On Sunday, L.A. Reported launched as the latest startup in the country’s second-largest city.
The organization was founded by Scott Woolley, formerly Forbes’ West Coast bureau chief, and David Dreier, former chairman of the Tribune Publishing Company who previously spent 32 years in Congress. Along with inaugural editor Karin Klein, who worked at the Los Angeles Times for 35 years, the outlet aims to bring a mix of old-school style to a new-school platform.
Primarily distributed through Substack, L.A. Reported’s first package examined where the city stands a year after the devastating wildfires that burned through the region. The launch comes days after The LA Local, a nonprofit newsroom backed by the American Journalism Project, went live as well.
Medill’s Local News Initiative caught up with Woolley to get a better understanding of L.A. Reported’s goals, its experimental financial model and more. Answers have been edited and condensed for clarity and brevity.
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Eric Rynston-Lobel I saw one of the key things you've been touting is that this is a new model for nonprofit news. Can you explain how and what it is you're doing that's different?
Eric Rynston-Lobel -
Scott Woolley We like to talk about having sort of both a new economic model and a new editorial model that's paired with it. We’re a 501(c)(3) — so we're launching purely with philanthropic money but hoping to prove that we can eventually, within three years, become reader supported.
There are a couple reasons for this. The most fundamental one is that I think it's just a lot healthier to have your readership as the group you really owe your allegiance to. I'm on the board of Voice of San Diego — there's a lot of good nonprofits, donors are well intentioned, following the direction of donors. It's not that that causes a huge problem, but I think I would love to work to a place where we're serving readers and our success is based on our ability to make readers happy. So that's a piece of it.
The other piece is that ultimately, that's just a more scalable, replicable model. If we want to really help fill the hole in local news that's been left by the death or coming death of the local newspaper industry, just relying on perpetual philanthropic funding just makes that really hard to do. You have to go start up from scratch, and then you have to raise money every year. At Voice of San Diego, budget's about $2.1 million; that's what we've got to raise every year. It works because they're a great organization, but that is hard to just go to a new city and be like, 'Now we're going to start raising $2.1 million in this new place.' If we can prove that we can use philanthropic dollars to launch and then move to a place where we're reader supported, then all of a sudden, that's a huge home run, not just because we'll be doing good work here in LA, but because we'll have a model that we can spread across the country in a much faster way than I think a pure nonprofit model could ever do.
Scott Woolley -
Eric Rynston-Lobel So it sounds like the experience you’ve had with Voice of San Diego has informed your hypothesis here. Were there other models that you looked at that inspired the decision to pursue this route?
Eric Rynston-Lobel -
Scott Woolley I started my career at Forbes, so I looked at the financial statements of a lot of different nonprofits around the country. Part of our expense model, and another potential benefit of moving to a Substack reader-supported model, is that we won't need to pay for a development division, a fundraising arm which will save us a bunch of money. I went through and looked at the existing nonprofit model, and there's so many nonprofits that do a lot of great work — I don't want to in anyway diminish them — it's just the ability to replicate that quickly is really constrained by the amount of money they need, so we really look to try to strip out as many major expense categories as we could.
Having grown up in the old magazine world, I just have a real affection for this sort of narrative storytelling and the old-school journalism skills you used to have to attract readers back then because the way you got advertisers was to have a big readership. There's a century of experience and how to attract and retain readers by producing high-quality journalism. I want to steal as many of those ideas and stick it into our model as I can.
Scott Woolley -
Eric Rynston-Lobel You've talked about how the plan right now is to have mostly freelance writers, is that right?
Eric Rynston-Lobel -
Scott Woolley Yeah, and in fact it's shifted to be entirely freelance writers. On the editorial side of the model, we're really looking to produce a smaller number of really high-quality stories. Original reporting, in-depth reporting, working with high-quality editors, paying for fact-checking. And one of the ways we're going to be able to afford to do that is to not publish a lot of stories.
We’re starting with one a week; we're going to go to two a week, hopefully within a couple months. But given that volume production, it doesn't make sense to have a big full-time staff. And one of the hidden assets that we found, especially here in LA, but I really think around the country, is that there's a lot of reporters who had great careers and might be semi-retired. And if you can say, 'Hey, we're going to pay you well to do stories that you care about and give you the time to really do the reporting and the writing and work with a good editor,' that's just been a really compelling sales pitch for a ton of people. So it saves us money because we don't need a full-time staff, and yet it allows us to pay well in the freelance market.
Scott Woolley -
Eric Rynston-Lobel Do you have a subscription rate set?
Eric Rynston-Lobel -
Scott Woolley We're using the standard Substack model of $5/month. And you can pay more if you want to be generous, that's great. But one of the quick and dirty explanations I use when I'm talking about our economic model is, so Substack, they take 10%, the credit card processing company they use takes 3%. That means every subscriber dollar, we keep 87 cents. At $5/month, 87 cents on the dollar, we get 20,000 subscribers, that's $1 million a year in revenue. In the city of LA, actually we serve the county of LA, 20,000 subscribers is not a big penetration rate.
If we could get to a million bucks a year, then we're doing 150 stories a year, a million bucks, that's a lot of money per story. And our key metric that we really focus on is how do we maximize editorial dollars invested per story? How do we spend more on reporting? How do we spend more on quality editing and art and fact-checking? Would love to be able to pay people to really spend months doing a big investigation.
Scott Woolley -
Eric Rynston-Lobel Are you able to share who some of the philanthropic backers have been?
Eric Rynston-Lobel -
Scott Woolley It's been largely small donors to date. David Dreier who is my co-founder, he's the former chairman of the Tribune Company, he was in Congress for a long time, but he really got the journalism bug when he was working at the Tribune Company; he's been a big backer. The A-Mark Foundation, they support investigative journalism. But mostly it's been small individual grants. We're running a really lean operation and hoping to — we sort of look at this as an experiment, and we just need to get enough funding combined with our subscription revenue so that if we can go three years, by the end of three years, if we're a success, we should no longer need philanthropic funding.
Scott Woolley -
Eric Rynston-Lobel And I'm sure you saw that The LA Local just launched as well and there has been seemingly an interest in LA and local news recently. I imagine you've talked to a lot of people who are looking for the type of work that you're going to be producing. Why do you feel confident that you will be able to stick out or be successful in this landscape that's seeing a lot of new opportunities?
Eric Rynston-Lobel -
Scott Woolley Two answers to that question. The first is that, yes, there's been a lot of growth which I'm excited about. I look at them less as competitors and more as potential collaborators because while there's been a lot of growth, we're starting from rock bottom. LA, six months ago or a year ago when I was getting this thing off the ground, everyone said, 'Why is LA such a news desert?' You look around and, as I said, I'm on the board of Voice of San Diego, there's nothing like that in LA a year ago. LA is the second-biggest city in the country, so everyone used LA as this example of a place where there is no local news. So yeah, there's been a lot of growth, but boy I see the ratio of residents to news outlets is still just rock bottom. So I'm not concerned on that front.
And then the way we stand out is to do — our tagline is true stories set in LA. If you can use those old magazine, old journalism tools to tell stories that people care about — my old editor at Forbes said you used to have to trick people into caring about things that matter by telling them a good story, so I think that if we can do things that matter and affect what it's like to live here in LA, like the pedestrian deaths, political malfeasance, things people care about, but you wrap them in stories that are just fun to read, there's a huge market for that. I just feel that that addressable market is gigantic.
And God bless all my fellow startups. I think there's plenty for all of us.
Scott Woolley