Online Journalism Enterprises: From Startup to Sustainability

When the Internet, Craigslist and other media developments shoved newspapers into a tailspin, it touched off a fleet of entrepreneurial start-ups racing to fill the voids in journalism.  Now there are signs of a looming shakeout among these new, largely web-based operations, and philanthropy is poised to offer them the two things they need most: cash, of course, but more importantly, business know-how.

 

These are the implications of a Renaissance Journalism Center study of news media entrepreneurs called "Online Journalism Enterprises: From Start-up to Sustainability." I presented highlights at a recent workshop for funders sponsored by Northern California Grantmakers in San Francisco. The William and Flora Hewlett Foundation supported the study, which is available on the NCG website.

 

The study asked the leaders to talk about the challenges they face in maintaining and growing and their news operations. Thirty-two respondents completed the questionnaire, ranging from the Washington-based Center for Public Integrity to small operations like Berkeleyside, which covers the hometown of the University of California’s flagship campus. As a group, they offered the characteristics that were desired for the study. They were geographically diverse, with 74.2% of them focusing on local/community news. Nearly half have been in operation three or more years. The group included both for-profits and nonprofits, but most were nonprofits that secured their initial funding in the form of foundation grants.

 

I was most startled by two of our findings. First, two-thirds of the study respondents said they are at or approaching a crossroads where it is getting difficult to secure a second or third round of grants or financing. This means that when newspapers started to collapse or shrink, funders were quick to recognize that a civic crisis was in the making … the decline of independent journalism was a danger to the community. Some investors, on the other hand, saw this as an opportunity if they managed to hook up with the entrepreneur who would discover the new model that would turn journalism into a money maker.

 

The study showed that that these news operations are trying a wide variety of ways to produce revenues, from selling advertising and offering consulting services to soliciting grants and holding special events. Still, no magic bullets have been discovered yet, and funders of all stripes are becoming more wary.

 

One of the study subjects (all responses were anonymous) described their situation quite clearly: “We believe that the window for foundations' intense interest in funding journalism is probably limited, so we are intensely focused on how to be sustainable through earned income.”

 

The second important finding is that these news outlets clearly realize that they need to gain more business expertise if they expect to survive. 

 

We asked the entrepreneurs to identify what they needed to help them become successful. Most frequently, they said they needed introductions to funders, investors and banks. That’s to be expected. I know from my own experience as a grantmaker—11 years as a media program officer at the Ford Foundation—that most applicants are looking for cash when they come knocking at a foundation’s door.

 

But here’s what’s really revealing: Next in order of needs came a long list of business-related skills and lessons: Information about innovative revenue streams; sharing of best practices; ongoing business planning and coaching; training in marketing and promotion; and so on. Whether you call it training, capacity building or wisdom, that’s what they need right now.

 

This lack of business know-how should not be surprising. When the news business started to go into its deep dive, refugees from the newsroom were the first to join the race to find new models. Many were out of work due to newsroom layoffs and closures. Others were motivated by the excitement of creating something new. Our study showed that the boards and management teams of the outlets that we studied were overwhelmingly dominated by journalists—individuals who know how to cover the news, but not necessarily how to make a business of it.

 

(Jon Funabiki is a professor of journalism and executive director of the Renaissance Journalism Center at San Francisco State University. He is the former deputy director of Media, Arts & Culture at the Ford Foundation.)