The state of independent local online news: Start-ups look for foundation support

November 3, 2008 by

[Editor’s note: This the final article in OJR’s week-long look at the state of independent local online news start-ups.If you missed the first five installments, here they are:
Part 1: Sites on the rise; business models remain elusive
Part 2: Experience makes MinnPost a top online new startup
Part 3: No paper? No problem! News companies use the Web to enter new markets
Part 4: Seeking consistency from grassroots reporting
Part 5: Outsourcing as a path to profitability?]

Can the nation’s network of private local foundations be rallied to the cause of nonprofit news on the Web? Even if they can, is there enough money there to make a difference in the developing world of local-news Internet startups?

The Knight Foundation, which has given $400 million in journalism grants over the last six decades, is trying to find out. And there are a few early signals that there’s at least some money to be had by journalists trying to make a local news splash on the Web.

The Voice of San Diego, the three-and-a-half-year-old community news site, recently won two grants from the San Diego Foundation – $25,000 to support the site’s own fundraising efforts and $40,000 to tell the stories of San Diego residents who overcame particular challenges to succeed in the community.

MinnPost, a Minneapolis site that celebrates its first birthday Nov. 9, recently won a $225,000 grant from the Minnesota-based Blandin Foundation to produce reporting on rural issues in Minnesota.

These are smallish examples against a backdrop of huge potential needs, as strapped mainstream media scale back reporting resources in their communities. Nevertheless, some Web startups are making the argument that local foundations ought to consider news and information as critical community needs along with traditional territory like the arts and health care.

“We’re getting a lot of attention from foundations,” Andrew Donohue, co-editor of the Voice of San Diego, told me in an interview at the Voice’s offices in San Diego. “They realize if they care about certain things in the community like science and environmental issues, there’s a real problem if there’s no way to get this information to the public. If there’s no journalist around to tell important stories, what do you do?”

With advertising dollars still scarce for Voice of San Diego and their counterparts across the country, the Knight Foundation is spending $24 million to test the theory that local foundations might take local journalism under their wings as a threatened community resource.

I talked by phone with Gary Kebbel, journalism program officer at the Knight Foundation and a digital pioneer in his own right.

“We’re trying to convince foundations that a core community need is not just health, education and welfare, but also information,” Kebbel told me.

Geoff Dougherty, editor and CEO of the ChiTown Daily News, says foundation involvement can’t happen fast enough. “I don’t think the philanthropic community has realized how rapidly local coverage has fallen apart in many urban areas, and how important that local coverage is to the health of democracy,” he said.

The foundation initiative is but one way Knight is aiming to prod innovation on meeting community information needs – premised mainly on the theory that big gaps are emerging in mainstream media’s reporting. Knight is handing out millions more to innovators eager to try out a new proposal. For example, it gave $250,000 to MinnPost and $340,000 to the ChiTown Daily News.

Last week, applications closed on a new round of Knight’s $5 million news challenge, aimed at community news startups.

I asked Kebbel how the Knight Foundation saw its role in digital transformation as it relates to news.

“We’re hoping to lead it,” he said. “We have the luxury of being the industry’s research and development arm, if the industry is smart enough to use it. And we have the luxury of testing things to see if some actually succeed.”

Note: In a future post, I plan to look at the digital innovation strategies of other major journalism funders like McCormick, Carnegie and MacArthur.

Q&A

Here’s more from my interview with Gary Kebbel:

Q. What’s your sense of how independent news sites are doing?

A. I can’t say I’ve studied the sites content-wise. What I can talk about is the fact that you’ve got individuals who have the tools to start sites, and they’re going ahead and doing it. And how long they can sustain it is sort of the big question. They get going on the fact that they can start for relatively cheap, and initially it’s sort of exciting. And then all of a sudden, six months into it, holy criminey, this is a lot of work. So the question is, in that year, have they gotten enough of an audience, have they gotten savvy enough to get advertisers? And also, I think, have they figured out who to partner with? There’s a decent enough amount of people willing to devote time and energy. Our New Voices project, our whole process is to fund startups, and see what startups work. One model is an association with a library, another is a partnership with a university. So who produces and who can make it sustainable? I think quite possibly the model that is going to have the longest staying power is the one associated with the universities.

Q. Does Knight have concerns about losing a place where the whole community comes together?

A. That’s a perfect question. I don’t think we’ve reached a place where we know the answer to that. As you know, the newspaper used to be sort of that place. As we look back on it, we probably thought it was more that place than it really was. Sorry to say. But in the new model, is that place radio or TV? And I think it might be.

Q. Is that because the economics are drifting in that direction?

A. I’d say ease of use. Much as I hate it, people don’t seem to be taking the time or effort to read newspapers the way they use to. But they’re certainly willing to listen to radio on the drive to work or TV, and watch TV in the evening. So the question is, how much of that is local news? I mention radio and TV in part because it’s the structure in place to reach a mass audience immediately, and to overcome literacy issues.

Q. What is the Knight Foundation’s role in digital transformation as it relates to news?

A. We’re hoping to lead it. We’re hoping others see it that it way. We’re doing it through funding principally through the Knight News Challenge, which funds digital innovation and experimentation. We have the luxury of being the industry’s research and development arm, if the industry is smart enough to use it. And we have the luxury of testing things and seeing if some actually succeed.

Q. Joel Kramer of MinnPost told me foundation support will only be there in the startup phase and will disappear after a short amount of time. Is that how you see it?

A. That’s fair. We look more and more at what we do as startup funding. That doesn’t mean we don’t give additional funding. But people really should not come to expect it. And they should not build their sustainability plan on the fact that when the money runs out they can go back to Knight Foundation for more.

Q. Can nonprofit news sites expect to build a member contributor base?

A. I really don’t know. I do think we’re at the stage where more and more sites are experimenting with more and more ways to charge. And I think the public is getting used to paying for some things. If the content is good enough, special enough, speaks to them enough, perhaps micro-payments will be part of the answer, perhaps memberships might be part of the answer. I don’t think any of these will be THE answer.

Q. Tell me about other Knight programs.

A. What we’re doing right now is trying to serve the information needs for communities in a democracy. And overall, we’re trying to increase the information flows in communities, and increase the quality. The News Challenge is No. 1. Another is the Knight Commission on the Information Needs of Communities in a Democracy. Another leg is trying to get universal access in the 26 Knight communities – wi-fi or wired or whatever. Then there’s the Community Information Challenge. That’s an initiative to pair up startup innovators with local foundations. We’re trying to convince foundations that a core need is not just health, education and welfare, but also information. The business model is the $64,000 question, and nobody has the answer yet. That’s why the Knight Foundation is doing all these experiments.

David Westphal is executive in residence at the USC Annenberg School for Communication. He is affiliated with Annenberg’s Center for Communication Leadership and the Knight Digital Media Center.

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The state of independent local online news, part 5: Outsourcing as a path to profitability?

October 31, 2008 by

[Editor’s note: This is day five of OJR’s a week-long look at the state of independent local online news start-ups. Each day’s report will include a feature article, as well as a Q&A with one or more of the day’s sources. If you missed the first four installments, here they are:
Part 1: Sites on the rise; business models remain elusive
Part 2: Experience makes MinnPost a top online new startup
Part 3: No paper? No problem! News companies use the Web to enter new markets
Part 4: Seeking consistency from grassroots reporting]

James Macpherson learned a lesson last year when kicked up a journalism fuss over plans to outsource reporting on his Pasadena website to journalists in India.

“Never get talked out of your instincts,” he told me in a phone interview. When he forgot that adage, he said, “I got in the hole really fast.”

Macpherson, who’s run the news website “Pasadena Now” for the last four years, was so shaken by the criticism he received over his outsourcing plan that he immediately hired four reporters in what he said was an attempt to prove his journalism bona fides.

Macpherson said he almost immediately began losing money. “We did a great job. But it cost $5,000 a week… There was no way I could pay for it.”

So Macpherson got rid of the reporters and went back to his outsourcing plan, which he says is working. (He told an anecdote of how his workers in India delivered him a transcript of a 20-minute press conference at CityHall, about 90 minutes after the event. The cost? $1.70 or $1.80, he said.)

About five reporters in India contribute to the site, mainly by watching webcasts or listening to audio of government meetings and then writing stories.

Macpherson’s for-profit site, rich in community events, arts and culture, is now basically a two-person operation, with lots of help from citizen volunteers – though he doesn’t believe in citizen journalism per se.

Macpherson figures there’s a great future ahead for Pasadena Now. He’s experimenting with Pasadena Hoy, a Spanish language site – he can get translation done for 59 cents per 100 words. And he figures he can make some money on Internet advertising, though not directly.

“My approach is not to sell online advertising,” he said. “It’s to sell the Internet to our clients. We’ll help them develop e-commerce at their own sites. I don’t think newspapers can be in the business of just selling online business on their sites. That’s not a proposition that will keep anyone alive.”

Q&A

Interview with James Macpherson, who runs the Pasadena Now Website in Pasadena, Calif.

Q. What’s become of your outsourcing experiment?

A. I’ve reverted to, refined, and expanded upon people who do not live in Pasadena to create content. At one time I had 4 full-time reporters and, in my opinion, we were doing a great job. But it was financially unsustainable. I did that because I was stung by the criticism about outsourcing.

Q. Can you be more specific?

A. Technology today permits a reporter to virtually experience an event, regardless of where the reporter is located geographically. This reporter can experience an event in real time, and can therefore report with great authority what’s happening. I’m developing long-distance techniques for reporters who aren’t physically present.

I primarily work with Indians. Many of them can produce very well-written AP style stories. Many of them have gone to American universities. The person I’m working with the most now spent 12 years in New York. With Skype and high-speed and new Web applications, they’ve enabled me to do amazing things. There was a press conference Monday. I get transcriptions produced very cheaply. About 90 minutes later I had a transcript of the 20-minute press conference. I think it cost me $1.70 or $1.80.

We’re now experimenting with Pasadena Hoy, a Spanish language site. Translation costs me 59 cents per 100 words. I can afford that. And the community needs it.

Q. What do you consider the heart and soul of Pasadena Now?

A. The heartbeat of what we do has turned out to be coverage of community events – events that people sometimes might consider hokey. Award dinners, benefits, that kind of thing. These are events that typically don’t get covered. We have a huge events calendar, which is the second part of what we do. And we are working slowly to returning to a provider of hard news. That’s a money-losing proposition right now, but we’ll get back to it.

Q. How will you do that?

A. We’re going to do it with the community’s help, through establishing a Twitter force and salting the community with more observers and neighborhood associations. I don’t mean citizen journalism. What we are now is not where we want to be.

Q. How do you distinguish citizen journalism from community observers?

A. I like the pro-am model where the amateur people provide the raw information, the raw data. The point is for citizens to Twitter information they have observed. We want their raw information. But we will vet their observation in the way journalists do.
There’s too much inaccuracy and naiveté in a lot of citizen journalism I’m seeing.

Q. Tell me about your metrics – site traffic, profitability and so on.

A. We get about 63,000 unique readers a month. We also have an e-mailed newsletter that goes out every Thursday and we have 19,976 subscribers – mainly an arts and entertainment e-mail. The company is a for-profit company. And someday, just like General Motors, we too might make a profit. Most Pasadena merchants seem to be antediluvian in their attitudes. The Internet is something that they just don’t comprehend. But I don’t give up easily.

Q. What’s your take on the future of community-wide, general-interest news sites such as yours? Can they be successful?

A. I hope they can be. Pasadena is a city of real contrasts. We have billionaires living here. We have 15,000 out of 20,000 students who need subsidized lunches. We all need to live here. We all need to know more about each other. We all need to draw together.
I would like to be one place everyone goes to. We don’t take editorial positions. We try to be totally open to all these groups.

Q. What’s you staff look like?

A. Just Candice (Merrill, assistant editor) and me. When I hired those four reporters we had education, government/city hall, an all-purpose general reporter, a breaking news reporter. We did a great job. But it cost $5,000 a week. I couldn’t do it. Our readership went up. It was great. But there was no way I could pay for it. Never get talked out of your instincts. I got in the hole really fast.

In practice now, with the number of technological advances so prevalent, we now have people in India who are questioning the mayor by cell phone. And a senior citizen volunteer for us is arranging for the conversation, and has a video cam to record it.

Q. What else should we know about Pasadena Now?

A. There’s such potential now. I would love to have community publications syndicated, where something that’s happening in Pasadena we could provide that information to local television and the LA Times with video, audio, transcripts and so on. We should be doing partnering with the local Pasadena paper (Pasadena Star-News). There’s real room here for information sharing.

Q. Advertising?

A. We have no sales staff. One of our best advertisers was Pasadena Ford, which shut down a month-and-a-half ago. My approach is not to sell online advertising; it’s to sell the Internet to our clients. We’ll help them develop e-commerce, their own site. I don’t think newspapers can be in the business of just selling online business on their sites. That’s not a proposition that will keep anyone alive.

David Westphal is executive in residence at the USC Annenberg School for Communication. He is affiliated with Annenberg’s Center for Communication Leadership and the Knight Digital Media Center.

Monday: A conversation with Gary Kebbel of the Knight Foundation, and a wrap-up.

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The state of independent local online news, part 4: Seeking consistency from grassroots reporting

October 30, 2008 by

[Editor’s note: This is day four of OJR’s a week-long look at the state of independent local online news start-ups. Each day’s report will include a feature article, as well as a Q&A with one or more of the day’s sources. If you missed the first three installments, here they are:
Part 1: Sites on the rise; business models remain elusive
Part 2: Experience makes MinnPost a top online new startup
Part 3: No paper? No problem! News companies use the Web to enter new markets]

If the future of news is ultra-local, then ChiTown Daily News is gambling in the right direction.

The operators of the three-year-old news operation are counting on interest in Chicago’s 77 neighborhoods to bring readers to their nonprofit site, staffed almost entirely with citizen journalists.

The results so far are inconclusive. Traffic is building, but only recently passed the 25,000 mark on monthly unique visitors. (The Chicago Tribune’s monthly audience is about 150 times larger.) And the work of the citizen journalists, while often surprisingly good, is uneven.

“Performance and longevity have varied widely, and wildly,” editor and CEO Geoff Dougherty told me in an e-mail. “Some of the original crew is still with us; others drop out before writing an article.” But Dougherty added: “I have been enormously surprised by the quality of work that some of our people do – we get great stories this way.”

The site’s work has been bankrolled mainly by a two-year, $340,000 Knight Foundation grant that saluted its pioneering attempt. “Nobody has attempted to create an organized, cohesive system that enables coverage of a large city,” Knight said in announcing the grant.

Managing, directing and editing a citizen staff of 77 with a full-time staff of just four seems a Sisyphean task. Many of the neighborhood sections’ most recent stories are several months old.

“It’s been a lot more work than I envisioned, and fundraising and advertising sales have been harder than I’d thought,” said Dougherty. But reaction from many parts of the city has also been more favorable than expected. And even as ChiTown Daily News gets stronger, he said, the Chicago Tribune and Chicago Sun-Times get weaker because of reporting staff cuts.

Dougherty points to another bellwether.

“It’s also nice to come to work every day at an organization that is very clear about its mission, and one that is growing and (more or less) prospering. It’s a rare experience in journalism right now. We’re all a lot happier than everyone else I know in the business.”

Q & A

E-mailed responses to questions from Geoff Dougherty, editor of the ChiTown Daily News:

Q. I believe you were aiming at rounding up and training 75 or so citizen journalists. Have you gotten there yet, and what’s been their record of performance and longevity?

A. We’ve got 77, though we have not reached our goal of one in each of the city’s 77 neighborhoods. Our coverage is well-distributed in terms of the geographic and ethic breakdown of the neighborhoods, but we do have more than one person in a few places. We’ve still got eight months of funding left on the Knight grant that funded the program, so there’s little chance we won’t reach the goal.

Performance and longevity have varied widely, and wildly. Some of the original crew is still with us; others drop out before writing an article. Some of the articles take quite a bit of effort on our end before publication, while others require minor copyediting. We’ve only spiked two or three articles over the course of the last 18 months, though. Almost everything our people submit is eventually published. I have been enormously surprised by the quality of work that some of our people do — we get great stories this way.

Q. I saw on your site you were talking about 19,000 monthly visitors. What are the trend lines there and what are your most popular sections? Is the traffic what you’d projected?

A. The trend is definitely upward. We were able to double traffic over the six months that ended with the report you saw. We’re currently at 26,000 (monthly visitors). We’re looking to hit 35,000 at the end of the grant period, and 75,000 or so within the following year.

Q. What’s your news coverage strategy? It appears you’re hoping to provide something for everyone in your general news coverage, but then probably really focusing mainly on the neighborhoods. Is that accurate? Are neighborhoods your heart and soul?

A. Our goal is to provide people with nitty-gritty neighborhood coverage as well as distinctive citywide coverage. We focus on trying to cover stories and issues that are unique. For example, we’re the only news organization covering the Metropolitan Water Reclamation District, which spends a ton of money and is engaged in the largest public works project in American history. Ditto with the Chicago Housing Authority. At the same time, we try to really dig into what’s going on in the neighborhoods.

Q. Have you been tempted to scale back to a smaller niche that doesn’t attempt to be such a one-stop shop? Perhaps speak from a certain point of view?

A. So far this is working really well for us. People seem excited that we’re giving them info they can’t find anywhere else. We’ve identified funding to bring a couple of our beat reporters on staff, so I imagine that’ll lead to more, and more consistent, coverage.

Q. I believe you had begun a fund-raising campaign last spring. How did that go?

A. Fundraising is hard work. We brought a general manager on about six months ago to concentrate on the revenue side of things, and it’s paying off. We’ve got a number of additional grants in the pipeline, have brought in $25,000 or so in individual contributions, and are pushing that number higher every week. That said, our fundraising apparatus is very much in its infancy.

Q. What’s your staff look like?

A. There are four full-time employees — me, another editor, the GM, and our community organizer. Our freelance beat reporters all have serious experience at daily newspapers. Our transit reporter most recently covered city hall for one of the Detroit papers, and our board of education reporter is a former deputy sports editor from Jacksonville.

Q. Tell me what you can about revenue and expenses. What percent of revenue comes from advertising?

A. Advertising makes up a miniscule portion of our revenue — less than 5%. But it’s been growing rapidly since our GM started. During the fiscal year that closed at the end of June, we brought in $206,000 and spent slightly more than that.

Q. What happens when the Knight grant runs out?

A. That’ll be an interesting time. We’ve already started fundraising for the second phase of the neighborhood reporting program, and in fact have secured a $25,000 grant from the Herb Block Foundation. We’re talking with about a dozen other funders, including Knight, and expect some of those conversations will lead to grants. We expect the advertising and individual contributions will help greatly.

Q. When you think about your hopes and dreams on launching the site, how does that match up with your actual experience?

A. When I started this, it seemed like an idea that might work. It’s become clear that the idea does work, generally much better than I ever thought it could, which is amazing. The need for the kind of coverage has increased vastly over the past three years as the Chicago Tribune and the Sun-Times have shed reporters. So it’s intensely rewarding to be able to fill that need.

It’s been a lot more work than I envisioned, and fundraising and advertising sales have been harder than I’d thought. But we’ve got the machinery in place to make some big strides there, so I’m not particularly worried.

It’s also nice to come to work every day at an organization that is very clear about its mission, and one that is growing and (more or less) prospering. It’s a rare experience in journalism right now. We’re all a lot happier than everyone else I know in the business.

Q. Do you think replicas of the Daily News will blossom all over the country, or are you expecting more of the activity in smaller niche areas online?

A. I’m sure you’ve heard this from folks in San Diego and the Twin Cities, but we’re banding together to help the model spread to other places. I think it’s important that we succeed. While there are certainly some great sites that focus on niches like transit and urban planning, I don’t see niche sites willing to take on the kinds of longer-term projects we’ve done on topics like transit funding and police brutality.

I think there’s a big need for people to have a local news organization that’s working to hold government accountable, sue for access to records, and serve as a central gathering place for news and information.

Q. Any other thoughts about the Daily News experience?

A. I don’t think the philanthropic community has realized how rapidly local coverage has fallen apart in many urban areas, and how important that local coverage is to the health of democracy. We hope things won’t get too much worse before foundations and individual funders realize they have a critical role to play.

David Westphal is executive in residence at the USC Annenberg School for Communication. He is affiliated with Annenberg’s Center for Communication Leadership and the Knight Digital Media Center.

Tomorrow: PasadenaNow covers its community by outsourcing its reporting.

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