The capabilities and revenue streams essential for small newsroom success

I was asked what revenue streams scale down to support small newsrooms and solopreneurs, here are some ideas

In a recent editor of the Media Bulletin that I edit and write with my colleague James Kember at Pugpig, I used an interesting conversation the INMA board had last year to cast a look forward to this year. “What if the news industry’s total focus on subscriptions as the saviour of journalism has unintended consequences for the impact and influence of news brands,” asked Alexandra Beverfjord, executive vice president of Aller Media in Norway. Central to the question are several competing demands that media leaders must address such as the fundamental challenge of balancing the editorial mission with the need to fund that mission.

Ultimately, I think the question also is important to consider because as Earl Wilkinson of INMA says, subscriptions alone will not sustain an editorial business. And the issue is especially acute in light of Nic Newman’s latest survey in which he found that most media leaders surveyed said that subscription revenue was only up a bit. Reader revenue has provided an important foundation for publishers, but they are now seeking new sources of revenue. Revenue diversification will be a major focus for publishers in the coming year.

I shared the post on LinkedIn, and Anabelle Nicoud, who works as a news editor for Apple News, asked if I had any examples of revenue diversification with smaller newsrooms. Having worked in and with small newsrooms over my career, this is a subject near and dear to my heart. A decade ago, I left the UK to go back to the Midwest of the US, where I’m from, to manage two small Gannett newsrooms. The passion and dedication of the teams I managed made a great impression on me. I also know the pressures on those newsrooms. I started my role in February 2014. My job was eliminated in a round of budget cuts in October 2015. By the time I left the area in 2018, the newsrooms were just a quarter of the size they were when I started in 2014.

When it comes to what revenue streams work in small newsrooms, I will say all of them, well at least the most common ones of reader revenue, advertising, events and philanthropy. The challenge is to make informed choices of which ones to pursue based on mission, non-profit/for-profit status and market environment. For small newsrooms, focus is essential. Editorially, you can’t and shouldn’t try to be all things to all people, and from a business standpoint, focus is critical to survival and sustainability.

The revenue mix for small newsrooms

Some of the journalists whose jobs were eliminated have started news start-ups to continue to serve the communities where they live. Fortunately, in the US, they have organisations like LION Pubs - Local, independent online news publishers, to provide them with support in developing the business skills and capabilities that they need to create sustainable news organisations. Last year, they published the results of a survey of their members to see how their members were earning revenue. A few revenue diversification case studies:

  • The Springfield Daily Citizen wanted to add events to their business, but they didn’t want to “transfer the costs to attendees” so they sought corporate sponsorship to pay for the events.

  •  The Hingham Anchor had focused on direct sales advertising. They decided to “revamp their website rather than the costlier, longer process of migrating to a new CMS”. It allowed them to attract more advertisers.

  • The Press Gazette in the UK covered the Shawnee Mission Post in the US and its path to sustainability. It was grounded in providing essential information to their community and asking their readers to support their work.

The survey broke down revenue sources for their members, showing the difference between non-profit and for-profit organisations.

The most common revenue streams for for-profit members are:

  • Direct sold advertising: 55.8%

  • Small individual gifts (Less than $1,000): 20.2%

  • Subscriptions: 19.2%

The most common revenue streams for non-profit members are:

  • Philanthropies/Foundations: 66.9%

  • Small individual gifts (Less than $1,000): 64.2%

  • Major individual gifts (More than $1,000): 43%

Here in the UK where I am now. Independent news organisations like the Bristol Cable and the Manchester Mill have leaned into events. And if the New Year message from the Mill’s founder is any indication, things are going quite well.

To be honest, the revenue streams aren’t all that different from much larger news organisations: events, advertising and reader revenue. A much more common revenue stream, especially for non-profit newsrooms is philanthropy, although larger commercial publishers are now starting to get into that act as well. Some small publishers also branch out into digital marketing skills.

Solopreneurs cobble together revenue streams

Poynter has just drilled down even one layer further to the smallest newsrooms - the solopreneurs. Newsletters, WhatsApp groups and podcasts, solopreneurs are launching new news sources. This is a story about cobbling together revenue streams in novel ways. Hanna Raskin, who had been a food critic at Charleston’s The Post and Courier, found out about Substack’s local journalism programme. She was one of 12 winners, and for the first year, she earned $70,000. After that, she has worked to grow her paying subscribers on the platform but has also entered into a partnership with another publisher, The Assembly, to provide editing support on a part-time basis.

The message is the same as the INMA conversation: Reader revenue will not be enough to sustain a news organisation. “Diverse revenue streams are key, whether that’s through sponsorships, advertisements or even partnerships, like Raskin’s with The Assembly,” Elizabeth Djinis of Poynter said.

Will a new group of local media service providers open up new revenue opportunities?

I see another option for the future, a new set of revenue and business services that support local news sites. Instead of each outlet trying to develop its revenue infrastructure, some people see an opportunity to build services that can support local news entrepreneurs. These are just a couple of examples I know of from people I know. I would be interested to hear about more projects like this.

Steven Clift is building a service called Good Carts, which bundles purpose-driven businesses together in an affiliate network. “Be it a reward for signing up for an e-newsletter, subscribing to the news site, or an ad, the media site invites their visitors to check out some exclusive discounts via a dedicated coupon page of the brands that opted-in to their program,” Steven told me. The media company earns a commission from sales through their channels. It’s an affiliate marketing service that works with companies that would be consistent with the mission of journalism organisations.

Another example is News Oasis, founded by Former Dallas Morning News chief product officer Mike Orren. He hopes to provide business support services for news outlets serving news deserts. “We will achieve this via a hub-and-spoke model that is logistically not too dissimilar from what large-scale chains currently execute. We will have a centralized (but virtual) ‘home office’ with editors, designers, product managers, developers, business development, finance, and any other service that is not directly reporting the news.” The difference between the chains and News Oasis is that Mike wants this to be a force for local news renewal, to support the growing number of news entrepreneurs.

I’m so excited about the experimentation going on in the local news space, and I know how much effort these folks are expending to try to serve their communities. Fortunately, we are starting to see models that work and that might be the basis for rebuilding local news. And in the US, there is Press Forward, the half-billion dollar effort to regreen news deserts.

How to choose your business model

As I wrote in the Media Bulletin, one criterion for choosing revenue streams and an overall business model for news organisations large or small is that the revenue strategy needs to be aligned with the organisation’s mission. Anton Protsiuk at The Fix covered this well recently.

Small, start-up news organisations will also need to make sure that in addition to a strong editorial vision and capaibilities that they have some other skills as well. From my own experience, small newsrooms face a paradox. Decision-making can be quicker because there are fewer layers of management, but they also have fewer resources. While product management may seem like a luxury in small newsrooms, product thinking is critical because setting priorities is essential. It might not be a full-time position, but it is an audience-focused product mindset.

Business skills are essential as well. Chris Krewson, the executive director of LION Pubs, has done a great job of supporting members to have a business plan. Many journalists start these local, independent publications by seeing an unmet need, and of course, they approach their projects with an editorial focus. Making sure that they also have a strong business leader who shares their vision is critical to small newsroom success as well.

One last thing that I will only cover briefly, but which I have been thinking about for a long time. Most journalism entrepreneurs and investors say that for a commercially viable news organisation, you need an addressable market of at least 50,000 people. This can be geographically bounded in some way or a collection of people interested in the same issue or topic. If you are doing a local news start-up and it is focused on a particular area, you need to assess the local market conditions. When I was in Wisconsin, the communities that the newspapers I managed were very different. The Sheboygan Press served a city of 50,000 and a county (to a lesser extent) of 150,000, but the county boasted the headquarters of several national and international companies. Kohler, which made not only kitchen and bathroom fixtures but also power generation equipment, had its headquarters there. Bemis, a major plastic injection moulding company, had its headquarters and plant there. Sargento cheese. Johnsonville sausages. The list goes on. It still had an industrial base which provided jobs and a robust economy. It had a lot of civic capital. A news entrepreneur could tap into local philanthropy and serve a highly civically engaged audience.

I also managed the paper in Manitowoc. The community was on a different trajectory. Many of its major industries in Manitowoc and nearby Two Rivers had shuttered or relocated. It didn’t have the local civic or economic capital that Sheboygan had. To serve the community would require a much different approach and revenue mix, and to be honest, I am not sure that a for-profit model alone would sustain it. Communities like Manitowoc still deserve good local quality journalism, but I am not convinced that a purely commercial model is sustainable there. This topic is worth its own in-depth examination, and I would love to partner with a researcher to look into it. But hopefully, this is enough to jump-start a conversation about the wide variety of markets that are now news deserts or served by ghost papers and how to serve their information needs.