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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.

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.

April 20 2010

14:00

“Revenue promiscuity”: The many ways in-depth and investigative reporting will be funded (hopefully)

John Thornton, the chairman of the nonprofit Texas Tribune, has a term he uses to describe how his investigative news venture will stay afloat: revenue promiscuity. “You have to get it everywhere and often,” Thornton told a crowd of journalists this weekend at the Reva and David Logan Investigative Reporting Symposium.

Thorton’s crass imagery was a hit with the crowd and his fellow panelists, who agreed that funding high-quality investigative journalism can’t rely on just one or two sources of cash. The days of advertising and circulation revenue alone is over. We’re looking at a new era of mixed streams of revenue.

A spirited discussion — among The Washington Post’s Len Downie, the Center for Investigative Reporting’s Robert Rosenthal, Bay Citizen CEO Lisa Frazier, Newsosaur Alan Mutter, and Thornton — sketched a picture of a diverse (if uncertain) future for paying for the hardest of hard news. Here are three of the themes that emerged:

Beyond big money: tapping the grassroots

Just two years ago, whether or not foundations would step in to support investigative reporting was a point of discussion at this same seminar. This year, the question shifted to for how long — or for how many dollars — foundations will continue to do so.

Thornton, a venture capitalist who doubts investigative journalism works as a for-profit endeavor, said it’s not enough to think about foundation support. He described the Trib’s a public-radio-style model of tapping into reader donations to cover operating costs. Before The Texas Tribune launched, a splash page enticed 1,600 locals to give money to the site. (Thornton noted that all funding momentum stopped once the site actually launched: “Content is the enemy of conversion.”) Thornton hopes to pull in 10,000 supporters at an average of $100 each across the state over the next year. In three years, he hopes to pull in $3 million from readers, one third of the site’s operating costs. In addition, the Tribune plans to raise money by selling premium content and hosting live events.

For-profit plus

Alan Mutter, the panel’s most vocal proponent of a for-profit approach, argued that a strategy based on multiple revenue streams doesn’t have to exist in a nonprofit environment to work. Mutter proposed a multi-pronged approach, adding diversified revenue streams (from things like helping advertisers with their online presence, along with events and paid content) to more traditional ones — even if profit margins still wouldn’t be what they were in the glory days. Mutter’s pitch was received with some grumbling; Thornton said there’s no way news organizations can staff that kind of operation and still make money, the payoff of each wouldn’t make it profitable.

The future as experimentation

Frazier, of Bay Citizen, made clear that her yet-to-launch organization doesn’t claim to have all the answers, but that testing new ideas will be critical; she repeatedly referred to her operation as “an experiment.” She talked about using technology to make journalism more efficient (a.k.a. cheaper) to produce, but also said she’d be testing money-making models.

Rosenthal shared Frazier’s experimentation mentality, and offered some hope for anyone wondering about increased competition among nonprofits for foundation support. Two years ago Center for Investigative Reporting had a staff of about seven. Today it’s 26. “We’ve been remarkable in raising money.”

Photo by Thomas Hawk used under a Creative Commons license.

April 02 2010

14:00

This Week in Review: The iPad’s skeptics, Murdoch’s first paywall move and a ‘Chatroulette for news’

[Every Friday, Mark Coddington sums up the week’s top stories about the future of news and the debates that grew up around them. —Josh]

The iPad’s fanboys and skeptics: For tech geeks and future-of-journalism types everywhere, the biggest event of the week will undoubtedly come tomorrow, when Apple’s iPad goes on sale. The early reviews (Poynter’s Damon Kiesow has a compilation) have been mostly positive, but many of the folks opining on the iPad’s potential impact on journalism have been quite a bit less enthusiastic. A quick rundown:

— Scott Rosenberg, who’s studied the history of blogging and programming, says the news media’s excitement over the iPad reminds him of the CD-ROM craze of the early 1990s, particularly in its misguided expectation for a new, ill-defined technology to lead us into the future. The lesson we learned then and need to be reminded of now, Rosenberg says, is that “people like to interact with one another more than they like to engage with static information.”

— Business Insider’s Henry Blodget argues that the iPad won’t save media companies because they’re relying on the flawed premise that people want to consume content in a “tightly bound content package produced by a single publisher,” just like they did in print.

— Tech exec Barry Graubart says that while the iPad will be a boon to entertainment companies, it won’t provide the revenue boost news orgs expect it to, largely for two reasons: Its ads can’t draw the number of eyeballs that the standard web can, and many potential news app subscribers will be able to find suitable alternatives for free.

— GigaOm’s Mathew Ingram is not impressed with the iPad apps that news outlets have revealed so far, describing them as boring and unimaginative.

— Poynter’s Damon Kiesow gives us a quick summary of why some publishers thought the iPad might be a savior in the first place. (He doesn’t come down firmly on either side.)

Two other thoughtful pieces worth highlighting: Ken Doctor, a keen observer of the world of online news, asks nine questions about the iPad, and offers a lot of insight in the process. And Poynter’s Steve Myers challenges journalists to go beyond creating “good-enough” journalism for the iPad and produce creative, immersive content that takes full advantage of the device’s strengths.

Murdoch’s paid-content move begins: Rupert Murdoch has been talking for several months about his plans to put up paywalls around all of his news sites, and this week the first of those plans was unveiled. The Times and Sunday Times of London announced that they will begin charging for its site in June — £1 per day or £2 per week. This would be stricter than the metered model that The New York Times has proposed and the Financial Times employs: There are no free articles or limits, just 100% paid content.

The Times and Sunday Times both accompanied the announcement with their own editorials giving a rationale for their decision. The Sunday Times is far more straightforward: “At The Sunday Times we put an enormous amount of money and effort into producing the best journalism we possibly can. If we keep giving it away we will no longer be able to do that.” Some corners of journalism praised the Times’ decision and echoed its reasoning: BBC vet John Humphrys, Texas newspaperman John P. Garrett (though he didn’t mention the Times by name in a post decrying unthinking “have it your way” journalism), and British PR columnist Ian Monk.

The move also drew criticism, most prominently from web journalism guru Jeff Jarvis, who called the paywall “pathetic.” (If you want your paywall-bashing in video form, Sky News has one of Jarvis, too.) Over at True/Slant, Canadian writer Colin Horgan had some intriguing thoughts about why this move could be important: The fact that the Internet is so all-encompassing as a medium has led us to blur together vastly different types on it, Horgan argues. “What Murdoch is trying to do (perhaps unintentionally) is destroy that mental disconnect, and ask us to pay for media within a medium.”

Two other paid-content tidbits worth noting: Christian Science Monitor editor John Yemma told paidContent that news organizations’ future online will come not from “digital razzle dazzle,” but from relevant, meaningful content. And Damon Kiesow plotted paid content on a supply-and-demand curve, concluding that, not surprisingly, we have an oversupply of information.

Chatroulette, serendipity and the news: The random video chat site Chatroulette has drawn gobs of attention from media outlets, so it was probably only a matter of time before some of them applied the concept to online news. Daniel Vydra, a software developer at The Guardian, was among the first this week when he created Random Guardian and New York Times Roulette, two simple programs that take readers to random articles from those newspapers’ websites. Consultant Chris Thorpe explained the thinking behind their development — a Clay Shirky-inspired desire to recapture online the serendipity that a newspaper’s bundle provides.

GigaOm’s Mathew Ingram wrote about the project approvingly, saying he expects creative, open API projects like this to be more successful in the long run than Rupert Murdoch’s paywalls. Also, Publish2’s Ryan Sholin noted that just because everyone’s excited about the moniker “Chatroulette for news” doesn’t mean this concept hasn’t been around for quite a while.

Meanwhile, the idea sparked deeper thoughts from two CUNY j-profs about the concept of serendipity and the news. Here at the Lab, C.W. Anderson argued that true serendipity involves coming across perspectives you don’t agree with, and asked how one might create a true “news serendipity maker” that could take into account your news consumption patterns, then throw you some curveballs. And in a short but smart post, Jeff Jarvis said that serendipity is not mere randomness, but unexpected relevance — “the unknown but now fed curiosity.”

How much slack can nonprofits take up?: Alan Mutter, an expert in the dollars-and-cents world of the news business both traditionally and online, raised a pretty big stink this week with a post decrying the idea that nonprofits can carry the bulk of the load of journalism. The numbers at the core of Mutter’s argument are simple: Newspapers are spending an estimated $4.4 billion annually on newsgathering, and it would take an $88 billion endowment to provide that much money each year. That would be more than a quarter of the $307.7 billion contributed to charity in 2008 — a ridiculously tall order.

Mutter drew a lot of fire in his comment section for attacking a straw man with that argument, as he didn’t cite any specific people who are claiming that nonprofits will, in fact, take over the majority of journalism’s funding. As many of those folks wrote, the nonprofit advocates have always claimed that they’ll be a part of network that makes up journalism’s future, not the network itself. (One of them, Northeastern prof Ben Compaine, had made that exact argument just a few days earlier, and Steve Outing made a similar one in response to Mutter’s post.)

John Thornton, a co-founder of the nonprofit Texas Tribune, wrote the must-read point-by-point response, taking issue with the basis of Mutter’s math and his assumption that market-driven solutions are “inherently superior” to non-market ones. Besides, he argued, serious journalism hasn’t exactly been doing business like gangbusters lately, either: “Expecting investors to continue to fund for-profit, Capital J journalism just ‘cuz:  doesn’t that sound a lot like charity?” Reuters financial blogger Felix Salmon weighed in with similar numbers-based objections, as did David Cay Johnston.

Reading roundup: One mini-debate, and four nifty resources:

Former tech/biz journalist Chris Lynch fired a shot at j-schools in a post arguing that the shrunken (but elite) audiences resulting from widespread news paywalls would cause “most journalism schools to shrink or disappear.” Journalism schools, he said, are teaching an outdated objectivity-based philosophy that doesn’t hold water in the Internet era, when credibility is defined much differently. Gawker’s Ravi Somaiya chimed in with an anti-j-school rant, and North Carolina j-school dean Jean Folkerts and About.com’s Tony Rogers (a community college j-prof) leaped to j-schools’ defense.

Now the four resources:

— Mathew Ingram of GigaOm has a quick but pretty comprehensive explanation of the conundrum newspapers are in and some of the possible ways out. Couldn’t have summed it better myself.

— PBS MediaShift’s Jessica Clark outlines some very cool efforts to map out local news ecosystems. This will be something to keep an eye out for, especially in areas with blossoming hyperlocal news scenes, like Seattle.

— Consider this an addendum to last month’s South by Southwest festival: Ball State professor Brad King has posted more than a dozen short video interviews he conducted there, asking people from all corners of media what the most interesting thing they’re seeing is.

— British j-prof Paul Bradshaw briefly gives three principles for reporters in a networked era. Looks like a pretty good journalists’ mission statement to me.

March 31 2010

17:28

John Thornton: Nonprofit news outlets will be a bigger part of our future than Alan Mutter thinks

[Yesterday, Alan Mutter wrote a post detailing why he thinks nonprofit news outlets "can't possibly save news." An interesting discussion ensued in the comments (including contributions from Jay Rosen, our C.W. Anderson, Dick Tofel, and others). John Thornton, chairman of the nonprofit Texas Tribune, wrote a response to Mutter; I'm republishing it below. —Josh]

Alan Mutter is one of the keenest observers of today’s topsy turvy media landscape. I am therefore pleased that he payed me a compliment on his highly trafficked Newsosaur blog:

An amazing number of smart and sophisticated people continue to harbor the fantasy that philanthropic contributions can take over funding journalism from the media companies that traditionally have supported the press.

At least I think it was a compliment. You see, as a co-founder of The Texas Tribune, I am one of those fantasy-harboring loonies who believes that nonprofit journalism is important. But, now that Alan — who I consider a friend — also considers us smart and sophisticated, I suppose we should all be able to call the whole thing off and get back to our day jobs.

Or not. Alan gets so many things right that I can’t resist arguing the other side. I think he is gloriously, deliciously, spectacularly wrong here. Alan’s logic runs aground on the shoals of three m’s: math, model, and motive.

Math

Alan asserts that replacing the $4.4 billion spent in American newsrooms will require an $88 billion endowment, which he points out is a gargantuan proportion of the $300 billion or so of annual charitable giving in the U.S. There are at least three problems with this statement. The first is that it confuses a balance sheet concept (endowment) with an income statement concept (annual giving). In the parlance of Econ 101, Alan has confused a stock variable with a flow variable. Fox news anchors are known to resort to this trick when they want to make our government seem more profligate than it is (no easy task, that). It’s a little like confusing the federal debt with the deficit. If you take a big number and multiply it by 20: shazam! It’s a bigger number! An endowment is built up over a number of years, and so comparing it to annual giving is mixing apples and pomegranates. And besides, none of the nonprofits I know is considering raising an endowment any time soon.

That leads to problem number two. A tiny fraction of nonprofits of any type receive meaningful support from an endowment. And other than foundations, none of them lives entirely on an endowment’s investment income. Consider any nonprofit in your community: it likely operates primarily on a combination of earned income and annual giving. If it’s lucky, it has an operating reserve to shield it from rainy days and enable it to take care of special opportunities. It it’s really, really lucky, it might receive 10 percent of its operating budget from the income off its endowment.

Third, none of us sophisticated, nonprofit dingleberries is proposing that our efforts will replace commercial news. We do assert that what I call “Capital J” journalism is in trouble, because it’s not very profitable. Turns out that it never was. But now that, as Google’s Marissa Mayer asserts, every article on a paper’s web site needs to be a standalone profit center, the jig is really up, and we’re trying to figure out how to help.

You’ll never confuse what you read on Voice of San Diego or ProPublica or The Trib with content you can get on TMZ, TV Guide, Epicurious, or ESPN. We in Fantasy Land are trying instead to help shore up what Alex Jones calls “the iron core” of journalism in his book, Losing the News. Jones’s analysis reveals that this core of serious content constitutes about 15% of newspaper content, so let’s say it accounts for 15% of newsroom costs, as well. If we had the unhappy task of replacing all serious newspaper journalism with what nonprofit skeptics refer to derisively as “handouts,” we’d be staring at a $660 million annual problem. No doubt that’s real money, but consider this: according to Alan’s numbers, it’s about what people give to environmental causes in a year. In handouts, that is.

Model

But the $660 million number still overstates the size of the issue. No two nonprofit journalism organizations have exactly the same business model, but almost all of us are doing our best to practice what I call “revenue promiscuity.” At The Tribune, in addition to philanthropic support from wealthy individuals and foundations, we’re also chasing corporate sponsors for our events and for our web site. We’ll bring in about 15% of our expenses in subscriptions to Texas Weekly, a newsletter business we own and are working to expand into a string of highly valued niche titles. Our intermediate-term goal is a $3 million annual budget, split roughly equally between membership, corporate support, and specialty pubs. We’re a long way from that, but are making progress — and note that we’re not assuming any foundation support at all.

If organizations like ours can find non-handout sources for two thirds of our budget, Alan’s $88 billion problem becomes more like a couple hundred million. That’s considerably less than ballet companies raise in the U.S. every year. But the real point is this: not only will philanthropy alone not save journalism, it can’t likely support even the majority of our modest efforts. We need to run our businesses like businesses, even if our goal is public service rather than profitability.

Motive

Alan closes his post with these valedictory remarks to us fruit loops:

While there is a pressing need to save the press, a major shift in the philanthropic paradigm seems unlikely, especially in an era in which most folks — with the notable exception of a fortunate few — seem to be tightening their belts.

So, let’s stop dreaming about a visit from the Non-Profit News Bunny and get serious about discovering some realistic possibilities.

It’s a common refrain. I hear it from my friend Jeff Jarvis all the time (I have this mental image of Jeff in the classroom of his “new models for news” course, crying “THINK HARDER, DAMMIT!” to a group of j-school students with their eyes tightly clinched). But like lots of common refrains, I’m tired of it. Here’s why.

First of all, it’s not an either/or proposition. Fantasy Land could easily quadruple in population without meaningfully diluting the talent pool trying to figure out ways to make money in the news business. And although I admire his since of urgency, I should remind Alan to look at one of his own slides — the one that shows newspapers losing media spend share every single solitary year since 1959. Although the combination of the Great Recession and the digital revolution has caused the line on Alan’s chart to auger in recently, this is not exactly a new problem.

Second, the “think harder, dammit” refrain assumes that market solutions are inherently superior to non-market solutions in every situation, even though the existence of public goods (think clean air, national defense) is discussed in the early going of a basic economics course. My mentor in business was fond of saying, “get the big picture right.” It seems to me that the big picture at hand is that when atoms become bits, content consumers win and content producers get hammered into cost-cutting smithereens. If some of that content happens to be vital to the functioning of our society, I simply think it’s prudent to look around for other means of funding it.

Finally, Alan’s admonition for all of us wingnuts to get back to work reflects a view of capitalism which is totally opposite my experience as an investor. I can say with great confidence that markets are more efficient than not, that there is more than enough investment capital looking for profitable places to go, and that nobody had to yell “think harder” at Larry Page and Sergei Brin. I can say with even greater confidence that the world is a better place because investment capital tends to flow where it garners the highest risk-adjusted returns. This just in: the business of serious journalism news ain’t in the top 100, probably never was, and certainly won’t be again. Commercial efforts will persist because they just will. But expecting investors to continue to fund for-profit, Capital J journalism just ‘cuz: doesn’t that sound a lot like charity? And for the love of Zeus, please don’t talk to me about “patient capital” and “lower return expectations for noble causes.” It’s all just another form of philanthropy, but with the added confusion about whether service to God or Mammon is the order of any given day.

I’m about two years into my foray into non-profit journalism, and I’m more firm than ever in this conviction: Public media, privately funded, will be a bigger part of the media landscape in ten years than it is today. This will require the inhabitants of Fantasy Land to do a good deal of consciousness raising in the general public for membership support, and among foundations and major donors to give us the runway we need to establish sustainable business models.

We can use all the help we can get. Alan, we’ll leave the light on for you. And let me know if you see that Bunny!

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