Aaron Kremer, the site's founder and editor in chief, cut his teeth as a business writer for the local paper, the Richmond Times-Dispatch. An initial internship led to full-time freelance writing for the paper's business section, for which he filed three or four stories a week. But he knew he couldn't keep freelancing forever. When he was passed over for a staff writer position, he says, "I thought 'I either need to get out of journalism, or I need to fix the business model.' "
Part of Kremer's motivation for starting BizSense was his feeling that business coverage at the Times-Dispatch had declined over time. "When I moved to Richmond in 2006, it was stronger than now, with maybe twice as many reporters and editors," he says. "But even then I thought there could be even better small business coverage. I particularly enjoyed covering startups. I wanted to do more of that." He hoped that his experience and the weakened business section of his former employer would make it possible to achieve success with a competing business site.
In addition to coverage of small business and startups, key beats for BizSense include commercial real estate, entrepreneurship, banking, the local advertising industry, and the business of law. One recent scoop was a first look at a popular restauranteur's new upmarket concept, complete with art. The editorial tone is lighter than that of the Times-Dispatch and more conversational.
Besides Kremer, BizSense employs three full-time reporters, a part-time copy editor, and a full-time vice president of advertising. All reporters handle general-interest stories as well as their individual beats: One reporter covers banking; another commercial real estate and advertising; and the third covers entrepreneurship, retail, and sports. The site publishes at least two reported stories each day, and also publishes updates for its data sections on a rotating schedule. At least one data section is updated each weekday. On Monday, BizSense updates its data section on local foreclosures; Wednesday's data update is on local businesses and entrepreneurs who are seeking patents or building permits; and so on. Kremer also employs a contract reporter who goes to the courts every week to find out what lawsuits are on the docket. The Bizsense team also sends out news alerts to 12,000 email subscribers.
Kremer feels that most basic tenants of the traditional news business model can endure the transition to digital. "The news business has been a solid business for hundreds of years," says Kremer. "It's just going through a transition. Most of the time, it aligns motivations and incentives pretty well." In other words, advertisers, readers, and publishers continue to want the same things from one another, and that three-pointed relationship will remain largely the same.
But eight months after his startup's launch, Kremer had yet to prove his theory. An investor came on board in the fall of 2008, and "was instrumental" in keeping BizSense afloat, Kremer says. The investor, who prefers to remain anonymous, provided $50,000 at a time when BizSense had run out of money and needed to hire another reporter. Although Kremer hadn't initially planned to seek outside investment, he was glad for the influx of cash, which he used to pay salaries, including his own.
In June 2009, the site broke even and began repaying its investor. It has turned a profit ever since. The profit for last year, says Kremer, who owns 90 percent of BizSense, was between $100,000 and $200,000, almost all of which, after taxes, went back into the business. "We hired more staff, expanded our data offerings and upgraded the website's look and feel and its functionality," he says. He paid back the investor's loan within two years, and now sends him a monthly check containing his share of the profits.
Kremer also laid aside a financial cushion with some of the profits. "Not a big one, mind you, but enough that should ads slow for a quarter, we can still run the site how we need."
One possible reason for BizSense's startup success is its approach to advertising. "We do not sell clicks," he says. "We are not doing pay-per-click advertising. We are selling exposure to a highly sought-after audience." Kremer believes convincing advertisers--which are mainly Richmond businesses--of the value of BizSense's audience has made the site profitable. The biggest package it sells is a large wrap ad that surrounds the news content--an attempt, according to Kremer, to find a digital replacement for successful print ad types such as the full-page spread. The wrap ad costs $4,000 a month. Other ads, including those in the daily BizSense email, start at $750 a month. All ads are sold at flat rates not subject to viewership numbers.
While 90 percent of the site's revenue comes from ads, the other 10 percent comes from paid subscriptions to the premium version, BizSense Pro, which costs $85 per year and includes exclusive content such as a roundup of local court cases. So far there are 300 Pro subscribers. Kremer says he'd eventually like to earn 20 percent of the site's revenue from reader subscriptions alone.
According to Kremer, the site receives 12,000 unique visitors per day, and between 10,000 and 22,000 daily page views during the workweek. He has considered expanding--either into other cities or into news subjects other than business--but for now, lack of time and money limit his ambitions. "It takes a lot of my energy just to keep [the operation in] Richmond running well, so I don't know how you scale to other cities. It's just sort of a daydream right now."
He remains confident, however, that digital news has a bright future and need herald no decline in the quality of journalism. Two of his reporters are "refugees" from large, struggling media companies--Gannett and Landmark Communications (now Landmark Media Enterprises).
While BizSense has so far made a successful run at the advertising model, Kremer still believes that the news business needs to do more to earn revenue by other means. "Whoever can figure out how to change consumers' mindsets about what they're willing to pay for news--that's the Holy Grail."
Then he reconsiders. "I guess it's not the Holy Grail, but advertising is a fickle business, and I suppose after five years I find the idea of 5,000 readers paying $100 each comforting, and more reliable than the seasonality of ad sales." With advertising, he says, "there is always a fear: Will businesses want to stick with it? Of course they have [so far], but like a shop owner, you always wonder: Will they come in and buy?"
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