How newsrooms large and small are learning to grow new revenue streams
Bigger, entrepreneurial newsrooms are innovating ways to grow revenue. Smaller newsrooms? Their path is less clear.
Here’s the good news for bigger newsrooms: The financial picture is not quite so bleak. Aggressive, better capitalized newsrooms are blazing new paths to increased revenue. Digital circulation is growing fast; they are selling new products and services, from newsletters to tech. Look at the The New York Times and Washington Post: If not exactly booming, they are doing decent.
So much for the good news.
The view is a lot murkier for regional and local newsrooms, many of which are struggling and on a path that’s not nearly as clear. Smaller newsrooms often lack the cash or technical skills to offer new products and services that drive revenue.
At least some newsrooms are doing well exploiting niches. The Texas Tribune has done well with events; the Boston Globe with paid digital subscribers; and the nonprofit VTDigger with donations and subscribers. But it’s mostly infant money steps for medium and small newsrooms, even as a growing divide deepens between them and the larger newsrooms that have the financial strength to experiment with new revenue streams. No “silver bullet” has been found that will save foundering newsrooms, nor is any one revenue source likely. Newsrooms need to explore multiple avenues.
“Newsrooms are all going to need a diversity of revenue streams and that mix will likely continue to change over time,” said Josh Stearns, who funds local news and experiments at Democracy Fund. “We need to begin supporting newsrooms and news leaders who can build in adaptability, and be on the look out for new revenue models rooted in community needs and services.”
Experiments continue. Entrepreneurs recognize how difficult it is for newsrooms to focus on creating top-tier content while also trying to create new products and services. Their pitch: You concentrate on news; we’ll handle everything from the web site to advertising. Revenue gets split. Results have been mixed, but the idea continues to tantalize.
The bigger news organizations are innovating. The Times and Post are taking different paths towards profitability, but there are common themes: They are creative and aggressive about trying new ideas. If one idea fails, shrug it off, and try something new. Both are reaping the benefits of scale by exploiting new products and services. They are trying everything from recipes to technology, from newsletters to events. (Not coincidentally, both are on a journalistic roll, running kick-ass stories day in and day out.)
The Times and Post are also seeing big gains in digital circulation. Newsrooms love subscriptions, with their regular monthly deposits, especially as advertising withers. In decades past, money from subscriptions amounted to the equivalent of a rounding error in a business dominated by advertising revenue. Now it is a major source of income. The Times, in fact, calls itself a “subscription-first business” and has 1.6 million paid digital subscribers.
Unfortunately, digital circulation gains have not benefited all newsrooms. Circulation overall fell across the industry last year, even with big gains reported by The New York Times (514,000 new subscribers), the Wall Street Journal (150,000), and Chicago Tribune (100,000).
Cooking up revenue
So where else are the big players looking for revenue? The Times, believe it or not, is looking at cooking, which Ken Doctor called the paper’s “next big paid product” last month in TheStreet. Cooking, the Times‘ 3-year-old cooking app, has 10 million monthly users. It’s free. Well, it’s still free as of today, anyways. That’s expected to change. The Times reportedly plans to start charging for the app, part of their plan to double overall digital revenue between 2015 and 2020. They’re aiming to grow to 10 million subscribers. A good percent of those new subscribers – if they get them – will not be news subscribers, but instead be signed up for apps like Cooking or other products they spin out. That’s a sign that forward-looking news publishers are willing to look past news for growth.
Cooking will become the Times’ third paid product, after news subscription and crosswords. News and crosswords are hits. At the same time, the Times has not been deterred by some high profile failures, such as its apps NYT Now and NYT Opinion.
That’s OK; newsrooms have to keep innovating. No one expects a home run every time up.
Lease out your CMS
It’s harder to know how well the privately-owned Washington Post is doing because it does not report financials. What the paper has said publicly is that it was profitable in 2016. That’s remarkable. To finish in the black, at a time when it has hired hundreds of reporters, editors, and technologists under editor Martin Baron, is a major achievement. The Post doesn’t release numbers on their total digital subscribers but Doctor reports in Nieman Lab that they have about 500,000.
The Post is wagering different bets than the Times. Reflecting the tech swagger of owner Jeff Bezos, founder of Amazon, the Post is investing heavily in technology. It has jumped into the business of selling its content-management system, the complicated software that run news websites. (CMSs like the Post’s do everything from controlling the flow of stories from a reporter’s fingers to how they appear online to hosting and helping monetize the web sites.)
The Post system is called Arc. It’s now leasing Arc to the media company Tronc, according to the Wall Street Journal. Tronc plans to use it for its stable of digital properties, which includes the L.A. Times. The Post has also worked out deals with Argentina’s InfoBae.com and Canada’s Globe and Mail, according to the Journal.
Developing a CMS is a bold step and a big money bet by the Post. CMSs are notoriously complex. But it’s potential gold mine — many publishers are not happy with their CMS. According to the Journal, “The Post has previously said it charges large publishers up to $150,000 a month for access to Arc, and that it hopes the product can eventually generate over $100 million in revenue per year.”
And at smaller newsrooms: Ouch…
It’s much rougher downstream from the big players. Some smaller sites are doing OK, but for the most part the regionals and smaller newsrooms find themselves hard pressed to keep up. “They have less resources, time, and nimbleness to try things out and adapt,” said Stearns.
Many find it difficult to keep up technically and to create interesting products for new, varied revenue streams. Fortunately, there are outliers.
The Boston Globe is doing well with digital subscriptions. The Globe (my old employer) has 84,000 digital subscriptions, which is excellent among the regionals. Others have found it much more challenging to build a solid subscriber base.
The non-profit Texas Tribune has built a niche as the go-to site for state data and for running financially successful conferences. Its data includes everything from the salaries of public officials to a guide to the financial interests of elected officials. It runs 50 public events a year including The Texas Tribune Festival, the paper’s signature three-day event that attracts thousands, including government officials, activists, and citizens.
All that leads to the Texas Tribune’s impressive revenue growth — which rose from $4.1 million in 2011 to $6.5 million in 2015.
The Vermont nonprofit VTDigger has done well attracting support from readers, said editor Anne Galloway. About 40 percent of its revenue comes from 2,700 readers, of whom 400 people give monthly. They hope to grow that to 500 by the end of the year. Its budget has nearly doubled to $1.3 million since 2014. The site has a newsroom of 14, including five reporters in the statehouse. It’s planning new advertising products, too.
However, the overall business environment for news remains what bankruptcy lawyers like to euphemistically call “challenging.” Newsrooms are struggling to stay competitive in a tech environment that’s constantly changing. They need to be masters of everything from social media platforms to data visualizations — oh, and by the way, don’t forget to publish some, you know, news today.
Crying out for a third-party solution
It’s a situation that cries out for a third-party solution. What if that third-party (let’s call it a “publisher”) offered to supply newsrooms with tech and other services? That would leave newsrooms to concentrate on what they do best — content. The publisher could split ad revenue with any number of the newsroom, while taking care of the the back-end, front-end and advertising.
That’s the argument made by Ben Thompson in Stratechery. As an example, he points to the announcement that Bill Simmons’s popular sports site, The Ringer, will move from Medium to Vox Media. Vox already has its own stable of branded verticals, ranging from Vox, which covers general news, to SB Nation, about sports (with its own team verticals), to The Verge on tech. Now it’s taking on The Ringer, promising it independence and its own brand.
Medium actually tried this path, seeking to publish many money-making verticals on a broad scale. But the hoped-for advertising didn’t come through. The Vox example is a much more limited deal, with a greater chance of success. Other examples of this include Backchannel’s recent move to Wired and Mic’s booting up of nine new verticals including Payoff for financial advice, Slay on women’s issues, and Multi-Player on gaming.
There are plenty of other examples of third-party solutions. Here’s a short list that Stearns shared:
- TAPinto is trying a franchise model, with back-end and front-end support. It supports about 65 sites in New Jersey and New York.
- News Revenue Hub sets up membership programs for a fee and “facilitates an exchange of insights among participating outlets.”
- The Institute for Nonprofit News has created a WordPress framework for news publishers called Largo.
- Spirited Media, parent of Billy Penn, is piloting new local media operations in Philly, Denver and Pittsburgh.
What’s the revenue future look like for news? Not as dark as it did a few years ago, but a bright dawn is not imminent. Some bigger sites, with revenue to fuel innovation, are doing OK. Mid-size and smaller publishers are slowly carving out multiple channels for revenue, from memberships to digital subscriptions, from sponsored advertising to newsletters. But adoption and success are slow. There is no one-size-fits-all solution.
Photo: Travis Swicegood via Flickr.