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March 29 2013

14:15

Texas Tribune expands its niche email business with In the Flow

texastribuneflowThe Texas Tribune is getting into the niche newsletter business. The Tribune’s new twice-a-month newsletter, In the Flow, takes a look at water issues and related topics like droughts and fracking. But the newsletter won’t be delivered to subscribers inboxes; email alerts will direct readers to TexasTribune.org when new issues are available. It’s email as push notification rather than email as delivery platform.

Evan Smith, editor-in-chief and CEO of the Tribune, said they’re taking a lesson from that world of push notifications and alerts: Prodding people to go to the website, rather than just reading in their inbox, can expose them to more content and advertising, he said.

It’s another data point in the surprising continued life of email newsletters which — despite the rise of social media, usage shifts among young people, and the feeling of persistent dread with which many people approach their inboxes — has been an unexpected point of strength at many news organizations. (At the Lab, we didn’t even start a daily email for two years after our launch in 2008, thinking the action had moved elsewhere; today, our email has over 10,000 subscribers. It drives about 3 percent of our monthly pageviews.)

For readers, newsletters can represent a more focused, and digestible, version of the news they are interested in. For media companies, they’re another way to reach readers and develop additional lines of advertising. “At the end of the day what this is about is a sustainable business model that allows us to produce great journalism,” Smith told me.

In the Flow is also interesting because it’s a partnership for the Tribune — it’s jointly producing the newsletter with the Meadows Center for Water and the Environment at Texas State University. That center has already been producing a version of the newsletter since 2005, and will now offer “original reporting from the Trib, interactive maps and other data journalism, and stories and research from trusted outside sources,” Smith wrote on Wednesday.

Stories in the newsletter will be written by freelancer Carol Flake, with editing and additional content supplied by the Tribune. The plan, according to Smith, is for the Tribune to reimburse the Meadows Center for producing the newsletter through sponsorship revenue. Anything above the cost to the Meadow Center will go back into the Tribune, he said. The idea for partnering came from the Meadows Center, but Smith told me he’s been wanting to get deeper into the newsletter business since the Tribune started. “We thought this is the perfect petri dish for us to experiment with the idea of a newsletter vertical,” he said.

Through reporting, events, and database projects, the Tribune has focused on Texas government and the civil sector. Smith said niche newsletters are a way to go deeper into specific policy areas for “people who live in that policy world all day, every day, and they almost speak another language.” Water is a big issue in Texas: It intersects with the energy industry, but is also a concern on the local level as communities try to manage water reserves amid population growth. Smith said for a certain population of readers, whether they work in water-related industries or are just interested, there’s a — pun coming — thirst (sorry) for this kind of information. “There are a lot of generalists out there in the world, but at the end of the day you want special knowledge, and that adds value to what you do,” he said.

For the Tribune, it also could add up to a new line of business. Because the newsletter will live on the Tribune’s website, they can be accompanied by existing ad runs. But Smith said In the Flow, and other newsletters, create an opportunity for targeted advertising from sponsors interested in specific topic areas. “In the perfect world, your lines of business are complementary and help one another,” Smith said. “I think that’s what’s going to happen here.” So if you’re a company interested in water issues or the environment, and you’ve already sponsored events with the Tribune, there’s a chance you’d want to advertise in a niche product that aligns with your mission, Smith said. Because of the select nature of the newsletters — in this case people really interested in water — that represents a targeted audience, Smith said.

The nonprofit Tribune has taken an aggressive approach to diversifying how it makes money. In 2012 they ended the year upwards of $4.5 million in revenue, a new high for the organization, which relies on a mix of memberships, corporate underwriting, and sponsorships to operate. Smith thinks that newsletter sponsorships, or even paid-subscription newsletters, could produce new revenue in the six figure range.

In the Flow is not the first newsletter for the Tribune, which also produces Texas Weekly, a newsletter focused on state government and politics. Texas Weekly, which was founded in 1984, became part of the Tribune when the site launched in 2009. Smith said he’d like to see additional newsletters from the Tribune — specifically in policy areas like education, clean energy, transportation, and health care.

April 12 2012

15:12

The newsonomics of small things

If the news business were sexy enough (it’s not) to fuel Hollywood or Bollywood filmmaking, we might envision this wake-me-from-the-dead screenplay: A publisher (I’m thinking Tom Hanks, now almost old enough to look sufficiently weary), lured by the sirens on the Isle of Profitos, falls into a deep, deep sleep.

Awakened 10 years later, he finds his golden egg of a business withered, an ellipse of uncertain provenance or fertility, halved in size. He pokes around the egg — surely the once-thriving thing can be revived somehow. Finally, after what seems like years, he gives in to nature, and set outs to find a new, big golden egg.

Yet search as he might, through forest, beach, and urban landscape, he can find none. All he finds is little eggs. They seem puny. Egg analysts calculate that these little finds will never reach the size of the prized golden egg, and advise they be discarded. They are no replacement for that big golden egg.

But maybe, say a couple of advisers, you need to learn how to assemble a bunch of those golden eggs. Some will never grow big, to be sure — but some may thrive, and if you add three or four of them together, maybe they will begin to approach the size of that golden egg.

That’s the news industry today.

Until recently, the holy grail was summed up in two words: replacement revenue. Now the jig’s up. No matter how fast you shovel digital dirt into the chasm of print loss, you can’t recreate the past; you can’t fill the hole. Now, though, we see new foundations being set and fresher building — with more realistic expectations — begun. The change is a huge one. Where once top newspaper company execs eschewed new initiatives as too small with which to bother, the awareness that the old business simply is never coming back has almost sunk in.

Meinolf Ellers, managing director at dpa-infocom, crystallized the Small Things phenomenon for me last month. At a Moscow conference of MINDS International, a five-year-old network of 22 of the world’s news agencies, he invoked Steve Jobs and talked about “getting small things right.” People have talked about the Apple founder’s attention to small product details, to doing fewer things better and to pricing some things low (think iTunes songs at the uniform and now ubiquitous price point of 99 cents). Start small, get it right, and then maybe if the universe aligns, get big.

For Ellers, one of the best forward thinkers in the news business, thinking small works, for now, on at least two levels.

He thinks of the lessons of the digital gaming industry (“The newsonomics of gamification”) and how luring in customers step-by-step — first with freemium techniques, and then with low (yup, 99 cents) incremental pricing — builds customer engagement and purchasing.

Secondly, he thinks of it on a more global level: “What we all see — newspaper publisher or news agency — is that the bundle is eroding, losing its power. The more we see the bundle losing market share and reaching the end of its lifecycle, the more we have to work on smaller, fragmented products that, not each by each, but overall, can compensate. That’s the strategy.”

So, let’s call it the newsonomics of small things, with a nod to Mr. Jobs and to Meinolf Ellers’ realization. Let’s focus on Small Things as opposed to Big Things — meaning traditional advertising and circulation, the long-in-the-tooth double-digit contributors to newspaper company revenues.

It would be great to replace those-end-of-lifecycle business lines with other Big Things, but those are few and far between. Google developed the Next Big Thing of paid search advertising, and continues to dominate that $40 billion global industry, with 76 percent market share in the Americas and 94 percent in EMEA, according to Covario, an large, independent search marketing agency. AT&T and Verizon replaced their cycle-ending landline business by going Triple Play, adding broadband and cable to their revenue lines. Facebook cornered the market on a little segment called global social connectivity. Newspapers have been searching in vain for two decades for such Big Things and have come up short.

So let’s touch on six Small Things — each now a small egg, at best a single digit contributor to overall revenue. Then let’s toss in a couple of Wild Things, fliers of businesses that might work.

We can turn our eyes to Texas to see at least half of them, an indication of how fast the Small Things movement is accelerating.

In Houston and San Antonio, Hearst has been leading the marketing services push, among newspaper companies. In Dallas, the Morning News is making a significant business of in-sourcing, becoming a major printer and distributor of Old World print, at the same time it is launching (with Hearst) its own marketing services foray. In Austin, the Texas Tribune has created an events business model, widely, if quietly, being studied and adopted in various parts of the country.

In Morning News publisher Jim Moroney’s sum-up of his push, I think we see a common thread among these and of Small Thing moves: “Print editions are not going away anytime soon. So take the extra capacity of your print facility and bring in as much commercial broadsheet or tab newsprint work as you can. There’s no reason to have idle capacity.”

In a word, capacity. What kinds of skills, knowledge and abilities do you have in your company, assets that can be used newly and differently? What kind of job needs to be one by someone who has the budget and has no go-to supplier…yet?

Let’s look at those six Small Things, just as first examples, through the lens of capacity and revenue potential.

Marketing services

That push (“The newsonomics of 8 percent reach”) is indicative of the fastest-growing digital ad line for many news publishers. Hearst Media Services and its Local Edge push, Tribune 365, Gannett Local, Advance Digital, and McClatchy are among the many companies plying this territory.

John Denny, VP of marketing for Advance Digital, recently spoke in Boston to the Kelsey Interactive Local Marketing East Conference. He outlined well the value of the marketing services push: “[There's a] growing importance of ‘services’ in the world of marketing priorities for businesses. That money is now shifting from what has always been viewed as ‘advertising’ (whether traditional or digital media) to a whole host of growing priorities including search engine optimization, social media optimization, blogs, and content marketing.” Every merchant faces the same kind of blur of too many choices — digital marketing choices — and some will take a newspapers’ help in sorting them out.

Talk to marketing services execs and they’ll tell you that today marketing services revenues — money paid by local merchants to publishers who help them with their advertising, in addition to any ads those merchants buy on publisher websites or in the paper — amounts to at least 10 percent of overall digital ad revenues. Some are pushing that number towards a quarter or a third of the total; several say they expect marketing services to account for half of all digital ad-related revenue within three years.

Capacity use: Makes great use of newspaper brand equity capacity. While many companies employ a separate (from their own ad selling) salesforce, some company infrastruture can also be used.

Revenue contribution: 1-3 percent of total revenue in 2012; could reach 10-15 percent by 2015.

In-sourcing printing and distribution

From recent quarterly reports, figure that the Morning News (good interview with publisher Moroney in News & Tech) is now getting close to using the full capacity of its printing and distribution resources. You won’t find a Morning News thrower with a single paper; they toss USA Today, The Wall Street Journal, The New York Times, and a couple other titles.

Capacity use: Rather than outsourcing, more common among daily papers, the insourcing is making almost full use of the Old World asset.

Revenue contribution: Figure about five percent of Morning News revenues, with fair margins, are derived from insourcing.

Custom publishing

Journalism companies know how to create readable content, though we often take that for granted. In London, the Press Association, the AP’s cousin, is building a substantial business in bespoke — or as Yanks would say, custom — publishing. News agencies, of course, are native B2B industries. They are used to selling the same content stream — the wire — to many comers, a good business for a long time, but now threatened as their newspaper customer budgets decline.

So Tony Watson, PA’s managing director, has now extended that B2B publishing customer relationship. Working with top portal customers, providing them unique content they can monetize, he’s grown that business more than 50 percent year over year. It’s still small, but growing rapidly, as newspaper revenue contributions to his budget decline markedly in the UK recession.

Watson isn’t alone, but custom content marketing — whether performed by an auxiliary staff or the core one — is nascent in much of the news industry.

Capacity use: For Watson, that’s what it’s about: using PA’s “significant product development capability” — though the agency is careful to avoid conflicts of interest.

Revenue contribution: Low single digits at this point, but could make up 10 percent within three to four years. In addition, it’s a cousin to commercial content creation, noted under marketing services.

Events

Newspapers have long sponsored bridal fairs and the like. What we see in Texas Tribune’s new event model (“For the Texas Tribune, events are journalism — and money makers”) is connecting public service journalism with worthy civic events that make money. CEO Evan Smith told me that he expects $900,000 in revenue from events sponsorships this year, plus attendee income. I hear a lot of ferment among publishers wanting to borrow the model.

Capacity use: While the events staff is focused on that work, the piggybacking on the Tribune’s excellent journalism doubles its value.

Revenue contribution: Maybe about 20 percent now — a big number for a start-up finding its model — and could grow to around 33 percent, while supporting other revenue lines like site sponsorship and membership.

Syndication

California Watch, now newly expanded with the CIR/Bay Citizen merger, has smartly considered itself largely a B2B business, a new wire for a new time. Its stories reach hundreds of thousands of print, online, and broadcast news consumers.

Capacity use: That’s the once (and future) beauty of the wire business. Produce once, customize a little, and distribute many times over.

Revenue contribution: California Watch stories are still underpriced, contributing less than 10 percent of the organization’s revenue. With scale and a greater track record, it may be able to wring closer to 20 percent of its revenue from syndication in three years.

Ebooks

Last week, I wrote about the coming explosion of ebook publishing by news and magazine publishers; in the past week, I’ve heard from many more publishers whose ebook plans I hadn’t known about. Getting into the ebooks business — or “mining the archive” — is becoming mainstream. Ellers’ dpa is one of those stepping up its business, out of its News Lab. It will soon produce ebooks on both wacky subjects and the historically significant, like the 1972 Munich Olympics killings of Israeli athletes.

Capacity use: Excellent. Content is already paid for, edited, and largely ready to go.

Revenue contribution: Tiny in 2012; at least five percent by 2015, if publishers execute well.

A couple of Wild Things that could become Small Things:

Journalism company journalism schools: College education is going digital and virtual anyhow, so why can’t journalists (and marketers) get into the business. The Guardian is tiptoeing into it, and you can imagine what a diploma from The New York Times or Wall Street Journal might be worth. Journal Register is already retraining its own staff at its Digital Ninja schools; why not go bigger?

Professional services: Several publishers have told me how they idolize the Financial Times for its pricing schemes, product initiatives, and intensive use of analytics. As the FT goes forward, and at least some other publishers get proficient at newer parts of the business, professional services — or, to use the old-fashioned world — will make sense for some.

Overall, it’s much better to move into the future with a half-dozen revenue streams — even if some are now just trickles — to stick with only two big-but-slowing ones. It should be more lucrative than selling the same old things. And maybe more fun, too.

“As a news agency guy,” says Meinolf Ellers, “I’m used to being disrupted. Now I can be the disruptor [with ebooks] to the book industry.”

July 25 2011

16:00

For the Texas Tribune, “events are journalism” — and money makers

Texas Tribune Festival logo

When Evan Smith helped launch the nonprofit Texas Tribune in 2009, he set out to get people engaged in their government again, especially in places where newspaper coverage has dwindled. The Tribune introduced blogs, multimedia, troves of government data, and something old-fashioned for an online news startup: face-to-face conversations.

The Tribune has hosted more than 60 public events — all free — attracting top influencers, big audiences, and hundreds of thousands of dollars in corporate sponsorships. Now the Tribune is blowing up the event and throwing The Texas Tribune Festival, a weekend of ideas for policy wonks, lobbyists, and anyone else invested enough in local government to pay $125 for a ticket.

“Events are journalism — events are content. And in this new world, content comes to you and you create it in many forms,” says Smith, the Tribune’s chief editor and chief executive.

One goal: to combat low levels of public engagement on a lot of the issues the event will address. “We think much of the technology world embraces ‘push’ as opposed to ‘pull’ as a way to reach people,” Smith says. “We are taking a ‘push’ approach to content, and that means going to people with content where they live.”

The speaker list includes top names in the universe of Texas politics: energy tycoon T. Boone Pickins, former U.S. Education Secretary Margaret Spellings, San Antonio Mayor Julián Castro. And the topics covered are also the Tribune’s core coverage areas: health and human services, energy and the environment, public and higher education, and race and immigration.

Evan Smith

If that all sounds familiar, it’s because the idea is modeled on the New Yorker Festival. In 2009, Smith hired the person who created that festival, Tanya Erlach, the former senior talent manager for The New Yorker. (“She’s not reinventing the wheel; this is her wheel,” Smith says.) Erlach handles everything from programming to logistics.

Smith is the first to admit that events don’t only produce journalism. They also produce revenue. And even the free events, including the TribLive speaker series, have been money-makers. They are cheap to produce, for one thing, and often underwritten by corporate sponsors. Smith estimates the Tribune raised about $650,000 in corporate support last year, which includes events. He expects to raise $1.3 million this year. While major gifts from philanthropists represented almost all of the Tribune’s revenue in 2009, Smith expects more financial diversity in 2011, with income from philanthropy, corporations, and events evenly split. Altogether, the Tribune has raised $9.3 million in barely two years — far more than like-minded nonprofit startups elsewhere.

“A lot of better established nonprofit news organizations — and I’m not counting the public broadcasting TV and radio stations but the sites that are similar to ours, ones that have been in existence longer — really have not approached the task of soliciting corporate support, underwriting, and sponsorships. We’ve just not seen other folks approach this, and they started to call us and ask us and our folks, you know, ‘How are you doing this?’”

If journalism is to survive, Smith says, business must be in the DNA. It’s in the Tribune’s DNA. Another Tribune co-founder was a venture capitalist, John Thornton, who initially raised $4 million in startup funding, including $1 million of his own cash and a large grant from the Knight Foundation. While Smith does not handle fundraising, he does reach out to executives personally to solicit their support.

Is Smith sheepish about that? “Hell, no.” Is there a conflict of interest? “Our only bias is in favor of Texas.” Public radio and television, he points out, rely heavily on corporate underwriting. The Tribune is neither paying people to speak at the festival nor covering their expenses. And the only reward for a corporate sponsorship is “a handshake and a tax letter,” he says.

“The work we do is important. And it needs to be paid for,” Smith explains. “There are appropriate sources of revenue out there. There is nothing to be ashamed of when putting a ‘for sale’ sign on as much stuff as possible, provided that it doesn’t have a negative impact on the work that you do or doesn’t create a negative perception of your integrity.”

Besides the financial value of the Tribune’s events, Smith says, there’s also value in the B word — you know, the word that tends to be uncomfortable in journalism circles. “Just as some other organizations may shrink from associating with corporate interests, there are some organizations, I suspect…that don’t fully appreciate the value of branding,” he says. A big festival is a platform for the Tribune to present itself as a grown-up operation, to build credibility and attract new readers.

Tickets went on sale July 11, with a discount for Texas Tribune contributors. Smith is working out a deal with sponsors to make admission free for college students.

December 20 2010

17:00

Maybe not much will change at all: 2011 journalism predictions from Malik, Gillmor, Golis, Grimm, more

Editor’s Note: We’re wrapping up 2010 by asking some of the smartest people in journalism what the new year will bring.

Below are predictions from Andrew Golis, Dan Gillmor, Joe Grimm, Om Malik, Jim Brady, Seth Lewis, David Cohn, Jeff Israely, Barry Sussman, Evan Smith, and Joe Bergantino. Plus, to round things off, a few not-so-serious predictions from Dan Kennedy and Bob Garfield.

Seth C. Lewis, assistant professor of new media journalism, U. of Minnesota

So, the question is: how much will journalism and media change in 2011? My answer: not much, actually. I know that’s a contrarian view, at a time when so much seems to be in flux, so let me try to explain.

I think we tend to overestimate the volume of change that actually occurs in a given year, and at the same time underestimate the obduracy of individual and societal habits, routines, values, and bureaucratic systems. This doesn’t mean change doesn’t occur — of course it does! — but rather that it tends to be more incremental, more subtle, and even more glacial than we sometimes like to imagine. And I’m not trying to be a kill-joy here, for I love tracking the exciting future of journalism as much as anyone and have no particular fondness for the past. Rather, I’m coming at this question as a former journalist and present academic who studies the extent to which (professional) journalism’s core identity — its ethics, worldview, fundamental practices, etc. — is evolving in the digital age. The research out there suggests that change does come, yes, but not without considerable resistance and reluctance on the part of professions and institutions.

So, what does this mean for 2011? Well, that we’re more likely to see change occurring by degree rather than by kind. There will be more iPad news apps; more journalism crafted to take advantage of the social, viral, and “spreadable” nature of networked media; and more newsrooms experimenting with Big Data, both of the WikiLeaks and less sensational variety. There may even be some business-model breakthroughs as newspapers figure out a Groupon-like strategy for local advertising. But to see truly significant changes in kind — changes to the very DNA of journalism and how it gets accomplished — we may have to look beyond 2011, toward something like a five-year or even a ten-year time horizon. Just as we can see rather significant changes in news work as we look back over the past decade, it may be a long while yet before we appreciate what’s really happening under our feet, and its impact (or lack thereof), in any particular year.

When I sit down and think about the future of media, I see two core problems with the media business at large. Most media entities tend to define themselves by features — magazines, newspapers, television and radio — while the audience aka the customers see media entities as “information” resources.

I think we are going to see the continuous destruction of value in the media industry because folks refuse to look beyond what is obvious and comfortable. That is precisely why we are going to see media industry lose a shirt on ill-conceived mobile applications, mostly because publishers want to replicate what they know best — an ambiguous, non-measurable advertising paradigm — on digital devices.

Similarly, the media entities will all come to a realization that chasing pageviews is a zero-sum game, and they are playing with a losing hand against zero-cost pageview-generation megafarms like Facebook, especially at a time when the modes of content consumption and discovery are changing. Content farms like Demand Media and Associated Content are commoditizing the value of banner ads and pageviews.

In 2011, I expect following to happen:

Bloomberg will continue its march and become one of the most powerful media entities in the U.S. It has television assets to go along with web, print offerings (Bloomberg BusinessWeek), and data terminals — making it a company in the business of selling information.

— We will see continued implosion of large-scale media barring a handful of national/transnational brands such as The New York Times and The Wall Street Journal. 2011 is going to be particularly hard for companies that have cut back on their core competency — journalism.

— MSNBC make a serious bid to acquire The Huffington Post.

— The Discovery Group will become one of the major media groups. The company has done a good job of merging its cable television and web businesses with a thriving e-commerce business, making it less reliant on pure advertising revenues. In 2011, Oprah joins the Discover family. What’s good for Oprah is good for Om!

Andrew Golis, blogging czar, Yahoo News

2011 will be the year online journalistic innovation reaches scale.

For the first time, a critical mass of journalists — not just a handful of early-adopters — have moved beyond learning the core skill set or figuring out the inherent incentives of the web. They’ve mastered the craft and the medium and are primed to push boundaries and innovate.

At the same time, those who have been experimenting — be it startup, nonprofit, amateur, or otherwise — are coming away from their projects with lessons learned. Now their ambitions and ideas are less abstract, more tangible and ready to be implemented.

And add to that the fact that major news organizations have stopped playing defense and are pivoting to invest in things that will excite their fickle, fragmenting audiences.

2011, then, will be the year millions of Americans see the kind of experimentation and innovation Nieman Lab readers have been following.

The “woe is us” crowd, which dominated the conversation for the past several years, will be largely supplanted by the “wow, let’s try new things” multitudes who are experimenting with a huge variety of journalism and business models. We’ll also stop looking for magic solutions to the “problem” of replacing monopoly and oligopoly profits, recognizing that the emerging media ecosystem will be diverse and, in the end, more robust. The outlines of tomorrow’s ecosystem will begin to emerge as a small percentage of the experiments show signs of financial sustainability.

As we are flooded with more and more information, much of which is garbage, we’ll see a strong move toward trusted sources. This will take many forms. One will be a classic retreat to quality, as the best news providers retain or earn positions of trust. Another will be progress toward increasingly sophisticated combinations of human and machine intelligence, where aggregation and curation are melded so that people and communities can sort out what they need and want based on quality, popularity and reputation. But we’re also in the early days of this shift, so it won’t happen in a mere 12 months.

Overhanging all this will be who controls the ecosystem. Will it be us, the users, or will it be powerful interests that clamp down on what we can do? I fear that 2011 will be more of the latter, as media and communications incumbents, aided by a government that increasingly wants to control what we can see and do online, erect more and more barriers to innovation. The people who favor a diverse and robust media ecosystem will realize they need to become more political — and as they do they’ll help the public understand what’s at stake.

Jim Brady, former general manager, TBD

Local will be the next hot thing. The continued rise of mobile and location-based services will be major factors in that emergence, and will help drive major innovations in local journalism. I predict a steady rise in locally based startups.

You’ll see more longtime digital types abandoning their legacy roots and either going to web-only companies or starting their own things.

Social media will establish itself firmly as something that every media company will need to have a strategy and staff for. This isn’t a fad.

Partnerships will be a strong theme. Companies that once would never have considered even talking to each other will begin forming partnerships in order to allow each to focus on its strengths. As a result, news sites will continue to become more niche.

The number of niche news startups employing fewer than 20 people will begin to increase, and begin to cause grief for larger, more general-interest news sites.

The paywall debate will drone on for another year, and at the end of it, there will still be equally dug-in camps on both extremes of the issue. (That’s the prediction I feel most comfortable about).

Joe Grimm, Poynter blogger and recruiter, Patch.com

In 2011, I expect to see some shakeout of traditional and innovative newsrooms. Some of the new ones will have hit the wall that tells them they don’t have the right model to go forward. Legacy newsrooms seem to gaining traction with digital advertising and are feeling some traditional advertisers come back, but they have been substantially weakened and devalued. With the amount of cash that is sitting idle, I expect we will see some acquisitions among traditional media companies. The prize in those deals will be the content parts of the operations, of course.

I would not surprised if some traditional newsrooms are absorbed by digital companies looking to build credibly news-oriented footprints fast. Watch Yahoo! and Facebook in 2011 to see how they try to grow their reputations as news sources.

Mobile and tablets will continue to boom, with some shakeout among devices and a real gold rush to build apps, backed up by original news and news aggregation. Individualized services or services curated by friends will grow.

The WikiLeaks phenomenon will continue. As Julian Assange has recently said, he’ll move out of military leaks and into Wall Street. Instead of being unpatriotic, there will be new legal claims blasted at them (copyright, IP, privacy). The ongoing drama of Julian Assange will come to a head in some way shape or form (arrested, killed, stepping down), but WikiLeaks or another organization with the same ethos will remain. Somehow it must move beyond Julian Assange and just be WikiLeaks, or another leak-esque organization that doesn’t have a cult of personality.

The New York Times pay ramp will launch. It will neither be a huge success or a huge failure. The nature of the pay ramp means that the vast majority of people will still get free content from the Times. They’ll only be able to ask people who come to the site regularly to pony up some money. And that amount of money will have to be high enough to compensate for the loss in advertising dollars (when X percent of readers leave) and low enough that the X percent is as low as possible.

As a result, it’ll work. It might even make them some money. But the margin of error is so small here — if they charge too early or too much — that it won’t really solve the problem of print dollars to digital dimes.

Next year will mark the end of the pay vs. free debate as we’ve known it. In 2011, those on either side of the question who speak about it in ideological/philosophical/historical terms will begin to sound, like, so 2000s. We can all now agree that information neither “wants to be free” nor is a consumer good like any other. The confluence of more and cheaper tablets on the market, the Times’ metered-model rollout and Murdoch’s continued (and intentional) overplaying of his hand with thick paywalls will combine to help close the black-or-white era of this debate.

This doesn’t mean that next to the barrel-chested Murdoch, The New York Times will not look a bit, er, wimpy in its halting moves to charge for some of its content. But even if it has trouble finding the sweet spot on the meter (or communicating its intentions), it will become clear rather quickly in 2011 that for a quality/global news gathering organization like The New York Times, there is no turning back to the days of all free access. This is also does not mean that the Guardian or Des Moines Register or Twitter for that matter can’t have another approach. But from now on, they’ll always have to explain their choice in strategic terms.

Meanwhile, Julian Assange has shown that there are still plenty of religious battle lines to be drawn around the Internet and information, without having to debate whether it is right or wrong to charge people (who can afford it) for news and let those who would rather spend their money elsewhere find the free stuff.

Stories by nonprofit, online news organizations already have a foothold in elite national newspapers — but nothing like the prominence they’ll have in 2011. They will produce strong watchdog reporting and, as a result, they’ll draw sharply increased funding from individual large donors.

Evan Smith, editor-in-chief and CEO, Texas Tribune

More meaningful collaborations between nonprofits and for-profits!

Public TV and public radio will take a much more proactive role in helping fill the investigative reporting void that’s resulted from cutbacks at commercial media outlets.

Many more newspapers will attempt to monetize their websites with paywalls for “exclusive” content.

The experiments to pool, among local TV stations, more types of news coverage, will accelerate over the next year —leading eventually to the end of an era in which most major cities have at least three or four TV stations airing several newscasts.

Dan Kennedy, journalism professor, Northeastern U.

AOL executives, despairing at the dearth of advertising on their hyperlocal Patch.com sites will hit upon a bold new strategy: print. “We believe that publishing weekly community newspapers will prove to be the hottest new media idea since Twitter,” AOL chief executive Tim Armstrong will say. “A study we conducted shows that local businesses such as hardware stores, funeral homes, and nail salons are far more likely to advertise in a newspaper than online. Our goal is nothing less than to revolutionize local journalism and the business model that supports it.” Kirk Davis, president of GateHouse Media, which publishes nearly 400 weekly and daily community newspapers across the United States, will not be reachable for comment.

Time magazine will name Google’s ruling troika its Persons of the Year for 2011. In singling out chairman Eric Schmidt and co-founders Sergey Brin and Larry Page, the magazine will explain: “In a digital media world in which most consumers are all too willing to live under Apple’s semi-benign dictatorship, Google has kept the flame of openness alive, selling tablet computers and smartphones for which anyone can write applications without fear of censorship. The spirit of the garage-based startup lives.” In response, Apple CEO Steve Jobs will order Time’s iPad app to be removed from the App Store.

Rupert Murdoch’s “The Daily” debuts. Both subscribers are extremely satisfied.

In August, after months of crushing losses, The Daily Beast/Newsweek folds. In November, Howard Kurtz stops filing stories.

Glenn Beck shoots at two black helicopters hovering near his home, killing a Medevac pilot and a Fox 5 traffic babe.

Katie Couric steps down as anchor of CBS Evening News to join 60 Minutes, lowering the average correspondent age by 28 years. Kim Kardashian assumes Couric’s role reading the news.

WikiLeaks founder Julian Assange, on trial in Sweden, is asked by prosecutor where he pays taxes. “None of your beeswax,” Assange replies.

On March 1, Steve Jobs introduces the iPatch, a tablet designed for content piracy. More than 30 million units sold on first day.

On April 1, 100 million iPatches explode, maiming the entire US population between 15 and 29.

Fearing revenue declines at its Kaplan Education subsidiary, the Washington Post Co. buys 49 percent of the Mafia.

Comcast, under FCC scrutiny for first time, sells NBC Universal to Barry Diller. Tina Brown brought in to run it.

Paul Krugman loses his sense of outrage. Universe contracts.

August 18 2010

16:30

Seeking Sustainability, Part 2: John Thornton and others on strategies for nonprofit revenue generation

This spring, the Knight Foundation hosted a roundtable discussion exploring a crucial issue in journalism: the sustainability of nonprofit news organizations. This week, we’re passing along some videos of the conversations that resulted (and, as always, we’d love to continue the discussion in the comments section). We posted Part 1 of the series, a talk focused on business-model viability over time, yesterday. And in today’s pair of videos, John Thornton, chairman of the excitement-inducing Texas Tribune, leads a discussion about a topic near and dear to the hearts of even, yes, nonprofit news outlets: revenue generation.

“It is nowhere in the mid-life venture capital playbook to start a nonprofit news organization,” Thornton noted; “and so none of us would be doing this if the central mission weren’t about public service.”

Thornton’s introduction is above; below is a discussion that it sparked among the nonprofit all-stars Knight brought together for the occasion — among them The Bay Citizen’s Lisa Frazier, the Chicago News Cooperative’s Jim O’Shea and Peter Osnos, the Texas Tribune’s Evan Smith, Voice of San Diego’s Scott Lewis, The Atlantic PhilanthropiesJack Rosenthal, Seattle CrossCut’s David Brewster, the New Haven Independent’s Paul Bass, California Watch’s Mark Katches, J-Lab’s Jan Schaffer, and the St. Louis Beacon’s Nicole Hollway. The group discussed finance-crucial issues like publicity, community, membership incentives, collaboration, demographic measurement, branding, corporate sponsorship, and more…not from a theoretical perspective, but from the point of view of practitioners who spend their days thinking about how to keep their organizations thriving.

The conversation, by the way, is well worth watching all the way to the end: The video closes with group members discussing some of their more outlandish — and, so, intriguing — ideas for revenue-generation.

July 29 2010

16:00

The Newsonomics of membership

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

New journalism is hungry for new business models. Beyond millions in foundation start-up support, what will sustain these enterprises?

One answer: membership. The notion is borrowed from NPR (née National Public Radio), which we must remind ourselves is no “experiment.” NPR is now more than 40 years old, trying to fight off its own middle-age doldrums by reinventing itself as public media, as digitally oriented as it is radio-oriented — but that’s a topic for another day.

While the daily press is testing paywalls — some with big holes, some with small, some with rungs, some without — news startups are taking a different route, that NPR model. That divide of how best to get readers to pay may be a decisive one when we look back in five years.

For startups, membership is all the rage these days, as these new companies look to it to provide a vital leg in the new stool supporting new journalism. Texas Tribune CEO Evan Smith says his plan calls for a third of the site’s funding to come from memberships, aiming toward a goal of 10,000 members. The Tribune’s been a fast climber, signing up about 1,700 members at a median price of about $100, since launching in November.

MinnPost, though, claims the lead, having built to more than 2,000 members in its two-and-a-half year history. Within the next several weeks, GlobalPost, now one-and-a-half-years-old, will relaunch its own membership program, Passport. Perhaps significantly, GlobalPost built its new offer on the Journalism Online Press+ platform, and that, too, could serve as a model for others, if successful.  Those who run sites that have tested membership have fielded lots of calls from their news media start-up compatriots inquiring how to make membership work, and we can all expect to hear a lot more about it over the next year.

So let’s look at the very early Newsonomics of membership, talking to the architects about their building in process. In the second part of Newsonomics of membership, we’ll look at some public radio data that helps fill out the emerging online model.

MinnPost borrowed the NPR approach of letting readers determine how much they want to contribute, offering everything from a $10 “student” membership to a $500 “media mogul” one. Joel Kramer, CEO and editor, says that the average gifts are either $50 or $100. In 2009, membership contributed to 30% of the site’s $1.2 million, bringing in about $360,000.

Importantly, Kramer is trying to figure out the metrics of membership, and he may be farther along there than others as well.

As the former Star Tribune publisher and editor has moved online-only, he’s studied the new business. One thing that he knows is missing is consistent, useful audience measurement, and it’s interesting that his comments there parallel those of new Newspaper Association of America incoming chairman Mark Contreras, a senior vice president of Scripps. Apples-to-apples audience measurement is key to building digital businesses, and both Kramer and Contreras will tell you it’s missing today.

So Kramer has figured out his own fledgling metrics to assess how well membership is doing. He uses Quantcast data, and here’s his logic.  It’s those readers who come to MinnPost at least twice a month — 27 percent of MinnPost’s visitors — who are most likely to sign up as members. The rest are fly-bys, referred haphazardly by Google and others. That 27 percent now accounts for about 40,000 visitors a month. So Kramer figures that at the current rate, he can expect that five percent of those more frequent visitors — 2,000 people — will become members. (Remember that five-percent number, when we move to part two on membership and look at NPR’s experience.)

For Kramer, the metric is a snapshot. Double the number of more-frequent visitors, and he would expect a doubling of membership. Maybe, though, five percent is just an early number, and that the percentage itself will increase as the site’s service to readers grows in time. If MinnPost could yield 10 percent of its more-frequent visitors, it could have 4,000 members today. That could mean that membership will pay for 60 percent of the bills, or that MinnPost could expand its staff and site.

MinnPost eschews giving members special perks, the kinds of gifts that often accompany NPR pledge drives. “The only perk a member gets is an invitation to core events,” usually staff-hosted affairs where members can mingle with the journalists. MinnRoast, an annual MinnPost event, brought in another $100,000 last year — so we see in this budding business model the link between membership and events.

Membership may all be about building relationships over time.

GlobalPost CEO Phil Balboni believes in relationship-building as well. GlobalPost’s new Journalism Online (JO) model gives it a third try to tweak the membership model. At launch, it went premium, charging $199 annually, but finding few takers. Then, it moved to a $49.95 price point, and has picked up 500 members.

When it launches with Journalism Online, it will offer two membership prices, $22 a year or $1.99 a month. Key JO-powered approach is the ability to pop up membership offers after a half dozen or so “content triggers.” When users hit certain parts of the site, or read a certain number of pages, the voluntary membership offer will pop up. That’s key to Balboni, who estimates that one percent or less of those who see membership offers will act on them. One of the current roadblocks, he believes, is that few people see the Passport membership page; increasing membership offer visibility, he hopes, will multiply membership. Key to the Passport offer: Members get to select some story assignments that GlobalPost will pursue.

A veteran of the news trade, Balboni realizes it’s a long-term build: “This is a five- to 15-year effort to get consumer behavior changed.” Balboni would like to see membership build into funding half the budget.

Texas Tribune’s Evan Smith is aiming to make membership pay a third of the freight by the end of Year 3, which would be fall 2012. He figures the site has so far converted less than one percent of its total unique visitors (compared to a little more than one percent for the older MinnPost) as it has burst out of the gate in Texas with lots of promotion. His end-of-2010 goal is 2,600 members, up from the current 1,700. Members pick their level of giving.

Good or poor current audience metrics, make no mistake that this membership business is a game of metrics. Three stand out for now:

  • What percentage of which part of the readership can news sites expect to contribute?
  • How much of their going-forward budgets — and if and when foundation money dries up — can be made up by readers?
  • What’s the median gift?

Those are three key questions, as news people try to inculcate (or as least borrow from NPR) a membership ethic. In the meantime, those who care about nurturing the new news can do something: Join the favorite new enterprise of their choice. Here are the links: MinnPost, GlobalPost, and Texas Tribune.

Photo by Leo Reynolds used under a Creative Commons license.

May 19 2010

14:00

Huffington talks convergence, and “monetizeable free”

We wrote yesterday about The Washington Post taking a page from The Huffington Post in building blog networks on the content-for-exposure-not-cash model. But the borrowing isn’t all going in one direction. In this conversation with Texas Tribune boss Evan Smith, HuffPo founder Arianna Huffington says she sees a broader narrative of convergence, where “legacy media” (her term) and the startups are moving in similar directions. The Washington Post might be looking to leverage free content, but she’s hired reporters and launched a non-profit investigative unit — decisions that look more traditional than new.

Smith interviewed Huffington in honor of the political site’s fifth anniversary last week. The site recently hit 13 million monthly unique visitors, pushing it ahead of The Washington Post and USA Today and within shouting distance of The New York Times. Here’s what Huffington had to say about changes in media, particularly the difference between mainstream media and bloggers in the last five years:

Well, first of all, I think what’s happening now is more of a convergence. When we launched The Huffington Post, we were worlds apart. There was the legacy media that were very, very skeptical about blogging, or the future of online media. And there were the startups like The Huffington Post. Now The New York Times is doing a lot online. They’re doing a lot of great things online. And we are hiring more and more reporters. And we have launched The Huffington Post Investigative Fund, which is a not-for-profit operation that does many of the long-form, more traditional journalistic investigative pieces. So I think we’re moving toward a hybrid model, where those who recognize we are living in a brave new world — it’s about the link economy, it’s not about paywalls — are going to actually survive and thrive. And those of us who recognize that the traditional tenets of journalism — fairness, accuracy, fact checking — need to prevail and be supplemented by all the new technical tools and the new citizen engagement are also going to survive and thrive.

The Huffington Post has a clear interest in making sure the link economy thrives and paywalls aren’t erected. Aside from its countless bloggers, the biggest draw of her site is the aggregation the site’s editors do on each vertical, which have expanded from a single front page to more than 20.

Smith also quizzed Huffington on keeping HuffPo a free site. She was quick to point out that “the culture of free” is “monetizable free.” The site is expected to become profitable this year.

We are, as I said, paying all our reporters and all our editors. People who want to write, in the same way you would write an op-ed for The New York Times or The Washington Post, do it whenever they want. They are not our employees. They have no obligation to us. We have no expectations. It’s they who want to post, because they want to disseminate what they’re thinking. Whether it’s on politics or food, we have thousands of requests to post, thousands more than we have the opportunity and ability to process — beyond the 6,000 bloggers who have a password and can post whenever they want. And then our editors decide what they’re going to feature on the home section or the other sections…

We pay them in visibility. We pay them in that we provide the infrastructure, the community, the civil environment into which their work appears. The traffic. And then also the fact that many in the media have the site bookmarked means that they’re going to be seen, not just by many people, but many of the people they may want to reach to go on TV, to get a book contract. We love it. We all love it on the site when we get a call from an agent saying “Can you get us in touch with so-and-so blogger?” In many ways, it becomes like an addition platform.

January 05 2010

18:00

California Watch: The latest entrant in the dot-org journalism boom

“Ten years ago,” says Mark Katches, editorial director of California Watch, “there were 85 reporters covering the California state house; today there are fewer than 25.”

Katches sees California Watch, which officially launched yesterday after a soft launch period and months of preparation, as stepping into a “big void in doing investigative work in California.” Katches has assembled the largest investigative team in the state: seven reporters, two multimedia producers, and two editors.

The site is focused on investigative watchdog journalism. It won’t cover the ins and outs of the California legislature or other governmental minutiae, aiming instead to “expose injustice, waste, mismanagement, wrongdoing, questionable practices and corruption, so that those responsible can be held to account and the public is armed with the information it needs to debate solutions and spark change.” Besides political topics, the site will cover higher education, health and welfare, and criminal justice.

Assembling the team

Based in Berkeley, California Watch has a four-person team in Sacramento, and hopes to open a Los Angeles office as well. 

The team’s credentials are impressive. Katches is a California native who lived in the state most of his life; he directed investigative teams at The Orange County Register and for the past two years at the Milwaukee Journal Sentinel. The team’s director is Louis Freedberg, a longtime reporter on California affairs for the San Francisco Chronicle and other state and national publications. Senior editor Robert Salladay is a veteran of the L. A. Times; senior reporter Lance Williams has 32 years of California coverage experience and was one of the two reporters at the Chronicle who uncovered the Barry Bonds-BALCO steroid doping scandal.  Web entrepreneur Susan Mernit, a veteran of AOL, Netscape and Yahoo, supplies web strategy. Multimedia guru Mark Luckie (of 10,000 Words fame) is producing content. And longtime Philadelphia Inquirer journalist Robert Rosenthal, director of CIR, and others on the CIR staff supply development and administrative support.

I asked Katches whether California Watch is doling out the kind of salaries reported to be going to the top talent at recent nonprofit startup Texas Tribune ($315,000 to CEO Evan Smith, $90,000 to top reporter Brian Thevenot). “Not even close,” he said. Top California Watch executives are paid closer to what Texas Tribune reporters get, but Katches says the pay scales are competitive and appropriate for the levels of talent and scope of management involved.

The model

The site aims for up to a dozen updates every weekday, including daily blog entries by most staffers. A rotation of four top stories are featured front and center, followed by the “WatchBlog” and an inside-the-newsroom feature. Like The Texas Tribune, the site offers an extensive data center, currently featuring information about stimulus-funding distribution, campaign finance, educational costs, and wildfires. It’s not as extensive or interactive as the Texas Trib databases and document collection, but the intent is to build up its contents over time.

California Watch is a project of the Center for Investigative Reporting, the oldest nonprofit investigative news organization in the country (founded 1977), and joins a growing list of state and regional nonprofits that have in common a serious journalistic mission but take a variety of approaches to funding, coverage and distribution. The highest profile, best-funded members of that list now include The Texas Tribune, MinnPost, the St. Louis Beacon, Voice of San Diego, and (at a national level) ProPublica. “The dot-org boom” is really one of the top journalism stories of 2009, Katches says.

CIR garnered about $3.5 million in funding to start California Watch (roughly the same amount as The Texas Tribune), enough for more than two years of operations at its $1.5 million annual budget. Major funding came from the John S. and James L. Knight Foundation [also a supporter of this site —Ed.], the William and Flora Hewlett Foundation, and the James Irvine Foundation.

Going forward, California Watch plans to develop a business model that includes continued philanthropic support, along with revenue from sponsorship, individual memberships, advertising, and licensing. The site is offering its content to the state’s newspapers and other media on a fee basis. One of its first stories during the development period was carried by 25 of the state’s papers, all on the front page. (This fee-based model differs from The Texas Tribune, which is offering its content free to Texas media outlets for now; Texas Tribune also covers day-to-day politics in addition to doing investigative journalism.) California Watch partners with KQED in San Francisco for radio and TV distribution; with the Associated Press for distribution through its Exchange marketplace; and with New America Media for distribution of translated versions to ethnic media.

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