Nieman Foundation at Harvard
HOME
          
LATEST STORY
Votebeat will cover local election administration as a permanent newsroom
ABOUT                    SUBSCRIBE
March 31, 2022, 11:46 a.m.
Business Models

Forming a co-op saved six Canadian newspapers from closing. Here’s how they do business now.

“Being so close to bankruptcy made people realize that what we were offering them was a treasure, but it was pretty fragile.”

In 2019, six regional daily newspapers in Quebec, Canada were saved from closure after their parent company, Groupe Capitales Médias, announced it was filing for bankruptcy.

On the day that the bankruptcy was announced, the Quebec government authorized CAD $5 million in emergency aid to keep the presses running while the papers found a new owner.

“It’s impossible to envision the closure of six newspapers,” Pierre Fitzgibbon, Quebec’s economy minister, said at the time.

The six dailies — Le SoleilLa Voix de l’Est, La Tribune, Le Nouvelliste, Le Droit, and Le Quotidien — were then bought for the symbolic price of one dollar by the National Cooperative for Independent Information (Coopérative nationale de l’information indépendante, known as CN2i), a newly formed co-op. The plan was that it would initially be sustained by $21 million in funding from the provincial government and private stakeholders, all of whom were invested in continued access to information in the region, while it found its footing.

CN2i took over the operation of the six dailies, as well as employing the collective of 450 media workers. About 100 were laid off when CN2i ceased print operations of the weekday papers (they still print Saturday editions) and 15 to 20 people have since been hired in digital and reporting roles.

“We had to find a solution to assure [our journalism] will continue, and collective ownership seems to be the best answer to maintain a collective treasure for our communities,” CN2i CEO Stéphane Lavallée said.

A co-operative, generally, is a company where the users of the service it provides are also owners.

CN2i is structured so that each publication is its own cooperative and operates autonomously, guided by an individual strategic plan. One member from each co-op serves on CN2i’s board of directors, and a seventh board member is chosen by investors. Lavallée was hired by CN2i’s board of directors in 2019. CN2i’s digital growth director, Marc Gendron, was previously the editor-in-chief of La Voix de l’Est.

Each co-op paper has two types of members: “Worker-members” and “consumer-members” (readers and advertisers). Each newspaper is then a support-member of the CN2i cooperative, and they often provide a shared service to the larger group.

The Conversion to Cooperatives Project, a Canadian initiative that provides guidance for business that want to transition to the co-op model, explained in a case study:

This second level co-operative, without being a federation, offers common services to each cooperative, including financial planning for the entire group, digital shift coordination, and human resource management.

In addition, as a CN2i member, each co-operative provides a service to the entire group. For example, classified ads are managed by one of the co-operatives, while obituaries are handled by another, and customer service for the digital shift is handled by a third one. By taking responsibility for a shared activity, each co-operative produces content for CN2i, the producer co-operative.

Regarding the distribution of content, the Coop de solidarité Le Soleil in Québec City and the Coopérative de solidarité Le Droit in Outaouais benefit from the respective presence of provincial and federal governments. Indeed, governments generate news not only about regional matters, but of national interest, resulting in these two cooperatives being highly sought-after. Thus, the co-operation agreement between the CN2i member co-operatives provides for a revenue model that includes the distribution of content between co-operatives.

CN2i isn’t the only media co-op in Canada. The New Brunswick Media Co-op formed in 2009 to cover marginalized groups that weren’t prioritized by corporate media outlets. The Media Co-Op formed in 2006 after re-incorporating the newspaper The Dominion to be reader-funded and member-owned.

CN2i officially launched in March 2020, with a campaign calling on readers to gift or purchase shares in the company. That resulted in CAD $2.5 million in donations to the individual publications, which are reserved for special projects, Lavallée said.

Still, the pandemic posed additional, immediate challenges. CN2i’s six papers cut print editions the same month, citing a “brutal drop” in ad revenue caused by the pandemic. They now only publish print editions on Saturdays.

The launch also required significant buy-in from staff, and it wasn’t entirely rosy. The pensions of workers and retirees were cut; employees’ wages were frozen for two years.

“We’ve made this transformation facing a lot of wind, because we did it with urgency and we did it during a global pandemic,” Gendron said. “We are a legacy organization, with some of our newspapers being more than 100 years old. The staff worked in one way for so long and now they have to learn to do things differently.”

Readers can pay for one subscription (there are three subscription tiers) and access all six news outlets through their websites or through one mobile app. Each news outlet’s website is similar in design and is united at the top by a navigation bar with links to the all the other news outlets in the co-op.

Since launching its digital subscription offering in November 2020, CN2i has sold more than 30,000 subscriptions across all six papers — an impressive number, Lavallée feels, since the co-op’s coverage is local in scope.

“When we were on the verge of bankruptcy, we felt the love of all of our communities and that kickstarted the project and inspired us to become the owners of our own companies,” Gendron said. “Being so close to bankruptcy made people realize that what we were offering them was a treasure, but it was pretty fragile.”

That “love” is somewhat unique to Canada, according to Jean-Hugues Roy, a journalism professor at the University of Quebec in Montreal who is working on a research project and book about the co-op.

In 2019, the federal budget introduced three new types of tax credits: one for news outlets hiring journalists, one for paying subscribers to qualifying Canadian news outlets, and one for donors to qualifying news outlets. (Some have argued, including here on Nieman Lab, that this money props up failing news organizations instead of helping more promising startups.) Quebec’s provincial government introduced an additional tax credit for hiring and directed most of its Covid and vaccine-related advertising dollars to media organizations. CN2i also received funding from Meta and partnered with the Google News Showcase.

“There has been a deluge of public money showered on Québec media in 2020 and 2021,” Roy told me in an email. “The six co-op dailies under the CN2i umbrella have benefited from it, as have many other news organizations. The real test will be when that flow [of money] is reduced — there are already less Covid ads — or when it dries up.” The tax credit programs run until 2024, he noted, though they may be extended.

“During the summer of 2019, we all knew that the financial situation of the company was precarious,” Gendron said. “We read about [the bankruptcy] in [a competing news outlet] but we had little to no information coming from higher management. Now, transparency is the basis of the relationship between the members and the publishers of the group.”

[photocaption]Photo by Joy Real on Unsplash[/photocaption]

POSTED     March 31, 2022, 11:46 a.m.
SEE MORE ON Business Models
Show tags
 
Join the 60,000 who get the freshest future-of-journalism news in our daily email.
Votebeat will cover local election administration as a permanent newsroom
“How do you produce journalism that strengthens elections? That’s the question that runs through my mind every day.”
Hype is a weaponized form of optimism
Want to know the true value of AI, NFTs, and other much-touted technologies? Ignore the news and look at the harsh judgment of the market.
For print newspapers, one Florida retirement community is a better market than Atlanta, St. Louis, or Portland
For local newspapers, print circulation has collapsed for every audience except retirees. That’s why the daily paper in The Villages, Florida (metro population 129,752) prints as many copies as the one in Atlanta (metro population 6,930,423).