Revenue is job one for a diverse field of community news sites

Michele McLellan has worked with the New Media Journalism Initiative on the Block by Block Community News Summit and the Super Camp business mentoring program for independent local news publishers. This guest post also appeared on the Knight Digital Media Center’s website.

It’s a familiar story: Journalist passionate about community news starts news website to help fill gaps as traditional media decline. Journalist discovers money doesn’t automatically flow in from foundations or wealthy donors. Journalist makes a pivot to bring more focus to developing revenue – or fails to make the turn and the site fails.

Later this week, more than 30 leaders of community news start ups that are trying to make that critical turn will gather in Los Angeles for two days to develop plans for operating their ventures more effectively as businesses and to grow and diversify their revenue streams.

Most are journalists and they lead promising, if young, news operations - a mix of for-profit and non-profit. They are a microcosm for a larger field that is producing excellent and much needed journalism while struggling with revenue and long-term sustainability.

The program – Community Journalism Executive Training (CJET) is a collaboration of the Investigative News Network, Block by Block, and Knight Digital Media Center at USC Annenberg. It is funded by the John S. and James L. Knight Foundation, The Patterson Foundation and the McCormick Foundation. The Patterson Foundation also supported development of the core curriculum during an intensive yearlong training and mentoring program for publishers - Block by Block Super Camp.

I have a number of connections to the program and they are detailed at the end of this post. The main purpose of this post is to give a quick snapshot of a few of the participants as a way of showing where the emerging field of community news is and is going.

The CJET participants make up a highly diverse group – for example, participants include Voice of San Diego, a seven-year-old foundation-supported nonprofit news site with a $1.1 million annual budget, and Yellowstone Gate, for-profit bootstrap that in a solid first year has generated just enough advertising revenue to pay the publisher/reporter’s expenses.

This diversity reflects another aspect of the larger field where news operations are experimenting with both journalistic mission and revenue models. But all are concerned about money at very different levels.

Mary Walter-Brown, vice president of advancement and engagement at Voice of San Diego, says the organization needs help figuring out priorities for revenue streams. The site already has a healthy mix of revenue streams – sponsorships, memberships, foundation grants, large donors and programming for a local television station.

But Walter-Brown says it’s not always clear how to focus limited development resources. “Are we doing enough to cultivate foundations, applying for grants? Next year, do we sell advertising or mine for foundation grants?”

“We want to reduce our dependence on foundation grants. It’s the hamster on the wheel. We’re really trying to reduce anything that doesn’t have a lot of predictability,” she said.

As befits its relative youth, the three-year-old Wisconsin Center for Investigative Reporting is  highly dependent on foundation grants and large donations.

Executive Director Andy Hall notes that the center is demonstrating that its innovative model – a nonprofit news organization that collaborates with other organizations, including universities and publishes the work of students who are paid along with professional staff – can work and thrive journalistically.

Interestingly, the center has significantly increased its donation revenue - and doubled its staff to four journalists and two paid interns - since Scott Walker became the state’s controversial governor.

“National attention focused on Wisconsin’s political chaos has helped dramatize the need for investigative journalism and has made it easy to convince everybody that what happens at the statehouse matters,” Hall said. “Certainly some of the increase in our support I believe is because of the chaotic political climate and the national attention” to it.

Still, that does not mean the center has attained sustainability, or as Hall defines it - "Durability."

“When I use that word I have a flasback to those Tonka trucks I used to play with as a kid. They could take some abuse, some hits but the wheels didn’t come off,” Hall says.

“Our biggest challenge is financial sustainability,” Hall says. In addition to grants and donations, the center received contract funds from other organizations to produce specific stories. One is Money & Politics, a feature the center has continued even after the contract ended July 1.  The center has a budget of $397,000 this year, up from $250,000 in 2012.

Hall says the center is working on additional efforts to cultivate donors, including individuals and institutions who may be interested in supporting the center’s educational mission of training the next generation of journalists.

Hall approaches the idea of corporate sponsorships with caution because he believes in certain instances they could pose the appearance of a conflict of interest.

By contrast, VTDigger, is putting increased focus on advertising and corporate sponsorships, says Anne Galloway, founder and editor of the site covering Vermont government and policy.

The annual budget of $350,000 this year is heavily supported by foundation funds, including a grant from the Knight Community Information Challenge and the The Vermont Community Foundation.

A goal for the year is to raise $150,000 from sponsorship sales or advertising, Galloway said. The organization must prepare now for the end of the Knight grant, she said. “We need to step up so we can be ready for that cliff and be sustainable. “

Growing sponsorships is key. “We haven’t been able to break into state businesses that we need yearlong commitments from,” she said.

Next year, Vermont Digger will also shift from display advertising to cost per impression and a redesign will make it easier to upload ad materials.

Advertising is the sole source of revenue so far for Yellowstone Gate, a for-profit site that launched just  a year ago.

Ruffin Prevost, founding editor of Yellowstone Gate, believes his next step is to grow advertising revenue from businesses in towns other than Cody, Wyoming, where he is based.

Businesses in these communities buy “ads to attract three million visitors to Yellowstone. If I can make myself a must-buy for all those people, there are hundreds of thousands of dollar being spent.”

A particular challenge for both reporting and ad sales is the distance between key communities around Yellowstone park. A drive from Cody to Jackson, Prevost notes, takes four hours in the summer and six hours over mountains in the winter.

For a one-person operation like Yellowstone Gate, one question in this phase is how to prioritize – how much time on content that drives traffic and how much time developing revenue?

Prevost’s operation is a true bootstrap. He’s been building content and public awareness during the past year while selling enough advertising to make expenses.

“I’ve sold enough ads that I’m not paying out of pocket for what I’m doing. I have money in the bank and for travel to spend on news gathering which isn’t cheap - gas in the car and a hotel in an expensive tourist town,” he said.

Prevost’s wife started what became a successful wine shop in Cody while he drew a newsroom paycheck. Now, he can afford to be in start up mode -  “I’ll do my thing at no salary for now.”

He’s prepared to do that indefinitely. “I’m in for the long haul, in my mind it’s open ended, as long as it takes.”

The question he is taking to CJET is: “How do I make this transition from a successful one per operation to a growing news outlet where I can add staff and grow those revenues.”

Polly Kreisman, The Loop in Southern Westchester County, New York, is asking a similar question five years into her operation. Her site has competition from a Patch and another corporate hyperlocal. Her business has had its ups and downs – a contract with a business that took on her site management and ad sales earlier this year caused her revenues to drop, forcing her to let go of an editor.

Now a one-person operation, Kreisman says CJET will be the start of “one more very intense, committed stab at this before I go in another direction. I’m committed to hyperlocal news.  The loop - it’s not working the way it should to sustain itself and me.”

Like many site operators – especially the early pioneers like Kreisman – she says when she started “I didn’t intend for this to be a business. I’m hoping by becoming more committed to really being conscious of then umbers, I might be able to finally make a go of it."

Kreisman and the other publishers are in for an intense couple of days at CJET. A key feature of the program, which begins Thursday, are small group mentoring sessions with a coaches with diverse business and fundraising expertise.

Rusty Coats, a digital consultant and president of Coats2Coats, designed the program as well as the earlier Block by Block Super Camp program.

Coats says the work will focus on two significant themes:

- The need to diversity revenue streams. “Diversity of revenue streams is a shared problem for the profit and nonprofit model. If your revenue stream is not diverse because 80 percent depends on banner advertising, that’s just as perilous as if you’re 80 percent dependent on foundation funding,” Coats said.

- The imperative to build a sales and business structure. Many journalists start news sites because of their passion for journalism. At some point, they say “We didn’t start this as a business and now it is one whether it’s a for profit or a non-profit,” Coats said. “The folks attending have been so mission focused that this is a bit of catch up.”

Unlike Super Camp, CJET will not provide follow up mentoring for participants. So coaches on site will help participants determine how they can create significant change in their organizations and how they will do to follow through.

“Our goal is to really hammer on her ‘s your plan here are your deliverable dates here are things you are going to do in the future to hold yourself accountable,” Coats said.

This blog is made possible by a grant from the John S. and James L. Knight Foundation.

(Disclosure: I have a variety of loose connections to this program as a programming consultant and blogger for Knight Digital Media Center, as a consultant to the Knight Foundation and The Patterson Foundation, and as founder of Block by Block. I helped select participants for CJET and have contributed to the planning team in a minor way.)