds until the plutocrats really pay attention and maybe even go to prison for a long, long time. Associated Press correspondent and former Texas Observer managing editor Chris Tomlinson calls those the “WTF” stories, the ones that make readers go “What the fuck!” So far, it’s hard to point to a jaw-dropping WTF in the Tribune.

Ramshaw admits it took time for the Tribune to find its groove, the kind of accountability journalism that has the metabolism of the web and the insight of an investigative reporter. “We really transitioned from covering everything Texas all the time to covering the stories where we can have the greatest impact, where we can hold elected officials and state agencies accountable for their actions,” she said.

One way the Tribune wanted to amplify its work was by offering its stories for free to other news outlets within the state. This is by now a common move in the nonprofit news playbook, but on a state level the old lines of competition still remain. John Bridges, managing editor of the Austin American-Statesman, says his paper has made use of Tribune stories in its page — at least a dozen within the past year. But partnering with an outlet like the Tribune brings some inherent difficulties; Bridges joked over email that it can be hard to get reporters in the same newsroom to share information, much less with a rival newsroom. “We have a healthy professional respect for the Tribune’s staff, but we also regard them as competitors when it comes to breaking stories or enterprise coverage of state government,” he told me.

Bob Mong
In 2010, Ramshaw worked with Houston Chronicle reporter Terri Langford on an investigation into a state-contacted youth home that forced mentally disabled girls into fighting each other. (Langford would eventually join the Trib in 2014.)

Both the Statesman and The Dallas Morning News were initially cool to the idea of significant collaboration with a new rival, but those relationships have thawed a bit. Morning News editor Bob Mong said they’ve also run Tribune stories and collaborated in the past. Mong, over email, said he appreciated the thought and creativity that went into developing the Tribune: “Without question, it is the most significant new media addition in Texas over the last five years. I think it’s likely a sustainable model,” he said.

The Tribune’s Texas focus occasionally reaches a broader audience in a big way. In 2012, the site gained more exposure for reporter Jay Root’s coverage of the nascent stages of Texas governor Rick Perry’s candidacy for president. The Tribune saw a boost both in pageviews and on its balance sheet, raising just under $300,000 for Perry coverage. “There’s no question Rick Perry was good for business,” said Smith told us in 2012. “Even if his presidential campaign wasn’t successful these last five months, we were.”

Similarly, in 2013, the Tribune found itself in the national spotlight again when state senator Wendy Davis’s 11-hour filibuster of an abortion bill became national news. This time, it was the Tribune’s use of technology — namely its access to the livestream within the senate chamber, which it streamed on YouTube — that grabbed attention for the startup, including a tweet from the commander-in-chief. The livestream had more than 250,000 views across 180 countries, according to Rodney Gibbs, the Tribune’s chief innovation officer.

All along the way though, with the reporting successes, the accolades, and the attention came more money. Following the filibuster, the Tribune raised around $24,000 and earned over 400 new membership signups. They doubled down on the livestream with a Kickstarter campaign to raise $60,000 for more video equipment. They wound up with $65,000.

TribFest 2014 Governor Rick Perry
Evan Smith interviews Texas governor Rick Perry at TribFest 2014.

By spring 2013, the Tribune seemed to have turned a corner. “Sustainability” is the mantra for most news nonprofits, though what it means can be fuzzy. The Tribune’s founders had originally set a goal of raising $9 million in funding by 2013; they ended up at $11 million. Maybe more importantly, the nonprofit was at the breakeven point by Year 3: In 2012, the Tribune brought in $4.5 million in revenue while adding up $4.2 million in expenses, according to internal numbers. It was enough to convince the Knight Foundation to award the Tribune a $1.5 million grant to examine the reasons behind its rapid ascent and financial strength. Lots of news nonprofits had popped up in the past half-decade, but many were struggling to diversify revenue sources — or just to keep the lights on. What was different about Texas?

“A couple things about the Tribune that stand out are the entrepreneurial creativity, in terms of the way they have thought out revenue opportunities, and really been pretty aggressive — more aggressive than one would have thought of in the past as the typical nonprofit model,” says Jake Batsell, an assistant professor of journalism at Southern Methodist University. Batsell was one of the two Tribune Fellows brought on to examine the nonprofit as part of the Knight grant. Batsell said there are plenty of elements from the Tribune’s playbook that other nonprofits could duplicate in their own community. But there’s other factors that are Lone Star-specific: “Some of the personalities there aren’t replicable. The concentration of corporate wealth in Texas. The scale, and the sense of statewide identity that is unique to Texas.”

Smith is fond of using the word “promiscuity” in describing the Tribune’s strategy; others might say revenue diversity. Either way, the goal is the same: stacking up as many sources of funding that the loss of no single one will be the end of you. And, increasingly, the source nonprofits like the Tribune are trying to ween themselves from is the generosity of others — it wants earned income.

In 2010, the first full year the Tribune was in operation, the site had $1.7 million in total revenue, with the bulk coming from individual donations and foundation funding. In 2013, the Tribune brought in $5.1 million in revenue, with $1.16 million coming from corporate sponsorships and $1.13 million from events.

At the outset, the Tribune’s setup wasn’t too far from the public media model, relying on members and generous donors to keep the lights on. But memberships for the Tribune have grown slowly, from a base of 1,327 members providing $196,924 in 2010 to 2,720 members responsible for $668,642 in 2013.

Instead it’s been sponsorships and events that have made the difference. Corporate sponsorships include what look a lot like ads you might see on a for-profit’s site or newsletter, but the Tribune’s targeted audience of Austin politicos and staffers makes a sponsorship desirable to those seeking influence. According to the Tribune’s own database of sponsors, that includes familiar names like Blue Cross and Blue Shield of Texas, AT&T, and Google. You might also find these companies as sponsors at events like the Trib Talks that take place at colleges around the state and the annual Texas Tribune Festival. Since April 2012, the Tribune has held 135 events, averaging almost one a week. The 2014 festival generated about $700,000 from tickets and sponsorships, Smith says.

With money strong and journalism solid, the Trib’s focus now is audience development, and since the site’s bread and butter is politics, it only makes sense that Smith sees the site’s audience strategy in similar terms. The Tribune has appeal because its mission is covering policy and politics, and the people who tend to obsess and follow those things also happen to have money to throw after causes.

Evan Smith
“The attributes of a person who contributes to political campaigns, who wants to change the world, who cares passionately about the community,” Smith says. “That’s the kind of person who gives.”

That philosophy has some in Texas asking whether the Tribune’s business model should be so reliant on taking money from powerful interests, some of which they set out to cover. It’s a similar line of questioning that has chased ProPublica since the Sandlers decided to spend $10 million out of their own pocket to launch the investigative nonprofit. In a sense, it’s a descendant of age-old concerns about news organizations being too close to their advertisers.

Minutaglio, writing earlier this year from the Observer, argued the Tribune’s collection of donors and traveling road shows with politicians can create, at a minimum, a perception problem:

The conundrum points to how fine a line the brave new world of nonprofit journalism has to tread in the search for viable business models. Access to the state’s heavy hitters can put readers close to important news and sources. But the perception of favor toward those same heavy hitters is an obvious pitfall. Readers might begin to wonder what really happens when you dance too closely with the bigwigs what brung ya. And that’s when image can start to overshadow all of that hard-earned journalism.

It’s not the first time Smith has heard this line of argument. “This criticism and critique has been leveled over five years and has come without there being any basis or evidence that we’ve ever played this as anything other than straight down the middle,” he said.

Smith doesn’t rile easily, and he doesn’t stray from the topic at hand for long. There’s nothing to apologize for in how the Tribune tries to find ways to sustain itself, he says. The journalism can be nonpartisan and nonprofit while reaching out to potential donors and readers, he insists. In fact, they have to if they’re going to make it to its next five-year milestone.

“You have to be willing to do this over the long term and get people wherever you can get them,” said Smith. “But you have to get them. You can’t wait for them to come to you.”

A Trib happy hour in May 2013.

When Tribune publisher Tim Griggs talks about growing the site’s audience, he mentions two large numbers: 400,000 and 4 million.

Think of those as concentric circles of audience. As part of the reader research, they found that the potential audience of hardcore readers, the ones who most closely resemble the demographic that already visits regularly, is around 400,000 people. (The Trib averages about 635,000 unique visitors a month, on whom about 85,000 core readers generate 5 or more pageviews — proof that there’s still plenty of potential growth even in this core group.)

But if you take a few steps back, another larger potential audience of 4 million users emerges, he says. These are not the people who live and die by water policy or needs to keep on top of the legislative session for their job. Instead, these people are looking for statewide news or the political stories they need to know.

The problem is that these two groups have different needs. One wants depth and analysis, the other brevity and overviews. By reaching the readers focused on general news, the Tribune can help build awareness for the nonprofit. The power users, on the other hand, build a bigger group of core readers who will use the Tribune regularly and have the potential to become supporters, Griggs said.

“It’s important the Tribune recognizes now that there’s a lot more it can do and we don’t repeat the mistakes of legacy media by resting on our laurels,” Griggs said.

But getting at the solution may not be easy. One way to reach both audiences might be to develop a more consciously insider product, following the blueprint of something like Politico Pro. That, of course, requires marshaling more money and more staff.

Instead, they want to add new layers to what the Tribune already produces, making the site more accessible to newcomers while also building features that let insiders dig deep into their favorite subjects. Griggs said the Tribune is looking at spinning up products that will meet the needs of both groups, whether that’s customizable tools and alerts for core readers or better, more skimmable email newsletters for the wider audience.

In trying to reach its best and broadest potential audience, the Tribune will also have to figure out what it is going to look like. Most of the staffers I spoke with said they know the Tribune of 2019 can’t look like the one of today. But that question of identity, and how it shapes audience, has been hovering in the Tribune newsroom almost from the beginning. “I think strategically, the Tribune is at an interesting moment in: Do they want to expand the audience to more people or super-serve the core?” Batsell said.

Stiles described it as “trying to find the sweet spot between ProPublica and Politico for Texas. I don’t know if they’ve settled on where they are on that meter.”

Stories about The Texas Tribune always seem to either start or end with Smith. He’s an irrepressible promoter of the site, the one whose job it is to carry the flag for the Tribune and, as he says, the one who “carries it the highest and waves it most vigorously.” When he’s not flag waving, he’s on the road, racking up miles in his car to get to places like Nacogdoches and Corpus Christi for Trib Talks or setting meetings with donors.

It’s been like that for five years, and to get the Tribune to where it needs to be, Smith won’t be able to shake off that hustle. The audience research proves there’s still plenty of work to do. The wider pool of potential users it identified differs from its current audience in important ways: less likely to live in Austin, more likely to identify as conservative and Republican, more interested in local news. (And both current and potential users skew older: The median age of a current Trib user is 55, with only 23 percent being under 45.)

And even among the site’s current users, the survey found that 39 percent didn’t know it was a nonprofit. “There are a lot of people who don’t know us. I just think that’s a chance to be out in the community making more noise and engaging more people,” Smith said.

Emily Ramshaw
Growing the Tribune will mean finding new ways to do what they do best and connecting with those people who don’t know them. It doesn’t mean they’ll be changing their scope or introducing coverage too far outside of what they do, Smith says. But it’s clear the Tribune is still figuring out what’s next. Smith, paraphrasing a famous line from Annie Hall, says the Tribune has to be constantly move forward: “What we don’t want to have on our hands is a dead shark.”

The Tribune resembled most startups — news or otherwise — its its early stages, with Smith as the public face of the enterprise: the one on the conference circuit, the promote-in-chief. Smith’s ease and swagger has been part of what’s helped bring dollars in the door. But any new venture that wants to become an institution has to grow beyond any one person. The Tribune has built out its structure, adding editorial staff as well as its technology and development teams. “The great thing about the Tribune of late is I become less and less integral to the success of this operation with each passing day,” Smith said.

Smith is 48, and when I ask him if he plans on sticking around the Tribune forever, he laughs. He says the time will come when he wants to move on, but it’s not here yet. He’s a big believer in contingency plans. When he began thinking about a post Texas Monthly career, Smith said he knew the magazine would be in good hands because Jake Silverstein, who recently departed for The New York Times Magazine, was ready to step up.

In the newsroom, the successor is Ramshaw, who started as a reporter and now oversees editorial. Ramshaw talks about the Tribune’s future with the same enthusiasm and assuredness as Smith. For the Tribune to deliver on its mission of serving Texans news from the capitol, the site needs to keep pushing outside of Austin, she said. Getting Tribune stories in local papers and on local TV is one way of doing that. Another is pushing on more collaborations, including a forthcoming investigative reporting project with The Verge on lethal injections.

Something like The Shale Life may seem ambitious or experimental for a site known more for statehouse work, but it’s a model for the Tribune going forward, she says. Not only did the project advance new ideas for digital storytelling, it got the Tribune and its journalists out in the community in front of other Texans, she said.

“If you’re tethered to the newsroom, if you’re tethered to the hamster wheel, you’re not telling stories that affect people’s lives,” Ramshaw said.

Photo of Texas cake from 19melissa68 and photos of Evan Smith and Rick Perry and a Tribune happy hour from The Texas Tribune used under a Creative Commons license. Photo of Tribune staff meeting by Martin do Nascimento/The Texas Tribune.

POSTED     Nov. 3, 2014, 10:29 a.m.
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