Originally published 10-30-2012 at Submojour.net as “Submojour Report: 4. Sustaining journalistic entrepreneurship”
By Pekka Pekkala and Clare Cook
Structural change in the media ecology has opened up a range of opportunities for startups, as this report has detailed. Media entrepreneurs have flexed their muscles creating all manner of new sites, products and services in the journalism ecology. Many have launched blogs or niche interest sites, forums or digital communities; others trade on civic, investigative or citizen journalism; others on technology and production. This chapter recognizes the valid addition of these sites to the potential career path of a journalist and the increasing likelihood for journalists to work within, create or alongside such journalistic entities. Where once innovation and change happened slowly, current media technologies are developing continually and the rate of product development has increased exponentially.
As part of the interview process to create the SuBMoJour database, researchers had the opportunity to discuss with media managers about the range of skills required to sustain journalistic entrepreneurship. Not all interviewees participated in these discussions. However, the interviews were free enough to allow for subjective information to be solicited where possible as to the journey experienced towards sustainability.
Of the responses collated, there were several points of advice from journalism entrepreneurs worthy of note. These are detailed below in the intention of helping those planning their own startup by giving some lived experience of more established entrepreneurs. These are not intended as a definitive list but go some way to identify the scope and reach of possible skills development and research in the future. This builds on more general advice in both practice and theory (Tidd et al 2001; Briggs 2012; Chesbrough 2003; Bessant & Tidd 2010). The objective is to increase the resources on which media entrepreneurs can draw and thus enhance the collective creativity of journalists around the world. It acknowledges the advice needed for all those who are considering a career as a media entrepreneur and wanting to start their own journalistic outlet on the Internet.
1. Small teams
Many case studies from the US and Europe, especially those sites focussing on niche topics, reported a key element for profitability was to do almost everything by yourself. Many of the sites run on minimal staff: they don’t have bespoke offices but work from home and they buy only little work or consulting from other companies or people. They have only a few freelancers working for them very occasionally and citizen contributions are quite low. Bargain Babe editor Julia Scott notes: “I used to be a full time reporter, and when you’re a reporter you have the luxury to report and write all day long. There are very few meetings. I realized after I started Bargain Babe that I have to do all of the business stuff: deal with advertisers, get my site listed, work on SEO, network with people, learn everything I needed to know about running a business, filing my taxes… All this stuff that, as a reporter, you don’t have to deal with. I spend anywhere from a third to half of my time writing and the rest of the time, on all the business stuff.”
The database details the time managers spend on business affairs compared to content production. Thierry Chervel, managing director of Perlentaucher, Germany’s Internet-only culture magazine, notes: “As a managing director my time is divided 50/50 between doing business and content. I am the public face of the company; I am also the principal contact person for our clients. However, since we are a small firm there is no organisational hierarchy.” However, even those journalists who appear to be outwardly a “one man band” may still need support, probably on an ad hoc basis. Several managers reported outsourcing technical or site engineering. Finnish food website Hellapoliisi is owned by Kati Jaakonen, who does all the content – recipes and photos – herself, yet she outsources all the technical maintenance, site design and development.
Where small teams have been created, the skill base varies depending on the site or product. Broadly speaking, these roles fell into the following categories: business, marketing and sales; content producers; unpaid citizen journalists; developers and designers; web, system engineers or technical support.
It seems that all the financially successful publications pay their freelancers and staff. None of the US cases run solely on citizen contributions or content that is written for free. Some have unpaid community contributors, but none says their input is crucial for the website but rather an addition. Thus, most profits are put towards salaries and supporting writers. Of all those interviewed for the database, the majority cited that investment in journalism, journalists and staff would be a key area for further investment, should funds become available. This is probably one of the biggest shifts from traditional media companies, where only 20–30 percent of the revenue goes to the newsroom (Filloux 2008). Most of the publishers seem to believe that their success is tied to quality content. To get quality, you have to pay for it. And when asked about the profit and where it goes, usually the answer is “better content, more writers”.
Having such restricted access to human resources, however, necessitates a wider understanding of the basics of web publishing technologies: how to set up a blog, publish stories and pictures. Many cite the need to learn how to manage display ad systems and do affiliate linking. All of them buy more advanced or complicated programming tasks from an outside developer or have friends who do it for free. If the site is not selling a technology platform for other bloggers or publishers, then media entrepreneurs rarely hire full-time programmers or tech staff.
2. Master of many skills
Of the startup case studies gathered for this study, few were generating large profits. This feeds the need for frugality and results in entrepreneurs needing to increase their skill set to include all manner of business management, marketing and sales skills. For example, apart from economical sustainability, the Japanese online journalism culture is facing several challenges for its sustainability owing to the training, supplying and the livelihood of young journalists. In the US, entrepreneurial thinking remains a problem. Traditional newsroom work doesn’t require any business intelligence and journalists start their entrepreneurial path from zero. It takes time for them to realize that they are probably the best people to run the business side of things as well as the editorial. A business mindset gradually grows instead of an overnight shift: the skills are there but they need time to develop.
The business side of publishing has been the most difficult thing to learn for journalists, no matter if they are new writers or seasoned veterans. David Boraks from Davidson.net explains that it took 18 months for him to realize that he could not be the journalism-only journalist he used to be: “You know in an ideal world I would love to get back to the point where I am not doing any of the business stuff because I am a journalist at heart. But at the same time it’s been really a challenge and it’s been fun for me to try and figure how to grow the business. I did try last year to hire somebody to be a business manager for the whole business and it just didn’t work out the way I had hoped. I realized that when you are starting a small business and you have a vision you really need to do a lot of that leg work yourself; you can’t turn it over to somebody else and expect it to happen the way you want it to.”
Julia Scott from BargainBabe explains how to do marketing when you don’t have a marketing department or even a budget to do it: “One of my biggest business expenses when I first started was making flyers. I had a friend design a flyer, I wrote all the copy myself. I would go to Kinkos and they had a free colour paper offer if you made a copy there and so I got Hot Pink ones. I would cut those flyers myself, cutting paper two hours every month or something.”
Jonathan Lloyd, the founder and owner of Mediastreetapp, a start-up business developing a web software application to run local websites, cites: “I like to structure it so that I’m publishing some content early in the morning so that people arriving at their desks can see that story. The rest of the morning I mostly do sales and marketing activities. In the afternoon I tend to be out and about seeing my local businesses and clients. In the evening I do development work.”
3. Start thinking about the money from the start
It seems that reaching profitability requires work from day one. This was mentioned in most of the US interviews. Managers noted it was difficult to begin by making the site ready and then selling advertising: the sales had to happen earlier in the business cycle, not least because the site was rarely deemed ready. Howard Owens from the Batavian hyperlocal news site describes how the operation had to become profitable in three months or close down the operation. He notes: “I would just walk in (to a shop), you know, if they are new. I just walk in and ask if they have heard of the site? They have, great! Talk to them a little bit about it, ask if I am allowed to sit down and say how what we are doing can help promote your business and help get more business for them. And if you want to engage me in a conversation right there, great, we can talk. I may just walk out or I will just give a media kit and say we can talk again a week later. If they are showing any interest at all… a week later or a month later whenever it seems appropriate, we have a conversation.”
Sustainability was consistently noted as something that had to be built into the production cycle. Craig McGinty, editor of ThisFrenchLife, advocates the need to think about how to make money from content or how to drive advertising based on story ideas and vice versa. “Content spins off from advertising and back again. Your contact is direct with the reader, answering their questions, but you have to consider if topics highlight or spin off into new directions and go with it.” Much of this can be down to attention to detail. For example, small sites can maximise traffic to their sites simply by locking into topics or issues relating to big-spend advertising campaigns by bigger players elsewhere on the Internet. This helps drive traffic and users.
Much of the sustainability of smaller startups requires an ability to see patterns and opportunities, and act on them. This includes diversifying revenue streams. Artsjournal.com’s Douglas McLennan’s revenue says: “What happened for me was that when you look at 2,000 stories every day, you start to see them almost as clouds on the horizon and you start to see, ‘Ah, you know, here is an issue on Australia that they’re dealing with and this is how they’re dealing with it’ and, ‘Oh, you know what? That is going to happen over here in Germany next week and they’re dealing with it in a very different way’ and you start connecting dots and you become this sociologist of arts.”
When you talk to journalism startups, it is easy to see that they are masters of business frugality. Most start working from home, with old laptops and cellphones. Hosting and content management are done with WordPress or similar free or mostly free platforms.
4. Relationships with advertisers
The SuBMoJour database and this accompanying report sets out the revenue sources open to media startups seeking financial sustainability. There are, however, issues to note about how journalists should conduct themselves in order to maximise these revenue streams. Overall across the database, display advertising is still the king and it is usually sold as CPM. Local sites, however, have a different approach: they sell weekly or monthly display advertising or offer space for time-specific advertising campaigns. This is because local businesses understand the weekly rates better than CPM: when you buy an ad, you see it in a certain spot on the site for a week. With CPM, there might be banner rotation and other confusing elements that are not familiar to businesses who are making their first entry to online advertising.
This inexperience for small-deal advertisers creates a new responsibility for the media entrepreneur: that of educating or hand holding the advertiser as they make their first foray into digital advertising. They often do not understand the statistics behind it and need to overcome a comfort of recognition with legacy media. Media entrepreneurs have cajoled many advertisers into spending their money on online advertising, thus moving the journalist more significantly towards the role of sales person. Editor at Alderleyedge.com in the UK states: ‘“The difficult part is to change the perception of what a local site is to people who still see a local newspaper as the local supplier of news so we are having to work to change perceptions all the time. It is also an issue that a lot of advertisers are much more comfortable with print advertising than they are with online. A lot of the advertisers are located within a five mile radius and a lot are only just setting up their own websites so we are having to do a lot more hand holding.”
There is a different approach to advertising networks as well. To sell ads, the site has to feel local. And the editor has to be part of the local community. While Ars Technica praised ad networks for taking the pain of selling off the site, also advocated by BargainBabe, local sites are more averse to advertising networks. Local sites are part of the local community and ad networks don’t support that: the networks tend not to deal with local classified advertising and random Google Ads seem silly on a local site, instead of well-targeted local ads from local hairdressers or shops. Craig McGinty, founder of ThisFrenchLife, notes: “People have no idea about CPM and they run a mile. You have to sell the idea of supporting the site and the community of interest in general rather than just purely click through. For specialised sites you have to convince them that feeling part of the community and with a story to sell, and develop a real connection, is more important than the quantity of clicks.” This shift tallies with the “humanization of business” advocated by Joel (2011).
5. Support is more than financial
In many interviews, publishers noted a new relationship between payments and the site. Many reported feeling that financial support was much more than a simple transaction: there is often a feeling that donations, subscriptions – or even the support from advertisers – can relate directly to willing a site on to success or understanding that payments and revenue are necessary to survive. This is an under-researched area but one which can be maximised by media entrepreneurs capable of building loyal and engaged readers, users or advertisers.
Several cited that subscriptions or membership fees – and indeed often advertisers as well – perceived payments and involvement with sites as much more like NPR-style donations than actual purchases of premium content or access. Regional publisher Dijonscope moved from advertising-supported to subscription-only based purely on the appeal that good journalism is worth paying for. Ken Fisher from Ars Technica describes their venture to subscriptions: “We’ve been selling a digital subscription to Ars Technica since 2001. It was actually a bit cheesy, now that I think about it. We put the plea to the community and said ‘we are launching a subscription program; it’s $50 a year. You get the warm fuzzy feeling of supporting us.’ We made two parts of the forum subscriber access only.”
Douglas McLennan from Artsjournal.com adds: “Now the Premium version, what do you get extra? Well, not a lot. The free version you get the headline with the link, the Premium version you get the headline and the link plus the description, you know, the blur; so it’s more of digest, rather. But in reality you could just come to the website and get that because this goes out of there. So essentially, what people are doing is they’re looking for a way to support you. It’s the public radio mentality.”
6. Find your niche
Of the startups included in the study, all seem to have found a niche – either in the long tail of supply or the long tail of outputs as detailed by Anderson (2004). Several trade on specifity and an ability to triangulate niche products and services, with revenue streams in an iterative way. All have a very specific area that they are covering: either geographically or in a certain topic, service or product.
For example, what makes ArsTechnica special among thousands of other tech sites or blogs? Ken Fisher advices the need to take a hard look at the marketplace and find something that makes your publication special. He says not to aim to be the next Wired or Mashable but rather to work on finding your own niche. “The sad reality is if you go in like that, it becomes a race to the bottom. In the sense that if you kind of compete with everybody else on their own terms than the only way you’re really going to compete with them is to kind of do what they do but maybe do a crappier version on some level. Don’t just try to be 30 seconds faster regurgitating the same stupid bloggy content that’s going to be on five other text sites in 10 minutes anyway.” Similarly, there may be opportunities to step into territory previously dominated by mainstream media, as discussed earlier. Audioboo founder and CEO Mark Rock notes: “In 2008, we were working with Channel 4 to do more recording with mobiles but the recession happened and it was clear they weren’t going to launch so we thought we would develop it anyway.”
This reconfigures the journalist entrepreneur in many ways as a connector: between audiences, services and revenue streams. This triangulation requires a new emphasis on business skills to complement those already honed through journalism. Journalists are looking to reinvent their careers. A better understanding of the lived experience of media entrepreneurs already achieving sustainability in this space can help.
Briggs, M. (2012) Entrepreneurial journalism how to build what’s next for news Sage
Chesbrough, H. (2012) Open innovation the new imperative for creating and profiting from technology. Harvard business school press Boston mass.
Filloux, F. (2008) The economics of moving from print to online: lose one hundred, get back eight. Monday Note 29.09.2008. http://www.mondaynote.com/2008/09/29/the-economics-of-moving-from-print-to-online-lose-one-hundred-get-back-eight/
Joel, M. (2011) Humanization of business six pixels of separation marketing and communication insights. http://www.twistimage.com/blog/archives/human-business-in-the-social-media-age/
Tidd, J., Bessant, J. R. & Pavitt, K. (2001) Managing innovation: integrating technological market and organizational change. John Wiley Chichester