Entrepreneurs looking to establish, buy or invest in a local news outlet must tackle a number of strategic obstacles. At the top of the agenda is obtaining sufficient funding in the early years to support the growth and development of the outlet over time.
The NewStart program at the University of West Virginia offers a degree program for entrepreneurs seeking to buy a local newspaper or start a digital operation, and the National Trust for Local News works with communities to invest in and save local news operations.
While each community is different – and no single business plan will work for every community – a dozen interviews with directors at these two organizations, as well as with founders of local news sites, reveal an emerging consensus around what works in both small and large markets. Entrepreneurs need to:
Take time to know the community, ferreting out the needs and wants of residents in the community, as well as potential funding sources. “Understanding how a community can and will support local news is critical,” said Jim Iovino, director of the NewStart program. He recommends that entrepreneurs scour not only government data for trends, but also conduct surveys and one-on-one interviews with potential target audiences and financial supporters (businesses, as well as community organizations).
In establishing the Benito Link in 2012, the residents of San Benito County in California conducted “a series of listening sessions with different segments – including farmers, tech workers and migrants,” according to Executive Director Leslie David. Those sessions engendered broad community support for launching the site and have been critically important in recent years, with local donors and local businesses contributing almost two-thirds of the funds needed to support the site’s $300,000 annual budget.
Develop multiple business scenarios, with a focus on achieving sustainability. “You need a sufficient handle on the business that you can project out potential revenues and expenses that will ensure long-term viability,” said Fraser Nelson, co-founder and managing director of the National Trust. “If you can scale a digital product, what does it mean over a two-year period to the bottom line?”
Becky Pallack, co-founder of AZ Luminaria, which launched in 2021, developed a “rainbows-and-butterflies annual budget that would have cost $600,000.” She and her team “then downsized our ambitions until we could match our fund-raising capabilities. That led to a first-year budget of $300,000.”
Prioritize investments around transformation of the business model that will lead to higher margins over time. “It is often a product vs. technology choice,” said Nelson.
Investments in technology can lead to significant cost savings, while investments in marketing and content can produce significantly higher revenues.
Shamus Toomey, co-founder of the nonprofit Block Club Chicago, said that “initial technical help from Civil (a network of digital independent news publishers initially focused on block chain technology) was critical to our successful launch only a few months after DNA Chicago closed.”
Additionally, Toomey prioritized acquiring the archives and mailing lists from DNAinfo Chicago. The email addresses of 150,000 previous visitors to the DNAinfo Chicago site allowed him to identify potential subscribers and donors for Block Club Chicago. “Between Civil and a Kickstarter campaign that raised $183,000, we were able to launch our first year with a budget north of $300,000,” he said.
Be very slow and deliberate about how you grow. “You need to be creative about how you develop various streams of revenue,” said Iovino, “but you also need to be realistic about planning for contingencies. Not everything you try will work. And some people who supported you in the beginning will move onto other projects.”
In 11 years, Carolina Public Press has grown from a one-person operation focused on covering local news in western North Carolina to a statewide news site that has an annual budget in excess of $500,000 and employs eight full-time employees. Lisa Lopez, development director of Carolina Public Press, said that with steady, thoughtful growth, “We’ve stayed true to our values: committed to providing non-partisan reporting, investigative journalism that results in corrective action and engaging underserved communities. Encouraging people to fund this mission takes time and it takes building relationships. So, we are often strategizing long-term goals while knowing that bills need to get paid tomorrow.”
An additional thought on the advantages of slowing down comes from Howard Owens, who founded one of the oldest local news sites, The Batavian, in upstate New York in 2008. “Be prepared for how hard it is to start and run a digital news operation,” he said. “So, take time off, exercise and take care of yourself. Be deliberate in how you set personal and professional priorities. And don’t forget you don’t succeed without help from your employees.”
Article image by KOBU Agency used under Unsplash license (Unsplash)