The state of independent local online news, part 3: No paper? No problem! News companies use the Web to enter new markets

[Editor’s note: This is day three 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 two installments, here they are:
Part 1: Sites on the rise; business models remain elusive
Part 2: Experience makes MinnPost a top online new startup]

In the spring of 2005, Morris Publications tried something new: It started a website in Bluffton, S.C., a town where it had no newspaper, in a bid for market share via the Internet.

Now GateHouse Media Inc. is trying something similar. Last May, GateHouse launched a community website in Batavia, N.Y., where the Batavia Daily News was firmly established as the local newspaper.

Howard Owens, GateHouse’s director of digital publishing, told the International Journal of Newspaper Technology that GateHouse wasn’t seeing The Batavian as a newspaper replacement.

But when I asked Owens about The Batavian’s mission, he indicated that newspapers may be vulnerable because of an inability to change quickly enough.

“One way to look at it: In the early days of television, broadcast news consisted of a guy sitting in front of a camera reading a newspaper. The vast majority of newspaper websites are still at that stage, or only slightly beyond,” he said. “Any site that is, is vulnerable to disruption.”

The hometown newspaper, the Batavia Daily News, currently has no online presence, though the newspaper has indicated it will soon. Owens said the absence of an existing news website was a factor in The Batavian’s creation – as was the fact that Batavia is only 40 miles from GateHouse’s headquarters in upstate New York.

But he said The Batavian model could work just as well in a community where a newspaper already operates a website.

Interestingly, much of The Batavian’s local content comes right out of the Batavia Daily News, and The Batavian editors give it full credit – even to the point of encouraging its readers to subscribe to the local daily.

The other local news posts are filed mostly by the two full-time news staffers The Batavian employs, one in sports, one in news.

The site is set up to accept files from citizen journalists in designated neighborhood areas, but that’s yet to fully develop. Owens estimates only about 10 percent of the site’s content is user-generated.

Owens acknowledges resistance to the idea of user-generated content, including from some unlikely quarters.

“We’ve hit some roadblocks with people used to dealing with old media who don’t quite get what we’re doing, and that has been a challenge,” he said.

“One tends to think that only old-salt print journalists don’t get new media. Some official sources don’t get it, either. That’s been one of the most surprising revelations.”

Q & A

E-mailed responses to questions by Howard Owens, Gatehouse Media director of digital publishing and head guru of The Batavian:

Q. You’re soon coming up on the half-year mark. Could you give us a progress report?

A. I’ve run lots of websites, some from scratch. Still, making traffic estimates amounts to a guess. We’re a bit ahead of our projections five months in. We’ve received lots of positive feedback. I’ve learned a ton about how to do this kind of journalism. We’ve hit some roadblocks with people used to dealing with old media who don’t quite get what we’re doing, and that has been a challenge. One tends to think that only old-salt print journalists don’t get new media. Some official sources don’t get it, either. That’s been one of the most surprising revelations.

Q. What’s the mission of The Batavian? To see if GateHouse could grab advertising share in markets where it didn’t own the paper? And if so, might we see this model replicated many times over? Or is it feasible only in places where an established paper has no website?

A. First, it was attractive to start in a town without a newspaper website, but that was not a deciding criterion. Really, the most important aspects were the town itself and the proximity to the corporate office (40 miles).

Without giving a lesson on disruptive innovation, anybody who fully understands that term will better understand this project. We could do this with equal success — maybe even more success to this point — in a town where the newspaper had a standard newspaper.com.

One way to look at it: In the early days of television, broadcast news consisted of a guy sitting in front of a camera reading a newspaper. The vast majority of newspaper websites are still at that stage, or only slightly beyond. Any site that is, is vulnerable to disruption.

Q. How many people are on staff? Is most of your content contributed from volunteers?

A. Two full-time. One covering news. One covering sports news. The sports guy spent eight years at the Batavia Daily News covering sports.

I also contribute, but mainly in a traditional blogging (is there traditional blogging?) style. I find things on the net and write about it, mostly. Maybe 10 percent of our content at this point comes from user contributions, if that.

It’s been interesting to see how people respond to “you can submit your own news.” You would think that public officials, politicians, civic leaders, volunteer-group leaders would be all over that… Maybe people, especially the higher-up in that information food chain, still haven’t come to grips with an open news network. They still expect filters and reporters reporting their news.

Q. What’s the heart and soul of The Batavian? Useful neighborhood-by-neighborhood information, or the fact that it is trying to be an all-purpose local news/sports/national/international site?

A. Heart and soul is a bit strong. We’ve found success in these areas:

— Disaster, of course. House fires get traffic, period.
— Big topics … lots of discussion around the terrible downtown shopping mall. We covered this topic heavily in the second month or so and gained many of our current regular users during that time.
— National news has its place. People do want to talk about politics right now. Sarah Palin posts were huge last month.
— And the small topics can get interest, but more hit and miss. We talk a lot about this post that Philip Anselmo (editor) did about some sidewalk chalk graffiti. It was a good post. It’s really how I define hyper-local … just those little observances of life can generate interest. We actually want to do more of this. It’s the cracks between traditional news coverage that can most disrupt traditional media.
— We, and especially I, blog about politics a lot. I’m sometimes skeptical if this helps us grow audience, but our current audience is almost always responsive. I mean, for example, finding posts or stories related to the state offices races and the congressional race.

Q. I was surprised to see the national and international posts there. What’s that about?

A. See above … people like to talk about this stuff. Frankly, I have my doubts about whether we should do this, but I’ve always believed there is value in people of a local community being able to come together even on non-local issues.

The Nation and World section is our lowest trafficked section, which is only three or four weeks old. When we’ve done national politics on the front page, we’ve had those be among our top posts, so we’re still trying to find the best path here.

I’m not looking for nation and world news to draw traffic to the site, but I do hope that it would make it more sticky. Plenty of surveys show that news addicts care about news up and down the news chain.

Q. You’ve said that you didn’t really think The Batavian would damage the longtime daily, the Batavia Daily News (which has plans for a website). And you even summarize the Daily News’ top stories and encourage your readers to subscribe. What’s that about? It sounds a bit fiendish,
if your real aspiration is to take market share.

A. Did radio destroy newspapers? Did television? Batavia/Genesee County is a big enough market to support three media outlets. The Batavian isn’t the biggest threat the Daily faces. It is all the same historical forces that challenge all newspapers.

If you look at the circulation trends, it is not the Internet that is causing the most harm to newspapers. There are larger historical forces at work that go back 80 years.

In the near term, probably even in my lifetime, newspapers should be able to survive and in better economic times, even thrive.

I honestly want people to subscribe to the Daily. I think it’s good for the community and enhances what we do.

Q. What’s ad revenue looking like on your site? Is the Batavian already self-supporting?

A. Oh, we’re a long way from self-supporting. We didn’t project selling our first ad until month 9 and we’re in month 6.

That said, without going into detail, we’re learning a lot about our early ad sales efforts and I’m rethinking what our approach needs to be. I’m not ready to discuss that in detail yet.

Q. What’s your own sense, broadly speaking, of the future of general-interest, online-only news community news sites? Is there a role there, or do you think the trend will be for scores of specialized sites (soccer, business, politics, schools, etc.) to spring up?

A. You can point to several local, suburban successes in online news (Baristanet and WestSeattleBlog come to mind). One way the Batavian is unique, as far as we know, is its rural placement.

I’m dedicated to finding the online business model for local news sites. I see all of the trends toward fragmentation and niche/specialty, but in its way, local niche, too. We simply must, must — for the sake of a free society — find a way to make local journalism pay in a digital world.

Q. What else should we know about the Batavian’s early months?

A. For people who might be tempted to pass judgment on us, it’s still early, for good or ill, it’s still early. We’re learning a lot. We’re growing. We’re optimistic, but it’s still too soon to draw a conclusion one way or another.

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: ChiTown Daily News bets on reader reports to capture the local online news market.
Friday: PasadenaNow covers its community by outsourcing its reporting.

The state of independent local online news, part 2: Experience makes MinnPost a top online new startup

[Editor’s note: This is day two 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 installment, here it is: The state of independent local online news, part 1: Sites on the rise; business models remain elusive]

Take newspapers’ classic strengths of in-depth reporting and high-quality writing. Convert to an online-only operation.

You’ve got MinnPost.

The nonprofit Minneapolis news site, written mainly by free-lancers who formerly worked for one of the big Twin Cities dailies, is the largest and one of the strongest of the startup websites focusing on local and regional news.

But like everyone else occupying the space of online-only community news, MinnPost founder and editor Joel Kramer finds the business model elusive.

The strength of the Twin Cities market – it has the country’s most literate and civically engaged population – also turns into a liability, because Minneapolis/St. Paul is jam-packed with local news outlets of every stripe.

MinnPost wasn’t even the first entry in the Twin Cities’ online-only news space. Jeremy Iggers launched the Twin Cities Daily Planet in May 2006 as a hybrid of community news written by professional and citizen journalists. Between other online players like Minnesota Independent and dozens of other news websites, there are too many ad sales people chasing too few Web advertisers.

“What really makes things difficult is the high volume of publishers,” said Kramer. “Anybody can be a publisher. There’s just a tremendous number of publishers offering advertising to a still relatively small volume of buyers.”

MinnPost has intentionally raised the bar higher by positioning itself as a high-quality content site and so its advertising rates are relatively high.

The site has a roughly $1.2 million operating budget this year and is attracting about 150,000 unique monthly visitors, said Kramer, former publisher of the Minneapolis Star Tribune.

Many of MinnPost’s first-year metrics have been worse than projected: Advertising has been harder to come by and page views began lower than expected, for example. But audience growth after launch has hit the target of 5-10 percent month-to-month gains, and the site’s paying membership ($10 to $10,000 contributions) at the one-year mark will be almost exactly at the projected 1,100.

Interestingly, some of MinnPost’s strongest traffic comes from readers of staff-produced national stories, which, in the site’s original blueprint were not going to be done at all. “I can tell you after 11 months of watching what people read, we’ve learned that in fact, doing those national stories increases traffic because of the way the Web works.”

That, and the fact that some of the other best-read stories are offbeat pieces that were almost throwaways at the time, makes it complex for a staff trying to stay true to its core mission of serious, high-quality local reporting.

Reflecting the reactions of many news-site publishers, Kramer said the first year has been both enormously rewarding and exceptionally difficult.

Asked to compare the work with his old day job as Star Tribune publisher, Kramer said, “This is more stressful, actually. There’s nothing like starting from scratch in a media world that is so much more in turmoil and so hard to figure out what to do. But I’m having a lot of fun. And I’m getting great satisfaction from readers who tell us we’re the best thing in town.”

Kramer’s standing in the community helps explain the site’s robust startup. Initial funding of $850,000 came mostly from families (including his own) closely involved in the Star Tribune in the days when it was still owned by the Cowles family. The site has also received funding from the Knight Foundation ($250,000) and the Blandin Foundation ($225,000), for rural Minnesota coverage.

Like everyone else, Kramer hopes foundation support will get MinnPost over the startup hump. But he says it won’t last long. “You can’t rely on the foundation model,” he said. “Most foundations want to know what you’re going to do when they stop funding you.”

More promising are paid memberships, and here Kramer draws on the success story of Minnesota Public Radio and its 94,000 member contributors.

“We have only a little more than 1,000 now at MinnPost,” said Kramer. “We think we can get more.”

Interview with Joel Kramer, editor and founder of MinnPost

Joel Kramer

Q. Next month you’ll celebrate your first anniversary. How will you sum up for your readers the first-year story of MinnPost?

A. First I’d say we’ve been clearly embraced by a growing portion of the community. We’ve had very steady traffic growth. We’re up to more than 150,000 unique monthly visitors now, and a half a million page views. And those numbers have been going up about 5 to 10 percent a month. We also have more than 1,050 paying members, and that was an important part of our long-term sustainability model. Our plan was to hit 1,100 by the end of the first year.

Advertising is weaker than planned, because of the slow economy, but that’s an important part for us to develop because to become sustainable we need to have both membership and advertising dollars.

Q. What was your hope, what is your hope on the mix of advertising and contributed revenue?

A. When we started we said our hope was, by 2011, 70 percent advertising, 30 percent membership. Right now it’s running about 50-50, maybe a little higher on the membership side. It’s pure guesswork because it’s a new model. The key is to get to a sustainable model by 2011. There are a lot of reasons to become optimistic, but the advertising side really needs to get better.

Q. Are the economic problems you talked about mainly the general economy or the new-media economy?

A. The sense in which it’s the overall economy, we’ve had a number of advertisers say they were happy with us, getting good click-through rates, but their budgets have been cut. But in addition, there are the challenges associated with being a startup in the online world. We’re small and many advertisers don’t want to deal with small players. We’re also following the strategy of not being the cheapest player. We’re trying to create a quality environment on the site and charge higher rates, which I believe is necessary to survive.

What really makes things difficult is the high volume of publishers. Anybody can be a publisher. There’s just a tremendous number of publishers offering advertising to a still relatively small volume of buyers. Many buyers don’t really understand online yet. That combination is very difficult for advertising. Some months we’re selling $20,000 in advertising. But that’s less than we’d projected.

Q. The 150,000 monthly uniques. How does that match the goals you set at startup?

A. We started with a page-view goal of 400,000, and we started below 300,000. But the growth rate is what we expected, which is a doubling in the first year.

Q. What’s been your biggest surprise?

A. On the Web you get instant feedback about who reads what, which is something as an old newspaper editor I did not have. And the process of seeing how people use your site and what they read is constantly surprising. One of the challenges is that we started our site with a public purpose which is to do high-quality journalism which we believe is in decline. But when you look at the traffic, often you find it’s the most casual or offbeat story that gets the most traffic. And also, you’ll get a lot more traffic when you get a story of national interest vs. just a local story. So there’s a constant tension in an enterprise like ours, how to do what we set out to do out to do, but also to grow traffic when the things that attract the most traffic are not always the most important story.

Q. You do run quite a few national stories. It surprised me a bit. That’s a shift, that you’re doing more national than you expected?

A. Before we started I thought we’d do everything local. My reasoning for that is that when you’re on the Web, you’re just one click away from national sites that have a lot of resources so why duplicate? But even before we started we did some focus groups with interested readers, and in those focus groups people said to us, ‘If you want a site that we’re going to identify with, as being the site for Minnesotans to come to who are serious about news, don’t make it provincial. We have broad interests.’ So even before we launched we heard quite a bit of that. So even before the launch we decided to do some national work. I can tell you after 11 months of watching what people read, we’ve learned that in fact, doing those national stories increases traffic because of the way the Web works.

We’ve had some very good, solid local stories that have gotten 5,000 readers or more. But others not so much. Our goal is to do serious, high-quality journalism for people who care about Minnesota. That’s our public purpose. But we’re dealing in a medium where you often get traffic from strange things.

Q. Can a general-interest community news site compete with the multiplicity of niche sites springing up?

A. It’s hard to predict the future. I think there is a place for both in the firmament. The way people navigate the Web changes the paradigm that people are going to just a few sites for news. I think it’s very possible, and likely, that both kinds of sites can flourish. We want to be the site that many people who care about Minnesota come to.

We’re not trying to do everything. We’re broad-based but we also have a kind of magazine sensibility that we’ll write about what interests us. In addition to politics, which has been our strongest area, and media, which is our second-strongest, we also do sports, sciences, health, arts. We don’t try to cover anything near the range of topics the Metro newspaper uses.

Q. Talk about your staff.

A. We have two full-time writers, Eric Black and David Brauer, and then a few more writers that write frequently for us. And then a stable of several dozen free-lancers who work less frequently. We have five editors plus a technology person/director of operations. It’s a big infrastructure. We’re not bringing in enough money to cover our costs.

Q. Are you interested in the micro-neighborhood-citizen journalism model?

A. No. I think there’s a place for that. I’m interested in people who are experimenting with that. But I don’t think anyone can do everything. We really have as our mission to do professional journalism. We are interested in ways new technology could enable us to do professional journalism in a more interactive way with the audience. I’m interested in techniques that can expand participation with our work. But not the amateur model. It’s a different game and requires a different approach. It’s not our field.

Q. Are you expecting replicas of MinnPost all over the country?

A. We are in conversations with the ones who have started, the nonprofit sites. And maybe helping others get started. I do think this will happen. Our sites are all somewhat different, in content and funding.

Q. Where are you getting your funding?

A. We got $250,000 from the Knight Foundation. And then a $225,000 grant from the Blandin Foundation. They specialize in rural Minnesota. And our grant was to expand our reach and our coverage outside the metro area. So our goal is to be a statewide publication. Historically, newspapers did that but they stopped because the circulation was too expensive. Building geographical communities on the Web is very difficult. The business model tends to work against it, because the real traffic comes from reaching out to a broader base. We’re spending about $100,000 a month. That puts us in the high range of sites like this. We also are bringing in members and advertising faster.

Q. Are you planning one-year course corrections?

A. One of the interesting things is how fast you change. We’ve changed many, many times We had no full-time writers when we started. We now have two. And they’re our No. 1 and No. 2 traffic-getters. When we started we published mainly once a day. (We have one ad director and one commission ad seller.) Now there’s stuff going up all day long. We still don’t publish a lot nights and weekends. And the reason is cost. But we have found publishing all day works better.

Q. Your career is backwards from a traditional one. You oversaw this huge news operation in Minneapolis as publisher of the Star Tribune; now you’ve got this startup that is not making money yet. What’s that like for you personally?

A. This is more stressful, actually. There’s nothing like starting from scratch in a media world that is so much more in turmoil and so hard to figure out what to do. But I’m having a lot of fun. And I’m getting great satisfaction from readers who tell us we’re the best thing in town. They’re not enough of them yet. And the reporters who tell me they’re doing the best work of their lives.

Q. Talk about your journalism.

A. There are a number of really good reporters experimenting with sustaining their commitment to high-quality journalism and still operate in this news medium. The two people to watch at MinnPost are Eric Black and David Brauer. Eric in particular, he used to be at the Star Tribune, he’s very open with the reader. He’s a good prototype of the change going on. His stuff is more of a conversation with reader. He’ll write in parts as opposed to one long story. It’s a challenge finding reporters like that.

Q. How do you think the digital revolution will shake out with respect to mainstream media?

A. At the national and international level, some good will come out of this, because of the way the Web favors national and international coverage. I’m more worried about the local and regional levels. And it’s why I think there’s going to be need for non-profit journalism at the local level. The dynamic of the Web is not very favorable to spending money at the local level.

Q. Is there philanthropy enough to go around for this?

A. Foundations alone, definitely not. You can’t rely on the foundation model. Most foundations want to know what you’re going to do when they stop funding you. I do think there’s a lot of individual money around – a lot less than a couple of months ago. We have 94,000 contributors to Minnesota Public Radio. We have only a little more than 1,000 now at MinnPost. We think we can get more.

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: We talk with Howard Owens about GateHouse Media, Inc.’s online-only community news site in Batavia, N.Y.
Thursday: ChiTown Daily News bets on reader reports to capture the local online news market.
Friday: PasadenaNow covers its community by outsourcing its reporting.

Sites on the rise: Business models remain elusive

[Editor’s note: Today OJR begins 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. In addition, at the end of today’s entry, you will find links to and information about many of the websites we’ll be examining this week.]

SAN DIEGO – The 10 reporters, editors and photographers working out of a small office on a former military base here represent some of journalism’s brightest hopes.

The nearly four-year-old website they work for, the nonprofit Voice of San Diego, is doing some of the best and liveliest muckraking reporting of any Web-only news staff in the country.

Mostly former newspaper reporters, the Voice’s staffers have rattled off a string of exposes that has grabbed the attention of the city’s power structure. They think their site will prove not only that local journalism can thrive on the Web, but that their enterprise can grow many times over as mainstream media continue to decline.

There’s just one thing missing: a business model. Even with a small operation like this – 10 people reporting about the nation’s eighth-largest city – it’s not clear whether sustained funding will materialize.

Buzz Woolley, the San Diego businessman who created and still bankrolls a large chunk of the operation, says advertising is unlikely to fund more than 10 percent of Voice of San Diego. The rest of the site’s budget, about $780,000 this year, will have to come from small contributions and philanthropy, he said.

“How exactly is that going to happen?” he said in a phone interview. “I don’t know. But nonprofit journalism is starting to strike a note with people. They know something like this is going to have to be done.”

The Voice of San Diego is at the leading edge of a growth industry – online-only news sites that in some places are establishing themselves as players in their hometown media landscapes.

They come in all sizes and shapes, from mom-and-pop shops focused on a single community concern, to seven-figure operations that reflect wide civic interests. While nearly all of the sites struggle to find advertising dollars, the number of communities served by online-only news staffs continues to grow.

Most are nonprofits, though some are testing the waters of commercial viability, convinced that opportunities will widen as mainstream media continue to struggle.

Some, like the $1.2 million-a-year MinnPost and the brand new St. Louis Beacon, cover the meat and potatoes of traditional community news – city hall, politics, education, the arts, crime, mass transit – mostly using professional journalists as reporters.

Others, like the ChiTown Daily News, are deputizing “citizen journalists” to write about their neighborhoods – territory most newspapers have been forced to scale back in recent years, or never really achieved. The Daily News has carved up Chicago into 77 neighborhoods and is recruiting a citizen journalist for each.

One newspaper company, GateHouse Media Inc., is trying the citizen approach by starting a website, the Batavian, in a community where someone else owns the local paper – a possible sign that the newspaper competition that used to exist in most communities could return, in a new Web form.

Jan Schaffer, executive director of the new-media center J-Lab at American University in Washington, D.C., says many of the new sites are taking an entirely different approach by focusing on a single topic, and by reporting as participants in that topic as opposed to journalism’s traditional outside-in approach.

“People may not necessarily be looking online for cover-the-waterfront sites, or geographic or regional sites,” said Schaffer in an e-mail. “Instead they want ‘picky’ sites that offer them stuff that they like knowing because it’s useful and interesting and doesn’t waste their time with must-cover stories.”

Some of the sites winning Knight Foundation grants this year as part of its New Voices project attest to the specialty trend: Digital Journalism in the Nation’s Birthplace of Aviation; Green Jobs Philly; Immigration: The View from Here; Voices for Veterans; Family Life Behind Bars.

But one thing unites nearly all of these experiments. Profit or nonprofit, they’re struggling to make ends meet.

“Some day, just like General Motors, we too might make a profit,” said James Macpherson, who with one other paid staffer operates the Pasadena Now site. Macpherson stirred up controversy a year ago by disclosing plans to outsource some of his community reporting to India – a plan he is now carrying out. (A recent transcript of a City Hall press conference cost him $1.70, he says.)

He complains that merchants in Pasadena are “antediluvian” when it comes to the Internet. But Macpherson says, “I don’t give up easily,” and he’s experimenting with a Spanish language companion site.

Sites like Voice of San Diego and Pasadena Now are fascinating because they represent first-generation experiments to find a local-news alternative to the newspaper and television powerhouses that dominated their hometowns for decades.

Often, as in the case of the St. Louis Beacon and its roster of Post-Dispatch alums, staffs are made up largely of experienced journalists who took buyouts from the big local daily. Some of the reporters and editors who recently left the Palm Beach Post, for example, are now talking about setting up a community news site.

Might someday we look back at this moment and see in sites like Voice of San Diego and the New Haven (Conn.) Independent the birthplace of a new kind of journalism that would find its Web financial moorings? Or will the Internet dynamic of fragmentation work against the newspaper model of presenting a grab-bag compendium of community interests?

Some of the Web editors I spoke with say part of their optimism comes from an assumption that legacy media have only begun to fade. It’s certainly not hard these days to find new-media thinkers predicting their outright collapse.

Karin Winner, editor of the San Diego Union-Tribune, says those prognosticators are way off. At her office a few miles inland from the Voice, she told me she has every expectation that the combination of a newspaper’s printed sheet and website will continue to be an unbeatable and superior source of community news. “It has the brand and the resources to maintain that position,” she said.

The new websites certainly are starting from far back. MinnPost, with one of the more robust audiences at 150,000 monthly unique visitors, still has less than 10 percent of the traffic of the Twin Cities’ dominant daily, startribune.com.

But the playing field is changing quickly. Nearly all of the nation’s metropolitan dailies are in the thick of major staff cutbacks caused by advertising declines.

Winner’s own paper has been forced to reduce its news-gathering force because of the Internet-induced loss of advertising, and she’s part of a management team that’s supervising the likely sale of the newspaper by the owning Copley family.

Others say that even if newspapers and local TV outlets maintain strong news-gathering positions, their staffs will be so depleted that windows of opportunity will only grow for new-media players.

These forces are prompting discussion at USC’s Annenberg School for Communication, where I work, about arming journalism students not just with traditional and new media skills, but also with entrepreneurial proficiency that will help them in a world populated with new-media startups.
Still, where will the money come from?

Woolley, the Voice of San Diego founder, makes a case for foundation funding, which he expects to provide 80 percent of his site’s future revenue. One hopeful sign: The local San Diego Foundation has approved two grants for the site – one to assist with fundraising and the other to sponsor reporting on citizens who overcame challenges in contributing to the community.

The Knight Foundation, journalism’s dominant philanthropic funder, has multiple irons in the digital revolution, and one of them is to encourage community foundations to support Internet news startups. “We’re trying to convince foundations that a core need is not just health, education and welfare, but also information,” said Gary Kebbel, journalism program director at the Knight Foundation.

But like Schaffer, Kebbel is skeptical of prospects for websites that essentially try to replicate the community-wide coverage of newspapers on the Internet. Television and radio, he says, are more likely to fill the role of community unifiers.

In any case, Knight Foundation is generally not going to provide more than startup funding.

Knight’s main role, Kebbel said, is to “fund startups, and see what startups work.” The beneficiaries, he added, “should not build their sustainability plan on the fact that when the money runs out they can go back to Knight Foundation for more.”

Joel Kramer, whose MinnPost site celebrates its first birthday in November, got a $250,000 Knight Grant, and he accepts that sustained foundation funding will be hard to come by.

He’s more hopeful about the individual-contributor model, noting that MinnPost will meet its first-year target of having 1,100 member-contributors. The example of Minnesota Public Radio, with 94,000 members, suggests there’s vast room for improvement. “We think we can get more,” he said.

Meanwhile, everyone is hoping that, someday, local Web advertising comes around. But these early adopters don’t think it will be anytime soon.

Kramer said there are both supply and demand problems now. Advertisers are in short supply, and those that do business are on the Web often don’t want to deal with small operations like local news websites, he said.

“What really makes things difficult is the high volume of publishers,” he said. “There’s just a tremendous number of publishers offering advertising to a still relatively small volume of buyers.”

While MinnPost some months reaches $20,000 in ad sales, that’s only 20 percent of overall spending and less than projected at startup.

James Macpherson, who operates the Pasadena Now website, says his plan is to become an all-purpose e-commerce consultant to advertisers as a way to subsidize his website.

“I don’t think news sites can be in the business of just selling online business,” he said. “That’s not a proposition that will keep anyone alive.”

Howard Owens, a new-media veteran, says it’s way too early to assess the future of his startup, The Batavian, or of the general world of online-only news.

Acknowledging the trends toward Internet niche sites and fragmentation, he expressed optimism about finding the business model for local news sites.

“We simply must, must – for the sake of a free society – find a way to make local journalism pay in a digital world.”

Q & A

More on the Voice of San Diego from my interview with co-executive editors Scott Lewis and Andrew Donohue:

Andrew Donohue and Scott Lewis
Andrew Donohue (left) and Scott Lewis, co-executive editors of the Voice of San Diego

Q: Give us a bit of history of Voice of San Diego.

Andrew: Neil Morgan was almost the grandpa of journalism in San Diego. He worked as a reporter in town and was the editor in chief of the Evening Tribune a long time ago. Later he became Metro columnist when the papers combined. He knows absolutely everybody in this area. One day in the fall of 2004 he showed up at work and got a pink slip. He was such a beloved guy in the community. He got together with Buzz Woolley, who had been interested in journalism for a long time and was unhappy with what the community was getting from the Union-Tribune. I think Buzz had always been interested in starting a newspaper, but it was way too expensive. Buzz said to Neil, I don’t want to lose your voice in this community. They came up with the idea of an online nonprofit, which right now makes a lot of sense but in the fall of 2004 it was pretty revolutionary.

From there we just sort of established ourselves. The site launched in February 2005.

Scott: We took a more investigative look. We came up with the basic philosophy that we wouldn’t cover anything unless we could cover it better than anyone else, or no one else was covering it. So our stories need a lot of context and depth and an investigative focus.

Andrew: The key was there was a gap identified by our founders when we started. And that gap has grown farther and faster than anyone imagined since then. We’ve been fortunate to fill it.

Q: Would you talk a little bit about metrics? Audience, funding, staffing and so on.

Scott: Last month, 61,000 unique visitors. Time on site averaged more than 8 minutes. The traffic is all from San Diego.

Andrew: Six beat reporters, plus two editors. Scott does the column and blog. I do the investigative projects. We have a multimedia photography specialist. And then we have Web content producer, plus a development director that does the fundraising. So that’s 11 full-time. Our annual budget is $780,000 for this year. We’ll come in a little under that.

Revenue comes from four major sources. We have major contributions. Buzz continues to support us, this year supplying about a third of our budget. We also have a couple of others like Irwin Jacobs who give more than $15,000. Then we have 715 individual donations from different people. These are people who give between $35 and $5,000, and that’s growing rapidly. Maybe $70,000 or $80,000 this year from that. Then grants and foundations, which have been growing this year. And then we got a grant from the San Diego Foundation for the first time this year, to spur our fundraising , and a year-long campaign to talk about community heroes who have overcome challenges. Then advertising and sponsorships, which are coming on. We do Google Ads, but they’re bringing in less than $10,000 a year. We’ll never sell products on our site. But advertisers will use our site to send messages.

Scott: It’s only in the last year that we’ve ramped up foundation grant money. And that’s our top priority going forward.

Andrew: We’re getting a lot of attention from these foundations. They realize if they care about certain things in the community like science and environmental issues, if they care about these traditional philanthropic efforts, there needs to be an information delivery system. If the newspaper falls apart, or no journalist around to tell important stories, the effort to tell your story is a problem. That’s why I’m excited about what Knight is doing to educate foundations. The newspaper industry has been cluster-bombed; something’s got to replace it.

Philanthropists don’t want to mess with the editorial product. We’ve had no problems with donors wanting to change our message. But they do want to be recognized for having brought about some specific additional coverage. So over time we will have “sponsored by”ads.

Scott: At first we thought we could pitch people on the high-minded idea of saving journalism. But then we realized you actually had to touch these people emotionally – what is it this person cares about? Well, they care about science, so talking about science is where you have to be.

Individual memberships will be a big deal, but that will be slow. The big growth area is foundations and grants.

Andrew: We’ve found people are quite invested in us – more so than you get invested in newspapers. We were nervous about people trying to interfere at first. But that wasn’t a problem.

Q: What are the content areas you focus on?

Andrew: Our big deal is quality of life issues in San Diego – the things that really drive change here, that have big impact. We do politics, education, environment, public safety, housing and jobs, and science and technology. That’s our core.

Scott: We’re really well known for our government and City Hall coverage. Stories we’ve broken this year have changed the city more than anything else. But we also have been strong on housing – without the boosterism in the way it’s covered elsewhere.

Andrew: We try to see an issue all the way through. We don’t hit on something and leave. We keep hammering to see how it plays out.

Scott: We used to get happy and excited when we scooped the Union-Tribune. But they’ve lost so many of their strong reporters and editors, now it’s just sad to see what’s happening. I think they’re particularly bad at a particularly bad time.

Q: Do you have a gut feeling of how this plays out?

Andy: The newspaper franchise is going to have to define itself. What are we going to be in the future? They’re still trying to be everything for everybody. And, yes, we’re going to see more niche publications. We’re not going to do reviews here of concerts downtown or other entertainment.

Scott: One thing we’re noticing is a lot of people think there’s a technological answer to what’s happening in journalism. I don’t think what we’re facing is a technological problem. We contribute greatly to this community without every having a fulltime IT person. We’re going to see more aggregators. But the people who put money into content are going to stand out, and that’s why we’re excited about this alliance for other nonprofits.

Q: Does Voice of San Diego have the potential to grow substantially or will you continue to be small?

Scott: I think we could have a budget as high as $10 million some day. A lot of newspapers are making that much from the websites these days. I could see us having 40 reporters. But we’ll grow slowly.

Q: Have you thought about citizen journalism?

Andy: We’re not big believers in citizen journalism. We don’t see them as being the answer. We do use them in a different level of engagement. We’re always soliciting their ideas. We tap into our everyday readers more than most publications would.

One of the early mistakes we almost made, we almost made as our first hire a very expensive Web developer, almost because we were intimidated by the technology. We stopped at the last second and realized we could hire two reporters. And we thought let’s just have a simple site and hire these two reporters. And we were lucky; Scott learned how to do the technology. We learned this stuff isn’t that tough. Scott’s our IT department.

Q: Aren’t these killer jobs?

Andrew: You should see how young we looked like three years ago.

Scott: It’s long hours, but everybody likes being here at the start of this. We just have a job opening now and we have 80-90 applications.

Q: What do you tell journalism students about the future?

Andrew: I just spoke to high school students recently, and I said we are very optimistic. We feel there will be plenty of opportunities. There’s a massive upheaval now. But we feel we’re fairly confident there will be jobs.

Scott: I take a little different tack. I might be a little worried. Maybe there will be more opportunities at places like ours. But I am a little worried about what’s happening to our industry. Only in our dreams would we have 40 reporters.

Q: Many people are thinking that the way to go on the Web today is to have passionate voices who are invested in this or that cause or activity and to write from a point of view. Are you tempted by that?

Andrew: We push our reporters to report so well that they write with authority. There’s never writing with an agenda, but we do feel writing with authority is the way to go.

A sampling of community news websites

Here’s a look at some of the players in the community-news Web world:

Voice of San Diego
Launched: 2005
Target audience: San Diego County.
Content: All local. City hall, development, real estate, education, science, environment.
Staff: 6 reporters, 2 editors, 1 photographer, 1 Web content producer, 1 development director.
Key leaders: Buzz Woolley, key funder and board member; Scott Lewis and Andrew Donohue, co-executive editors.
Status: Non-profit. Budget of about $780,000.
Metrics: 61,000 monthly unique visitors. Average time on site: 8-plus minutes.

MinnPost
Launched: 2007
Target audience: Minneapolis/St. Paul and the state of Minnesota
Key content areas: Politics, media, sports, sciences, health, arts. Focus mainly is on local and state but site frequently covers national politics.
Staff: 2 reporters, five editors, 1 IT/operations manager, several dozen free-lancers.
Key leaders: Joel Kramer, editor and founder.
Status: Non-profit. Budget of about $1.2 million.
Metrics: 150,000 unique monthly visitors. Time on site not stated publicly because of problems with counting methodology.

ChiTown Daily News
Launched: 2007
Target audience: Chicago metro area
Content: Individual coverage of 77 Chicago neighborhoods plus unique citywide coverage.
Staff: 2 editors, general manager, community organizer.
Key leaders: Geoff Dougherty, editor.
Status: Nonprofit. Budget of $206,000.
Metrics: 26,000 monthly unique visitors. Average time on site: One minute 35 seconds.

The Batavian (Batavia, N.Y.)
Launched: 2008
Target audience: Batavia, N.Y.
Content: All local. Neighborhood, city hall, sports.
Staff: 1 news editor, 1 sports editor.
Key leaders: Howard Owens, GateHouse Media Inc.
Status: For profit.
Metrics: 10,000-plus unique monthly visitors (Oct. 1-21). No report on average time on site.

Pasadena Now (Pasadena, Calif.)
Launched: 2005
Target audience: Pasadena residents.
Content: Civic events, entertainment calendar, awards.
Staff: 2 editors.
Key leaders: James Macpherson, publisher.
Status: For profit
Metrics: 63,000 unique monthly visitors. Average time on site: 12 minutes.

St. Louis Beacon (St. Louis)
Launched: 2008
Target audience: St. Louis region.
Content: Politics and public issues (including the economy education, race, environment), science, health, arts.
Staff: 4 full-time editors, 3 part-time, 2 full-time reporters, 1 part-time, 1 public insight journalism analyst, presentation editor, general manager, office manager, several dozen free-lancers.
Key leaders: Editor Margaret Wolf Freivogel, associate editor Robert Duffy, board chairman Richard Weil.
Status: Nonprofit. Budget of about $900,000 per year.
Metrics: Site too recently launched to provide meaningful data.

Pegasus News
Launched: 2006
Target audience: Dallas/Fort Worth metro area
Content: Neighborhood news, arts/entertainment, civic events, schools, searchable databases.
Staff: Site lists 12 news staffers; 5 on the business side and two IT staff.
Key leaders: Mike Orren, founder and president.
Status: For profit; sold to Fisher Communications in 2007.
Metrics: 392,000 unique monthly visitors.

New Haven Independent
Launched: September 2005
Target audience: People who live, work or play in New Haven, Conn.
Key content areas: hard news and reader debates; multimedia; politics, government, criminal justice, housing, neighborhoods, health care, schools.
Staff: 3 full-time editorial employees, 1 part-time local staffer, 1 state capital reporter on contract, part-time Webmaster, citizen contributors.
Key leaders: Paul Bass, editor and publisher; Melissa Bailey, managing editor.
Status: Non-profit. Budget of about $200,000 a year
Metrics: 45,000 unique visitors on average month.

NewcastleNOW.org
Launched: October 2007
Target audience: Town of New Castle, NY, containing the hamlets of Chappaqua and Millwood, and portions of Mt. Pleasant, Ossining and Mt. Kisco. Population: approximately 18,000.
Content: Local: town hall, real estate development and transactions, schools, police blotter, high school and recreation league sports, gardening, performing arts, science, environment; letters, op-ed.
Staff: Editor, managing editor (and photographer), publisher (and Webmaster), advertising executive. Plus two freelancers and 100 citizen journalists.
Key leaders: Founders Ann Marie Fallon (publisher and Webmaster); Susie Pender (editor); Christine Yeres (managing editor and photographer).
Status: Nonprofit, first-year budget of $17,000.
Metrics: 5,500 monthly unique visitors. Average time on site: 4.3 minutes.

The Forum (New Hampshire)
Launched: 2005
Target audience: Candia, Deerfield, Northwood and Nottingham, N.H. (pop. 16,000).
Content: All local with minor exceptions for national and regional political coverage. Town boards, arts, outdoors, youth sports, recreation, library news.
Staff: All volunteer. Ad manager works on commission. Occasional stipend for editor positions. 300 volunteer writers, photographers, editors, reporters.
Key leaders: Maureen Mann, founding member and managing editor for three years, former board chair; Deb Boisvert, founding member and current board chair.
Status: Nonprofit. Budget of about $20,000.
Metrics: 2,800 monthly unique visitors. Average time on site: 4 minutes.

Ann Arbor Chronicle (Michigan)
Launched: September 2008.
Target audience: Ann Arbor area.
Content: All local content. Daily postings of local news, features, public meeting coverage, opinion pieces, cartoons.
Staff: Two full-time, plus more than a dozen “correspondents” contributing to a feature modeled after Twitter.
Key leaders: Mary Morgan, David Askins.
Status: For-profit. Local advertising revenue model.
Metrics: 4,000 unique visitors for the first month in operation.

YubaNet.Com (Nevada City, Calif.)
Launched: September 1999.
Target audience: Sierra Nevada, Calif.
Content: Regional news, features, public meeting coverage, opinion pieces, world news, national and environment, cartoons. Wildland fire information service.
Staff: Two full-time, plus free-lance contributors.
Key leader: Susan Levitz, founder and publisher.
Status: For-profit. Local advertising revenue model.
Metrics: 70,000+ unique monthly visitors. Average time on site: 2.5 minutes.

Texas Watchdog (Houston)
Launched: August 2008
Target audience: Texas
Content: Local and state government in Houston and around Texas, but so far we’ve been mostly focused on Houston and Dallas. We want to branch out, though.
Staff: Three reporter-editors in Houston, one reporter in Dallas, and an intern in Houston.
Key leaders: Editor Trent Seibert.
Status: Nonprofit; we’re trying to get our paperwork through the IRS right now.
Metrics: We just launched three months ago, so the numbers are all over the place. There’s a lot of difference between the day we launched and the day we got one story linked-to by Drudge Report.

The Dagger Press (Baltimore)
Launched: September 2007.
Target audience: Suburban Baltimore, with most coverage based in Harford County.
Content: Local news and opinion, politics, education, local sports, entertainment.
Staff: No full-time staff, 2 editors, 6 outstanding contributors, and, of course, our readers, who participate daily.
Key leaders: Brian Goodman, founder, and Steve James, technical director.
Status: For-profit. Local advertising revenue model.
Metrics: 5,500-plus unique monthly visitors. Average time on site: 5.46 minutes.

blogdowntown (Los Angeles)
Launched: January, 2005
Target Audience: Downtown Los Angeles
Content: News and information about what’s going on in downtown from restaurant openings to City Hall.
Staff: One editor, plus eight writers and contributors.
Key Leaders: Eric Richardson
Status: Non-profit as of September, 2008. About to start first fundraising campaign.
Metrics: Roughly 20,000 uniques monthly.

SunValleyOnline (Idaho)
Launched: October 2004.
Target audience: Sun Valley area and 2nd homeowners & visitors to the resort community.
Content: All local content. Daily postings of local news, features, public meeting coverage, events calendar, photos, blogs.
Staff: Three full-time, plus dozens of citizen contributors to news, blogs, photos, events and more.
Key leaders: Dave Chase.
Status: For-profit. Local advertising revenue model.
Metrics: 25,000 unique visitors in a typical month (has been as high as 100,000 during breaking news – fire, Larry Craig incident, Arnold Schwarzenegger breaking his leg)

West Seattle Blog (Washington state)
Launched: December 2005 (moved to news format starting December 2006)
Target audience: West Seattle, a peninsula with 20 percent of the city’s population.
Content: Local news, photos, video, event previews, “happening now” reports, member forums, some sports/entertainment coverage, some human-interest features. Areas of specialty include transportation, development, education.
Staff: Two full-time, part-time editor/writer job posted, pays freelancers for assignments.
Key leaders: Tracy Record, Patrick Sand (co-publishers).
Status: For-profit. Local advertising revenue model. (No AdSense) Did not sell/run advertising until November 2007; site has since become self-sustaining, with revenue covering all business and family expenses for its operators (wife-husband team).
Metrics: 45,000-plus uniques and 530,000-plus pageviews monthly. Average time on site 4-plus minutes. (All stats per Google Analytics)

Black White Read (east Dallas, Texas)
Launched: August 2006.
Target audience: residents of six (and growing) east Dallas neighborhoods.
Content: Hyperlocal news and information, community calendar, restaurant and theater reviews.
Staff: Full-time editor, half-time photo editor, photo assistant, 5-6 regular professional contributors, 10-12 regular amateur contributors. Two full-time sales reps. Principals include technology person and sales and marketing professional.
Key leaders: Steve Crozier, Bryon Morrison, Ed Wagner
Status: For-profit. Local advertising revenue model.
Metrics: 4,500 unique readers in an editorial area covering about 6,200 homes.

The Common Language Project (Seattle, Wash.)
Launched: January 2006.
Target audience: National and Seattle area.
Content: Investigative multimedia features, international and local.
Staff: Three half-time volunteer staff. One will become a paid position in 2009; all three to be paid positions in 2010.
Key leaders: Sarah Stuteville, Alex Stonehill, Jessica Partnow.
Status: Non-profit. Foundation grants, individual donors and earned income (freelance payments and speaker fees) each bring in one-third of our income. Currently an all-volunteer organization though international projects has been fully funded and able to pay staff as well as cover expenses and staff are sometimes paid contractors on a project-by project basis.
Metrics: 4,000 unique visitors/month on actual site; many more through placements in other mainstream and alternative outlets.

Evanston Now (Illinois)
Launched: April 2006.
Target audience: Evanston area.
Content: All local content. Daily postings of local news, features, public meeting coverage, opinion pieces.
Staff: One full-time. Several freelance contributors.
Many local residents posting comments.
Key leader: Bill Smith.
Status: For-profit. Local advertising revenue model.
Metrics: 8,000 to 10,000 unique visitors per month.

MyDedhamNews (Mass.)
Launched: January 2009
Target audience: Dedham, Mass.
Content: All local content. Daily postings of local news, features, public meeting coverage, business news, daily podcasts with news roundups, sports.
Staff: One full time, with over 500 registered users on the blog
Key leader: Brian Keaney
Status: For-profit. Local advertising revenue model.
Metrics: Too soon to say.

News from Cornwall and Cornwall-on-Hudson
Launched: July 2006
Target: Cornwall, Cornwall-on-Hudson (N.Y.)
Content: All local politics, arts, culture, community. Extensive calendar.
Key leader: Nancy Peckenham
Status: For-profit. Local advertising revenue model.
Metrics: 5,000 unique visitors/month.

Investigative Voice (Baltimore, Md.)
Launched: February 2009.
Target audience: Baltimore and the state of Maryland.
Content: Investigative reporting, so far on city crime and city government, but looking to expand.
Key leaders: Stephen Janis, Luke Broadwater, Regina Holmes.
Status: For-profit. Local advertising and a pay-what-you-think-it’s-worth subscription revenue model.
Metrics: 1,000 unique visitors the first day.

To add to our database: Send us information about your community news site, at [email protected].

Tomorrow: We look at MinnPost.com, and see how a former major-metro print newspaper publisher is faring in the online world.
Wednesday: We talk with Howard Owens about GateHouse Media, Inc.’s online-only community news site in Batavia, N.Y.
Thursday: ChiTown Daily News bets on reader reports to capture the local online news market.
Friday: PasadenaNow covers its community by outsourcing its reporting.

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.