In my days as a business analyst at the management consultancy McKinsey and Company, before I morphed into a new media entrepreneur, I received an insightful and empowering directive. Be unafraid to speak up, my tenured colleagues told me; you have “an obligation to dissent”. In their view, being the youngest in rank – the proverbial small fry – meant that I was closer to the ground, and therefore closer to the truth. As the analysts tasked with working on a problem, elbow-deep in the data, we were more likely to see the answer.
Something similar is happening today in digital media, in its industry-wide search for sustainable business models. Everyone from legacy incumbents like the New York Times to start-up news organizations like BuzzFeed and ProPublica are experimenting with new revenue streams. Some have been more successful than others. All of them are dealing with the same problem, wrestling with how to sustain quality content and make users pay for a labour-intensive product. It may be the small fry that is coming up with the best answers.
Take the case of the young, plucky and highly successful Texas Tribune. The non-profit, digital native news outlet launched in 2009 with a round of seed capital from foundations and private individuals. Their mission: to achieve revenue diversity and business sustainability, cutting their reliance on continued donor funding.
Five years later, they’ve succeeded, with $5.1 million in revenue across a handful of sources. Even as a non-profit organization, they built an innovative approach to business development – they monetized not just content, but community. Leveraging a strong, state-level identity, they offered value-added services to their Texan readership, monetizing their role as a content-rich convening platform. From live events and corporate sponsorships, to syndication and reader memberships, they ravenously pursued revenue while keeping to one organizational guideline: “put a price tag on everything but your integrity.”
“With its entrepreneurial drive, the Texas Tribune has been an exciting model for the non-profit news world, in terms of achieving that revenue diversity”, said Jake Batsell, a digital journalism professor at Southern Methodist University. He’s currently a Knight Foundation investigator of best practice, assigned to study everything the Texas Tribune did right.
“You’ve got to be more entrepreneurial in how you build and monetize an audience. Memberships might work for some, not for others. Events might work for some, not for others. It’s a matter of knowing your audience, filling a need for that audience, and building value,” he told me.
One specific example: the Texas Tribune sends out all their content for free, to news editors and universities. They then monetized that blast by selling a banner ad that comes with it. Similarly, they sold advertising around their most popular widget – a space usually left blank on most news websites.
“They sold sponsorship around what’s a glorified AP story list,” Batsell said. “It’s not pay-for-play – it’s just making use of real estate.”
Their approach is setting the standard for early and medium-stage digital media ventures, with small-market digital media groups like VTDigger in Vermont and NJSpotlight in New Jersey following their lead. In parallel, at the global level, entrepreneurial newspapers like Verdade in Mozambique are setting a similar course.
And their lessons learned are filtering into the mainstream press. Legacy news organizations are starving for revenue, replicating what they see in the start-up news environment.
“The Dallas Morning News has made a real foray into events after seeing how successful the Tribune’s events have been. It was the Tribune’s success that opened their eyes,” said Batsell.
Meanwhile, the Texas Tribune itself is still an experiment – a newsroom living in hope that its learning curve and track record to date will be enough to keep it going. Batsell sees it as a mission-driven business in the making. “They’re a mid-stage start-up, still hustling to survive.”
Author: Lara Setrakian is the founder and executive editor of News Deeply. She is a World Economic Forum Young Global Leader and a Member of the Global Agenda Council on the United States.
Image: Fans wave a Texas flag during Game 1 of the Texas Rangers against the New York Yankees in Arlington, Texas REUTERS/Hans Deryk