Esthe Thorpe
Esther Thorpe: Hello and welcome to this special episode of Media Voices. I’m Esther Thorpe, and this episode I’ll be speaking to some start-up founders in the US about finding a model to save local news.
The narrative that local news is dead is widely accepted in the media industry. Following decades of cuts and decline at once-lucrative newspaper organisations, it looks like the rise of digital advertising has cut off local news’ main source of revenue, and publications have struggled to adapt.
But over the last few years, there have been glimmers of hope. Although there are still vast news deserts with no coverage, start-ups are springing up to fill the gap. I’m not talking about Axios and their pledge to save local news through newsletters – although this in itself is a sign that there are opportunities. There are many small publishers which get far less attention, but which are on the road to making the business side of local news work for them.
We spoke to four of the participants of the most recent Google News Initiative Startups Lab about what drove them to start their publication, what their focus is, what business models they’re choosing to use, the challenges of starting a media business, and what they think the future holds for local news. But first, I asked the Startups Program Lead Conor Crowley why local news has got into this situation in the first place.
Conor Crowley: To drastically oversimplify the problem, as circulation and print advertising revenues have declined over the years, there’s been downsizing and closures of newsrooms, that’s become somewhat of a constant. I think the news consumer has felt this. Either there’s a decline in the volume or quality of the local coverage, or else there’s a complete shattering of a local news source. A news desert might be created. But even in cases where the local legacy newsroom is still standing, given that downsizing, an unmatched information need very often still exists. I think for the most part, these digital startups, they’re really just responding to that information need. It’s not that people have suddenly stopped caring about where they live – far from it. There are communities of all shapes and sizes out there who are very hungry for local content. And in fact, the vast majority of founders we work with are themselves and were themselves concerned community members who wanted to do something to positively contribute to the area they live in, and the people in it.
Nissa Rhee and Michelle Kanaa are the founders of Borderless, which serves the immigrant communities of the Chicago area with essential information. They also hire and train freelance immigrant journalists. Nissa explained that Borderless actually began as a rapid response media project back in February 2017, and has grown from there:
Nissa Rhee: It was not intended to be a long-term newsroom or a business or anything like that. It was really just a response to the Muslim travel ban and the media coverage that we saw going on around that issue, and immigration in general, in the Chicago area and also nationally.
So it came from a desire to really change the narrative around the travel ban and around immigration and really uplift the voices of the people most impacted by the ban and immigration policy, which are immigrants, of course. And so we started with this value that immigrant voices are powerful, they should be at the centre of any sort of coverage about immigration and immigrant communities, and we ran with it.
Husband and wife team Josh Barousse and Ramona Giwargis are both San Jose natives. Ramona had worked at Alden-owned Mercury News for some years as a journalist covering politics and government. But following multiple rounds of cuts and layoffs, the two decided to launch their own local news organisation in January 2018..
Ramona Giwargis: My husband, Josh, our co founder, you’ll hear from in a minute, both of us are San Jose natives, we were raised in San Jose, grew up in San Jose, went to public schools in San Jose. We would always hear from our friends or colleagues or neighbours that they really wished that there was another source for local news, for local journalism.
We decided that we are the right team to start that news organisation and to fill that void in local news, so we did it. We worked really hard to create a following and a readership even before our website was actually live, before we even launched. Some of the ways we did that is we had a newsletter, a very popular newsletter, we had all of our contacts, Josh’s contacts working in politics and government, he’s been in the Bay Area and in the industry for over ten years.
So he had a lot of contacts, I had contacts from my days at the newspapers, so we basically put all those contacts into a list, and began sending them stories that we were writing and building a readership and building loyalty with readers, even before the website launched. We did the same thing with social media. We had all of our social media platforms up and running. So essentially, we were delivering the news to residents as we were building and creating the website.
Josh Barousse: When Ramona came home with the vision, with the concept to launch a nonprofit news organisation in San Jose, that was in April of 2018. So from concept to launch in January of 2019, it was just nine months. So I have a nine month runway.
Josh and Ramona aren’t the only ones to have launched a joint venture. Also in early 2019, Kara Meyberg Guzman started a new local news site with a fellow reporter, Steven Baxter, from legacy paper the Santa Cruz Sentinel. The new rival, Santa Cruz Local, doubles down on local coverage in the area, filling a number of big gaps.
Kara Meyberg Guzman: I left the paper and the day after Stephen reached out to me on Twitter and said, let’s start a competitor. And I was like, sure, let’s go for it. From then on, I was working full-time on this project. We started as an experiment. We had this gut feeling that people in Santa Cruz County – well, actually, we started with a much more targeted audience.
We had this sense that people in Santa Cruz wanted much deeper and more reliable coverage of the Santa Cruz City Council. And we also had this other gut feeling that people wanted their news through a podcast because we have tens of thousands of commuters in our county who drive an hour to Silicon Valley for work. So we thought we’d try a little podcast about what happened last night in Santa Cruz City Council to see if it would stick and it did.
People really liked it, we started a really informal newsletter right after, just from my Gmail account, just a newsletter to let people know that we were publishing these podcast episodes. And that eventually grew. People wanted more of it. And so we built a website and eventually grew our products and our scope to what we are today.
The Mendocino Voice founders Kate Maxwell and Adrian Fernandez Baumann also met whilst working at a legacy newspaper in the county. They spotted an opportunity to take advantage of the possibilities in digital, which weren’t being used by the local papers. In 2016, The Mendocino Voice was born.
Kate Maxwell: There were some really specific topics that we knew were big gaps here locally. One of them was wildfires because the local papers were primarily focused on specific towns, and some of them were only actually publishing once a week. A lot of the coverage of fires was just in the past, about what happened with a fire last weekend. But it wasn’t in any way useful for people in that moment, while the fire was happening.
Another one of the things we really wanted to focus on was actually cannabis coverage. There’s a lot of cannabis farming here in Mendocino County. And at the time that we started, it was something that had traditionally been covered just as a crime story, where there would be raids by the local sheriffs, and that’s how the papers would cover it. But when we were starting, that was something that was beginning to become more commercially legal across California and so covering it like it was actually a regulation.
Agriculture industry was a really big deal for our audience. We also really wanted to both address historical distrust around how a lot of the local news coverage had been done by previous reporters here in Mendocino County, and create better jobs for people that were actually sustainable and could support long-term actual reliable coverage for communities here, with all them having just been increasingly cut back.
In many news start-ups, it is journalists that spot the opportunities and found new publications. But running a business is a very different challenge to running a newsroom. For Kate at The Mendocino Voice, she relished the challenge of figuring out reporting and how she could change the digital news landscape in the area. But the business side has proven more difficult.
Kate: There’s been a lot of really great things about having these conversations with our readers and talking to people about what local news really could be, and what are different ways that we can think about reporting and digital news and ways to get information. That has been a net positive for us in terms of building this outlet and making sure that we’re really serving our audience.
But I think there’s been a lot of different kinds of things we’ve had to learn, whether or not it’s HR things, or putting all of those workflows and organisational infrastructure in place, or making sure our membership software is working, or our tech stack. A lot of things that as starting out as reporters, we’ve had to take on as challenges when we really wanted to be focusing on the editorial side of things.
So I think inevitably, as a local news startup, we’re at a moment in the industry where people don’t have clear paths that they can offer, as to what’s the best way to do this. It’s been a process of trying to look at what works in other places and talk to our readers and see what we can do as a staff and figure out what’s really going to work for people here.
Conor has worked with a wide variety of news startup founders with the Google News Initiative. This business knowledge is something he sees as a frequent stumbling block, and is an area he often has to offer support on.
Conor: Most of the founders who stand something up, they’re journalists by trade themselves, so they bring a really solid editorial skill set. They know what good reporting looks like, they have a pretty clear idea of who their audience is, or will be. They’re good at doing the community outreach, to build engagement with the community. They’ve got all of that already.
But they’re typically not as strong when it comes to building out a business and putting in place the operational backbone when you’re trying to grow and scale something up. There’s a lot of jobs to be done when you’re running any business and they might be less interesting than the reporting, things like budgeting, fundraising, hiring, etc.
But unless you do them, and do them well, then you’re going to find yourself in trouble before too long and you can forget about scaling beyond a certain point. So there’s an element there of building the plane while flying it.
For Nissa at Borderless, the publication started without a long-term plan in mind. This is something she has had to pick up along the way.
Nissa: When we started, we weren’t really thinking of this as a business. It was really about there being a need, we’re journalists, we can fill this. My background is as a reporter, I was a foreign correspondent and radio producer. I didn’t have a background in business, so it’s really been a big learning process. I had to learn accounting, how to do budgeting, how to write a grant, all of these things – there was a huge learning curve.
For Ramona and Josh at the San Jose Spotlight, they were fortunate that as a pair, they had complementary skill sets.
Ramona: I think a lot of times, I’ve seen these ideas started by folks who are journalists who have great intentions, they want to serve their community, they want to fill a local news gap, but they may not have the business sense. How do you put together a business plan? How do you apply for a 501C3? I was very fortunate and blessed that my husband had that experience. Josh had that experience in the nonprofit world. He knew how to run a campaign. He knew how to raise money.
So we have those different skill sets. I come from journalism for 13 years, that’s my background. I brought the editorial skills to the table and he brought the business acumen to the table that I don’t have, frankly. I’ve never fundraised, I’ve never asked for money before, so he was able to help with that piece of it, while I focused on the journalism.
Even with founding partners and complementary skills, running a news start-up requires the people in charge to be wearing many hats, both on the editorial and business side. Santa Cruz Local founder Kara Meyberg Guzman highlighted this as one of her biggest challenges.
Kara: It’s a scramble, we’re constantly juggling. I’m constantly juggling many tasks. I’m in charge of leading division for the newsroom and making sure we have enough money in our bank account to pay the bills, but I’m also reporting on Santa Cruz City Council and staying up late getting the newsletter together. So I guess juggling the many tasks of being a news entrepreneur, even if it’s a small startup organisation.
A passion for the editorial side of things can be really beneficial in a start-up. But it can be a pitfall. Conor has noticed that as start-ups evolve within the first few years, too much emphasis on the editorial side can cause major cashflow problems.
Conor: That’s typically what the founder brings right there, brings that editorial background and that can come at an expense On the business side, if the business side is slightly neglected, from what we see, that early focus on revenue is super, super important. We observe that, after a certain point in a new business’s growth, adding on more and more editorial hires to do the reporting, that’s actually associated with a diminishing return in terms of the business performance in the business outlook.
Whereas even making one specialist business development hire, someone like an experienced salesperson, that can have a transformative impact, particularly in those early stages. But even in news organisations of 10 people or more, it’s very common for the founder to be the only person with even a part-time focus on making money.
From his experience working with early-stage newsrooms, he has some advice for making key business hires and getting in the right mindset early on.
Conor: So stepping back a little bit from editorial responsibility, it can be really, really tough for founders to do that. The publication is their baby. And if they want to stick with the editorial, that’s fine. But if they do, then they have to put in place the resources on the business development side as well. Because the results of not doing so are often disastrous. You’re talking cashflow problems and running out of runway.
So in the startup slog, we often talk about creating and cultivating the CEO mindset. That’s transitioning from the journalist who founded it, and becoming the CEO. It’s not always a comfortable journey to make. But it’s one that, at a certain stage in growth, it’s very important to make.
Conor also noted that getting the capital together is the biggest barrier many news start-ups face when it comes to getting through the first couple of years. It’s incredibly challenging to attract investment, meaning that founders have to rely either on philanthropic donations and grants, or put money behind it themselves.
Conor: The biggest one, by far, is funding, just money paying the bills. We ran a landscape report last year called Project Oasis. In that, we studied over 700 digital native news arcs across North America. I should note the database of those publishers, the research findings, that’s all freely available online, at projectsnewsoasis.com. But one of those findings was that two thirds of digital native news outlets were bootstrapped, and said they were bankrolled by their founder.
The median amount that they were funded for was about $10,000 in personal savings. So that’s really, really hard, to stand something up on such a shoestring budget. What that tells us is clear, is that the funding pipeline for local news is severely strained in North America. And yes, North America is probably the best funding pipeline out there, in terms of the amount of philanthropic support that’s on offer. In other regions, the funding pipeline is non existent, or next to, so yI would say that is the main challenge, at the individual publisher level.
Money is something Kate at the Mendocino Voice struggled with in the early days. She is passionate about creating the right working conditions for her own staff, especially given the coverage they have to provide.
Kate: As a startup without any initial capital, we worked really long hours doing a lot of different kinds of jobs over the first couple years. One of our co-founders left this summer. Just getting to a point, as an organisation, that we could really offer the sustainable jobs that we had wanted to build when we started as optimistic and ambitious reporters took a couple years to get to.
I think we are at that point now, but making sure that we can continue to really offer working conditions and an environment that’s supportive of doing the kind of reporting and journalism that we think this community deserves, is still a work in progress because, particularly with breaking news and wildfires, there’s just a lot of very difficult things, both being a resident, but also being a reporter in that environment. It just is inevitably something that needs more support to manage.
After having the initial idea for the San Jose Spotlight, Ramona and Josh took a huge leap of faith in order to get the company off the ground.
Ramona: We both ended up quitting our full-time jobs and moving back to San Jose, to the Bay Area, which is one of the most expensive housing markets in the country. I think it’s like number two in terms of the expensive rents. So moving back to San Jose, one of the most expensive places and not having a full-time job, just working on San Jose Spotlight, we lived off of our savings for about six months.
Everybody thought we were crazy, our parents were really worried about us. But I think we just had so much faith that this would not fail. We had so much faith in the San Jose community, in our city, and our residents that we knew that they would support this and there was no plan B. We just went all in because we felt so confident that this would work.
Ramona and Josh aren’t the only ones who had to dip into savings in order to survive the first year. Kara sold her car in 2019 in order to get enough money to launch Santa Cruz Local.
Kara: At the start, it was very difficult to just launch and get on the path to sustainability. Because we didn’t have the benefit of millions of dollars in seed money. We don’t even have hundreds of thousands or tens of thousands in seed money. My business partner, Stephen Baxter, worked another full-time job too and worked on Santa Cruz Local in his free time, at the very start. I was dipping into my savings, into my retirement account, I sold my car to build a little bit of seed money to allow myself to work full-time on this without pay.
I think for news entrepreneurs, for founders of newsrooms that start with no capital basically, that can be a huge barrier. How do you find the time to, how do you create the room and financial security to allow yourself to take this big plunge? We were very lucky. The stars aligned for us, Steven was able to have the flexibility with his other job and I was able to piece it together, personally, to allow myself to do this. I feel very privileged that we were able to take this risk and have the runway to get it to the point of sustainability where we are now. I feel good about our path or future.
With Borderless, one challenge has been the widespread misunderstanding about immigrants. This has affected both the audience for their work, and their attempts to attract funding.
Nissa: Something that surprised me were the conversations we were having with people, potential funders, and they were just really confused about what does it mean to be an immigrant today? I think there’s a lot of stereotypes where we live in Chicago, it’s a pretty progressive city. It’s got 1.6 million immigrants, and they’re very mixed into our families and our lives. But for other people, they had a stereotype that immigrants are all low-income, undocumented Mexicans, for instance.
And so we’ve had a lot of hard conversations with people saying, no, they’re extremely diverse, come from all parts of world, all different kinds of visas, and different programmes. I think that’s something that we’re just trying to push very much in our coverage, and showing that diversity of experience and of everything, of skin colour, of gender, of traumas, of success, all of the diversity. But at the same time, we’re also having those conversations more on the quiet level with funders, and making the case that this is really something that needs to be covered in a more than superficial way.
None of these challenges are new or exclusive to the founders. This means that coming together and sharing learnings can be really helpful in addressing them, as Conor explains.
Conor: The majority of challenges that local news services face, their shared challenges, for the most part at the most basic level, the journey is to stand up a public;y available offering, to build a loyal audience around it, and then figure out how to monetize that audience.
The how of the work changes, obviously case to case, but the steps in the journey are largely the same. It’s very, very rare that a news organisation is taking on the challenge that hasn’t been tackled by someone else before, or that probably has been solved before. I think that’s one of the reasons why the Startup Labs cohort approach works well. It gives the ten publishers that are partaking the network of shared knowledge, the opportunity for shared learning.
One challenge that none of these founders saw coming was the pandemic. The effects of the crisis on larger organisations are well-documented. But how have these start-ups fared?
The San Jose Spotlight saw a few large philanthropic donors pulling back as lockdowns struck. But they saw a huge uplift in support from audiences.
Ramona: We did lose some donations. But I will say in many ways, the pandemic was also good for local news, because we saw a huge spike in readership, people turning to San Jose Spotlight, people discovering us for the first time because we were providing life-saving information. How to get a test, where to find a meal, what are the symptoms of COVID, how do I get a vaccine, when is it my turn?
These basic things that the world was trying to figure out together, we were on the frontlines of that. We were really giving people that education that could save their life. So we saw a huge spike in readers and, in turn, donations, as well as people turn to us during that time.
Josh: In fact, at the end of 2020, we nearly doubled our revenue from 2019 to 2020, solely because of what Ramona just alluded to, that folks are just so unaware of what was going on. They were turning to us to give them the information they needed to navigate their way through the pandemic. And in turn, they wanted to keep this journalism going, so they all pitched in.
At the Santa Cruz Local, Kara had more than just the pandemic to contend with. But like many publishers, she also saw a huge uplift in traffic as people sought out vital information.
Kara: 2020 was a very difficult time for our county, we not only had the pandemic but we also had the most destructive wildfire in recent history in our county. So, in some ways, it was a great year for news. I think it really showed people that the need for fair, reliable, accurate information about basic information about our county’s biggest issues. We actually saw our audience and our revenue skyrocket since March 2020.
I think part of it had to do with our approach. I mean, we’re so small, which allows us to be really nimble, and really pinpoint what people need. For example, when the wildfire started, we very quickly threw up a survey, asking people: what do you need? People were calling, texting us, submitting responses to our survey, and we found ou things we might not have realised, like, for example, one of the biggest needs right at the very start was hotel rooms. Where are there available hotels that take pets, for example, or that have a discounted rate for people displaced by the wildfires.
And so we quickly put together a spreadsheet and updated all of that and put together a very useful resource page. It has attracted so much traffic that our website shut down, like we weren’t ready for the influx of traffic. We were scrambling to switch servers during this one weekend, because we were just getting so much traffic. Our membership revenue also really skyrocketed during that time. I think, over the course of 2020, our membership more than doubled. The amount of support we got from the community was just thrilling.
Each of these news start-ups has a clear mission in mind, from what it’s choosing to cover to who its journalism is serving. But in order to survive beyond philanthropic gestures, they have all needed to find business models that work for them. All the start-ups we spoke to for this episode have taken part in a recent Startups Lab from the Google News Initiative, which is a programme helping publishers on the path to financial stability. I asked Conor to explain a bit about what the Startup Labs does, and why organisations like these were selected.
Conor: So in a nutshell, the Startups Lab is a very intensive, six-month, accelerator programme. It caters to new entrepreneurs who are post-launch, who have gained a real traction with an audience, but who probably still have a road to travel before they could be considered sustainable. The Lab tries to help ten of them get there through coaching and funding and community.
The central question we’re asking ourselves here is: who can this programme be the difference maker for? We’re not really in the business of trying to pick the guaranteed winners here, like a venture capital firm might, let’s say. There are some young news organisations out there who have done a fabulous job at fundraising. In North America, for example, there’s a couple of startups who have raised multi-million dollar kitties, even before they launched. More power to them, but the Startups Lab is probably not for them, they’ve been very well supported already.
Instead, we want to focus on those who really still need help and whose survival is not as assured, ho can the Startups Lab have a transformative impact on? That’s really who we’re after. The other hugely important component for us there, when it comes to selection, is diversity. Equality and inclusion, or the EI as we call it internally at the DNI, we’re very fully committed to giving opportunity to those drawn from or seeking to serve communities that have been traditionally underrepresented in media.
So just to give you a quick indication, in our most recent programme selection process here in North America, over 40% of participants identifies as a person of colour, over 60% identifies as female. Now, obviously, there are different definitions of diversity beyond just gender and race. And those definitions change as you go to different regions throughout the world. But we always push ourselves to be thoughtful in creating diverse cohorts that can come together, learn together, because ultimately that’s what’s going to produce the best results for everybody involved.
The Mendocino Voice is the most mature of the news start-ups we spoke to, having recently celebrated their five-year anniversary. As the business has evolved, they have turned their attention to effectively serving their communities, which in an area as diverse as Mendocino County, is no mean feat.
Kate: Part of what we wanted to do is start building in ways that we’re really making sure we are accountable and participating and a part of the community and having our audience drive what that mix of coverage looks like. We wanted to ask people both about the issues that were important to them, and but also the things that we were missing and the ways that we could improve.
Our motto is useful news for all of Mendocino County, and so that does mean that we have to balance a bunch of different communities and ways that people get their news. But it was reassuring for us, in that, the types of things that people said that they wanted to get more information about are the types of issues that we are really focused on covering. So that’s wildfires and droughts, but also more solutions journalism focused environmental coverage that really connects those issues for people around community resiliency during climate change.
There’s a lot of these bigger issues around health-related topics, even homelessness and housing, that are something that really impact people’s daily lives. And they want to know about those resources and participate in those conversations, but it’s not something that’s ever really been covered in a comprehensive or even a minimal way by the existing legacy papers. It’s something that we’re hoping to continue doing on a regular basis and building in democratic ways that our readers can help us guide our coverage as we scale, because making sure that we really have a sustainable model that is supported by our community, both financially and in terms of their trust and participation, is what we think is going to be the way that this is sustainable long-term.
The desire to keep news and key information free was shared by all the founders I spoke to. But that doesn’t make reader revenue any less of a priority. Instead, readers are encouraged to donate as a one off or via membership schemes. It’s a very different set of priorities to legacy local news giants who used to dominate the landscape. Nissa explains her position at Borderless.
Nissa: Borderless is committed to not having a paywall and having this information accessible, because I think that’s part of the reason we started, is the lack of accessibility to some of this information, and so that remains important to us. So as long as we do that, that means we know we rely on donations and and other things to keep us going.
Kate at the Mendocino Voice shares this belief that having the information open and accessible is important. Her priority now is working on making the membership appealing.
Kate: We really wanted to make sure that our coverage was not necessarily limited by certain financial interests, so we don’t have a paywall at all. That’s really important to us. But we did launch a membership programme within the first couple months of starting. At this point, we have about 1000 members in a county of maybe 90,000 people who give us recurring donations just to support our work.
Part of our plan is to be able to offer them increasing ways to participate, whether or not it’s in these Info Need surveys or around participatory budgeting, really making sure that we’re accountable and transparent to our members and readers.
Santa Cruz Local is also free, and Kara is firm that this is a vital part of the publisher’s mission. They also chose a membership scheme, after looking at what was working for other start-ups.
Kara: All our news is free. So we have a podcast and email newsletter and a website with news stories and we offer it free to the community as a public service. People can choose to support at different membership levels starting at $9 a month or $99 a year, if they share our values and our vision of informing the community with fair and accurate information about what’s happening in local government and the big issues facing our county, then they can support us through this membership model.
We cobbled together best practices of what we were seeing in our peer organisations around the country. There’s this wave of hundreds of local new startups, similar to Santa Cruz Local, and many of them do have membership models. We looked at research coming out from the Membership Puzzle Project, at how it’s being done elsewhere, and imitated what we thought was working well.
But one revenue stream isn’t enough – something these founders are acutely aware of. Most of Santa Cruz Local’s revenue comes from these memberships, but they are also supported in other ways.
Kara: We’re also supported by grants. For example, from the Google News initiative. We have small grants from Facebook Journalism Project, the Solutions Journalism Network, big institutional funders of journalism. And then we also are supported by major gifts, so gifts larger than $5,000. I think our model will always include a mix of membership grants, and philanthropic gifts from individual donors.
So right now, our monthly recurring revenue, the revenue that we can count on each month, which all comes from memberships, that covers about 60% of our staff costs. We want to get to a point where our monthly recurring revenue covers our monthly recurring expenses, which is basically our payroll. So essentially doubling, really growing our membership revenue. We have about 700 members right now. Our next milestone is when we can double the amount of revenue coming from that.
Nissa at Borderless is experimenting with different revenue streams, but acknowledges that what works for one publication may not work for another, especially given the younger audience Borderless attracts.
Nissa: I do have a lot of hope in a mixed revenue model like we’re trying to do, where you have not just foundation grants, because of course foundations change their minds and you might not be funded next year, but also a mix of that and reader revenue through our membership programme. We’re also doing consulting and we also have a merch store, so people can buy Borderless sweatshirts, or mugs, or whatever. It’s really a cool design by an undocumented artist here.
And so we’re trying to really experiment. I don’t think there’s going to be one model that will work for everyone because our audiences are different. Our audience looks completely different than the Chicago Tribune’s audience not just in size, but in demographics. Borderless Magazine’s audience is very young, most of our readers are under the age of 40. They’re very racially, ethnically, linguistically diverse. So you’re gonna have a different model for us than in another newsroom. But I do have a lot of faith in this mixed revenue model and hopefully, it’s just a matter of finding the balance of where can we keep pulling in different money.
Kate also recognises the value of a mixed revenue model, and has actually worked out a way to bring advertising into the mix at the Mendicino Voice – something that has been seen as incredibly difficult for local publications to do in the digital age.
Kate: The other thing that we have done is we have a pretty healthy mix of advertising and sponsorship. We’ve also gotten some grants. We limit our advertising to local businesses who are purchasing by the week. And we also have sponsorship programmes for specific sections, so that means that we can make sure we are not driving our reporting solely based on clicks, and that we’re really providing a way for local businesses to reach a dedicated local audience who values and trusts our local news and also trusts supporting local businesses, of which we are one.
That really means we can build a sustainable budget based on the local businesses here that want to support the work that we’re doing and the local residents here that want to support the work that we’re doing, and plan to grow and scale sustainably without needing to rely on large national advertisers or trying to drive clicks for reasons that aren’t actually valuable to our local audience.
Ramona and Josh decided to make the San Jose Spotlight nonprofit because of the changing nature of journalism. They have five main revenue streams to support the publication
Josh: So as far as revenue generation, we actually have five different revenue streams and they’re diverse streams. The first is corporate sponsorships or major gifts. Second is our return revenue and sustaining memberships, our monthly and annual memberships like MPR and KQED.
Third are event sponsorships, we hold the educational forums throughout the course of the year on important topics that face your local community, and we’re able to get sponsors to sponsor these events. Then fourth, our foundation grants which we’re having better luck now that we’re in our third year. A lot of foundations are more aware of our work and they trust us and they want us to be around. And then fifth is the advertising in our daily newsletter, in our weekly podcast. That’s a growing revenue stream as well.
For Borderless, who were initially set up as a short-term project, the need for a longer-term business model came later. They also chose to go the nonprofit route.
Nissa: When we decided to make this an actual business, we definitely felt strongly that it should be a nonprofit, mostly because of our strong mission. We really see this as changing how our industry covers immigration, not just us doing that work. We had a big, strong mission, and we wanted to be funded by the people we were covering in our community. So in the beginning, we had a Kickstarter Fund, which was great, it was so fun to see all the support from our community. And then we’ve been building on that.
So now we have a membership programme, where readers can donate to us at borderlessmag.org/donate. Also, we’re funded by foundations, and we do some consulting work for other news outlets who really want to bring up their game as far as reporting on immigration, doing coverage in Spanish or other languages than English, and really pushing themselves to the next level in thinking about these issues.
For a news outlet publishing in two languages, Borderless’ staff is much smaller than expected. But like many start-ups, they are wearing multiple hats, and their language skills are put to good use.
Nissa: What I hear from a lot from people is that we look like we are bigger, or have more money than we do. Actually, we’re doing a lot with a little. So in this year, it’s costing us about $275,000. We have three full-time staff members and two part-timers, and of course, freelancers. In the scheme of things, it’s still a relatively small shop.
But the reason we’re able to do so much is because our staff is amazing. Everyone is is speaking other languages, we don’t have to hire translators to, for instance, translate interviews when we’re out because our staff comes from these communities and are able to do that themselves.
Although many of these startups are finding their feet, they’re often doing so with shoestring budgets and incredibly limited resources. They’re also often working in the shadow of much larger legacy organisations. So why are things like accurate reporting on immigration, making content available in other languages and vital pandemic information not being done by larger organisations with more resources? The answer is complex, but is part of the reason these start-ups are succeeding. Nissa from Borderless has some thoughts.
Nissa: Some of it is just really basic like not including the voices of immigrants in your stories about immigration policy. So many times am I reading stories in big outlets, about the latest immigration policy, and they have a quote from a press release, or they have a quote from a lawyer, and they don’t actually talk to anyone who’s impacted by these issues.
So often, I see people parachuting in – I mentioned I was a foreign correspondent in Asia before doing this work and I see a lot of parallels between the kind of negativity that foreign correspondents can have, who will fly into a place and do a quick story and then come out and really just leave the community.
That kind of thing is happening when we have immigrant communities in Chicago, despite they’re just a few miles, or they’re my neighbours. There is this kind of divide that exists. When we’re talking about these big news outlets as well, most people covering immigration in the United States today do not have connections to immigration, they aren’t immigrants themselves, they don’t have immigrant backgrounds. And so they’re coming in with their own perspectives and we don’t see that sort of investment by news outlets in having long-term B reporters, covering immigration.
One name kept cropping up as the reason for local news coverage diminishing: Alden Global Capital. Over the last decade, it has grown to become one of the largest newspaper operators in the country, and has a reputation for aggressive cuts in order to squeeze out remaining profits, with no interest in long-term sustainability. It has even been described by some as a ‘vulture’ hedge fund. Three of the founders I spoke to had worked at an Alden-owned paper, and experienced first-hand these strategies, as Ramona explains.
Ramona: The San Jose Spotlight was born out of a need for more local news in San Jose, California, which is the 10th largest city in the nation, but had just one daily newspaper, a legacy newspaper. And unfortunately, that newspaper is owned by a hedge fund. That’s the story of many other cities across the US. There’s a hedge fund called Digital First Media and it’s owned by a group called Alden Global Capital.
Essentially what happens is they buy these newspapers across the country and gut the newsrooms and squeeze them for profit and layoff reporters. So I worked at the Mercury News for three years covering politics and government. During that time, we saw multiple rounds of layoffs, Pulitzer Prize winning journalists who were forced to leave the newsroom and take buyouts.
Kate and her co-founder Adrian Fernandez Baumann struggled to do their jobs effectively as employees of an Alden title. She explains how many opportunities were being missed at the publication:
Kate: We had both been reporters at one of the local newspapers here in Mendocino County, in Northern California. The majority of the legacy newspapers here are now owned by Alden Global Capital, Digital First Media. We both had our experiences working for that company and had a lot of frustrations about the ways that it was limiting local news coverage here and how we wanted to both do better coverage that actually served the community, but also take advantage of what you could do with all of the different digital possibilities which were not being employed by the local papers.
As local reporters there, we were both getting paid effectively minimum wage. It was really difficult to do any kind of valuable reporting within, a 40 hour week, and that certainly isn’t sustainable in the long term. There was a lot of turnover in those positions and decisions around what the scope of coverage was, or how many jobs are actually in the newsroom and what beats are included. It wasn’t in any way accountable to the local community.
Santa Cruz Local founder Kara is another ex-Alden journalist, having worked at the Santa Cruz Sentinel for a number of years. She became the first woman and the first person of colour to serve as the top editor in the newspaper’s 161 year history. But with shrinking budgets and staff cuts, she left to fill the growing gaps she saw in coverage.
Kara: The Sentinel is a much larger organisation. It’s a traditional daily newspaper. It serves the Santa Cruz County market. We’ve all watched it decline in recent years. It’s owned by Alden Capital, the hedge fund, that I know you know about. We’ve just seen their staff shrink and their coverage of civic news, like local government, the kind of news that you used to depend on the local paper for. It’s just not as reliable as it once was in its heyday, nor as comprehensive as it used to be. We just saw a really wide gap there. There are other local news organisations in our county, but no one was really covering the local government beats comprehensively.
Borderless co-founder Nissa Rhee believes that in her area, it is the decline of the local newspapers like the Chicago Tribune – now owned by Alden – which have really opened up opportunities for founders like her.
Nissa: In Chicago, in particular, we’ve seen the Chicago Tribune and the Sun Times, which are our two legacy newspapers here, they’ve really been decimated in the last decade or two. They cut a lot of jobs, they’ve really reduced their coverage. As that’s happened, we’ve seen a lot of growth of new outlets such as Borderless Magazine, and so there’s a blooming of nonprofit news outlets here. I think we’re all trying to figure it out together.
With all these legacy publications in varying levels of decline, many in the industry have written off local news as unsustainable in the digital age. These start-ups are hoping to prove them wrong, but it’s still early days. Conor is optimistic about their chances.
Conor: I absolutely do think local news can be sustainable. Don’t get me wrong, it’s a very hard problem to solve. But ultimately, I’m very bullish on it. It’s never been more accessible or affordable to launch a news product and get your message out there, even compared to just a few short years ago. Journalism entrepreneurs, they have access to a very wide choice when it comes to the medium for their message.
There’s a lot of great tools out there that can help youdiscover an audience, understand it, monetize it, when it comes to the digital natives. Now, there’s a lot of examples of success that are already out there. I would say, it’s fair to say that we’re still learning exactly what works, what doesn’t work. There’s not a silver bullet. I think new businesses, regardless of any industry, are going to have a very high rate of failure. So there’s inevitably going to be casualties along the way.
But if we keep learning from those casualties, and help new entrepreneurs avoid making the same mistakes that have been made elsewhere, then the odds of success are only going to improve.
It will be some years yet before we can see whether any of these four start-ups have managed to thrive and grow in a way that will set them up for long-term sustainability. But for now, it’s looking positive, and they are all optimistic about their chances. Nissa has a vision for Borderless which will see them expand their model outside just Chicago.
Nissa: We dream big, we really see a future where journalists are doing a better job covering immigration in Chicago and beyond, and that we as a news outlet can grow and thrive and have different bureaus in different areas, move beyond the Chicago Midwest area and expand.
I would love to expand into other languages and offer everything we have in more than just Spanish and English, but in Arabic and Filipino and Mandarin in particular. We’re already seeing some success here. It’s very early. We’ve only been around for a few years. But in our time, our city has gone from having only one other news outlet in Chicago with an immigration reporter, to now there’s two or three other news outlets with an immigration reporter. So I think that’s a great success, where we’re really leading the way for better coverage for more human-centered coverage.
I can’t wait to see what’s next for us in really pushing for better coverage of immigration, fair coverage, and expanding our work as a news outlet, shining light on the injustices going on against immigrants and immigrant communities.
Ramona and Josh are also focused on growth. They want to take their model for the San Jose Spotlight and see if it can work in neighbouring cities this year.
Ramona: We’re really excited about our future. We think that the growth that we’ve seen in our first two and a half, three years now have really inspired us to continue growing. One of the things we want to do is we want to expand our geographic footprint a little bit. We’ve been mostly focused, as you know, on San Jose, which is a big, big beat. It’s over a million residents, but we do want to expand out to some of the surrounding cities in San Jose and throughout Santa Clara County.
We hear almost every day from residents in those cities that, gosh, I wish you were here. I wish you covered news in my city, I wish that Spotlight would come here and write about this issue. We always have to say, well, we have a small team and we’re focused on San Jose. I think as we grow, God willing, we’re going to add a couple more reporter positions and another editor position and then we’re hoping to be able to expand our coverage to some of our surrounding neighbouring cities. I think that’s going to be a big push in 2022.
Kate wants to keep a close eye on the relationship The Mendocino Voice has with its community, and has plans to ensure they meet the neets of locals.
Kate: We’ve definitely had some times of overlapping crises, with COVID plus wildfire season plus other things. But we’ve also been able to grow to what I think is the largest newsroom in our county at this point. We are really planning to take a lot of the experiments that we’ve tried over the last couple years and we’ve been able to build a pretty good foundation of organisational structure and workflow. As we scale, we want to expand our Spanish language coverage.
We’re going to continue to expand our environmental and police accountability reporting, and government reporting. But a lot of our long term changes are around really building into our structure, in ways that we can make sure we remain accountable to our community. We want to have an ongoing info-need survey that might be targeted towards specific locations or groups at different points in time, but to really make sure our editorial strategy is keeping up with people’s most important community needs.
Kate isn’t the only one wanting to develop the community aspect. Kara has plans to grow staff and revenue at Santa Cruz Local, as well as expand their coverage of local government. But she also plans to keep sight of what makes Santa Cruz Local different, which is their growing community.
Kara: We really have invested a lot of time and work into building a trust-based relationship with our community. I think that’s the first step, as a news entrepreneur is really asking people: what kind of information do you need? What do you want out of your news? What do you wish is more covered? And then letting people letting your community know who you are and why you do this work. That has been a lot of our investment, that relationship building over the past two years and I think that’s a big part of what sets Santa Cruz Local apart, and it’s a big advantage of local news startups like us is that you have the freedom and ability to really focus on what the community needs most.
That’s all we have time for in this week’s special. Speaking to these founders made me feel a lot more optimistic about the future of local news in the US, and there are some really valuable lessons for other publishing start-ups from their experiences.
A huge thanks to all the founders for taking time to talk to us and share their stories. They are all doing really fantastic work in their local communities, and if you’re interested in learning more about any of the publications, we’ll include more information and links to their sites in this episode post on our website, voices.media.
Thanks too to Conor Crowley from the GNI Startups Lab for speaking to us. The startups we spoke to today have participated in the North America Lab, but Google run them in countries all around the world including Brazil, India and Europe. If you’re interested in taking part in a future Lab, you can find out more information at gnistartupslab.com
Finally if you’re new to Media Voices, we release new podcast episodes every Monday where we discuss the week’s media news, followed by an interview with a leading industry figure. If you enjoyed this episode, please do leave us a rating and a review, and make sure you’re following the podcast wherever you’re listening to get alerted about new episodes.
Until next Monday, when we’ll be back with our usual format, goodbye!
