[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.
About David Westphal
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In your other post about business models being elusive in local, I made some comments about how innovation is needed on the revenue side (see http://www.www.ojr.org/ojr/people/davidwestphal/200810/1560/) and that counting on foundation support seems to me a path for a very, very, very small number of sites. Thus, the 99% of the market who can’t count on that should try new approaches that don’t count on charity.
Twelve months ago we achieved profitability in our hyperlocal site. Not satisfied with that, this past week we just tried a new sales approach. The short version of the story is that in 3 1/2 days, we just drove 20% of the prior year’s revenue so we’re confident we’ve found a model that will scale.
Instead of “asking for the order” with foundations, my view is that energy should be spent with driving sustainable revenues. If I were to tap foundation money, it would be to tap those foundations that are doing what is called “Mission Related Investing”. That is, rather than just investing their endowment in unrelated businesses, they carve out a small % to invest in business ventures related to their core mission. As an entrepreneur, I’d much rather make my case to the investment folks than ask for charity which will inevitably dry up.