12 Roadmaps for Making Digital Media Sustainable

However, these hyperlocal sites have little diversity in their revenue models.The stronger ones use more diverse income streams like partnerships, native advertising and sponsorship.

The hyperlocals have few full-time paid workers, as the chart at left shows, and rely heavily on volunteers and part-timers. Scale might be an issue in sustainability, the researchers concluded, since hyperlocals are, by definition, small with limited revenue potential. Sixteen of the 31 generated less than £25,000 (US$ 37,000) in 2014.

They concluded that 8 of the 31 are “resilient”, meaning they can make a profit and grow; 10 are “sustainable”, meaning they can maintain a flow of content and cover costs; and 11 are “viable”, meaning they are fulfilling a demand for content. Two could not be rated.

5. The Press Association of Madrid, in its 2015 report on the state of the profession in Spain, included a list of 579 media launched by journalists since 2008, when industry-wide layoffs began. Since then more than 11,000 journalists in Spain have lost their jobs, and many used their severance packages to start media.

Of those startups, 458 were still active when the report was completed. The chart below shows the coverage areas of those active media. The longest bar represents the 131 that concentrate on local or hyper-local news coverage. The next three largest coverage specialties, representing 41 to 44 media, are culture, sports and national news.

From APM, Press Association of Madrid annual report, 2015. Click on chart to enlarge.

Half of the startups generate less than 50,000 euros (US$ 56,000) per year. The study’s analysis concluded that the vast majority of these publishers had limited or no sales and technical skills, and were extremely vulnerable financially.

However, one of the startups that has thrived is Porcentual, which has contracts with more than 80 media around Spain for its data visualization services. In an interview, founder Manuel Benito Ingelmo described how he launched the service after the newspaper where he worked laid him off to cut costs. Another startup success story is Eldiario.es, which specializes in exposés on corruption. It generated US$ 2.6 million in revenues in 2015 and has more than 50 employees.

The focus on recent startups often fails to take notice of the extraordinary success of the 15-year-old national news website El Confidencial, which has 100 employees, a strong journalistic reputation and ranks sixth among all news sites in Spain with 8 million unique users monthly, an audience half as big as El Pais, the country’s leader, according to ComScore.

Researchers have done several extensive projects about digital media in the region, but usually without a focus on financial sustainability. Poderopedia, a transparency organization, compiled data on the ownership structure of 509 media outlets in Chile and 220 in Colombia and found that they were concentrated in the hands of a few powerful organizations.

Fourteen digital media startups in Latin America and Spain described their business models at the 2013 International Symposium of Online Journalism at the University of Texas. In reporting on the event, Anne Nelson noted that many of these outlets were started with grants from foreign foundations. Their path to sustainability was uncertain.

6. A recent addition to the research is SembraMedia.org, founded and run by Janine Warner, whose team of 16 has created a database of more than 220 Spanish language digital media. (Disclosure: I have worked with Janine on some teaching ventures and am on the advisory board of SembraMedia.) The SembraMedia database has filters that allow a user to sort media by the sources and amounts of revenue generated, number of employees, year founded, coverage areas and other factors.

The aim of SembraMedia is to create a community of digital media entrepreneurs who can share best practices and take advantage of the free resources available on the platform. The site will generate revenue from fees for some courses.

SembraMedia includes a directory of digital media as well as entrepreneurial tools. Click to enlarge.

Holland

7. The venture philanthropy organization Shaerpa commissioned a study in 2015 that included a list of 52 ways to make money with quality journalism.

Authors Pieter Oostlander, Teun Gauter, and Sam Van Dyck looked at four traditional and nine new digital media in Holland and concluded that “quality journalism is a self-supporting proposition in this new ecosystem, and even a quite profitable one”.

To survive, publishers need to create hybrid business models to generate revenue, which are much more complex than in the past, the researchers admitted. “Self-employed information workers and small collectives do not have the skills, culture or supporting infrastructure to market and sell their work.”

Three of their recommendations and observations:

• New media should cooperate more and share infrastructure.
• There is more demand for high-quality journalism than supply, thus there is opportunity.
• Philanthropy needs to take equity positions and make loans, not just offer grants. This is the model used by Shaerpa and the Media Development Investment Fund.

8. Digital news startups in the U.K. and Ireland were tracked for a number of years by a website called Local Web List. The database was originally funded by the Carnegie U.K. Trust. In 2015, it included more than 570 hyper-local news sites. This online database has been limited in scope to identifying basic information about the location and geographic area covered by the websites.

However, researchers from Cardiff, Westminster, and Birmingham City universities used it as a basis to conduct a more detailed survey and received 183 responses. Among their findings, published in 2014:

• “Most hyperlocal news sites suffer from a lack of visibility in their own communities, with only very few reaching a high percentage of their potential local audiences.”
• 72% had fewer than 10,000 users.
• Three-fourths of the publications operated on less than 40 man-hours per week.
• 63% of the publishers paid all the costs of the website themselves.
• Only 8 percent generated more than $3,100 a month.

As in other countries, the vast majority of publishers were small, poorly funded, short on trained personnel, but absolutely dedicated to the work they were doing.

9. Several weeks after I presented my paper in New York, Arijit Sen and Rasmus Kleis Nielsen of the Reuters Institute for the Study of Journalism published Digital Journalism Startups in India.

“There are more new and interesting experiments in Indian journalism than in most other countries in the world,” the authors reported. They looked in depth at six sites but made observations on the enormous potential of the overall market.

Most startups in India are putting an emphasis on mobile-first design of their content and are focused on using social media to distribute it. While many are in English, some are focused on the much-larger Hindi market. Low ad rates and reluctance to pay for content make India a challenging environment for digital media entrepreneurs, they concluded.

11. One of the few databases of local news sites that was still being updated in 2015 was Michele’s List, produced by digital media researcher and consultant Michele McLellan. To be included in her list, a news website had to be “progressing on three fronts – content, management, and revenue.” The database includes 275 listings and has a filter function with 19 categories, including type of news, revenue sources, institutional partners, and location.

With the support of CUNY’s Graduate School of Journalism, McLellan produced The 2015 State of Local News Startups, with data on 84 of the 275 sites in her database.

Among the key findings:

• Two-thirds generate $100,000 a year or less annually, and half make $50,000 or less. 9% make more than $500,000.
• 47 percent said they turned a profit in 2014, and another 22 percent said they had developed a steady flow of revenue but were not profitable.
• Most were highly dependent on local advertising that they sold directly, as opposed to using advertising networks.
• Just over a third had full-time paid staff as content contributors. Most relied on freelance or part-time staff.
• On the business/marketing/sales side, 46% had full-time paid staff.
• Only a third of the publishers drew a full-time salary from their site; 40% of them were not drawing any salary.

In addition to this study, McLellan produced a guide of best practices in sales at 22 of the sites.

McLellan found that, unlike digital media that aim to sell advertising based on audiences in the tens or hundreds of millions, the more successful digital operations “do not use a rate model based on cost per impression (CPM), pay per click, or deals (such as Groupon) that require a large audience to make any money. Instead, these organizations use direct sales to advertisers and offer exposure to smaller, highly engaged audiences. This enables them to command higher rates, as they are unlikely to be sustainable at the lower rates.”

12. The leader in funding studies and projects aimed at improving community engagement and sustainability in digital journalism in the U.S. has been the Knight Foundation. (Disclosure: This writer has benefited from five years of support on three Knight-sponsored journalism projects.)

In a series of three reports over five years, the Knight Foundation tracked up to 20 nonprofit news ventures, some of which they had invested in.

• Budgets ranged from $34,000 for the Rapidian in Michigan to $7 million for the Texas Tribune.
• Average revenue growth from 2011 to 2013 was 73%. However, five either had no growth or a decline in revenue.
• The publications relied heavily on foundations, which provided 58% of total funding.
• Only 23% of their revenue came from earned income (advertising, events, sponsorships, trainings and subscriptions).
• The sites that grew substantially invested in full-time staff in fund-raising and technical innovation.

Only two of the 20 sites — the Rapidian and New England Center
for Investigative Reporting — had more than half of their revenue
from earned income, as opposed to grants.

Professor Jake Batsell of Southern Methodist University added an extensive coda to the report that included best practices of the Texas Tribune and some other leading news nonprofits. Among them:

• Know all about the audience and sell its value.
• Give sponsors options for exposure beyond banners, such as native advertising or sponsored content.
• Sell the value of the publication’s mission; sponsors respond to it.
• Syndicate content to generate revenue and exposure.
• Monetize data sets.

Summing Up: The Most Successful Strategies

James Breiner is a digital media consultant, bilingual in Spanish and English. He specializes in journalism innovation, entrepreneurship, and multimedia. He is currently visiting professor of communication at the University of Navarra in Pamplona, Spain. [email protected], @jamesbreiner. He has done consulting and teaching in more than a dozen countries in Europe, Asia, and the Americas. For two years he was director of the master’s program in Global Business Journalism at Tsinghua University in Beijing. He was founding director of the Center for Digital Journalism at the University of Guadalajara in Mexico. It was the second time he received a Knight International Journalism Fellowship to work in Latin America.