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Sept. 6, 2018, 1:01 p.m.

63 industry leaders, 40 organizations, and 5 opportunities for revitalization on the horizon of local news

Diversifying revenue, building a culture of philanthropy, seeding growth development, and more.

A crisis and/or a crossroads: That’s one of the many takeaways from a gathering of several dozen leaders from news organizations, platforms, and foundations discussing the prospects for the next batch of ideas for local journalism business models.

The Shorenstein Center on Media, Politics, and Public Policy at Harvard and the Lenfest Institute brought together a bunch of folks (see the full list in Appendix II here) in May to brainstorm ways to bolster innovation in local journalism sustainability. The mood of the room: “energized and, ultimately, optimistic.” We hope so.

In case it needs repeating, local news has borne the brunt of the crashing journalism ecosystem, with still high levels of trust from readers but little trickle-down of subscription dollars while the ad revenue still whirls over to Facebook and Google. Poachers — a.k.a. some of the corporate leaders taking advantage of what income does remain, *cough* Tronc, Digital First Media, *cough* — don’t exactly help. And there aren’t plentiful resources for each local organization to experiment in the same way that national organizations can, though there are some efforts being made to strengthen ties across the local news industry.

So that’s a sketch of the problem — what are some potential solutions? The Shorenstein/Lenfest group identified some targets, in a report published today by Elizabeth Hansen, Emily Roseman, and Matthew Spector of Shorenstein and Joseph Lichterman of Lenfest (disclosure: formerly of Nieman Lab). The full report has a wealth of examples with explanation, but we’ll hit on the highlights here, including a list of the results from a “one minute exercise around promising ideas for the field.” Behold:

Diversifying and strengthening revenue streams for journalism

Attendees agreed that “direct reader revenue must be at the center of sustainable business models for local journalism” — but it’s not going to be the saving grace of the business and everyone is different.

Examples: The News Revenue Hub, Facebook’s Digital Subscriptions Accelerator (now with a membership track as well), Gannett’s events business, The Guardian’s membership appeals, and Berkeleyside’s direct public offering (recently replicated by a news organization in Sonoma County)

Opportunities: “Above all, attendees highlighted the importance of emphasizing a publication’s journalistic mission as a way to drive support — in the vein of The Guardian’s successful campaign to get its readers to donate. This was seen as far more likely to grow reader revenue than offering exclusive access to events, extra content, or free gifts like tote bags.” Participants also emphasized the need for a streamlined subscription process and better customer relationship management tools to prioritize getting potential subscribers on an organization’s email list before getting through the $-sign door.

Field-building to grow a culture of philanthrophy

There’s a lot of cultures to be grown in newsrooms nowadays (no yogurt, please). The question parsed by the participants: “What would it take to build an ongoing source of philanthropic subsidy for journalism?” (I can only imagine that the questions of “should philanthropy be subsidizing journalism” and “are some nonprofit journalism outlets taking up all of the philanthropic oxygen,” as per a previous Shorenstein report, were also discussed. But remember, crossroads/crisis.)

Examples: Berkeleyside, Voice of San Diego, Chalkbeat, Richland Source, Block Club Chicago, NewsMatch, Civil, and more

Opportunities: “Foremost, attendees emphasized the need to stimulate a “philanthropic vanguard” — to build a new culture of giving that sees institutions acting together instead of alone, effectively “priming the pump” for future contributor interest, said one person…. Participants especially voiced the importance of further education to inform target communities, subject-area funders, and high net-worth individuals about a range of opportunities to support news. Philanthropic endeavors must be marketed differently, they said, beyond the idea of ‘giving something for nothing — except a tax break.'” That marketing should extend to individual donors as well, using NPR as an example.

There were also questions about conflicts of interest and how much of one’s reporting cards should be shown to potential donors: “Given the potential for funding that seeks to advance a particular agenda, attendees sought tools to clarify to community foundations and local nonprofits what they can expect to secure for their funding — including a toolbox of letters for initial requests.”

And yes, back to that question about long-term subsistence:

Philanthropy and funding should build capacity rather than dependency in news organizations, including asking the question “how do we equip newsrooms to run themselves?” This requires removing the silos between business, advertising, revenue, and editorial sides of the news organization’s ledger to ensure every member of the organization is directly engaged in the long-term strategy, participants said. Only “a small subset of individuals in the newsroom have the time to think about innovation,” one person noted. Funding strategies must seek to sustainably expand that capability—including embedding business-thinking inside newsrooms and sourcing operational support from outside.

Finding and seeding growth capital for mission-driven journalism enterprises

Early-stage ideas can excite, but are there resources to sustain them as they develop? Attendees suggested a blend of philanthropic support and venture fund activity. “I am seeing news startups go through a two-step process where they can get seed funding but usually get stuck in year three, and don’t have the operating fund of $30 to $50K to get through to sustainability,” one participant said. Another noted that “the worst place a growing nonprofit can land is with ‘on-mission, off-strategy’ funding that meets a funder’s programmatic requirements but doesn’t match the nonprofit’s strategy.” And remember, reader revenue only goes so far, especially when you’re trying to serve individuals who are limited in how much they can contribute (if it all).

Examples: The Knight Foundation’s Knight Enterprise Fund (disclosure: Knight has supported Nieman Lab in the past), VTDigger, Civil, Matter Ventures, American Public Media’s philanthropic investment fund, Berkeleyside’s direct public offering again, and more

Opportunities: Well, one opportunity is to overcome the assumptions of potential funders/investors about the news business. (Good luck.) Said one attendee: “My job is to persuade people that you don’t have to be Bezos to make a difference in the news space, that there are ways to support journalism around a topic, and other types of outlets for people who want to do something about news. Every time I tell people this, it’s an epiphany.” They also noted opportunities for investors to support software and product development through a free-to-scaling business that cuts across newsrooms. (See: Arc Publishing.)

Other ideas: Creating a Crunchbase for investors to connect with journalism organizations or a United Way journalism version to connect funders to organizations, pitching corporate social responsibility initiatives to support journalism, having Knight and other major funders do a “roadshow” to speak to potential civic investors in their communities, and supporting employee entrepreneurship in long-standing media businesses.

Growing the next generation of publishers in business acumen and leadership abilities

Raise your hand if you have taken too many financial literacy classes. Nobody? Alrighty then.

Although several world-class journalism schools are increasingly incorporating business teachings into their programs, many participants noted that the standard journalism school curriculum is in need of an overhaul in order to capture the evolving business and digital best practices to prepare today and tomorrow’s journalism and media leaders.

Examples: Columbia Graduate School of Journalism’s Knight-Bagehot Fellowship in Economics and Business Journalism, the Sulzberger Executive Leadership Program, UNC School of Media and Journalism’s business journalism program, CUNY Graduate School of Journalism’s entrepreneurial journalism program, the Knight-Lenfest Newsroom Initiative (aka Table Stakes), women’s leadership and coaching initiatives from Poynter and ONA, Knight Center’s product management for journalists online course, fellowships (such as those, you know, at Nieman) and much, much more.

Opportunities: An MBA for media/journalism focused more on turning around struggling companies rather than maintaining a big company, hybrid undergraduate training, a focus on diversity in recruitment, and more.

Building products to increase revenue and engagement

Product management is not exactly within local journalism’s wheelhouse nor top priority, though it is an emerging need. (See: ONA’s product design + development track for this year’s conference.) Standardization is one issue:

“KPI’s have not standardized throughout the industry,” noted a representative from Distributed Media Lab in our discussions. “Newsrooms can have different features for their systems, but everyone on that system needs to have the same data. The trend so far has not been that. Publishers [who don’t rely on open-source or commercial products] have mostly been building their own proprietary CMS. Unless you are marketing that software to other publishers, there is not evidence that publishers can significantly make money out of their investment in a proprietary software, or whether such software is necessary.”

Examples: WordPress’s forthcoming template optimized for small to midsize newsrooms’ subscription funnels, the Washington Post’s Arc and Vox Media’s Chorus, Merrill Brown’s The News Project‘s in-progress integrated CMS/CRM, Pico, the News Revenue Hub’s Salesforce/MailChimp/Stripe integration, Hearken, the Coral Project, Facebook Groups, Project Facet, Vigilant, and more

Opportunities: “In general, attendees felt the development of low-cost, shareable publishing tools would help relieve the financial burden many small newsrooms face in making technology development decisions…. Collaboration between small players is one way to address this problem of scale. ‘You can find partners that already have a business within your areas of coverage and build products together. You don’t have to replicate what they do, just work with them,’ said one person.”

Now what?

Here are the ideas the attendees deemed most promising for advancing local journalism (specifics can be found in Appendix I of the full report):

  1. Directory/database of news startups and available tools/vendors for the industry
  2. Subscription bundling across complementary outlets as a revenue source
  3. Integration and cooperation among media groups to leverage assets and learning (shared back-end tech like CRMs/CMSes, payment systems, revenue templates, etc)
  4. Expanded focus on revenue/grant sources, including VC, private donors, angel investors, templates, blockchain, etc
  5. Educating place-based foundations about local journalism as a philanthropic endeavor — why support it, and best practices/rules for not interfering with editorial, etc.
  6. Scale talent-building with smaller organizations where the publisher is an editor and there is an experience and expertise gap in technology and/or business

Photo of the horizon at Pier Park in Panama City Beach, Florida by Jody Claborn used under a Creative Commons license.

POSTED     Sept. 6, 2018, 1:01 p.m.
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