Revenue Models

‘Making Something Worth Paying For’

The financial bedrock of the American news industry has shifted radically, with advertising revenue no longer able to support the journalism that the public has long depended upon. Tech behemoths like Facebook and Google are reaping much of the ad money that once went to local news outlets.

According to the Pew Research Center, the newspaper industry’s ad revenue fell 13 percent in a single year, from 2017 to 2018. That figure was alarming but not surprising, reflecting the dire economic picture that newsroom managers see every day.

Revenue Models


I think eventually, at some point in the future, people are going to wake up and go, ‘Whoops, there’s nobody covering the news,’ when all the local news outlets have disappeared.

Jennifer Parker Editor and Publisher, CrossRoadsNews

Pew reported that 37,900 journalists were working in the newspaper industry last year, a drop of 14 percent from 2015 and 47 percent from 2004. Newspaper circulation, both print and digital, fell in 2018 to its lowest level since 1940, Pew reported. Local television news took a hit as well, with the average audience down 10 percent in the morning and 14 percent for evening and late-night broadcasts from 2017 to 2018.

The new reality: weakened news organizations and growing sections of the United States virtually abandoned by journalism. According to 2018 research on “news deserts” by Penny Abernathy of the University of North Carolina, more than one in five newspapers closed in the previous 15 years. Half of the 3,143 counties in the U.S. had only one newspaper, and 200 more had no newspaper at all.

Running out of things to jettison.

We’re on the edge of crisis. You know, quite realistically, any newspaper person that tells you they think they have a sustainable business is lying or whistling past the graveyard. There are no revenue trends that are positive if you’re not The New York Times. … We’re getting very, very close to the point where we don’t know what else we can jettison that won’t cause a big value loss and still produce something that’s relevant. Doug Phares Former CEO and President, Sandusky Newspaper Group
The business model has collapsed. That has led to decimation of the reporting squads, and as that happens, the reporting gets more superficial and less effective and meaningful to the community. Steven Waldman Co-Founder and President, Report for America

While advertising remains indispensable in the cash flow for most local news outlets, they are looking toward a host of smaller tributaries such as events, foundation-sponsored staff resources and business services such as marketing consultation.

Embracing a Customer Revenue Focus

The interviews in the News Leaders Project make clear that the No. 1 path for financial sustainability is a simple one: asking consumers to pay for their news.

They’ll pay if it’s worth it.

I always say the pay model strategy is deceptively simple. It is making something worth paying for. You can call it marketing strategy, you can call it a digital subscription strategy. But at the end of the day, it’s making something worth paying for. A.G. Sulzberger Publisher, The New York Times

The immediate challenge for many news outlets is to maintain or improve quality in difficult times while the public grows increasingly comfortable with paying journalists to inform them. And it appears that this attitudinal shift is happening.

Can Netflix help news outlets?

You can argue there’s the Netflix effect, where people do see that paying a certain amount of money every month for this all-access is something they’re willing to do. (People engaged in their communities) understand that having quality content costs money to create, and they want to support that. I think there’s more of that realization, that it can’t just be free. It can’t just be aggregated. That … journalism is important, and that there is a modest amount that our people are being asked to pay for, at least at our place, that they’re willing to pay for it. Timothy Knight President and CEO, Tribune Publishing

Gannett going halfsies on revenue.

Increasingly what we’re trying to do — and the goal for us is to get to about a 50-50 divide — is between our revenue being driven by advertising versus our revenue being driven by consumers and getting more and more to where consumers are paying for the content they’re consuming. Randy Lovely Former Vice President of Community News, Gannett

(Lovely was interviewed a few months before he retired as a Gannett executive. In August 2019, New Media Investment Group, the holding company that controls GateHouse Media, agreed to buy Gannett for $1.4 billion.)

But does reader revenue make a news outlet too elitist?

If you rely solely on subscriber revenue, you become very elitist, and it does not get to the people who need it most. Penny Abernathy Knight Chair in Journalism and Digital Media Economics, University of North Carolina at Chapel Hill

Everyone needs to row in the same direction.

One of the big lessons that we’ve certainly learned is that there are a few key things that have to happen for media businesses to successfully make this shift from the attention model to a user engagement model. The biggest is alignment across the company. That everybody sort of needs to understand that hey, we used to be all about trying to get as many eyeballs as possible and as many page views as possible and now what we’re trying to do is shift to getting really quality eyeballs that are more deeply engaged and really care about our product because that’s the way that we’re going to succeed. Michael Silberman Senior Vice President of Strategy, Piano
The silos are gone in a lot of companies. And the business side is working with the journalism side. And everybody’s working together on audience development. And it’s a beautiful thing to watch unfold. And I feel like the newsroom, for the first time, is actively involved in the business model of news. And they never were before. They never wanted to be. In fact, they despised it. But their future, and the future of journalism, really relies on them taking an active interest and help to figure it out. Nancy Lane President, Local Media Association

It’s not so simple, people.

The biggest piece of advice I feel like I’m giving ... right now is you can’t change your business model unless you change how you operate. I feel like a lot of people (say), ‘Oh, we need more consumer revenue.’ It’s like, OK, so what else are you doing to make that happen other than just changing from advertising to paywall? Because if you want to get money out of a consumer now, you’ve got to rethink the user experience of the site … the stories that you do. Are you doing events? You can’t just say, ‘Well, we used to get money from advertisers. Now we get it from readers.’ Like, OK, that’s an idea. But, like, to execute it, you actually have to pay attention to your readers, and you’ve got to come up with ways to get them more involved in what you do, and I feel like that piece is still missing. Jim Brady CEO, Spirited Media

Needed ASAP: expertise.

I think one of the things that’s probably going to be needed in the industry is some sort of institutional support, to help people understand how to put the fundamentals of the business together, how to take these lessons and build on them, and figure out what the relationship is between the editorial side and the business side. ... I’m involved in a project to try to provide a sort of cost-effective technological foundation for small start-ups, and small digital news organizations, because they have historically struggled with technology. But there’s a layer above that, which is essentially the expertise that you need to be able to run those systems effectively, and to know what knobs and dials to turn, and what levers to pull, and so forth. That is lacking as well. Both are sort of probably essential foundations before we’re going to see consistent models in marriage that are sustainable over time. Kinsey Wilson President,

Also needed ASAP: engagement.

Part of what we came to understand, I think very profoundly, in public radio was that the quality of the content was critical, but so was the relationship with the listener. And the way that got captured was sort of talking about both head and heart. That people had to feel both a connection intellectually, but also sort of had to feel it in their heart, if they were going to be likely to contribute. And I think that is equally applicable at the local level. I mean, that kind of membership support was in fact local. You know, public radio’s set up so that membership is collected by local member stations, not by the national organization. And that sort of direct connection, and sense of affinity, was really important to their being able to raise the kind of money they did. Kinsey Wilson President,

What Real Engagement Looks Like

A user revenue model means turning website visitors into loyal customers, providing stability in a frighteningly fluid industry.

Please come back soon.

It’s not good enough to just get an audience in, regardless. What you need to do is get the audience in that is most likely to be an audience that will come back. Michael Silberman Senior Vice President of Strategy, Piano
A monthly unique or even a weekly unique number is not very meaningful. It’s not meaningful to subscription or to advertising, and it’s really engagements. You want those repeat customers who are going to make a big difference. I was talking with the CEO of the New York Times this morning, for instance. They were talking about the app that they have and how important their app is to them because people who have the app will tend to use it eight to 10 times more than people who just use their browser. This is not new information in the industry, yet you’ll find very few newspaper companies that have developed a satisfactory app that’s going to help engagement. Ken Doctor Media Analyst, Nieman Journalism Lab

Clearly, it’s a better business model for one person to visit a news website 100 times than for 100 people to visit once and never be heard from again. The importance of repeat readers — ideally, daily — has gained increased recognition, notably in a Medill Local News Initiative study early this year that found regularity to be the metric most closely associated with subscription retention.

How can we make closer connections with customers?

That was something that especially local media companies really understood for many years and delivered for many years. Which is, make something that your readers really want and value and do it in a way that encourages them to consume it every single day. And certainly in the old sort of days of print newspaper that was just part of the DNA. And whether it was encouraging people to, you know, pick it up off the newsstand and buy it for 25 cents or something or whether it was to become a subscriber. And then what happened is in the shift to the internet and to digital, that habit of engagement was lost. … The ability to sort of drive big audience surges via social media or drive, you know, sort of side-door traffic by a search and SEO sort of took folks off that old path of understanding what it took to create an engaging product that resonated with their readers. Michael Silberman Senior Vice President of Strategy, Piano
If you’re going to establish a relationship with the readers, there are two fundamentals that are sort of inescapable. One is that you have to have some sort of regular daily presence in their lives. So you have to be habit forming. You need to have a reason for people to engage with you every single day, so that you’re top of mind, and so that they have an awareness of the role that you play in the community. … The other is, you really need to let people know what you stand for. And first and foremost in the journalism that you produce, but also as a branding exercise. So, if people are going to pay you money for what you do ... it’s less of a transactional relationship. Probably a very limited number of people are actually willing to pay in a very transactional way for a particular piece of news. Rather, they are more likely to pay, because you embody a set of values that they feel are important, because you represent a certain kind of civic awareness, or provide a certain level of accountability over public officials and large institutions in a community. Kinsey Wilson President,
The change in the paradigm is that news organizations are now much, much more focused on finding repeat loyal local visitors than just the mass of eyeballs that they had been looking at before. And the incentives are no longer how do we get from 5 to 10 million monthly unique visitors or UVs to how do we get from 100,000 to 200,000 local loyal repeat visitors and what’s the best way to engage them. That is partly the content and it’s partly the user experience. Jim Friedlich Executive Director and CEO, Lenfest Institute for Journalism

Nightmarish user experience is still a major problem.

I closed a popup; I got another popup. Now there’s a video playing somewhere making noise. I don’t know where it is. You spend half your time just doing whack-a-mole on these sites because they’re not designed for you. They’re designed for the advertiser. Throw off as many impressions and as much revenue as they can. The problem is people quit using those sites because they’re so bad. Especially people who actually put value in user experience. And they go to Vox, or Vice, or places that actually understand that, and don’t junk up their site with a bunch of crap. Jim Brady CEO, Spirited Media

A Key Connection Tool: Newsletters

A newspaper on the doorstep has long prompted print subscribers to develop a regular reading habit. The online equivalent: emailed newsletters.

This is not spam.

Newsletters these days are generally considered the best way to sort of promote that kind of habitual daily engagement. As old-fashioned as they are, they are directed, they go to your inbox. You can see what the open rate on them is. They are intentional; somebody has made a decision to subscribe; we’re not spamming them. Kinsey Wilson President,

Newsletter recipients are often subscribers.

Newsletters are there to encourage repeat visiting and loyalty, which then you monetize through a subscription. Ken Herts COO, Lenfest Institute for Journalism

That view was reinforced in a study by Harvard University’s Shorenstein Center on Media Politics and Public Policy and the Lenfest Institute for Journalism released in August 2019. Researchers found that, among the news organizations studied, people who received an emailed newsletter were five to 10 times more likely to subscribe to the news product as those who did not. That was a higher rate than those who were social media followers, who were four to six times more likely to be subscribers.

Newsletter engagement even works on a global basis.

We do have literally millions of subscribers to CNN’s email newsletters, which is just another direct relationship with consumers that I don’t know that people know how big our email newsletter products are, but they’re massive, massive plays. Again, free, but very much a direct relationship with consumers and the writers of those newsletters, they’ll often forward us exchanges they’re having with readers that are quite delightful. Mitra Kalita Senior Vice President of News, Opinion and Programming, CNN Digital

How it works for Chicago’s WBEZ public radio.

So we launched a daily newsletter in September (2018) that has proven to be immensely successful. And so we have close to 90,000 people that get that newsletter on a daily basis. And we’re starting to build a direct relationship with those people because we know who they are, and we know how often they engage with us. It has an incredibly high open rate, and dwell time rate. So, it has close to a 28 percent open rate. And 60 percent of the people that open the newsletter spend 15 seconds or more reading it, which sort of is the metric of ‘Are people getting down the page?’ Goli Sheikholeslami President and CEO, Chicago Public Media

Make sure your newsletter has your voice.

The second focus for us was really about making sure that the newsletter had personality, and it had a voice. So that the reader understood that there was an actual human being behind this newsletter, that it wasn’t just some randomly selected stories. And so our newsletter editor is, his name is Hunter Clauss, he has a very rich personality, which helps. You know, the newsletter starts out with just some comment from him that is just clever and engaging. And then it’s his excellent sort of curatorial taste. So, really making the decision of what gets into the newsletter. Goli Sheikholeslami President and CEO, Chicago Public Media

Subscribers or Members?

Should the value proposition be primarily transactional or should news outlets try to form a close and lasting relationship with their visitors?

Divining the difference between subscription and membership.

People are making up their own definitions. I’m not saying that as a criticism. I mean, I think of it as a continuum, from membership to subscription, with each organization sort of deciding for themselves what name they want to give it. I mean, I see some news organization using the word membership and it’s just a straight-on subscription, and less so vice versa. So, I wouldn’t worry too much about seeking a definition, because it has all become muddled. Vivian Schiller CEO, Civil Foundation
I’m not sure I fully understand the difference. … I think that if you’re the African American radio station in Philadelphia … people listen to you not because they really have to hear what’s on but because they like the idea that there is such a thing. If you’re mission-based, you do membership, if you’re product-based — you can be mission-based for profit, too — but it’s a marketing choice that I don’t fully understand the distinction between myself. Ken Herts COO, Lenfest Institute for Journalism

Here’s a rough way to differentiate the two: When a news outlet offers subscriptions, it’s selling its news product. When it offers memberships, it’s inviting customers to have more inclusive contact that may include things that aren’t necessarily considered news products. Simply put, news leaders interviewed for this project saw a subscription as a transaction and a membership as a relationship, and they thought membership offered more potential for brand loyalty and greater revenue.

Some say membership has more potential.

The access model (subscriptions) is the same for everybody. Everybody pays their same $6. But if you have a membership program, and somebody can give you $5,000, or they can give you $5. Or, like, you have a range. People give what they can give, but it opens the door to a lot more givers, and it’s a buy based in passion, not in access, because I’m a little worried about what happens to a lot of the newspapers that have these paywalls, when there’s half as many people working at these newsrooms as there is now. Are they going to be able to legitimately say I need the same $5, even though we produce half as much journalism every day? … Continuing to get people to buy that I think is harder than continuing to get them to give your money because of an emotional relationship they have. Jim Brady CEO, Spirited Media
I think getting money voluntarily from your readers is a huge deal because it shows their commitment and their buying in and the more you can call them members or make them part of your community and not make it transactional, like a subscriber. Steve Beatty Communications Director, Newspack

Membership means deeper ties between journalists and customers.

(It’s) two-way communication that goes beyond saying, ‘OK, here’s the comment section, have at it.’ You know, then it turns into a sewer that nobody really reads. So figuring out a way to be of the community again and be in touch with the people that you’re writing about to make sure you’re writing about the right things. Steve Beatty Communications Director, Newspack

What motivates members.

So, we wanted to actually see: Do our donors, when they think about the money that they give to us, do they think of it as paying it for media? Or do they see it as like a philanthropic charitable donation? And what was really fascinating in that research is that it was neither of those. The thing that people said over and over again is the reason they give to us is because they feel like they are in a relationship with us. … It’s like there is this really strong affinity with our brand. And they see us as an integral part of their lives. And I think it’s really hard to replicate if you are a true subscription service, in that you can’t get access to the content unless you pay for it. You know, we really are the original ‘freemium’ model. Our product is free. No one has to pay for it. And so giving people the choice to support something that they value is, I think, at the core of what makes our program strong. Goli Sheikholeslami President and CEO, Chicago Public Media

The Wall Street Journal example.

There’s a reason that the Wall Street Journal doesn’t have subscribers, they have members, and that really matters to them because they believe that that kind of membership loyalty that public radio stations and public television have had for years drives deeper loyalty and, therefore, in their case more subscriptions, ironically, than it did when people felt like it was a transactional subscription business. Jeremy Gilbert Director of Strategic Initiatives, The Washington Post
Fifteen or so years ago, The Wall Street Journal did a lot of studies of its readers and found there’s like seven types of readers and one type just wanted to be seen carrying The Wall Street Journal. Ken Herts COO, Lenfest Institute for Journalism

No cross words about New York Times’ subscriptions.

If you look at the New York Times’ subscription numbers, they’re really, really driven by crosswords, not just news. I’m not saying that as in they don’t have a good subscriber base, but there’s a utility that is being provided by the crossword puzzle. Jeremy Gilbert Director of Strategic Initiatives, The Washington Post

In early 2019, the New York Times’ crossword puzzle app passed the 500,000-subscriber mark. By the middle of the year, the Times’ total online subscriptions, including those for news, cooking and crosswords, exceeded 3.7 million. Some membership organizations offer more and different extras than others.

Gilbert cited Spirited Media, which recently sold off its three digital-only publications in Philadelphia, Pittsburgh and Denver. Gilbert noted that members and the newsroom “watch sporting events together, they go and debrief after city council meetings together. They do a lot of things where the public comes into contact directly with the journalists.”

Some news organizations have created a variety of programs that allow their customers to interact with their news staff. For example, they have charged fees for classes or lectures taught by reporters, an activity that highlights their staff’s expertise and exposes the staff to public opinions but also has been criticized in some circles as “selling access” to their reporters.

Membership may be a good match with public service.

In some news organizations, the subscription model has been most effective. It’s more transactional. You’re paying for access to this product. For us, we believe... journalism is a public service that you shouldn’t necessarily have to pay in order to access. We want the public to be deeply informed and educated and able to make decisions regardless of whether they can pay for a news product. So, for us, the membership model makes more sense. It’s paying what you can, whether that’s $5 or $500 or nothing at all, and hoping that the generosity of those who can afford more will subsidize the work for those who can’t. Emily Ramshaw Editor-in-Chief, The Texas Tribune

Membership as a rescue plan.

We’ve tried going free, total market coverage, and that didn’t work. We’ve tried deeply discounting our advertising rates to try to get more advertisers, so that we can get more members, and that didn’t work. So, what we did in August of 2017 was, we appealed to our readers and said, ‘Is there a future for The Town Crier? It’s up to you,’ and started a membership program. And people started signing up the next day. A lady came in with $2,000. That afternoon, a lady came in with $1,000, and that is what has kept us going, because we can’t depend on the advertising any longer. So what kept us going was starting the membership program. Becky Clark Co-Publisher, Idyllwild Town Crier

The Idyllwild Town Crier has long had close ties with the community. Its news meetings are held in the local library, open to the public. Under its membership program, patrons get a thank-you card, a decal, and a discount at a local restaurant. “We’ve had, you know, spouses come in and get really upset, because the other spouse stole the decal and put it on their car and they want one too,” Clark said. “So we give them one, you know?”

Not everyone is sold on the membership idea.

We tried the membership model and you know what? It just really, it didn’t pan out for us. And maybe our communities are smaller. Perhaps if you’re in a very, very large community you can get more traction with that. So no, we don’t see being a member of the newspaper as a driver. … Our membership would include, you know, that’s where you’d bundle all kinds of stuff together: access to events, premium content that perhaps is not available to others, special retail deals that you could have by being a member, discount cards. Just a bundle of things that you would get by being a member that transcend just the newspaper itself. Really in the end, people value the newspaper and we found that the other things every once in a while was a nice little additive, but it really was not a driver. People were not coming to us or staying with us because we offered that extra set of items. Doug Phares Former CEO and President, Sandusky Newspaper Group

Alternative Revenue Sources

While the shift from reliance on ads to user revenue is clear, news leaders interviewed in this project were skeptical that subscriptions or memberships alone could sustain most local news organizations.

Subscriptions are a disappointment for some.

The major attraction and the major disappointment has been the failure to sell digital subscriptions. While we see that working at a great level at the national publications like The Times, The Post, The Journal, and at FT, et cetera, we have not seen similar success for local newspapers. Ken Doctor Media Analyst, Nieman Journalism Lab
(The Chicago Sun-Times is) having to sell subscriptions at such a low price point. … If (the Sun-Times) had a national footprint like the New York Times or Washington Post, that sort of company can lean against their subscriptions. … Digital subscriptions are a focus ... but that alone will never ... be enough. Carol Fowler Director of Content, KSDK-TV

Some of the bigger regional news outlets have shown mixed results. The Los Angeles Times has more than 150,000 digital-only subscribers, but that’s well below its target of 300,000 by year’s end. The Boston Globe recently reported more than 112,000 online subscribers, with the digital number surpassing the print subscriber total. The Chicago Tribune announced in April 2019 that it had more than 100,000 digital-only subscribers.

So diversification is a must for many.

The traditional ones for newspapers were circulation subscriptions and advertising. It used to be that ‘other’ was just a very tiny, little sliver of things. ‘Other’ has gotten a lot more important for newspapers. That includes marketing services, digital marketing services, email management, all that kind of thing to the same local businesses you serve with advertising, events, maybe increased commercial printing for us who still have their own printing presses. So you could say that the revenue base is diversifying. It’s a little bit of the same story; it’s hard to increase those quite quickly enough to offset what’s fading away, especially print advertising. Broadcast is a little bit more straightforward. The traditional source is advertising, but as you know, they’ve had sort of a second booster, a pretty good picture with retransmission fees, so the cable companies are paying for carrying them, as was not uniformly the case five, 10 years ago. Rick Edmonds Media Business Analyst and Leader of News Transformation, Poynter Institute
Like any business and like any newspaper or news outfit, bringing in enough money to keep doing it is the biggest challenge. And we’ve got members who are trying everything, you know, events, subscribers or donors or members, however you want to label the people that give you money voluntarily, advertising, sponsored content, a speakers bureau, you know, hiring their folks out to go talk at local events, and there’s no one answer. It’s a six-, seven- or eight-legged stool. We just got to figure out what all those legs are. Steve Beatty Communications Director, Newspack

CNN isn’t local, but it, too, is intent on diversification.

We’ll often talk about a business model, singular, whereas really, newsletters, podcasts, pre-roll video, mid-roll video, a YouTube strategy. I have mixed feelings on Outbrain, but Outbrain, programmatic advertising. As you rattle them off, you start to see how a digital business actually needs to rest on many legs versus just one emerging thing. As we’ve seen over the last five, 10 years, there have been many outlets that have flopped to one platform or one strategy as savior, whether that’s Facebook traffic or video pre-rolls, or the ‘hot take’ or analysis. I think over and over, we’ve kind of been seduced and then fooled by that being the silver bullet when there’s actually probably going to be many, many bullets that are what we will be needing. Mitra Kalita Senior Vice President of News, Opinion and Programming, CNN Digital

The challenge is especially great for smaller news outlets.

With the smaller and mid-size markets, they’ve got to have a much more creative and disciplined strategy. It’s going to have to rely at least as much off revenue from businesses, because they do not have the scale or in many cases the local economics to support a subscription-based (model). Penny Abernathy Knight Chair in Journalism and Digital Media Economics, University of North Carolina at Chapel Hill
A small newspaper like us can’t generate the page views that we need to make money, significant money anyway, off digital ad sales. Peter Imes Publisher, The Commercial Dispatch

So let’s use our imagination.

We’re trying to be creative with kind of the traditional ways also in the ways we bundle print and digital subscriptions. For example, by offering magazines as a print advertising alternative to newspapers. And all of those work to an extent. But I just haven’t found anything that, on the traditional newspaper side, is going to help sustain kind of our news gathering efforts the way that we want to. So, that’s why we started looking at things kind of completely separate from traditional ad sales, or traditional subscriptions. Peter Imes Publisher, The Commercial Dispatch

Providing specialized services to businesses.

We are spending more time letting businesses that work with us know we have these digital capabilities. A lot of times, they just think of us as the print and maybe the website, that’s about it. They don’t know everything else we have available. Once they understand our capabilities, we often get very strong commercial relationships with them, and are able to deliver on their marketing objectives, and essentially compete with small advertising agencies in each of our markets. Timothy Knight President and CEO, Tribune Publishing
The idea of supplying local advertisers with digital marketing services seems like a really good idea, but it has not done that much to replace lost print revenue. Ken Doctor Media Analyst, Nieman Journalism Lab

Journalists are good at data, so …

We really have some expertise in being able to take data and synthesizing it. And a lot of it has emanated from the work that our investigative reporting teams have done. But interestingly, a project that the Herald-Tribune in Sarasota did on judges had a commercial implication to it, because it’s information that other lawyers and judges would be interested in. This was the case, though, where we did the research and someone else saw the opportunity. And so we’re working now on, OK, we have access to a lot of data that we spend a lot of time cleaning and validating, and it’s the type of information that a lot of companies pay for, or readers might be interested in. How do we take advantage of the information that we openly share with our public, but is there another opportunity for us to be able to provide it for someone that may have a specific interest, because the data that we’re accessing is actually public data on so many levels that just is not available in the form that the public needs. So we’re in the early stages on this, but I’m truly intrigued by it. Bill Church Senior Vice President of News, GateHouse Media

Many eggs, many baskets.

I think that what we’re seeing out there is that there is no one perfect business model, and that that’s an impossibility. Know that everyone has to be dividing up how their money is coming in and not putting all their eggs in one basket. I think that that’s really what’s working for a lot of the newsrooms that are seeing gains. Mandy Jenkins General Manager, The Compass Experiment at McClatchy

Gathering Support for Events

Another potential revenue stream is events, which are touted as a way to make money while increasing customer loyalty.

Events backing up subscriptions.

Events can be an important sort of tangible manifestation of what a news organization is, and what it stands for, and an opportunity for at least your most passionate readers to connect with you. And so it may have value in supporting subscription revenue more than it does in direct revenue. Kinsey Wilson President,

Business-oriented events based on editorial content.

Most of the events we do are coming off our editorial, so they’re themes like our Fast 50, which focuses on fast-growing companies, the fastest growing companies in Chicago, or we have a 40 Under 40 feature, which spotlights the 40 rising executives who are under the age of 40 from across different backgrounds. And we pull together an event to celebrate them. Hospital CEO Breakfast, for example, is our biggest event, focused on trends in the hospital industry and ... those are all ticket events. You sell sponsorships against them. … In that case, it’s a way to extend our journalism into sort of an experiential mode where we’re finding that people want to use (them) to connect and learn more and to network. We kind of are the glue to providing that service for them. That has helped become a pretty good extension of our business. Jim Kirk Publisher and Executive Editor, Crain's Chicago Business

Storytelling, sports and more.

In about two dozen of our markets, we have the Storytellers Project, which was originally launched in Phoenix about eight or nine years ago, and basically those are nights of live storytelling, which obviously is very much a part of our DNA and so they’re themed at nights and both journalists and community members come together. … It’s a paid admission, but we also have sponsorship opportunities of those nights. And most of those nights generate somewhere in the neighborhood of 200 attendees, so that’s been fairly successful. We do high school sports banquets in many of our markets, and then we’ve done some lifestyle events like food and wine festivals. One of the more recent ones that I’ve found really interesting was our properties in southwest Florida partnered with a local university this fall and they did a First Amendment festival and it was wildly successful. They had great attendance and maybe that speaks to the kind of environment that we find ourselves in, but that fed my soul a little bit that people were so willing to come to a series of events over a weekend framed around the First Amendment. Randy Lovely Former Vice President of Community News, Gannett

GateHouse was cited more than once as a chain innovating with events.

Their events division is pretty spectacular. And we have been saying for 10 years that events are part of the transformation storm. … They have a team that really knows how to produce events, knows how to sell the sponsorships, knows how to, in each market, uncover the events that are going to work. And they’ll bring in top-name personalities. So if they’re having a high school sports banquet in a bigger market, they’ll bring in a Drew Brees as the guest speaker. That brings in a lot of sponsorship money. It brings in a lot of registrations for the event. It’s a great community builder, because it’s built around high school athletes. Nancy Lane President, Local Media Association
They hired a guy who was a specialist in events and now they have made it a staple in that ‘other’ revenue category to roll out hundreds and hundreds of events throughout their markets across the United States, and some of them are huge money-makers, huge money-makers. So much so that it has attracted new entrants in terms of competition, in terms of other entrepreneurs that have jumped into the space. … Gannett has done a lot of those as well. So I would say event marketing has become big. And let’s talk about the Denver Post. The Denver Post, a market with which I’m very familiar, had a really nice building and had a huge auditorium. They had a view that overlooked the downtown landscape so they used those assets right on the busiest street in downtown Denver for a lot of things. They have community events because they have a huge amphitheater of about 220 seats to hold community events. They bring in speakers that are national speakers, political speakers, and then they sell events around that. They’ve also done things as small as rent space for weddings … because it looks over the mountains and it’s a downtown view and they have these huge balconies. So people looked at their assets and said what do we have here that we can monetize and events is something I would think would continue to make sense. We did that a long time ago when I was running the Kansas City Star because of our synergy. We collected all kinds of data in the newspaper and on weddings and wedding notices and engagement notices and we turned that into events where we sponsored a big kind of wedding extravaganza twice a year and then we created a magazine that’s 200 pages, a full glossy magazine that comes out twice a year and we have a database of people we communicated with and of course all the vendors because weddings have taken off and are a big, big business. So we really kind of leveraged data, relationships and sponsorships and all these kind of things. While events are kind of new, there have been some people that have really been after this business for 20 years. Mike Petrak Executive Vice President, Tactician Media

One popular type of GateHouse event involves high school sports.

Jason Taylor, who leads our GateHouse ventures, and his team are just brilliant about being able to bring together (events), working with local markets where you celebrate the top athletes across sports. Typically they’ll bring in a well-known celebrity sports figure in a banquet opportunity, and sponsors have the opportunity of getting to an audience that they typically don’t get to reach. And these events can go from 200 to 400 attendees. And they’re such feel-good events because you get a chance to not only get in touch with some inspirational stories from these athletes overcoming significant obstacles, but getting to celebrate good things happening in local communities. Bill Church Senior Vice President of News, GateHouse Media

How a news outlet can profit from an event it’s not running.

The advantage of this platform (GeoTix) over Eventbrite ... would be that you get to sell tickets online, but you also get the promotional power of being partnered with a newspaper. … So, for example, we would go out to the local arts council we say, ‘You’re selling all of your tickets currently just at the door, paper tickets, we want to allow you to sell digital tickets. We can make that happen for you easily, and we can give you promotions for your events throughout the year.’ And so, that’s something we just kicked off in the past month. Peter Imes Publisher, The Commercial Dispatch

The Morphing of Advertising

Ad revenue remains an important revenue source, especially for outlets with creative approaches, such as exclusive sponsorships of editorial content.

Multipronged approach to ad sales.

We are taking a diversified approach to our business model and I think that every organization no matter how big or small needs to think about that diverse approach. We make a large percentage of our money off different advertising models, so we have three or four different types of advertising that fill in that bucket. Everything from this incredible growth that we’ve seen across our podcasts over the last year — I think we’ve grown like 300 percent over the last year from the podcast base — to we’ve built out a really strong programmatic advertising technology called Concert that we’ve partnered with other organizations and that’s allowed us to really create a targeted solution for major ad campaigns. We work in sort of editorial sponsorships and in the branded content space as well so sort of high-touch, high-end advertising campaigns. We have an in-house ad agency. So that’s one bucket that has about four or five different approaches within that. We also have a new business line that we started about three years ago where we’re starting to develop licensing off our IP so it’s what we call our Vox Media Studio Business and that’s developing podcasts internally or externally with partners taking some of our really talented video work and developing shows around that. So we now have six television shows in production. ... We also licensed our technology platform called Chorus, which is a publishing platform and we built a staff business around that. … We just launched our first membership program with our Vox video YouTube team, which is very fun. Melissa Bell Publisher, Vox Media

‘Deeper relationships’ with advertisers.

The best way to innovate is always steer against the tide, and when the market of advertising is aflood with cheap, useless stuff, like, why steer into that? Why try to make more cheap useless stuff? Why don’t you say we’re actually going to do less stuff, and it’s going to be better, and we’re going to have a deeper relationship with you, the advertiser? … What we were trying to do was go back to that old model of doing premium partnerships, where we bundled up advertising, newsletter sponsorships, event sponsorships, and saying like, ‘Look, we’re only going to do deals with five or six partners, but they’re going to be pricey. But there’s only going to be five or six. And if you come in as the first bank that buys one of these, we won’t take any other bank advertisements this year. If you want to come in as the first auto dealer, we don’t take any other auto dealers. Jim Brady CEO, Spirited Media
I think one thing news organizations can do is help their local advertisers be more successful. For a long time that was a fairly turnkey relationship: You give us a camera-ready ad, we will put it in your newspaper; you film a local commercial, whether it’s high quality or low quality, we will put it on air. Now we’re trying to be a little bit more of an intermediary between the local ad agencies and local businesses and the newspaper, and we’re doing that in-house. And we can charge for those services but we can also look at a model that says you are making roughly this much from the advertising you run now, if we can improve that take rate, then what can we charge you for the difference there, so that we’re helping them but they’re helping us at the same time. Jeremy Gilbert Director of Strategic Initiatives, The Washington Post

Get a sponsor for your ‘voice.’

Just one-off advertising is not the future. The future is presenting sponsors, getting advertisers to pay for 100 percent share of voice. Carol Fowler Director of Content, KSDK-TV

Fowler, a former Chicago Sun-Times executive, cited an example of “100 percent share of voice” in the Sun-Times: an ad sponsorship of election news, which was coverage the newsroom was doing anyway.

There’s a firewall, but it can’t be ‘big.’

(The Sun-Times) did a deal with Allstate and produced content around young artists, teenagers who are gifted artistically, and did video features and created editorial content around these gifted kids and Allstate wanted its brand aligned. It has a huge artistic initiative and paid us to create the content. And the beauty of this is that these presenting advertisers give us absolute editorial independence; they don’t have any say-so over what we write. They’re along because there’s value to their brand. It’s not unlike PBS, like you’re watching ‘Nova’ and you see Samsung is underwriting this episode of ‘Nova’ or whatever. Samsung doesn’t tell the producers of ‘Nova’ what to put in their show. They have an interest in being aligned. That’s the model that honestly, I feel, is really the future for media and it’s a big learning curve. It requires a company where there are dedicated people on the editorial team who work closely with the sales and marketing teams. There can’t be this big firewall there, those days are gone. If there is, you’re not gonna make it, you’re just not. Carol Fowler Director of Content, KSDK-TV

Will Big Tech ace out local news outlets?

There’s a large and vital sector in local advertising, which is pure digital search engine email marketing, that kind of thing. A lot of the money from local marketers no longer goes through any of these media at all. It’s using a collection of often self-service tools like Google, Facebook and others that in many ways that’s really where the money has gone and the extent to which local media can serve a role in that and play a part in that ecosystem is a big question. It takes expertise and software capabilities and sales capacity that most local media don’t have. Jim Friedlich Executive Director and CEO, Lenfest Institute for Journalism

For-Profit Start-ups

Start-up digital outlets may have an edge over the established brands because they don’t have to erase decades or even centuries of customer expectations.

The advantage of starting from scratch.

The cuts just kept getting bigger and more obvious … but getting to the point in the newsroom where you say ‘let’s start over’ is very hard. It’s easy for a start-up to do. But these legacy newsrooms that have long attachments in a community where their audience is used to certain things, saying, ‘Hey, we’re going to start over.’ We need to take on this kind of start-up mentality, which means we’re going to begin again with this examination of: If we were coming to town right now, or just deciding we were going to start a news organization, what would that look like? How would we best serve our audience? What does this community want from us? What does the community need from us? That’s a really hard thing to do. And the papers, the television stations, the radio stations, the online news sites, whoever you are, those who can get the closest to that I think are those who will succeed or come closest to succeeding or be able to hold onto or build new audience better than some of their peers. Unfortunately, there aren’t a lot of places that are doing that particularly well. Ann Marie Lipinski Curator, Nieman Foundation

Start-ups must start with a mission.

I think if you come into a city with five people, and you want to do a start-up, and you say, ‘We’re just going to be better than the 200-person newsroom at these five things,’ I think that’s a short story. You’re not going to be around very long. You’ve got to differentiate yourself. You’ve got to have people have a sense of who you are. Jim Brady CEO, Spirited Media

Creating business-editorial balance is paramount.

My feeling is that many of the startups that have been out there have either been overweighted on the editorial side, or overweighted on the business side, and haven’t had a strong dynamic between the two. And I think that’s, you know, it takes a farsighted, and really talented publisher to be able to put both of those pieces together, and to get the right editors, or the right business folks working in tandem, and aligned around a strategy. Kinsey Wilson President,

Can start-ups solve ‘news deserts’?

I think if people want to help water these ‘news deserts,’ there are better options now than there were 10 or 15 years ago. Just because you’re learning from the hard-won lessons of the people who went before you. So it’s almost a better time to start it off, start off a newsroom now than it was, even though foundations are starting to not give out as much money for nonprofits. Steve Beatty Communications Director, Newspack
When we look at where the digital outlets have started, 90 percent of them are in metro areas, and there’s a good reason they are, because most of the money, whether you’re a for-profit or whether you’re depending on foundations, are in the metro area, right? At least for the time being, I do not see a for-profit incubator model working in most of the economically struggling communities that I see where there’s a news desert. Penny Abernathy Knight Chair in Journalism and Digital Media Economics, University of North Carolina at Chapel Hill

Berkeleyside as a B Corp.

A for-profit start-up to watch is Berkeleyside in Northern California. Berkeleyside, founded a decade ago, calls itself a “benefit corporation” or B Corp., and defines that on its website as “a type of for-profit corporate entity that includes positive impact on society, workers, the community and the environment.” In late 2016, it launched a direct public offering — a DPO — to attract supporters who would take an ownership stake.

Lance Knobel, Co-Founder and Publisher of Berkeleyside, said the DPO idea arrived during protests over police treatment of African Americans.

One of our readers contacted us and said, ‘Hey, Berkeleyside. Your coverage of these past two days has been incredibly important to me. I really wanted to know what was going on. I don’t know if you guys need any capital, but if you do, I think you’d be a great candidate for this thing called direct public offering.’ And we said to him, ‘What on Earth is direct public offering?’ and he explained it to us. Lance Knobel Co-Founder and Publisher, Berkeleyside

By April 2018, Berkeleyside had raised about $1 million in capital from 355 investors. But revenue flow remains a focus.

We rely on two main sources of revenue. The biggest is still advertising. We sell all of our advertising direct. We don’t use networks at all. And our advertising has held up pretty well against the onslaught of the major technology platforms. We don’t count on that necessarily happening forever. … By far the fastest growing area of revenue is membership. You know, like many sites, we take the attitude, we don’t make people pay for the news but we allow people to pay for the news. … The third area of revenue, which has been a good area for us, but I’ll kind of offer a caveat, is events. We’ve, for the last six years, run an annual ideas festival, a two-day ideas festival that is called Uncharted, the Berkeley Festival of Ideas. Lance Knobel Co-Founder and Publisher, Berkeleyside

Knobel noted that Berkeley “has the kind of famous record for being very politically ahead of the curve,” and acknowledged that his type of start-up would not work in some places.

In fact, I know it would be incredibly difficult to do some of the things that we’ve done, because they’re communities where people are scraping to get by economically. There’s a woman I know who’s running a news site in Flint, Michigan. I think she gets a lot of support from people in terms of, you know, ‘You go, girl,’ and, ‘We love what you do and it’s incredibly important to us,’ but most people there can’t provide a credit card and say, ‘I’ll give you $5 a month.’ That’s just a very limited percentage of the people in Flint because they’re so economically troubled and depressed. So I’m not saying, ’Yes, this is replicable everywhere.’ That would be folly. Lance Knobel Co-Founder and Publisher, Berkeleyside

Print is not dead, even though it’s seriously wounded. There is a growing trend to cut down on frequency, with more newspapers abandoning daily publication.

The price of ink-on-paper keeps going up.

I think, frankly, the state of print is difficult. We’re reaching a stage where organizations from The New York Times on down are basically pricing subscriptions more aggressively. You could say that’s righting a wrong from the old days when the papers were sold very cheap because advertising was so abundant, but it’s a tough sell. Rick Edmonds Media Business Analyst and Leader of News Transformation, Poynter Institute

Don’t count out print yet, says Tribune’s Knight.

The challenge is you are losing these higher-margin print dollars, but print still can be of huge value to the right advertiser, and we’ve leveraged the relationships in the brands that we have to grow new relationships, or deeper relationships. One of the things that we’re doing is hiring sales people who are really good at growing new accounts. Going out and bringing in new business, where historically we’ve been able to, because we were the powerhouse in the market, people would come to us. We’ve got to be more aggressive, and creative in how we go to market. How we go and let people know the broad range of services that we have. Timothy Knight President and CEO, Tribune Publishing

The daily print product is endangered.

I do think reduction in frequency is the next thing that’s going to happen. We had the announcement that McClatchy is going to drop Saturday in a number of markets. They already have in Myrtle Beach. It played out well for them in Myrtle Beach as a test. I think there’s three or four markets they’re now going to do that with. … Everyone expects print frequency to reduce. It’s in every scenario that every company talks about in like five years, 10 years, whatever the number is, first step for print going away would be a reduction in frequency from seven days to something else to eventually just a Sunday product. This is not shocking. But there’s still a lot of resistance to it. And I actually applaud McClatchy for trying this. Nancy Lane President, Local Media Association

Does print get in the way of digital?

(The Sun-Times has) a policy of digital first, but it can be a struggle to break the habits of orienting the assignments and the deadlines to support the print product. … There’s a rhythm with the newspaper product … and it’s a bit of a challenge in that there’s certain print things that have to be supported and they may not necessarily be in harmony with what we would do with the content if we were strictly a digital company. But the print product is still very important and is most closely associated with the brand. Some days I would say yeah, we were absolutely digital first, other days we’re not. Carol Fowler Director of Content, KSDK-TV

The subordination of print requires hard decisions.

Randy Siegel is CEO of Advance Local, which has been an early adopter on a number of industry trends, from three-days-a-week print publication to online-only local journalism.

We were probably the first company in America to double down on digital in 2012, when we relaunched our entire company, sold off our newspaper buildings, hired hundreds of new people. Made some challenging layoffs, and even cut back on some of our home delivery days of the week, because we knew what the future was going to look like. The question, I think, for us at the time was ‘Are we going to move fast enough to find that sustainable model for local journalism in an all-digital age?’ And we’re obsessed with that question. Now, we made a lot of progress. We still have a lot of challenges like everyone else, but we’re very excited about where we’ve been, but also very mindful of where we need to go. Randy Siegel CEO, Advance Local