So much innovation is occurring on the revenue side of new digital media that it’s time to review, update and aggregate. Some of the material has appeared in this blog before.
I was reminded of the power of community, as opposed to audience, when reading Martin Langeveld’s post for Nieman Lab on what was ahead for journalism in 2013.
- Engage the community where they live and spend their time — in their physical (if possible) and virtual communities (social networks).
- Think like a community organizer. That is how Robert Niles recommends journalists get started.
Think about that. By offering not just a product but access, privileges and opportunities to mix with the community, Texas Tribune is able to charge far more for a membership than it might get from a subscription.
MinnPost does the same. On its membership page, we learn that “membership means that you are part of the MinnPost family, helping us achieve our mission through ongoing financial support.” Membership brings privileges, discounts and networking opportunities. The asking price is higher than most paywall subscriptions, $120 to $600 a year.
Premium pricing for sponsorships: Texas Tribune offers three sponsorship levels that run from $1,000 to $5,000 a year. Sponsorship benefits include more than just the opportunity to put a message on the website. They include a more intimate relationship with the brand at events.
Leo Prieto, the co-founder of BetaZeta in Chile, which has a monthly audience of 10 million users, is turning away from traditional advertising toward sponsorships, which now make up 40 percent of its revenues.
Prieto prefers sponsor relationships with brands as opposed to the highly cyclical business of selling impressions and clicks to digital advertisers. Among other reasons, the price Betazeta can charge for traditional advertising continues to fall because of increasingly sophisticated ad-targeting software and automated ad buying. In addition, web titans like Google, Amazon, Microsoft, Apple and Facebook are gobbling up all this advertising.
Takeaway: A digital media outlet that has a reputation for credibility, strong ethical standards and community service will appeal to many advertisers who want to align their brands with those values. You can still sell the magic of the relationship.
This is old-fashioned brand-based advertising. It still works on a community level, despite all the naysaying by data-driven sales organizations.
When you think of community rather than audience, you no longer have to fall into the pricing trap of advertising contracts based on CPMs (rapidly falling, by the way), page views, unique users or clicks.
- 16 percent regional advertising
- 26 percent from national advertising
- 21 percent community outreach consultant projects (computer training)
- 37 percent social media consultancy and training programs.
El Faro, an investigative journalism website in El Salvador, has produced several books based on its investigations, and it offers them for sale on its website, along with other books, music, and artistic products.
Vox Media’s community for sports fanatics, SBNation, offers ticket sales and exchange services.
The Telegraph in England has an online store that sells almost anything you would find in a department store: clothing, household products, gardening, jewelry, etc.
A website about the business of fashion in Spain, Modaes.es, maintains an online store that offers printed research, back issues and event programs.
7. Events
Even though the community you build is online, its members still crave face-to-face contact. People want to connect and meet others who share the same interests and values. Sponsors who share those values and want to connect with that community are willing to pay for the right to be visible at such events.
When the events are aligned with the mission of your publication, they help reinforce your brand as a leader in the community.
At a minimum, you could hold brand-building events with a goal of just breaking even. Invite your online community to a happy hour or coffee, get the bar or cafe to offer discounted drinks or free food, and use the event to get close to your readers.
You can keep costs down by trading for some of the food and venue costs.
The nonprofit Texas Tribune is a great example of event marketing. It generated $1.2 million in 2013 from events and conferences.
There are at least four ways to make money from events:
- sponsorships
- tickets
- booths (display)
- product sales (publications, subscriptions, branded merchandise)
Businesses that wanted to become part of the community paid $5,000 to $25,000 to sponsor a single event such as Best Places to Work, Women Business Leaders, or 40 Under 40, an event honoring up-and-coming business people.
Sponsors received a banner and recognition in the printed program as well as mention in advertisements for the event. Ticket sales generated revenue. At some events we sold display booths or tables. Profit margins can be high if you keep costs down.
8. Repackage and sell data
Internet users are willing to pay a premium for data that is organized for them in a convenient format and is searchable. American City Business Journals (my former employer), with 40 newspapers in cities around the country, has been making money this way for years.
Each week these newspapers collect data on the largest local businesses in various categories — real estate developers, law firms, retailers, auto dealers, accounting firms, manufacturers, etc. In digital format these databases sell for $299 per city.
In addition, the newspapers publish information from public records sources, such as real estate transactions, new corporations and partnerships, bankruptcies, etc. This information is repackaged digitally and offered for sale. Businesses use this data to find new customers.
Capitales, a financial news website for Central America, offers premium information services to clients. Because Capitales collects so much information on the economies and capital markets of the region, it can create special information packages for clients, who pay as much as $25,000 a year for the service.
Texas Tribune — an innovator in events, membership, and sponsorships — has been an innovator in data. It generates most of its traffic not from its investigative journalism but from its databases of such things as state employee salaries, public education spending, water use, prison inmates, and others.
Takeaway: Online users will spend large amounts of time searching and studying a database. Time and attention translate into revenue opportunities. Sponsors will be interested.
9. Foundations and NGOs
Many media startups are getting the majority of their revenue from grants, which is not a sustainable position. If a major funder suffers a serious devaluation of its assets or decides to change direction, the media organization that has not diversified could be in big trouble.
In 2012, of 18 leading nonprofit news sites surveyed by the Knight Foundation, the eight local news sites were getting 47 percent of their funding from foundations, and the six state news sites averaged 66 percent. Vulnerable, in other words.
Source: Foundation Center |
The most comprehensive information about the status of funding for media comes from a Foundation Center report:
- 1,012 foundations made 12,040 media-related grants totaling $1.86 billion from 2009 to 2011.
- Media-related grantmaking grew at a faster rate than overall domestic grantmaking, 21% increase vs. 5.8%, respectively.
- Funders are reacting to the changing landscape of media in the digital age: New media investments (web-based and mobile) vastly outpaced that of traditional media (print, television, and radio), by a factor of four (116.5% vs. 29.4%).
- Media-related funding is diverse: Four of the five major areas of media-related grantmaking experienced growth from 2009 to 2011. Media applications and tools led the way in growth (107.8%), while funding for telecommunications infrastructure experienced the only decrease (48.4%).
- While funding for public broadcasting increased over time, it fell behind the increase in funding for media-related activities overall (17.6% vs. 21%, respectively).
Outside of the U.S., one of the biggest funders of journalism projects is the Open Society Foundations. In just two areas of focus for this blog — Latin America and independent journalism — the Open Society Foundations made grants of $34 million and $32 million respectively. (In all the foundations spent on programs and grants around the world.)
CIPER, an investigative news site in Chile, gets a significant portion of its revenues from Open Society and the Ford Foundation. LaSillaVacia in Colombia gets 52 percent of its revenue from foundations, most of that from Open Society.
10. Emerging entrepreneurs
As traditional media companies lose advertising and circulation revenue to the Internet, civic-minded people worry about the loss of news coverage. They want to see more investment in information.
We know about the $250 million Amazon founder Jeff Bezos spent to buy the Washington Post. And we heard about eBay founder Pierre Omidyar’s $50 million launch of the independent First Look Media.
But below that level of giving there is also a lot of money looking for ways to replace the loss of investigative journalism in regional and local news sites.
In San Francisco in 2009, billionaire Warren Hellman took the initiative to launch the Bay Citizen, a digital news site focused on the area, and contributed $5 million. He attracted other wealthy citizens and foundations and another $3.7 million to the cause of producing better local news coverage. The operation has since been merged with the Center for Investigative Reporting.
The Texas Tribune launched in 2009 with $4 million in seed funding, led by venture capitalist John Thornton, who personally contributed $1 million. It has a staff of 40 and posted revenues of $5.4 million last year.
In Latin America, emerging entrepreneurs can be an important force for change. These types of entrepreneurs do not have ties to the traditional oligarchies of business, politics, and media that have traditionally controlled the public agenda. Because of their independence, they support an independent press.
In El Salvador, the investigative news site El Faro has benefited from a partnership between the editor, Carlos Dada, and a software entrepreneur, Jorge Siman, for 16 years. Their independence has survived threats of violence and has led to award-winning coverage of political corruption and social issues such as the treatment of Central American immigrants bound for Mexico and the United States.
In Peru, the magazine and website Etiqueta Negra has carved out a reputation as a place to go for literary writing and investigative reporting. Part of the reason for its editorial success is its independence. It was started by the Jara brothers, who have no ties to the traditional power structure. It was that independence that allowed the magazine and website to establish themselves as an important voice in journalism for all of Latin America.
11. Real-time ads, daily deals
Mashable reported recently on How News Organizations Are Generating Revenue from Social Media, including real-time ads. Real-time ad widgets allow an advertiser to update the information on a website from their Twitter or email accounts to promote specials and coupons.
West Seattle blog offers coupons and deals to its readers. This is a way of attracting local advertisers with small budgets and giving them a low-cost way to see the impact of advertising.
12. Video
Chumel Torres is a video-blogger whose satirical take on politics and journalism has managed to attract 483,000 subscribers to his YouTube channel in just one year. (Described previously in this blog post.)
He has made a business out of the sponsors he attracts to his weekly program, El Pulso de la República (The Pulse of the Republic). Recent weekly episodes have attracted more than 1 million views each. YouTube has several ways for its video partners to generate money.
And he has a message for other young people who are frustrated with the coverage of politics by the major media: if you don’t like what they are doing, start your own program or news site, he said in an interview.
“If the newspaper doesn’t like you, doesn’t listen to you, doesn’t give you any money, doesn’t offer any opportunities, well then, create your own project. Anybody can shoot a video or record a radio program and upload it to the web. The only limitation is what you have in your head.”
Sell the magic
$600 million deal
Related:
How three independent news startups survived their first five years
Power shifts toward journalists in new media equation
How to make money publishing community news online
7 mobile stats that should worry digital publishers
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