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May 03 2012

14:55

The newsonomics of Pricing 101

When the price of your digital product is zero, that’s about how much you learn about customer pricing. Now, both the pricing and the learning is on the upswing.

The pay-for-digital content revolution is now fully upon us. Five years ago, only the music business had seen much rationalization, with Apple’s iTunes having bulled ahead with its new 99-cent order. Now, movies, TV shows, newspapers, and magazines are all embracing paid digital models, charging for single copies, pay-per-views, and subscriptions. From Hulu Plus to Netflix to Next Issue Media to Ongo to Press+ to The New York Times to Google Play to Amazon to Apple to Microsoft (buying into Nook this week), the move to paid media content is profound. The imperative to charge is clear, especially as legacy news and magazines see their share of the rapidly growing digital advertising pie (with that industry growing another 20 percent this year) actually decline.

Yes, it’s in part a 99-cent new world order as I wrote about last week (“The newsonomics of 99-cent media”), but there are wider lessons — some curiously counterintuitive — to be learned in the publishing world. Let’s call it the newsonomics of Pricing 101. The lessons here, gleaned from many conversations, are not definitive ones. In fact, they’re just pointers — with rich “how to” lessons found deeper in each.

Let’s not make any mistake this week, as the Audit Bureau of Circulation’s new numbers rolled out and confounded most everyone. Those ABC numbers wowed some with their high percentage growth rates. Let’s keep in mind that those growth numbers come on the heels of some of the worst newspaper quarterly reports issued in awhile. Not only is print advertising in a deepening tailspin, but digital advertising growth is stalled. Take all the ABC numbers you want and tell the world “We have astounding reach” — but if the audience can’t be monetized both with advertising and significant new circulation revenues, the numbers will be meaningless.

When it comes to dollars and sense, pricing matters a lot.

Let’s start with this basic principle: People won’t pay you for content if you don’t ask them to. That’s an inside-the-industry joke, but one with too much reality to sustain much laughter. It took the industry a long time to start testing offers and price points, as The Wall Street Journal and Walter Hussman’s Arkansas Democrat-Gazette provided lone wolf examples.

The corollary to that principle? If you don’t start to charge consumers — Warren Buffett on newspaper pricing: “You shouldn’t be giving away a product that you’re trying to sell.” — then you can’t learn how consumers respond to pricing. Once you start pricing, you can start learning, and adjust.

We can pick out at least nine emerging data points:

  • 33-45 percent of consumers who pay for digital subscriptions click to buy before they ever run into a paywall. That’s right — a third to a half of buyers just need to be told they will have to pay for continuing access, and they’re sold. As economists note that price is a signal of value, consumers understand the linkage. Assign what seems to be a fair price, and some readers pay up, especially if they are exposed to a “warning” screen, letting them know they’ve used up of critical number of “free” views. Maybe they want to avoid the bumping inconvenience — or maybe they just acknowledge the jig’s up.
  • If print readers are charged something extra for digital access, then non-print subscribers are more likely to buy a digital-only sub. Why pay for digital access is the other guys (the print subscribers) are getting it thrown in for “free”? Typically, Press+ sees a 20-percent-plus increase in signups on sites that charge print subscribers something extra. That extra may be just a third or so of the price digital-only subscribers pay (say, $2.95 instead of $6.95), but it makes a difference. Consequently, Press+ says 80-90 percent of its sites charge print subscribers for digital access. The company now powers 323 sites and thus has more access to collective data than any other news-selling source.
  • You can reverse the river, or at least channel it. The New York Times took a year, but figured it out righter than anyone expected. It bundled its Sunday print paper (still an ad behemoth) with digital, making that package $60 or so a year cheaper than digital alone. The result, of course, is that Sunday Times home delivery is up for first time since 2006. It’s not just NYT or the L.A. Times which have embraced Sunday/digital combos. In Minneapolis, the Star Tribune began a similar push in November. Now, of its 18,000 digital-only subscribers, 28 percent have agreed to an add on the Sunday paper, for just 30 cents a week, says CEO Mike Klingensmith (“A Twin Cities turnaround?”). So we see that consumers may well be more agnostic about platform than we thought. Given them an easy one-click way of buying even musty old print, and they will. Irony: If you hadn’t charged them for digital access, you probably wouldn’t have sold them on print.
  • New products create new markets. 70 percent of The Economist‘s digital subscribers are not former print subscribers, says Paul Rossi, managing director and executive vice president for the Americas. That’s surprising in one sense, but not in another. Newspaper company digital VPs will tell you that they’re surprised to see how little overlap there is between their print audience customer bases and their digital ones. The downside here: Many print customers seem not to value digital access that much. The Star Tribune is finding a low take rate of 3 percent of its Sunday-only print subscribers willing to take its digital-access upsell. One lesson: The building of a new digital-mainly audience won’t be easy and will require new product thinking; it’s not that easy just to port over established customers.
  • The all-access bundle must contain multiple consumer hooks. Sure, readers like to get mobile access as well as desktop and print, and maybe some video. Yet some may especially prize the special events or membership perks they are offered, as the L.A. Times is banking on (and start-ups Texas Tribune, MinnPost, and Global Post have applied outside the paywall model). Some will like the extras, like The Boston Globe telling its new 18,000 digital subscribers, as well as its print ones, that they now get “free” Sunday Supper ebooks (“The newsonomics of 100 products a year”). Sports fanatics or business data lovers will find other niches to value — and ones that make the whole bundle worthwhile. Archives — and the research riches they offer — will prove irresistible to some. In 2012, a bundle may offer a half dozen reasons to buy, casting a wide net, with the hope that at least one shiny lure will reel in the customers. By 2013, expect “dynamic, customized offers,” targeting would-be buyers by their specific interests to be more widely in use.
  • While pageviews may drop 10-15 percent with a paywall, unique visitors remain fairly constant. We see the phenomenon of those who do hit a paywall one month coming back in subsequent months, rather than fleeing forever. “It may be the second, third, or fourth month before someone says, ‘I guess I am a frequent visitor here, and I’ll play,’” says Press+’s Gordon Crovitz.
  • Archives find new life. Archives have lived in a corner of news and magazine websites for a long time. They’ve been used, but not highly used or highly monetized. Now, courtesy of the tablet, and a new way to charge, The Economist is finding that 20 percent of its single copy sales are of past issues. Readers will pay for the old in new wrappers, whether back e-issues, or niched ebooks. The all-access offer can be much wider than cross-platform, or multi-device. It can extend across time, from a century of yesterdays to alerts for tomorrow.
  • News media is probably underpriced. Take the high-end Economist. CEO Andrew Rashbass — speaking to MediaGuardian’s Changing Media Summit 2012, in a recommended video — said that a survey of its subscribers showed that a majority didn’t know how much they were paying for the Economist. When pressed to guess, most over-estimated the price. At the Columbia (Missouri) Daily Tribune, an early paywall leader in the middle of America, a recent price increase to $8.99 from $7.99 has so far resulted in no material loss of subscribers. At Europe’s Piano Media, early experience in Slovakia and Slovenia is that price isn’t a big factor, says Piano’s David Brauchli. “Payment for news on the web is really more a philosophical mindset rather than economic. People who are opposed to paying will always opposed to paying and those who see the value of paying don’t mind paying no matter what the price is.” That suggests pricing power. It makes sense that publishers, new to the pricing trade, have approached it gingerly. Yet the circulation revenue upside may well be substantial.
  • Bundle or unbundle — what’s the right way? Mainly, we don’t know yet, and the answer may be different for differing audience segments. The Economist started with print being a higher price than a separate digital sub. Then it raised the digital price to match that of print — to assert digital value. It now offers all-access: one price gets you both. Next up: You can buy either print or digital for the same price, but if you want both, you’ll pay more. It’s an evolution of testing, and so far, it’s been an upward one.

Overall, this is a revolution in more than pricing. It’s a revolution in thinking and, really, publisher identity.

The Boston Globe’s Jeff Moriarty sums it up well, as his company aims (as has the Financial Times before it: “The newsonomics of the FT as an internet retailer”) to emulate a little digital-first company called Amazon:

I think overall publishers have to start thinking more like e-commerce companies. More like Amazon. You can’t just throw up a wall or an app and expect it to just sell itself. We’re still building that muscle here at the Globe, and some of our colleagues in the industry are even farther along. We have extensive real-time and daily analytics and are employing multivariate testing to try offers and designs to refine the experience that works best for each type of user.

Photo by Jessica Wilson used under a Creative Commons license.

April 24 2012

20:50

MinnPost reaches five years of fundraising with MinnRoast

The secret to having a successful nonprofit journalism site? Comedy. Also, a CEO who’s willing to dance. This Friday MinnPost is holding MinnRoast, an event that mixes fundraiser and summer camp talent show.

It’s the fifth straight year for the Minnesota nonprofit news site’s version of the Gridiron Club Dinner. This year, the celebrity will be supplied by Minnesota Governor Mark Dayton, Senator Al Franken, the mayor of St. Paul, two former candidates for governor, the majority leader of the Minnesota State Senate, and local news personalities.

“I’m in the show. This year I’m in three dance numbers,” MinnPost CEO Joel Kramer told me. “I never danced before I got involved in MinnRoast.”

Of course, at one point, Kramer probably didn’t have much experience running a nonprofit news site either, but he seems to be adapting to both well. As funny as MinnRoast is, it’s serious business for MinnPost: Kramer said each year the fundraiser has contributed more to the nonprofit’s bottom line. “Revenue from MinnRoast this year will be in the neighborhood of 10 percent of our overall revenue.” That would be up slightly from 9 percent in 2011, according to MinnPost’s most recent year end report.

MinnPost is often pointed to as a bright spot in the nonprofit journalism landscape (it ended last year in the black), so it’s worth looking at what makes their fundraising efforts work. Events are a big part of that. Like a lot of nonprofit news sites (and increasing number of for-profit outlets), events are part of business for MinnPost, which counts its annual birthday party and book blast among its regular events. This year, they expect more than 900 people will attend. With tickets ranging from $35 to $175 and sponsorships starting at $800, you can figure out how that math adds up.

For nonprofit news sites — and nonprofits in general — it’s all about finding as many ways as possible for people to give you money. In a way, MinnPost is extending the idea of its membership model. If you’re already a donor, you’re likely to check out the show, but MinnPost hopes their audience brings a friend to have a good time. Kramer told me one of the benefits of the show is the sponsors’ use of their tickets to bring people unfamiliar with the site. That introduction can be valuable if it creates an impression, even if it is during a night of silliness. “People go to lots of fundraising events, and unfortunately most of them can be a drag,” Kramer said. “We just put the emphasis on a tremendous amount of fun and minimal amount of time raising money at the event.”

In that way, the event also serves as a tool of community engagement, bringing together readers, journalists, and public officials. MinnPost gets to act as a kind of convener and help generate money for their work. MinnRoast would already be noteworthy because it brings leaders in Minnesota’s political parties together for a night where the talk is less partisan than normal. Kramer said it’s a fairly polarizing time in state and national politics and taking a break from that can be healthy. “I think it’s a good idea to break the tension for people that are fighting with each other or in adversarial relationships to have a night off to have fun and be reminded we’re in the same community,” he said. It’s worth noting that because of the annual show, MinnPost has been criticized for having a seemingly cozy relationship with people in power — or at the least, singing and dancing in silly costumes with them.

MinnRoast will likely continue to grow. They expected only 200 people in the first year and saw 400. This year they’re close to selling out the theater where the event is held, which could mean a bigger venue in the future. More specifically, Kramer said MinnPost needs MinnRoast, as well as the other events the site hosts, to continue to grow as they try to adjust how the site makes money. In 2011, about 21 percent of MinnPost revenue came from foundations, a percentage Kramer knows will change whether MinnPost is proactive in finding new dollars or not. Kramer said one of their goals for 2012 is to increase advertising as well as donations through memberships. “Our goal is to keep building the other sources of revenue,” he said.

November 14 2011

18:30

Can Twitter advertising really work for newspapers?

Remember when newspapers debated the value and merits of using Twitter? Well, there’s a new question for news organizations to consider: Can newspapers use Twitter for advertising?

In the last few weeks, The Hartford Courant and The (New Orleans) Times-Picayune have experimented with using Twitter as a new advertising channel. At the Courant, they’ve started offering twice-daily deals to local businesses — think Groupon by tweet — to their followers. The Times-Picayune, more controversially, used Twitter to advertise itself — or at least its website, as the online division of its parent company, Advance Publications, paid New Orleans Saints players to tweet about the newspaper’s relaunched Saints site on Nola.com.

This isn’t exactly new territory, as a number of papers have experimented with droppings ads into Twitter in the last year. (Not to mention non-news outlets like, um, Kim Kardashian, for whom pay-per-tweet is a long-standing phenomenon.) Tweets offer another ad unit to sell, and when you’ve got an advertising salesforce in place, it almost — almost — seems like a no-brainer. And with the money floating around the paid-tweet world, it’s hard not to blame news organizations for wanting in on the market; five figures for tweeting endorsements is well within the reach of a popular reality TV star. Can Twitter advertising for newspapers work?

When I called up the Courant to talk about their sponsored tweet program, digital platform editor Rick Hancock told me “we don’t like to talk about our business plans and strategies” and declined to comment further.

From what I can tell the Courant runs their promotions twice a day, in an a.m. and p.m. tweet marked with SPONSORED and a link to the advertiser’s own site. On Oct. 25, they ran two sponsored tweets, one for a local Nutcracker production, another for a liposuction business (the “Official body sculpting company of the Miss Connecticut Organization”). Using Twitter search, it doesn’t look like the tweets got much traction aside from a few comments questioning the tweets. But since the tweets had photos attached, a check of Twitpic stats shows the Nutcracker ad got at least 120 views and liposuction ad 115. One thing worth noting: I haven’t seen any sponsored tweets from the Courant since.

In the case of the Times-Picayune, the product being hawked was neither liposuction or dancing dolls but the paper itself, namely the newly redesigned site for the paper’s coverage of the Super Bowl XLIV-winning New Orleans Saints. Advance Digital paid five Saints players to tweet promotional links to the site, which is more focused on community features than its predecessor. According to a Times-Picayune story about the campaign (and the confusion inside the paper about it — the newsroom didn’t know about the arrangement):

For instance, [Saints quarterback Drew] Brees’ nearly 700,000 Twitter followers received this message on Oct. 18: “Who Dats! If you didn’t join the NOLA Saints community this morning… join now!” The post included a link to the Saints page on NOLA.com and was retweeted, or forwarded, by 29 people.

The following day, prolific tweeter Vilma wrote: “I’ve been checking out the new #Saints community on NOLA. All my Who Dats need to join!” Vilma’s post was retweeted by 10 of his followers.

(It’s worth noting that Brees’ tweet and Vilma’s ended with the hashtag #spon, which some social media types are pushing as a semi-legible indicator of a sponsored tweet. A Twitter search for #spon is an enlightening look into what sorts of companies are paying people to tweet: at the moment, Verizon, Clorox, Pepperidge Farm, and Q-Tips.)

Here, it’s also unclear what sort of impact the Twitter promotion may have had. I emailed John Hassell, vice president of content for Advance Digital, to ask about any impact to traffic to Nola.com and have yet to hear back.

Though using Twitter as an advertising medium is still relatively new for news organizations, two outlets, MinnPost and the Austin American-Statesman, were early to experiment with the idea.

Since 2009, MinnPost has been running “real-time ads” on their site, which incorporate a business’ Twitter or RSS feed. Joel Kramer, CEO and editor of MinnPost, told me they’ve brought in about $30,000 through the ads, but that figure amounts to less than five percent of all advertising revenue. Kramer said most businesses are excited at the prospect of social media and the idea of real-time ads, but enthusiasm doesn’t always translate into sales. “I would say most people we show it to find it cool and interesting, but most are still struggling thinking about that kind of ad,” said Kramer.

Robert Quigley, the former social media editor for the Statesman, said he considers Twitter a promising advertising medium, but one that’s particularly tricky for newspapers to monetize. Quigley, who’s now a professor of journalism at the University of Texas, said the problem isn’t the ethical issues (though they exist) but more about the systems in place for newspaper advertising.

The Statesman’s plan called for clearly labeled sponsored tweets twice daily on their main Twitter account as well as their Austin360 feed. The ad staff secured the business and crafted the message, and once it got the okay from Quigley, it would go into the streams. Quigley trained and advised the advertising staff on social media, as well as how to pitch businesses on the platform, but he said his editor didn’t want to blur the newsroom/advertising divide too much. “Our editor, rightly, was concerned about me getting too close to the advertising side,” he said. “He didn’t want me meddling too much around in advertising. I was a newsroom employee, a journalist, and that wall between the two crumbled a little bit.”

Even if you get past the ethical issue, there’s little incentive for advertising staffs to sell sponsored tweets. If CPMs for online ads are a drop in the bucket compared to rates for print ads, the cost of a sponsored tweet (reportedly $300 a day for the Statesman) is not going to make anyone forget department store inserts as a revenue source. Unsurprisingly, some advertisers still prefer an old school system even though sponsored tweets could offer improved metrics for evaluating ads through Bitly or other analytical tools. “It’s not a tried and true method,” he said. “Retailers love having statistics and the kind of results they’ve counted on for years.”

Maybe it’ll just take time for businesses to warm up to the idea of advertising through the newspaper on Twitter. But the platform poses another problem: Newspapers are trying to insert themselves as a middleman in a medium that doesn’t require one. Joe’s Pizza has the same ability to publish on Twitter as the local daily does, and the audience monopoly that once existed in print is exploded on a democratized medium like Twitter. Sure, that local daily likely has more followers than Joe’s — but maybe not, and that pizza joint has other routes to reaching Twitter users than buying space in the daily’s stream. Twitter provides a new audience, but it also provides a channel for businesses to take matters into their own hands.

Still, even an incremental amount of new revenue is still new revenue. But news organizations still have a lot of work to do to figure out how best to integrate ads and Twitter. “It hasn’t been completely figured out yet,” Quigley said. “Maybe there is no figuring it out. Perhaps advertising in the Twitter stream is something that won’t work very well.”

Image by Calsidyrose used under a Creative Commons license

September 15 2011

15:00

The newsonomics of 1, 2, 3, 4

Editor’s Note: Each week, Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of news for the Lab.

Ah, the joys of print — and real world — serendipity.

Arriving in Berlin to speak at the annual Medienwoche, part of the IFA 2011 content-meets-tech conference, I took a post-flight stroll around my hotel. I picked up a Wired U.K. at a local newsstand (newsstands chock-full of magazines and newspapers seem ubiquitous in Germany, their big-city absence in America made more noticeable). It’s a good issue, exploring the top digital entrepreneurial hotspots across Europe, from a U.K. perspective.

Across from p. 82, my eye caught a house ad. It was selling all things Wired U.K., but selling them in a customer-centric way I hadn’t before seen. Reproduced below, you see how it focused on how customers may variously access Wired. It speaks “multi-platform,” “multimedia” and “news anywhere” much better than those compounded nouns (which, when you think of it, are starting to sound like multisyllabic German constructions).

It’s masterful in telling the reader simply, and with a bit of fun, what the Wired U.K. brand stands for, how you can pick your timeliness (now to annual), mode of ingestion (reading, listening, or attending conferences) and more.

In a second bit of terrestrial serendipity, it turned out that Wired U.K. Editor David Rowan was speaking at IFA two hours after my talk. He and his art director, Andrew Diprose, had already supplied a digital copy of the house ad. I told him how well I thought the ad captured a business model in the making, with a clear customer-centric approach. He thanked me for the comment, and added, “It’s just something we tossed together when we had an extra page.” Well, it may have been, but it shows how this Wired crew is thinking of their business, eating some of the digital dog food it dishes out in each issue.

The ad had particular resonance this week as I’ve been thinking about the question on everyone’s minds in the newspaper and magazine businesses: What’s the new business model — that hybrid print/digital or digital/print — going to look like? It’s clear to everyone at this point that while print has a significant role for as far forward as we can see, it’s receding in importance, and revenue, and that digital is the growth engine on which to focus.

It’s one thing to say that and quite another to say what the new business model will look like. How much revenue will come from what, when, and who?

Now approaching 2012, we see that 2011 has provided a few clues to that new business model. No one, though, even the world’s digital revenue news leader, Oslo-based Schibsted (with 30 percent of overall revenues driven by digital) will tell you that even the industry’s leader has not yet found a big, sustainable model able to support a large newsroom.

Let me propose a model I’m testing out, as we watch the rollicking developments in the industry. As paid digital-access plans roll out weekly, as Digital First becomes not just a catchphrase but a company, as tablet development moves to the front burner and as the TV business continues to outpace both newspapers and magazines, what are the common threads we can see?

It’s purposely a simplified, bare-bones structure. I call it the newsonomics of 1, 2, 3, 4 and welcome flesh to be added to the skeleton — and/or chiropractic adjustment as well.

It’s 1, 2, 3, 4, as in:

  • 1 brand
  • 2 major sources of revenue, advertiser and reader
  • 3 products: print, computer, and mobile
  • 4G, as in the coming of faster connectivity

Let’s look at each one, briefly:

1 brand

The first decade-plus of the web was all about collecting, bringing things together. That meant major wins (63 percent of U.S. digital ad revenue in 2011 is going to Google, Yahoo, AOL, Microsoft — and Facebook) for those who aggregated. The act of collecting (curating if you prefer) was rewarded at the expense of those being aggregated. Now, as we approach 2012, we’re seeing a major re-assertion of brand, and its primacy.

Steve Jobs’ tablet-launching assertion that search is so yesterday was part sales pitch, part prophecy. The app is nothing if not the re-ascendance of brand, encapsulated in a few pixels. These tiny apps — from ESPN, The Atlantic, Time, the Guardian, and Berliner Morgenpost to The Boston Globe, The New York Times and the Wall Street Journal — all convey new promise. That promise has found a business model — all-access — to accompany. After years of wandering in the wilderness of customer confusion and self-doubt, news companies are saying: “You know us, you know our brand; you value us. Pay us once and we’ll get you our stuff wherever, whenever, however you want it”. Call it “entertainment everywhere” or “news anywhere,” or “TV Everywhere,” major media are now re-training their core audiences to expect — and pay for — ubiquity.

News companies are following the lead of Netflix, HBO, and Comcast (Xfinity), all now basing their hybrid old world (TV/cable/post office) and new world (smartphone, tablet, computer, and connected TV) on the same simple idea. In the first digital decade, news and entertainment was atomized by aggregators, dis-branded, as readers and viewers often flipped through Google, YouTube, or Yahoo without knowing who actually produced news or entertainment.

Now, we see brand re-emerging to signal top-of-mind awareness — and to earn those one-click credit card payments. These are friendlier brands, attempting to leverage and master the new social curation of news and entertainment.

2 major sources of revenue, advertiser and reader

For that first decade plus of the web, news publishers relied on one revenue source — digital advertising. That’s been like wheeling into the future on a unicycle, lots of careening and too little forward progress. As publishers have taken a long-term view of the business, the conclusion from Arthur Sulzberger and Rupert Murdoch to Dallas’ Jim Moroney and Morris’ Michael Romaner has been the same: We have little hope of creating a successful digital business without robust digital reader revenue. Reader revenue doesn’t have to be mean only digital subscriptions. Schibsted and Australia’s Fairfax are pioneering “services,” with Schibsted’s story-aided weight-loss programs prototypical. Newbies Texas Tribune and MinnPost are showing how reader-attended events are moneymakers. The tablet will spawn lots of new one-off paid reader products.

And advertising doesn’t mean just selling space. Most major news chains, from Advance to Gannett to Hearst, are becoming regional ad agencies, selling and re-selling everything from deals to Yahoo (or in Advance’s case, Microsoft) to search engine marketing to Facebook and Google to local merchants large and small. The New York Times pulled Lincoln “ad” money into digital circulation push. Sponsorships are coming back in a big way for mobile.

So, two revenues, tried, true, but twisting new. Will they be 50/50 supports of new models? Too early to say, but they provide us the rivers and tributaries to build new revenue stream models.

3 products: print, computer, and mobile

“Online,” of course, was first re-purposed print. Too much of mobile is, again, re-purposed online. Yet, the smarter all-access players, mostly national, are looking at their audience data and seeing how different usage is by device or platform. There are new products — MediaNews’ TapIn is emblematic — that are made for the tablet, with even smartphone utility in question and desktop a distant third. We’ll see three distinct ways of thinking about product: print, lean-forward desktop/laptop and lean-back tablet/on-the-move smartphone. Newspaper print becomes just another platform. This triad becomes more than a smart way to think about product development — it becomes a way of measuring costs, revenues, and metrics like ARPU.

4G, as in the coming of faster connectivity

Only in the last couple of years have we passed 50 percent broadband access in the U.S., which currently ranks ninth worldwide at 63 percent of households. We’ve forgotten the days when pressing on the play button on a website’s video player was a crapshoot. Between buffering and bumbling of all sorts, video only sometimes worked. Now, take a look at the just-launched WSJ Live on the iPad, and you see how far we’ve come. 4G is now on the mainstream horizon, and with it comes the higher valuing of news video. That’s a challenge for text-based newspaper companies, most of whom have taken only first steps to becoming truly multimedia companies. You can see the 4G glow in the eyes of John Paton’s new Digital First Media company. I’m told his New Haven Register now outproduces the local TV stations in digital video news creation; few newspaper peers can yet say the same. With ad rates for news video are still markedly higher than for text stories, any successful model must put video at the center of new products.

So, it’s 1, 2, 3 and 4, good tests of evaluating new company strategies — from the inside or out.

July 18 2011

13:00

Pew: Nonprofit journalism doesn’t mean ideology-free

Pew’s Project for Excellence in Journalism is out with a new study this morning that looks at the new universe of nonprofit journalism — and tries to get beyond the ProPublicas of the world to see who else is producing journalism under the legal structure of a 501(c)3 exemption. After all, remember, “nonprofit” signals a tax status, not a belief system or a commitment to any particular ideals, journalistic or otherwise.

The study found more than a little ideology lurking under that IRS umbrella. Of the 46 sites examined — 39 nonprofit and 7 commercial as a control — around half “produced news coverage that was clearly ideological in nature,” the researchers report.

Pew had the expected nice things to say about the usual nonprofit rock stars, like ProPublica, the Texas Tribune, MinnPost, and California Watch. They’re transparent about their funding sources, which are numerous; their doesn’t skew too far in one political direction; they produce a lot of journalism, compared to their nonprofit peers. But the major national networks of state politics sites — the conservative Watchdog.org sites and the liberal American Independent News Network — don’t reveal much about who’s paying their bills, and their work skews clearly in one direction, both in the topics they cover and the content of individual stories.

(Because it attempted to cover an entire universe of nonprofit outlets, researchers had to limit their targets to a reasonable number. As a result, older news orgs like the Center for Public Integrity and metro-scale outlets like Voice of San Diego were both excluded.)

PEJ does a great job, with this and other studies, of moving past barroom debates and gathering real-world data on the new worlds of journalism. And while this research doesn’t draw explicit moral conclusions, it won’t be hard for others to: These nonprofits aren’t all they’re cracked up to be. They’re not objective; they’re hidden tools of politicos; they’re no replacement for newspapers. Beyond the flagships like ProPublica and Texas Tribune, it’s a mucky world.

And there’s some truth in that! But two points: First, few of even the most ambitious nonprofit outlets consider themselves true replacements for newspapers. The scale just isn’t there; as Pew’s study notes, the median editorial-staff size at the nonprofits they studied was three. (Although those three people are usually more topic-focused than their print peers — a nonprofit site covering a statehouse might be the biggest player in town with three reporters.) Replacement is a straw man; the vast majority of nonprofits, ideological or not, view themselves more as supplements.

Second, a little ideology isn’t such a bad thing. Take the right-of-center Watchdog.org sites, which we wrote about last year. They say their mission is to “promote social welfare and civil betterment by undertaking programs that promote journalism and the education of the public about corruption, incompetence, fraud, or taxpayer abuse by elected officials at all levels of government.” They investigate Democrats a lot more than Republicans, and they’re no great fans of what they see as wasteful big government.

The left-of-center American Independent News Network sites works the other side, saying its reporting “emphasizes the positive role of democratically elected government in securing the common good and social welfare, and the continuing benefits of our founding culture of egalitarian government by the people, for the people.” They take on the GOP more than Democrats, and they write a lot about the environment and labor issues.

Viewed as replacements, they fall short of what we’d expect from a good newspaper. But as supplements, I’m happy that both exist — that in a state with both a Watchdog site and an Independent site, both sides of the aisle will be poked and prodded, and that stories will surface that otherwise wouldn’t. I’d draw a distinction between ideological outlets as drivers of political culture — Fox News being a prime example — and as drivers of new information. The biggest risk posed by the loss of reporting manpower in places like our nation’s statehouses is that real stories will go unreported. Adding ideological outlets to the mix reduces that chance; at least someone will be paying attention to environmental issues or fraud at the DMV. And, unlike with Fox News, the readers of many of these sites tend to be high-information consumers of political news; a statehouse-news-only site isn’t ever going to reach the broader general audience of a newspaper or TV station.

Anyway, that’s just one take on what is a data-rich analysis, a snapshot of an important group of new players in the news world. Go read the full paper.

July 08 2011

20:32

Reinventing the newspaper - The rise of philanthrojournalism

Economist :: What's now being tried across America, is to build new, internet-native metropolitan news organisations supported by philanthropy. Examples include the Voice of San Diego, the St Louis Beacon, the MinnPost in Minneapolis, the Texas Tribune in Austin and the Bay Citizen in San Francisco.

Where they exist, they are doing a very good job, in some cases exceeding the quality of dailies,” says Ken Doctor, a news-industry analyst at Outsell. Because traditional newspapers are in trouble, these not-for-profit online news organisations can take their pick of experienced journalists, many of whom are also attracted by the new sites’ focus on politics, civic engagement and accountability journalism.

[Jonathan Weber, editor of the Bay Citizen] We believe the gap that we’re trying to fill has to do with reporting. There’s a lot of opinion out there, and a dearth of reporting.

Continue to read from the print edition, www.economist.com

June 15 2011

16:00

Does a new report mean doom and gloom for local online news? Maybe, but here are a few balancing factors

Matthew Hindman’s new paper showing miserably low levels of local online news consumption is a terrific addition to research on how journalism gets produced and consumed online. He found, using panel data from comScore, that local news sites received, on average, only about three pageviews per person per week in their local markets.

And that’s in total, adding up all local news sites — individual sites fared even worse. The largest local news site in a typical market reached only about 17.8 percent of local web users in a given month, and it drew only about five minutes of the typical web user’s attention during that month.

Nikki Usher summarized the report’s findings for us in a separate post. But while Hindman’s research is a welcome reminder of local online news’ limitations and failings, I think there are a number of factors that complicate his findings a bit. Here are four reasons why I think the doom and gloom that I expect to circle around this report might not be spot on.

comScore’s dataset isn’t perfect

Among the various traffic-measurement firms, comScore has a very solid reputation. But it is also subject to some of the criticisms that have historically faced Nielsen’s TV ratings, most notably that their sample may not be a representative one. For example, comScore panel data doesn’t measure mobile traffic. And it likely undercounts web traffic from people at work, which Pablo Boczkowski and others have shown to be where a disproportionate amount of online news consumption occurs. (Hindman, to his credit, highlights these problems with comScore’s dataset.)

And, frankly, I wouldn’t be surprised if the kind of person willing to install comScore’s traffic-recording tool on their computers isn’t perfectly representative of the web-using public. The biggest news nerds might be underrepresented.

But the reality is these are quibbles, and Hindman’s larger point remains. Even if comScore is undercounting by a factor of three or four, we’re still talking about a small-numbers showing for local online media.

Reach does not mean impact

If raw readership totals equaled impact — on political discussion, on democracy, on the culture — then USA Today would be more important than The New York Times and Reader’s Digest would be more important than The New Yorker. Reaching the “right” people — and by that I mean the people who have disproportionate influence in political discussion, democracy, or culture — can make an outlet’s reach more potent than traffic numbers would suggest.

So for sites like MinnPost or Voice of San Diego, which write extensively about politics and local government, it’s possible to be both a must-read in the corridors of City Hall or the statehouse and still reach an audience that’s disproportionately influential.

Take MinnPost, for instance. According to Hindman’s analysis, 0.61 percent of all pageviews in the Minneapolis-St. Paul metro area went to local news sites. And only about 0.001 percent of total pageviews went to MinnPost (varying slightly by month).

But MinnPost’s Joel Kramer told us in March that, in January and February, MinnPost.com had received 921,000 visits. Each of those generated at least one pageview. The site has 5,700 daily email newsletter subscribers, 2,500 weekly email subscribers, and over 10,000 followers on Twitter.

In other words, while MinnPost may look like a rounding error in the overall scheme of Twin Cities web traffic, it is reaching many thousands of people. And even if those people are a small subset of the area population, a site like MinnPost can still have a significant positive impact on public affairs.

In Hindman’s previous book, The Myth of Digital Democracy, he advanced a largely similar argument based around political blogs. Here’s the book’s promo copy from its publisher:

Matthew Hindman argues that, though hundreds of thousands of Americans blog about politics, blogs receive only a miniscule portion of Web traffic, and most blog readership goes to a handful of mainstream, highly educated professionals. He shows how, despite the wealth of independent Web sites, online news audiences are concentrated on the top twenty outlets, and online organizing and fund-raising are dominated by a few powerful interest groups. Hindman tracks nearly three million Web pages, analyzing how their links are structured, how citizens search for political content, and how leading search engines like Google and Yahoo! funnel traffic to popular outlets. He finds that while the Internet has increased some forms of political participation and transformed the way interest groups and candidates organize, mobilize, and raise funds, elites still strongly shape how political material on the Web is presented and accessed.

You can see the DNA of that argument in the current paper. And I think Hindman’s right: If your goal for online media is to create a digital version of the New England town hall, then yes, you’re going to be disappointed that online media creates its own new class of media elites. But I’d argue that, if we’re judging online media’s value or worthiness to democracy, it’s important to do so through a lens that isn’t merely transposed from the days of big broadcast towers and giant metro newspapers.

I think, even taking Hindman’s facts on political blogs, that it’s impossible to argue that they haven’t had a significant impact on political discussion in America — despite their comparatively small readership and their power-law popularity structure. So I’d caution against anyone drawing similar conclusions based on this new paper about online media more broadly.

Local news does not equal “news”

It’s worth noting that, while the comScore data found little interest in local news, it did find substantially more interest in national and global outlets. Hindman’s analysis found that local news made up only about 19 percent of all pageviews to news sites measured. (The remainder is only defined as “nonlocal news sources,” but we can presume that a healthy chunk of that is made up of the big national news brands: CNN, MSNBC, Fox News, The New York Times, The Huffington Post, etc.)

The numbers were even more lopsided when you look at minutes spent rather than pageviews. Only about 15 percent of all time spent consuming online news was spent on local news sites.

While that’s not great news for local sites, it does indicate that people’s interest in online news more broadly isn’t in the same state of disrepair as their interest in local news. And it perhaps speaks to the wisdom of strategies that try to inject local news into national news brands — for instance, what MSNBC.com is doing with EveryBlock, or what AOL is trying to do in marrying HuffPo to Patch and Outside.in.

Watch your comparison sphere

One final note: Be cautious about reading too much into any statistics that look at online news as a fraction of total time spent online. That’s putting online news in competition not just with other traditional content sources, but with Gmail, and Facebook, and shopping on Amazon, and all the other bazillion things we do all day on the Internet. In other words, as more and more activities that traditionally took place outside the browser move inside it, it only makes sense that online news’ share might not keep up — even if online news consumption were held constant. (For example, if online news reading went up 10 percent, but total online usage went up 100 percent, online news as a share of online activity would drop — even though people were consuming more online news. Time spent shopping for shoes at Zappos shouldn’t count against time spent reading local headlines.

Again, that’s not to invalidate (or even to argue against) Hindman’s findings; his raw numbers of minutes spent are plenty low enough on their own, even without any comparison to the rest of the web. But if we are going to judge online news consumption, let’s use the numbers that make the most sense.

Separately, because the FCC-funded research process is pleasantly open, you can read Hindman’s initial draft of his paper, a peer review of it by Iris Chyi at the University of Texas, Hindman’s response to Chyi’s remarks, and the final version. Probably only of interest to the nerdiest of news nerds, but Chyi raises some good points.

January 13 2011

15:30

The Newsonomics of 2011 news metrics to watch

[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.]

In the digital business, the old aphorism — “If you can’t measure it, it doesn’t exist” — is rapidly moving from article of faith to fundamental operating principle. Measurement systems are just getting better and better.

Yes, there are still quite a few naysayers in the digital news business, those who believe that editorial discretion is superior to any metric the digital combines can kick out. They’ll say you can’t measure the quality of journalism created — and, of course, they are partly right. The truth of the moment is that good (to great) editors, armed with good (to great) analytics, will be in the winners in the next web wars. The same is true for digital marketers working for news companies. Unless they combine their knowledge of markets, customers, and advertisers with often real-time numbers about performance, they’ll lose business to those who do.

The counting of numbers, though, is tricky. So many numbers, so little time, as 24/7 digital keystrokes stoke endless reams of data. Which ones to count, and which to pay closest attention? Meaningful numbers, of course, are called metrics, and meaningful interpretation of those numbers we now call analytics. These analytics, discovered or undiscovered, then drive the business, and they are particularly important in great times of change, when whole industries move profoundly digital. As that old investigative reporter Sherlock Holmes said, “Data. Data. Data. I can’t make bricks without clay.”

In the spirit of the new year, let me suggest some of the more valuable emerging metrics for those in the news business in 2011. Further, in that spirit, let’s pick 11 of them. These aren’t intended to be the most important ones — the mundane price of newsprint, trending up recently, still is a hugely influential number — but ones that are moving center stage in 2011.

1. How much are news companies getting for tablet advertising? Or, in more numerical terms, what’s the effective CPM, or cost-per-thousand readers? In 2010, those with tablet news products reaped a small windfall, gaining rates as high as $150 per thousand readers, which would be 20 times what many of them get for their website ads. Much of that business was “sponsorship,” meaning that advertisers paid simply for placement, not actually based on number of readers. It was the blush of the new, and the association with it, that drove that kind of money. While early 2011 pricing is still very good, as the tablet market goes mass, what will happen to the rates news companies can charge advertisers? This is a huge question, especially if tablet news reading does hasten movement from ad-rich newsprint (see “The Newsonomics of tablets replacing newspapers“).

2. What percentage of unique visitors will actually pay for online access? It’s going to be a tiny percentage — maybe one to five percent of all those uniques, the majority tossed onto sites by search. If it’s less than one percent, paid metered models may be of little consequence. At two percent, especially for the big guys, like The New York Times with its imminent launch, the numbers gets meaningful and model-setting.

3. Where are the news reading minutes going? The Pew study showing that Americans are reading news 13 minutes a day more, probably given smartphone usage, was a thunderbolt — a potential sign of growth for a news industry that has felt itself melting away. With tablet news reading joining even more smartphone reading (only 20 percent of cellphones are “smart” right now), each news company will have to look at its logs to see which readers are reading what with what kind of device — which will tell where reading is increasing and where (let’s guess, print) it is decreasing. Then comes the job to adjust products accordingly.

4. How good are the margins in the fast-developing marketing services business? Tribune’s 435 Digital, GannettLocal, and Advance Internet are among the leaders selling everything from search engine marketing and optimization to mobile and social to local merchants. It’s a big shift for big newspaper companies used to selling larger ticket ads to relatively few customers. There is no doubt that local merchants want help in digital marketing. The number to watch for the newspaper companies is their margin on sales — after paying off technology partners from Google to Bing to WebVisible. Once we see how those margins settle in, we’ll know whether marketing services is a big, or small, play to find local news company profit growth.

5. How much of digital revenue is being driven by digital-only ad sales? McClatchy has been a leader in unbundling print/online sales, with digital-only now approaching 50 percent. That’s a big number for all media companies to watch. Not only is the market pushing them to offer unbundled products, but the sooner they sell digital separately on its own merits, the faster they grasp the growing business and slowly cut the cord to the declining one.

6. How much of news traffic is now being driven by Facebook and Twitter? A few companies, including The Washington Post, know daily how much of their traffic is driven by social media; many others have little clue. Those that do watch the number know that Facebook and Twitter are the number one growth driver for news “referral” traffic, and that social traffic (friends don’t let friends read bad news) converts better to more regular readership than does search traffic. This metric then pushes newsrooms to more greatly, and more quickly, participate in the social whirl.

7. How much will membership grow at the highest-quality, online-only local news start-ups? MinnPost just hit 2,300, an impressive number, but it’s been a three-year road to get there. It is hiring a membership director and trying to better convert regular readers to members. The Texas Tribune is pushing toward 2,000 and Bay Citizen 1,500. Can membership be a significant, and ramping, piece of the new news business model, or will it have to look elsewhere — advertising, syndication, events, more grants — to find sustainable futures?

8. How many titles — and readers — is Journalism Online able to bring into its Press+ network? Journalism Online has moved from a question mark to a well-situated player in the iPad-fueled universe of paid content. Its Press+ network offers the promise of that elusive “network effect” — but only if it gets real scale.

9. How much “extra” do news companies charge for digital access? Okay, every publisher wants to be paid for news content. But as they test out pricing, they’re all over the board in how much to charge. Some want to charge as much for digital as for print; others are willing to throw in digital access for “free” if readers maintain print. The number to watch is one probably about 10-20 percent higher than print alone — as an opt-out upsell — and see how much that sticks with print readers. If that works, new “circulation” revenue helps replaces some of that disappearing ad money — and provide a route to a time of mainly digital, partially paid access.

10. What’s your cost of content? No journalist likes to be thought of as a widget producer, but news is a manufacturing trade, as the Demand Media model has shown us. How can news companies lower the cost of content while creating more? That’s why we see new Reuters America deals, Demand partnerships, more user-gen, more staff blogging. Editors are more needed than ever to make quality judgments about new content, but they and their business leaders must understand what content — high-end and low — really costs to produce.

11. How much do you spend on analytics? Ultimately, investing in the collection and interpretation of data is a big test of news companies’ ability to play digital. I’ve noted (“The Newsonomics of the FT as an Internet retailer“) how the Financial Times has set the pace for the industry in establishing a new team of (non-newspaper) people to run its analytics arm. That operation now numbers 11, up from nine last year. A good beginning metric for any news company to ask: How much money are we investing in understanding our business with the tools of the day?

January 05 2011

14:05

Why ProPublica is publishing web ads — and what that means for the nonprofit outfit’s funding future

Check out ProPublica’s website today, and you might notice — along with blog posts, donation buttons, links to special projects, and the kind of deep-dive investigative journalism that the nonprofit outfit is celebrated for — a new feature: advertisements. Starting today, the outfit is serving ads on its site to complement the funding it takes in from foundation support and reader contributions, its two primary revenue streams.

“This has been something we’ve been expecting to do for some time,” Richard Tofel, ProPublica’s general manager, told me in a phone call. “It was a question of when.”

ProPublica isn’t alone in venturing into the realm of dot-org advertising. A number of ProPublica’s nonprofit peers, California Watch, Texas Tribune, Voice of San Diego, and MinnPost among them, already run sponsored messages on their sites, served directly and via community partnerships and corporate underwriting. As Tofel noted in a blog post explaining the decision to take on ad support: “We’re doing this for the usual reason: to help raise revenue that can fuel our operations, promoting what people in the non-profit world call ’sustainability.’”

The revenue raised, though, won’t likely be much in comparison to that offered by ProPublica’s other funding streams. The site had 1,300 donors in 2010, Tofel notes, providing $3.8 million on top of the funding provided by the Sandler Foundation; web advertising being what it is, the revenue that comes from the ads will likely be a trickle compared to the site’s donation-based funding streams. “Given what’s happened to web advertising in the last five years, on any kind of reasonable projection of the size of our audience” — though the number fluctuates, ProPublica currently averages a little more than a million pageviews a month, he told me — “we’re not talking about a great deal of money.”

So HuffPost this is not. And that will be true not only in terms of the revenue generated by the ads, but also in terms of their content itself. ProPublica’s ads will be served as part of the Public Media Interactive Network, a digital ad network — operated by National Public Media — that started in 2008 to sell remnant ad space on NPR.org and PBS.org, but which recently expanded to include nonprofit news sites. (According to this press release, Texas Tribune and MinnPost are also members.) The network sells packages; publishers can either opt into or opt out of running those packages’ ads on their sites. And while “we’ve looked at the range of their clients, and I don’t see any at the moment that we’d have a problem with,” Tofel notes — none of those “lose inches of belly fat!” monstrosities here, folks — ultimately, “it’s our decision about whether to accept a particular advertiser that they have found.” As ProPublica explains in its new Advertising Acceptability Policy statement:

First, ProPublica reserves the right to accept or decline any advertisement or sponsorship it is offered.

ProPublica will decline to accept advertising that it knows or believes to be misleading, inaccurate, fraudulent or illegal, or that fails to comply, in ProPublica’s sole discretion, with its standards of decency, taste or dignity.

ProPublica, like all quality publishers of original journalism, maintains a clear separation between news and advertising content. Advertising that attempts to blur this distinction in a manner that, in ProPublica’s sole judgment, confuses readers will be rejected.

It’s an expect-the-best/prepare-for-the-worst approach to ceding a bit of control over what readers see when they visit the site, Tofel explained. “You just want to leave yourself the latitude so that you don’t get into a situation that is uncomfortable — or that undermines, most importantly, readers’ faith in what they’re reading.”

And that transaction with readers — one that, ultimately, understands an audience not as an anonymous collective of eyeballs and click-givers, but as individuals and, in the best sense, message-amplifiers — will remain a constant even as ProPublica tweaks its revenue strategy. As will, Tofel notes, the outlet’s partnerships with other news organizations (48 last year alone!) — and its rare-in-the-media-world comfort with sending users away to other outlets, partner and otherwise. While, yes, the inclusion of web ads represents an interest in keeping — and growing — direct traffic to ProPublica’s own site, “we are not in business to make money,” Tofel says. “We are in business to make change. And that’s still very much the case. But we do need to come up with enough money to float the boat, not just today and tomorrow, but on into the future.”

November 23 2010

15:00

A handbook for community-funded journalism: Turning Spot.Us experience into lessons for others

In creating a new system to fund reporting directly by donations from a geographic or online community, Spot.Us broke some of the traditional rules of journalism — namely that reporting is funded through a combination of advertising dollars and subscriptions.

That was two years ago, and now a network of individual journalists and small news organizations are attempting to use Spot.Us as a model to find new ways to fund their work and strengthen their connections to the community. And what they need are a new set of rules.

As part of his fellowship at the Reynolds Journalism Institute, Spot.Us founder David Cohn is developing a handbook for community-funded reporting that will cover everything from how reporters can pitch stories to establishing partnerships in the community to learning whether crowdfunding is right for your project. I spoke with Cohn and Jonathan Peters, who are working together on the project. In their eyes, it’s as much an assessment of how Spot.Us methods work as it is a handbook.

“I don’t want it to evangelize Spot.Us,” Cohn told me. “I want it to evangelize the type of community-funded reporting of Spot.Us.”

Spot.Us has worked with more than 70 organizations, from MinnPost and Oakland Local to The New York Times. “In my experience so far, it’s been the journalism community that has been adopting the Spot.us model, not the journalism industry,” Cohn said.

Which is why the book will serve not only as a how-to, but also something of a Hitchhiker’s Guide to the (Community-Funded Journalism) Galaxy, pointing out what has (and hasn’t) worked for Spot.Us, introducing the new players in community journalism, new methods of generating funding and a helpful glossary of terms (the difference between micro donations, crowdfunding and crowdsourcing for instance).

What they did not want to do, Peters says, is try and create a paint-by-numbers book that applies the same method to every community. “The community-funded model relies wholly on a very local focus, not only in the reporting that sites provide, but also in the structure of the site,” Peters said, adding that what works for one site may not work for another.

Only a few months into the project (they expect to be done by the spring), Cohn and Peters have found that one of the biggest questions the handbook can answer is how to explain the way community-funded reporting — and Spot.Us — works. For their research the two are surveying reporters who have worked with Spot.Us to fund and report stories. “The most interesting thing to the two of us was the majority of reporters who talked to us could not give an elevator speech to someone who does not know what Spot.Us does,” Peters said.

Making a pitch to an editor and convincing groups of people to help pay for a story are different things — largely because reporters tend to think journalism should be supported simply because it’s journalism, Cohn said. This is where a little entrepreneurship and the art of the sale come in, teaching journalists to articulate their goal and show their work meets an identifiable need. Just as important as the pitch is knowing how much of a story to tease out when trying to get funding. Cohn said reporters need to show what an investigation could reveal instead of giving up all the information their story will hold. Why would anyone pay to fund your story if you tell them the whole thing during the pitch?

Becoming something of a salesman and being more transparent in reporting are part of a broader question the handbook will deal with: Is community-funded journalism right for you? Those considerations, along with the amount of time it takes to raise money for reporting and having regular interaction with the audience, are key to whether a reporter will be successful working in Spot.Us model, Peters said.

Just as important is being able to navigate the playing field. Peters said its important for journalists to be aware of the varying options for getting funding for the work, whether it’s Kachingle and Kickstarter or GoJournalism (for Canadians).

Cohn and Peters say they don’t expect the handbook to be the definitive resource on community-funded reporting, but they expect it can help people who are curious. (As far as the actual book part of the handbook, they expect to publish it online.) Cohn said a large part of what he does now is talk to others about how Spot.Us works and how it can be applied elsewhere. Now all of that will be in handy book form.

“The audience is — as far as we can tell — writing for reporters who want to work with people like Spot.us or GoJournalism, and don’t know what it’s like,” Peters said. “We can knock down barriers and misconceptions.”

October 14 2010

14:30

The Newsonomics of replacement journalism

[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.]

Finally, we’re seeing light on the horizon. Journalism hiring is picking up.

The second half of the year has so far produced TBD’s hiring of 50 in Washington, Patch’s push to pick up 500 journalists across the country, and the new alliance for public media plan to hire more than 300 journalists in four major cities, if funding can be found in 2011. In addition, the brand-name journalist market has suddenly flowered, as everyone from National Journal to the Daily Beast to Bloomberg to AOL to the Huffington Post to Yahoo compete for talent. These are bigger numbers — and more activity — than we’ve previously seen, though they build on earlier hirings from ProPublica to California Watch to Bay Citizen to Texas Tribune to MinnPost and well beyond.

It’s a dizzying quilt of hiring, in some ways hard to make sense of, as business models (how exactly is Patch’s business model going to succeed? what happens when the foundation money dries up?) remain in deep flux. Yet, amid the hope, now comes this question: Are we beginning to see “replacement journalism” arriving?

Replacement journalism, by its nature, is a hazy notion. We won’t see some one-to-one swapping for what used to be with something new. Replacement journalism will though give us the sense that new journalism, of high quality, is getting funded, somehow, and that the vacuum created by the deepest cut in reporting we’ve ever seen is starting to be filled. It is an important, graspable question not just for journalists and aspiring journalists welling up in schools across the country, but also for readers: Are we beginning to see significant, tangible news coverage in this new, mainly digital world?

So, let’s assess where we on, on that road to replacement journalism. Let’s start with some numbers. Take the most useful census of daily newspaper newsroom employment, the annual ASNE (American Society of News Editors) census, conducted early each year and next reported out at its April 2011 conference. ASNE’s most current number is 41,500. That’s down from 46,700 a year earlier, from 52,600 in 2008 and from 55,000 in 2007. So, over those three-plus years, that’s a loss of 13,500 jobs, a 25-percent decline.

As we consider what’s been lost and what needs to replace it, we’ve got to look as much at possible at reporting. That news-gathering — not commentary (column or blog) — is what’s key to community information and understanding, fairly prerequisite in our struggling little democracy. While we don’t know how many of those 13,500 jobs lost are in reporting, we can do some extrapolation. Using that same ASNE census, we see that a little less than half (45 percent or so) of newsroom jobs are classified as reporting, while 20 percent are classified as copy/layout editors, 25 percent as supervisors and 10 percent as photographers and artists. So — while not undervaluing the contributions of non-reporters — let’s say, roughly, that half the jobs lost have been reporters. That would mean about 6,750 reporting jobs lost in three years.

Okay, so let’s use that number as a yardstick, against a quick list of journalist hiring:

  • Investigative and extended enterprise reporting: It’s tough to come up with any one number for investigative or long-form reporting in newspapers or in broadcast. We know that many newspapers and broadcasters have cut the investment in staff here, though, through the carnage of staff reduction. (One indication: “The membership of Investigative Reporters and Editors fell more than 30 percent, from 5,391 in 2003, to a 10-year low of 3,695 in 2009″, according to Mary Walton in the American Journalism Review.) Into this breach have come the new ProPublica, the restyled Center for Investigative Reporting (with its California Watch, most notably) and the growing Center for Public Integrity in Washington, D.C. They are joined by smaller centers from Maine to Wisconsin to California. Loss: Probably in the high hundreds. Gain: Probably in the small hundreds. Net: We’ve seen real high-quality replacement journalism, but need more, especially on the community level.
  • Washington, D.C. reporting: Dozens of D.C.-based reporting positions have been lost over the last several years, certainly, and the number may stretch into the hundreds. For awhile, the biggest news was that the Al Jazeera bureau was among the fastest-growing. Now, of course, there’s the goldrush in government-oriented reporting as the newly emboldened (and funded) National Journal group and Bloomberg Government add a couple of hundred positions, and join Politico in the D.C-based fray. With both new efforts still in formation, we’re not clear what kind of reporting they’ll do. If it’s mainly government-as-business (Bloomberg’s seeming model) and/or if it’s mainly behind pay wall, then then this new stuff will be less replacement-like. Covering public policy implications for all of us nationally, and the particular impacts on those of locally, is a key, yawning need. Loss: Significant. Gain: Substantial. Net: Unclear we see the words on our screens in 2011.
  • Hyperlocal reporting: The biggest news here is Patch, of course. With 500 sites in various stages of rollout, we can’t yet assess how much new reporting — and of what quality, what depth — will be added back, replaced. Add in the redeployment of many metro staff reporters from Hartford to Dallas to L.A., and the fact that smaller community dailies and weeklies have weathered the storms better than bigger papers. Loss: Uncountable, but real across the country. Gain: With Patch and with the re-attention of metros to smaller communities through staff redeployment and blog aggregation, it’s now substantial. Net: One of the most promising areas in replacement journalism.
  • Metro-level reporting: The devastation seems clearest here, with newspapers like the San Jose Mercury News cut to 125 newsroom staffers from 400 a decade ago, and many other dailies down by 50 percent or more. The bulk of cuts, as well chronicled by Erica Smith at Paper Cuts, appear to be at metros — and they are continuing; witness recent job losses in Sacramento and Miami and at USA Today. On the positive end of the ledger, the TBD-Bay Citizen-Voice of San Diego-MinnPost-Texas Tribune-Chicago News Cooperative parade has added real journalistic depth in selected markets. Yet, unless they grow substantially from the dozens they are — the public media push, though only in formation, is the most promising here — there’s a low replacement ratio. This is the biggest conundrum in front of us: how do we maintain current newsroom staffing of 340 at The Boston Globe or 325 at The Dallas Morning News, against the ravages of change? Loss: Huge. Gain: Spirited and of noteworthy excellence. Net: Biggest gap to fill — and the gap may be widening still.

“Replacement journalism,” of course, is a tricky term, and maybe only an interim notion — a handle that helps us from there to here to there. By the very nature of digital and business disruption and transformation, we have to remind ourselves that the future is never a straight line from past to future, and that it will offer us great positive surprises as well as continuing disappointments. William Gibson’s enduring line sums that up: “The future is already here. It’s just not evenly distributed.”

Photo by Matt Wetzler used under a Creative Commons license.

September 20 2010

14:00

L.A. Times’ controversial teacher database attracted traffic and got funding from a nontraditional source

Not so long ago, a hefty investigative series from the Los Angeles Times might have lived its life in print, starting on a Monday and culminating with abig package in the Sunday paper. But the web creates the potential for long-from and in-depth work to not just live on online, but but do so in a more useful way than a print-only story could. That’s certainly the case for the Times’ “Grading the Teachers,” a series based on the “value-added” performance of individual teachers and schools. On the Times’ site, users can review the value-added scores of 6,000 3rd- through 5th-grade teachers — by name — in the Los Angeles Unified School District as well as individual schools. The decision to run names of individual teachers and their performance was controversial.

The Times calculated the value-added scores from the 2002-2003 school year through 2008-2009 using standardized test data provided by the school district. The paper hired a researcher from RAND Corp. to run the analysis, though RAND was not involved. From there, in-house data expert and long-time reporter Doug Smith figured out how to present the information in a way that was usable for reporters and understandable to readers.

As might be expected, the interactive database has been a big traffic draw. Smith said that since the database went live, more than 150,000 unique visitors have checked it out. Some 50,000 went right away and now the Times is seeing about 4,000 users per day. And those users are engaged. So far the project has generated about 1.4 million page views — which means a typical user is clicking on more than 9 pages. That’s sticky content: Parents want to compare their child’s teacher to the others in that grade, their school against the neighbor’s. (I checked out my elementary school alma mater, which boasts a score of, well, average.)

To try to be fair to teachers, the Times gave their subjects a chance to review the data on their page and respond before publication. But that’s not easy when you’re dealing with thousands of subjects, in a school district where email addresses aren’t standardized. An early story in the series directed interested teachers to a web page where they were asked to prove their identity with a birth date and a district email address to get their data early. About 2,000 teachers did before the data went public. Another 300 submitted responses or comments on their pages.

“We moderate comments,” Smith said. “We didn’t have any problems. Most of them were immediately posteable. The level of discourse remained pretty high.”

All in all, it’s one of those great journalism moments at the intersection of important news and reader interest. But that doesn’t make it profitable. Even with the impressive pageviews, the story was costly from the start and required serious resource investment on the part of the Times.

To help cushion the blow, the newspaper accepted a grant from the Hechinger Report, the education nonprofit news organization based at Columbia’s Teachers College. [Disclosure: Lab director Joshua Benton sits on Hechinger's advisory board.] But aside from doing its own independent reporting, Hechinger also works with established news organizations to produce education stories for their own outlets. In the case of the Times, it was a $15,000 grant to help get the difficult data analysis work done.

I spoke with Richard Lee Colvin, editor of the Hechinger Report, about his decision to make the grant. Before Hechinger, Colvin covered education at the Times for seven years, and he was interested in helping the newspaper work with a professional statistician to score the 6,000 teachers using the “value-added” metric that was the basis for the series.

“[The L.A. Times] understood that was not something they had the capacity to do internally,” Colvin said. “They had already had conversations with this researcher, but they needed financial support to finish the project.” (Colvin wanted to be clear that he was not involved in the decision to run individual names of teachers on the Times’ site, just in analzying the testing data.) In exchange for the grant, the L.A. Times allowed Hechinger to use some of its content and gave them access to the data analysis, which Colvin says could have future uses.

At The Hechinger Report, Colvin is experimenting with how it can best carry out their mission of supporting in-depth education coverage — producing content for the Hechinger website, placing its articles with partner news organizations, or direct subsidies as in the L.A. Times series. They’re currently sponsoring a portion of the salary of a blogger at the nonprofit MinnPost whose beat includes education. “We’re very flexible in the ways we’re working with different organizations,” Colvin said. But, to clarify, he said, “we’re not a grant-making organization.”

As for the L.A. Times’ database, will the Times continue to update it every year? Smith says the district has not yet handed over the 2009-10 school year data, which isn’t a good sign for the Times. The district is battling with the union over whether to use value-added measurements in teacher evaluations, which could make it more difficult for the paper to get its hands on the data. “If we get it, we’ll release it,” Smith said.

August 12 2010

14:00

The Newsonomics of TBD

[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.]

Thirsting for good news, the welcome given TBD.com by news observers has been a bit overwhelming. In a desert of too-scarce good news about the news business, TBD represents one of the potential oases, like its smaller — and largely nonprofit — counterparts from San Diego to Austin to the Twin Cities to New York.

Most of the first appraisals have focused on the site’s product innovations. Let’s now take an early look at the size of this possible oasis and the unique business model under it, to gauge what kind of a test it may be. Let’s look at the Newsonomics of launching what is the nation’s first combined local online news startup/24-hour news channel.

That combination is the most basic to understanding the business of TBD, informing both TBD’s cost structure and revenue models. If TBD turns profitable within two to three years, it may become a prototype for digital/video/TV city-based news businesses.

While there may be two dozen or more metro news channels in the U.S, none has yet combined with a online news site to the extent that TBD is doing. The only parallel may be Cablevision’s News 12, its longstanding Long Island/Connecticut/New Jersey-oriented station that got a new cousin when the parent company bought Newsday from Tribune in 2008. In a post on that acquisition, I noted the potential synergies in the deal:

  1. Joint ad sales.
  2. Synergistic news-gathering and production.
  3. Monetizing cable-produced news video through Newsday’s site.

Since then, we haven’t seen a lot of that synergy in New York, as the cable news site and Newsday.com remain separate, with those who don’t subscribe to either having to pay for direct access. A cursory look at the sites doesn’t betray much sharing, but there may be more under the hood.

It is those three principles, though, plus an all-important fourth one — promotion — that should define this next, and bigger, experiment, as TBD.com and TBD TV (which has been rebranded from the former NewsChannel 8) take flight.

Let’s look first at the costs of TBD. TBD has added 50 new positions, all additional to the approximately 50 jobs ported over from the former NewsChannel 8. Jim Brady, TBD’s general manager, outlined the 50 for me: “About 30 doing news, including 15 reporters, six editors, two senior editors, six community engagement people. Another 20 doing tech, sales, product, and design.”

That tells us that the nut for TBD is about $3.5-4 million, salaries and operating costs combined. It needs to find new revenue — exclusive of what the former NewsChannel 8’s sales staff of seven brought in — to get to profitability. Profitability is a key goal for this for-profit company, and one key to proving out the model for use in other metro areas. The cost side is one of the areas that distinguishes the TBD experiment; it’s two to four times bigger than most of the local online news startups we’ve seen.

Key to our understanding here is that TBD — the website and the cable news station — is one organization. Brady is in charge of the P&L of it, though he has a dotted-line relationship to the ad sales heads. While it adds costs to do 24-hour cable news as well as 24-hour digital news, it offers more revenue opportunities as well.

The key synergy: a kind of virtuous circle of promotion to stoke growth of audience and advertising dollars.

“They have the big megaphone [of promotion],” points out Phil Balboni, now CEO of startup GlobalPost, but also a veteran of New England Cable News, which he built and operated. “They can push TBD on every program. Within a short period of time, they will get great brand awareness.” So, yes, TBD TV pushes people to the website, but TBD.com also pushes people to the cable news channel. And WJLA, the ABC7 affiliate also owned by Allbritton, promotes both. JLA’s been the second-ranked station in the broadcast market.

The idea: Big promotion drives in samplers. Then the site must convert a good 20 percent of them to regular customers.

So what does TBD need to get to profitability — and make itself the model to match? Let’s quickly look at the two big qualifiers, audience and sales.

A big audience: Let’s remember that TBD starts with a significant audience, though one far smaller than WashingtonPost.com, just to drop a name. It gets traffic from both WJLA and the former NewsChannel 8; both of their former websites now point to TBD.com. According to Nielsen, WJLA pulled in about 327,000 unique visitors and 1,516,000 page views in July, while NewsChannel 8 appeared to attract a small fraction of that.

Make no mistake: Gaining attention in a crowded media marketplace won’t be simple — and is one of the reasons for the fast-out-of-the-chute TBD Community Network of 129 bloggers.

The Post is formidable competition. It is a premier regional website (built by Brady and others) and in a June Nielsen report, showed a 5.27-percent increase in unique visitors year over year, to 10,089,000 unique visitors and 106,387,000 pageviews. It zigged — up — while the news category zagged down 2.74 percent overall for the same period.

So figure that TBD.com needs a web audience of between 10 and 20 million page views a month at some point in the next 24-36 months to get to profitability. That’s a fifth to a tenth of the Post’s online audience, which, we should keep in mind comes more from outside D.C. than in within it.

Significant new revenue from both TBD.com and TBD TV: The revenue will be mainly advertising. As a for-profit, TBD.com is taking a different route than non-profits MinnPost and Texas Tribune, for instance, both of which are focusing strongly on membership and corporate/institutional sponsorships. The nonprofits are thinking that maybe a third — or less — of their revenue will come from traditional “advertising.” For TBD, though, it’s all about the sale of advertising. Just as TBD TV is critical to TBD.com site promotion, its own revenue growth will be key.

Figure that as much as 30 percent of new revenue generated out of the new enterprise could come from new TV revenue; to the extent it does, the site’s growth could trend more to the 10 million monthly page views, than 20 million, and still be profitable.

Brady says a new online-only sales staff of four will drive both online-only and bundled sales, working with the established sales force. “You start with a sales force that has relationships with an auto dealer, for instance, ” says Brady. “You don’t need a million uniques to get a meeting with them.”

The questions here are familiar ones for local broadcasters and for newspaper publishers: How do you a traditional ad sales staff — one mainly used to selling “time” — to sell the web effectively? How do you blend the online-only sales force with TV-oriented one? How much do you emphasize online-only sales, or continue a focus on bundling with TV time?

It’s a complex sell, combining sales of space, time, and pay-for-performance advertising. “They need to sell four or five different kinds of advertising,” says Arul Sundaram, an industry consultant who formerly was vice-president of strategy for Internet Broadcasting, which has powered dozens of local broadcast station websites. Beyond selling cost-per-thousand display advertising, Sundaram ticks off various pay-for-performance (largely search-based), video, and mobile ad products that the operation should learn to sell as well.

Pioneering models is a tough business. As the news business looks for new models, the man of the moment is man behind the TBD curtain, Robert Allbritton, CEO of his eponymous company. Allbritton’s gotten credit for seeing, and seeing through, Politico, his first web venture, to on-again, off-again profitablity. Importantly, he’s been credited with allocating sufficient resources, even in cash-negative startup times to create journalistic products that attract audiences.

As Phil Balboni sees it, Allbritton’s move, especially in this economic climate, is “a gutsy statement.” In 2010, especially, no guts, no glory.

August 02 2010

14:00

The Newsonomics of membership, part 2

[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 news organizations have embraced the membership model (see part 1 of The Newsonomics of membership), but they don’t have to reinvent the wheel to do it. They can hone that wheel, for the digital-only and digital-first age. One of the best places to gain insight is in public radio, which has been plying the membership trade for more than 40 years now — learning the dos and don’ts and sharing some best practices internally.

As city sites begin to build on what MinnPost, Texas Tribune, and GlobalPost have started, they can certainly apply some of those lessons. I made an initial, unscientific foray into NPR membership, to feel the ground and see what’s shaking. I think at this point, pending much deeper study, we can see both some metrics and some lessons that have useful applications.

The Metrics

As I noted in my first membership post, there are at least three key metrics for new websites to master as they move forward:

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

NPR station experience helps inform those metrics.

Percentage of listeners who become members: There is no single number to cite, but most reports come in at somewhere between 6 and 12 percent, though it’s clear that counting methodology is not consistent across the nation. KUT, Austin’s public radio station, is part of a group of eight like-sized stations which collectively pool their membership data. Those eight sign up 5.8 percent of listeners, Holly Gaete, KUT’s director of membership, told me. “Listeners” are those who listen for at least five minutes per week. KUT currently counts 17,338 contributors.

Oregon Public Broadcasting says it gets about 10 percent of its public TV viewers to become members, but has no similar data for the radio; that’s one of the nuances of counting, as a number of dual-license stations (public TV and public radio under one umbrella) complicate any apples-to-apples comparisons.

A few people make the point that it’s long-time listeners — those who’ve listened for two years or more — that make up the best universe of potential public radio members. That notion (akin to MinnPost’s Joel Kramer’s notion that frequent visitors offer greater potential than infrequent ones) makes sense, but is apparently not something widely measured in public radio.

What brings them in?: KUT’s Gaete makes the point that membership directors use diverse tools to gain members. Here’s her breakdown:

Radio pitches (those twice-yearly pledge drives): 37 percent
Mail: 36 percent
Web: 18 percent
Telesales: 5 percent
Other: 4 percent

Stewart Vanderwilt, KUT’s general manager, differentiates between those who make “intellectual” decisions to give — responding to mail, for instance — from those who make an “emotional” decision, often responding to an on-air appeal. The intellectual decision-makers’ average gift is higher, and they renew at a higher rate. KUT’s overall renewal rate is 58 percent.

The sweet spot of giving: Again, counting standards differ, but it’s the $50-$150 range that draws a majority of gifts. The buck-a-week or 10-bucks-a-month pitch seems to have resonance with donors, with some making the point that “that’s cheaper than the daily newspaper.”

What’s the trend line?: Interestingly, the recession’s not done a great deal of damage to membership, at least not as much as we’ve seen circulation fall at dailies. Some stations report membership mildly down, but giving flat or up a tad. Others report membership even up a little, but giving down. Stations’ recent membership performance may indicate a couple of things: Long-term relationships may help weather bad economic periods, and listeners understand the increasing role of public radio in filling the news vacuum.

How important is membership giving?: KQED’s Scott Walton, executive director of communications, reports that membership tops 200,000 — and accounts for 60 percent of the stations’ $55 million budget. Oregon Public Broadcasting — its number of contributors up two percent over the last year — counts 120,000 members, which account for 64 percent of its budget.

The Lessons

Beware the power of the barker. Bill Buzenberg, now director of the Center for Public Integrity, used to serve as vice president of news for National Public Radio. He’s in a unique position to observe membership, given that background. As he compares online news startups with public radio, he notes one big distinction that will affect membership sign-ups.

“The difference is that public radio has a ‘barker channel,’ meaning they have the radio megaphone to get people to come into the tent or become members in the first place during membership drives in which they can withhold the programming,” he says. “That barker channel is great for public radio and drives up the membership numbers, even if listeners hate the membership drives. MinnPost, or other non-profit centers, have no barker channel.”

If barking helps, just talking to potential donors — and current ones — about the deep journalism crisis, especially the local one, helps too. Donors feel an obvious kinship with the stations — maybe akin to a loyalty newspaper subscribers have traditionally felt. Or perhaps, the notion of voluntary donation itself creates a reinforced relationship, more so than a fee-for-service “subscription.” That’s a key question as we see membership pushes for online media ramp up just as paywalls are increasingly erected by legacy news companies.

“People have the tangible sense that journalism is troubled,” reports Oregon Public Broadcasting CEO Steve Bass, who says he hears that from donors, as newspapers from The Oregonian to smaller dailies cut back on coverage.

Borrowing lessons from public radio isn’t easy. Metrics within public radio vary and are not freely available. In addition, we’re in the early stages of thinking about what’s different and what’s similar between public radio and online news sites. Further collaboration here — maybe abetted by such groups as the Knight Foundation — could be a win/win, though potential competition as we see developing in the Twin Cities (MPR, MinnPost) could be an issue.

Finally, as member-based sites ramp up — or, in the case of public radio, morph into digital-first news producers — one curious question will be the the advertising value of these members. Membership and ads need not be two separate universes. In fact, member data — how they read, what they read, what they buy, where they are — can greatly help the targeting of ads. That could make members even more lucrative than readers, and listeners, overall.

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.

June 08 2010

21:00

MinnPost, The UpTake try Spot.us to raise funds for their coverage of the Minnesota gubernatorial race

Interesting pitch on Spot.us today:

With the cutback of political reporters at every major newspaper in the state, the need for more political coverage is clear, we will have a new Governor come November, and the citizens of Minnesota need to know as much as they can about everyone in the race. This means we need more, more stories written, more video captured and more questions asked.

We’ve decided that our communities who rely on our coverage may also share these goals and we are excited to be using Spot.us to help us crowd-fund this story idea.

The pitch comes from the Minnesota nonprofits MinnPost and the citizen journalism site The UpTake. It’s looking for funding through November. Oh, and it estimates the total cost of the project to be $40,800.

Yes. That’s steep by all accounts — “if I’m realistic, I don’t know if we’re going to hit that,” Spot.us founder Dave Cohn told me — but it’s also based on straightforward estimates of the man-hours both outlets will require to report (MinnPost) and record (The UpTake) information between now and election time this fall — with about a 50/50 split between the two. MinnPost, says Roger Buoen, the managing editor overseeing the site’s coverage, will have a lead journalist backed with, if resources allow, three or four other reporters. And The UpTake, executive director Jason Barnett told me, will hire a professional videographer — again, if resources allow — to be assisted by the outlet’s cadre of citizen volunteers. That’s a commitment. And a costly one. Indeed, the collaborative coverage idea “has been one of the most expensive projects presented to Spot.us,” Barnett notes.

This isn’t the first time media organizations have used the Spot.us platform to solicit donations for reporting — in the past, the community-funding site has hosted pitches from Bay Area news organizations like the Oakland Tribune, San Francisco magazine, the San Francisco Appeal, the Bay Guardian, and Investigate West — but the MinnPost/UpTake partnership represents a significant step forward for the still-fledgling site. Not only are the organizations based in Minnesota — and proposing to produce an ongoing series of stories that are very specific to Minnesota’s interests — but they’re also, together, significantly bigger than most other outlets that have solicited funding through Spot.us.

“MinnPost is arguably the largest nonprofit that we’ve worked with,” Cohn told me. And it’s also “the second in the Investigative News Network that we’ve worked with.” (TheUpTake — “sort of the local C-SPAN,” Buoen puts it — isn’t an INN member, Cohn notes. “But they’re also awesome.”)

The trifecta came about as many such collaborations do: through a casual meeting that became something more. Cohn and Barnett met each other “maybe a year and a half ago,” Cohn recalls, “and we always talked about doing something together.” At the same time, Barnett and his staff had been working with MinnPost, supplying livestreamed video for, among other things, the long saga that was the Al Franken/Norm Coleman Senate runoff. The collaboration — MinnPost supplying the reporting, TheUpTake providing the video — worked so well that they wanted to continue it for other political stories. “Jason and I had been talking for some time about gubernatorial coverage,” Buoen says; the Spot.us pitch was in some ways a logical outcome of that discussion.

So a Kickstarter-esque, all-or-nothing proposition this is not. “Even if we don’t raise a lot of money, we’re going to do a lot of this stuff anyway,” Buoen says. The question is how much reporting they’ll be able to do with whatever funds they’re able to raise. Cohn said that, for Spot.us pitches that don’t reach their fundraising goal, reporters have the option to take the money donated and do the work anyway. And Buoen sees the Spot.us effort as existing separately from MinnPost’s current, three-tiered revenue stream of subscription fees, advertising dollars, and foundation support.

Still, the new-car-worthy ticket price isn’t just a matter of pragmatism, Cohn points out. The high number — which lives, price-tag-like, next to the description of the MinnPost/UpTake reporting project on the Spot.us site — serves as a reminder that good, thorough journalism is, you know, pricey. The Spot.us pitch is an effort to raise money, of course; but it’s also an effort to raise awareness. It’s a way, Barnett says, to “present some of the real costs of journalism.”

13:54

Community Centered Ads Boost Engagement, Funding at Spot.Us

The beauty of starting something from scratch is the iterative and agile process I've talked about since before "Spot.Us":http://www.spot.us began. In this post I'm going to discuss two new developments at Spot.Us. One is an exciting feature and revenue stream. The other is in relation to our expansion into new regions.

For almost two years now, Spot.Us has been growing and evolving. I'm very happy to say that the last month has possibly been the most exciting since our launch. We grew almost 30 percent in terms of users. Even more exciting is that the technology behind Spot.Us is starting to show real signs of scale between our expansion into Seattle and other regions, which I'll describe below.

So what's happened in the last month?

Community Centered Advertising

I'm normally good about breaking news of Spot.Us on my personal blog and Idea Lab. But last month we unleashed a feature somewhat quietly, using just an email to registered members of Spot.Us (sign up for our newsletters here). It was later covered in Poynter.

We call it "Community Centered Advertising." Before I go off on a rant about it, let me ask long time readers, friends, acquaintances, lovers of journalism or revenue geeks to try the following demonstration.

In less than two minutes and five clicks you can help an independent reporter (and Spot.Us).

  1. Go to Spot.Us and login or register.
  2. Click "Earn Credits" in the header navigation.
  3. Take a simple and short survey.
  4. Submit the survey and earn $5. Then you'll be taken to a page with all our active pitches.
  5. Select the pitch of your choice (this is the fun part), click "Apply Credits," and confirm that decision.

Bill Mitchel from Poynter wrote about it and summed it up: "In some ways, it seems like a no-brainer: Encourage consumer engagement with advertising by giving users a stake in deciding how the revenue gets spent ... Spot.Us itself is an experiment in transparency and control of money for news. This is just a matter of applying it to advertising."

What we are doing is making it very transparent how advertising money gets spent on Spot.Us. It's so transparent that we give up ownership of that decision to members of the public who engage with the advertisement. Spot.Us is sponsoring this current campaign but we already have our next sponsor lined up. (Interested in being a sponsor? Contact info@spot.us).

Is It Working?

1. The numbers don't lie: Our engagement percentages went up drastically. When fundraising online you can expect a certain amount of attrition. People will view your site and not engage. It's a big mental burden to reach for your wallet even if it's not a financial burden. Folks like Beth Kanter have been talking about it for years; there is an engagement
ladder
and people have to start from the bottom. Well, now the bottom level of engagement on Spot.Us can still support stories financially at no cost to the user. As expected, user engagement went up dramatically -- it quadrupled, in fact.

2. The numbers got better: We also saw something that I didn't expect to happen -- we got more financial contributions on Spot.Us as well. I figured with the "Earn Credits" option nobody would donate their own money. To the contrary, many did. The $5 in credits was an appetizer.

3. The challenges for this revenue stream: I feel confident that this model is ethically sound in that the advertising won't influence the content -- at least, no more than could be argued advertising impacts content for any publication. That said, we want sponsorships that engage people in a positive way. Wouldn't it be great if people were engaging with the advertisement not just because they wanted the credits, but because it served their information needs somehow? Still, we are a non-profit startup. Unlike the Bay Citizen which had $8.7 million at their launch, we have just me to try and sell sponsorships on top of everything else. So challenge  number one is finding a way to sell sponsorships quick and easy. To do this we need a broader appeal. Which brings us to the next part of
this update.

Spot.Us Creeping into Your Town (Lessons on Assumptions)

Today we are publishing a pitch that is in collaboration with both The Uptake
and MinnPost.com, two of Minnesota's finest non-profit news organizations. 

There have been two aspects of Spot.Us that, since launching, I realize have not worked the way I envisioned. One was around the idea of distributing content. Most news organizations are adverse to running content that isn't 100 percent produced by them or produced by somebody within the mainstream media club. Hell, even the larger non-profits have trouble distributing their content to the AP. It's a challenge and we've gotten around it by partnering with news organizations from the start of a project. That was a shift from my original vision.

It's time now to question my original vision of expansion, and this creep into Minnesota is a perfect example. The pitch we're publishing today is to cover the gubernatorial race via video from The Uptake coupled with reporting from MinnPost. You couldn't find two better partners to do this. Meanwhile, they have large enough audiences such that if 10 percent or so take action on "community centered advertising" we'd start fundraising large amounts. Even better, it wouldn't divert from their regular fundraising efforts. If anything, it might bolster it by giving potential future donors an easy route in.

But this is the only pitch we have in the Minnesota region (more are welcome -- just click "Start a Story.")

Meanwhile, over in Seattle, we've funded two stories and a third is close. After that's done, I'm going to have to start emailing around to convince reporters to create a pitch. Not an impossible task, but a drain nonetheless.

At the same time, I'm getting pitches from places like Portland, Oregon; Sacramento, California; Vermont; Maine, etc. Even as far away as Guatemala (international is a whole other can of worms). These locations don't necessarily merit their own network. I don't suspect I could get a steady stream of pitches from Maine. But the pitch that has come my way is pretty good. It is local and covers civic issues. I certainly wouldn't want that to die on the vine because I couldn't find three other Maine reporters to create sister pitches. 

From the start, I thought Spot.Us would expand a la Craigslist: Pick locations, create sub-domains and let people aggregate around them. Certainly San Francisco and Los Angeles have worked like this. We always have about five active pitches in both locations at any given time. Seattle however, might not be that way. I fear I'm viewed as an outsider -- perhaps even as "competition." And perhaps outside of The Uptake and MinnPost.com, I will have no luck in Minnesota either (I hope I'm wrong). 

But that shouldn't stop me from expanding. Especially not when I am getting very solid pitches from around the country.

Which is to say: Spot.Us might need a new organizing principle for expanding. Maybe the network or "region" shouldn't be a factor at all; maybe we will expand to wherever a decent pitch comes calling, be it in New York or Sante Fe. Making this shift would undoubtedly raise more questions, such as how we decide what pitches to take, etc. But I am prepared to have that conversation.

What do you think?

June 01 2010

16:00

MinnPost’s Joel Kramer on the pull between big audience and big impact

The New York Times’ David Carr took a look recently at the nonprofit news site MinnPost, which he called “one of the more promising experiments in the next version of regional news.” Here’s an excerpt:

“We want MinnPost to be able to stand on its own by 2012, and I have a very aggressive definition of sustainability, which is that we have enough revenues to survive without foundation money,” [MinnPost founder Joel Kramer] said. “A lot of the foundation money for journalism goes to large, investigative-oriented sites, and I don’t know that there will always be money for sites like ours where the emphasis is on regional coverage.”

That means that some ambitions have been deferred. The staff is small, some of the work comes from freelancers and, journalistically, MinnPost is a careful, really smart site, but it is built on high-quality analysis rather than deep reporting and investigative work. Mr. Kramer was hard-pressed to come up with a single large story the site broke that changed the course of events.

Kramer’s right that much of the attention nonprofit news outlets receive focuses on the big investigative operations, most prominently ProPublica. And if your goal is to replace what newspapers no longer do as much of, investigative reporting is an obvious focus for nonprofits and foundations. ProPublica’s Paul Steiger has said he measures his success by “impact” — a.k.a. stories that “changed the course of events” — more than audience.

I was interested in that tension between impact and audience, so I gave Kramer a call. “Having a loyal audience is central to our success and our survival, and, therefore, when we decide how to allocate resources, we have to focus on which things will build this loyal audience,” he told me. Here’s an edited version of the conversation I had with Kramer about the evolution of MinnPost.

I’m remembering when MinnPost launched back in 2007, that it was launched in response to newsroom cuts in Minnesota. Do you still see your site as serving that fill-in function of trying to produce additional news in the state? Or has your vision for what the site is doing changed?

The goal was never fill in. I would say that the goal is to serve a community of people who care about Minnesota, people who are engaged in creating the state’s future, opinion leaders, office holders, activists. It’s an important segment of the people who read newspapers. It’s not everybody. Our goal has always been to serve that audience with news, information, analysis, commentary, forum for discussion, for people who are actively involved in the community of the state. That has always been our goal. It’s never been to replace what mainstream media do, but to supplement it, aimed at the people who read the most and act on what they read the most. And that has not changed.

David Carr referred to journalism that “changed the course of events.” Do you see that sort of journalism as your responsibility as a news outlet?

I don’t think that is our principal responsibility. We take our principal responsibility as informing this community with what they want and need to know to play the roles they want to play in creating our community and creating its future.

We do ask our audience what it is that makes them read MinnPost and why they like it and why they keep coming back to it, and the most important thing is reporting and analysis from writers they trust and being on top of stories they really care about and explaining what the stories really mean. In other words, getting beyond the superficial reporting. For example, reporting on the motives of lawmakers — assessing the quality of their proposals and of their actions. Comparing what happens here to comparable situations elsewhere. Predicting what might happen next, based on the authority of the reporter. And introducing these readers to new ideas they didn’t know about, trends and people they should know about. These are the main things, the most important things we do.

Does the site look the way you would have predicted two years ago? Has it evolved based on feedback from your readers?

It has evolved. We learned both from examining the data about traffic and talking to readers that frequency of appearance on the site by trusted writers is a critical element of success. I’m not going to say that is necessarily true for everybody — I’m just talking to our experience. But for us, we learned that. Whereas before I started I might have thought that writers would take a longer period of time on a story and then write less frequently and maybe at greater length, that does not produce the kind of loyal following that we were after. That critical element is appearing frequently on the site, in a way that it is clear who the writer is.

I went back and looked at the clips from when MinnPost launched and at the time it seemed that the site was going to be more like a traditional newspaper translated online than what it is now, which I think is more like a blog that has taken reporting elements. I think if you were to read your description from when it launched and looked now, I think it looks different.

When we launched, some skeptics said that, you know, ‘Joel and his people don’t really understand new media, they don’t really understand the internet.’ And I would plead guilty to that. At the time I even said, I’m a journalist, I come out of a print background, although we did have a couple of editors with more of an Internet background than I did, and I agreed that I was trying to make something happen here that related to a value system I had built in previous media. But I said we were going to learn. So there’s no question: I’d be shocked if our site looked today like I was talking about 2.5 years ago. That’s a long time ago in the Internet world. So, yes, it’s clearly different — no question about it.

But the differences, in my opinion — and this is important to me — they’re not differences in what constitutes quality. Because you can have quality in short term, [quality] that’s in long form. You can have quality in pieces that took six months and pieces that were turned in four hours. And from day one, we were committed to the idea that our writers did not have to be bound by some false definition of objectivity, in which the writer pretends that he or she has no views about anything. So those thing were there from the beginning. But there has been a significant evolution about what works in the medium and what works to build and audience.

What about other models, like nonprofits that focus more on investigative reporting?

As is mentioned in the Times piece, we have the goal of becoming sustainable without foundations. It’s a very ambitious goal and I’m hoping we’ll achieve it by 2012, our fifth year. It’s certainly not a goal shared by all nonprofit journalism enterprises. A key to succeeding at that goal is you have to have an audience that you can figure out a variety of ways to monetize. That could be advertising, it could be sponsorships, it could be donations. It could be the support of people of wealthy means in the community who love the idea and the audience that’s been created. Having a loyal audience is central to our success and our survival, and, therefore, when we decide how to allocate resources, we have to focus on which things will build this loyal audience. And it’s that that we’re talking about changes over time because you get tremendous feedback, traffic feedback, anecdotal feedback, and you learn what it is that is attracting your audience to you.

I think the differing goals of these nonprofits are interesting; some nonprofits are just not particularly concerned with the traffic levels on their website. What do you think of the differences?

There are all kinds of different missions, and I think it’s a great time in the ecosystem where all different things are being tried. If you’re not concerned with traffic, you need to have a set of supporters who are going to be there, not because of your audience, but because of some other factor — such as your impact through investigations on the quality of government in your community, or something like that. So there are ways you could sustain with that without a focus on a regular audience. Another thing you can do, and some of my peer sites are doing this, is give your content away to other places. Now if you do that, then visits to your site are not important, and then you might be able to build a model based on syndication where publishing less frequently but giving it to prominent places could work for you. But our model is based on building a loyal audience to our site.

April 15 2010

15:15

Nieman Journalism Lab: MinnPost editor on new audience building strategy

Valuing returning readers over vagrant visitors, a strategy extolled by Gawker a few weeks back and termed “reader affection”, has caught on at non-profit investigative site MinnPost. Speaking at the ASNE NewsNow Ideas Summit this week, editor Joel Kramer announced that MinnPost is also a fan of the affection metric, and aims to build up a “community of intensely engaged followers”. From Nieman:

The strategy, for MinnPost, is a financial as much as an editorial one: It’s about concentrating impact, but also about monetising that impact. The outlet’s ultimate goal in developing a core readership, Kramer said, is to “convert that community into enough money to sustain the journalism”.

Full story at this link…

Read Journalism.co.uk’s interview with Kramer at this link.

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April 14 2010

17:22

“Intensely engaged followers”: Joel Kramer on MinnPost’s focused audienced-building strategy

Joel Kramer came right out and said it: He discriminates when it comes to his readers. MinnPost cares more about repeat readers than stray visitors, the site’s editor said during the “Building Online Communities” session at the ASNE NewsNow Ideas Summit this week; it’s chosen depth over breadth in its strategy of audience cultivation.

“What we’re trying to do is build a community of intensely engaged followers,” Kramer said. And while, yes, “user engagement” and its iterations seem to be the unofficial theme of this year’s ASNE event, Kramer wasn’t simply referring to engagement in the most common, “traffic-plus-interaction” sense of the term. For MinnPost, engagement is repetition. It’s commitment. It’s what Gawker Media has termed, simply, “affection.”

The strategy, for MinnPost, is a financial as much as an editorial one: It’s about concentrating impact, but also about monetizing that impact. The outlet’s ultimate goal in developing a core readership, Kramer said, is to “convert that community into enough money to sustain the journalism.”

It’s a more nuanced approach to a pageview-focused perspective on audience cultivation; last year, in a piece for our sister publication Nieman Reports, Kramer noted that “traffic to our web site, MinnPost.com, is critical to our financial success.” That’s still the case, of course; but a work-your-core caveat marks a shift in that traffic-is-traffic sensibility — and, as far as the outlet’s reach-out to advertisers is concerned, a shift in the eyeballs-are-eyeballs sensibility. It’s a commercial truth as well as a journalistic one: Not all readers are created equal.

The intense-engagement strategy makes sense in the context of MinnPost’s particular fusion of funding streams: A nonprofit, the outlet also relies on ad revenue — and on member donations that it hopes, eventually, will increase in number and put MinnPost on a path to sustainability. But: eventually. At this point, “the vast majority of our unique visitors are passers-by,” Kramer noted. The goal is to increase the ratio of repeat visitors to one-time ones.

How to do that is the big question — though engaging people with MinnPost’s journalism via the get-them-where-they-are approach will likely play a big role in it. “Social media, comment, and other forms of engagement with the audience have a tremendous effect on audience-building,” Kramer noted. “Facebook is the number-one referrer to our site not counting search — and we hardly were on it at all eight months ago.”

Comments have also been a boon. The site’s ban of anonymous comments, Kramer said, was “controversial” at its inception — “and it probably depresses the traffic,” he allowed — but it maintains MinnPost’s mission, he said, and leads to a more civil environment on the site. Which is another route to constructive community engagement.

And then there’s getting-readers-where-they-are in the more literal sense. “Probably the number-one builder of intensity is face-to-face contact, not online,” Kramer said. He mentioned the annual MinnRoast — the site’s version of the Gridiron Dinner — and some other in-person events that are targeted, in particular, at reaching readers under 40. The outlet recently polled young people about effective ways to get them excited about MinnPost, its content, and its community, Kramer noted. “The first thing they said was, ‘Hold events at bars.’”

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