Community News: “Where’s the Money?”

Medill’s series on business models for news sites

Students at Northwestern University’s Medill School have been following up on last month’s Block by Block Community News Summit with a blog series entitled, appropriately, “Where’s the Money?” They’ve been posting one mini-profile a day, asking the conference’s participants how (or whether) their sites are financially sustainable.

If there is a pattern here, it’s that most sites start out with a hefty foundation grant, and then their proprietors work double-duty to make it last: producing content that establish them in their local communities, and devising strategies to find more revenue sources for the future. They seem pretty divided about whether to go profit or non-profit, with all the pitfalls and promise that both routes entail.

The series is worth a read—and it’s an ongoing project—but here are some excerpts, straight from some of the hardest working folks in news:

-Evanston Now, edited by Bill Smith: “Currently, Evanston Now revenues — generated from the sale of display advertising — cover the site’s day-to-day expenses without a payroll. To move toward full sustainability, Smith said he is in the process of hiring two part-time sales representatives who will work strictly on commission. He’s also considering other revenue options, including subscriptions, paid content, donations or a pay-for-posting membership model.”

-Michelle Ferrier of Locally Grown News in Daytona Beach, FL: “I started the site after receiving a grant, but formed it as a for-profit entity…. I’ve bartered a few ads on my site, but am just getting into ad sales on the site. We just launched in June and I felt it was important to focus on content and delivering a product that was informative, engaging and useful. Ad revenue is one source of revenue. I’m adding a ‘classified ad’ revenue stream. Also, I’m not shying away from a print vehicle, like many other hyperlocals.”

-I-News, the Rocky Mountain Investigative News Network, headed by Laura Frank: “I-News currently operates under grants from the John S. and James L. Knight Foundation and the Ethics & Excellence Journalism Foundation. It has also won story-specific grants from the McCormick Foundation, the Fund for Investigative Journalism and the Fund for Environmental Journalism. Frank and her team are currently working toward a ‘four-legged’ business model. This model will ultimately rely on four sources of revenue: grants and donations; subscription services by other media outlets; underwriting; and training for investigative journalists and citizen watchdogs.”

-Chicago’s Gapers Block, managed by Andrew Huff: “Huff said about 100 volunteer writers produce content for more than 100,000 monthly visitors…. Eight editors, the only paid staffers besides Huff himself, oversee content production. Gapers Block also won a $35,000 grant from the Community Trust to generate more neighborhood-based, original local coverage on the site. But Huff said he largely relies on himself, his advertising director, and a salesman to keep the efficient operation profitable. ‘Our overhead is our server space and assorted paid services – we easily take care of those costs,’ Huff said. ‘Beyond that, what is breaking even? I don’t have a target for each month.’”

-Susan Mernit of Oakland Local: “So Oakland Local’s a non-profit. Legally, we’re a project of a 501(c)(3). We have a fiscal sponsor right now: the Center for Media Change, which is the organization that is also the fiscal sponsor for Spot.Us…. I feel strongly that, right now, being a non-profit is a really good fit for Oakland Local because of our focus on social justice and community empowerment. We actually are starting a for-profit division that will be a separate company that we’ll run some revenue strategies through.” “Peter Sklar founded in Santa Barbara, Calif. about six years ago, opting for a traditional ad-and-subscription business model so the site would be an independent source of community news. Non-profits rely too much on grants and donations, he said, potentially affecting the angle of the coverage…. Roughly half of Edhat’s monthly operating revenue comes from paid subscribers, he said. The other half comes from local advertisers.”

-Chuck Welch of Lakeland Local: Q: “Are you a for-profit or a nonprofit company?” A: “Neither. I’m a self-supported site, so I’m not set up as a business at all. I’m retired basically. If you were here last night, you heard me say that I make my living off my wife, who supports everything I do…. None of these questions about advertisers or sponsors. Sponsors want you to cover a story the same way as advertisers. They think that by becoming a sponsor, you’re going to be a little nicer to their field or whatever. I don’t have any of that. I write about what I want, when I want.”

-The St. Louis Beacon, edited by Margaret Freivogel: “Roughly 10 percent of the Beacon’s donations come from foundations, while the remaining 90 percent are from individual donors…. The Beacon, according to Freivogel, operates with a budget of $1 million in 2010, not including donations collected from its exceptional and ‘unusual’ recent contributions – much of which is being saved for long-term growth and plan for staff expansion.”

-John Murden of Church Hill People’s News blog network in Richmond, VA: “We have an ad network across the 13 community blogs, a local blog aggregator, and the community blog aggregator. We have a person that sells ads across the network…. We like the idea of making money, though only our two or four most trafficked sites are really making anything worth talking about. The sales rep is living off of the income, and within a year or two, we could have a few more of us as professional bloggers.”

-Dan Christensen of Broward Bulldog in Broward County, FL: “I went [the nonprofit] route because I did not feel I could sustain the business on an advertising model. Nonprofit gives you the added dimension of pursuing large foundation grants…. Revenue sources today are contributions from individuals, plus the sale of stories to newspapers and news services.

-The Twin Cities Daily Planet, headed by Jeremy Iggers and edited by Mary Turck: The site’s “parent organization, the Twin Cities Media Alliance, was organized as a nonprofit in order to take advantage of foundation support, which provides more than 80 percent of revenue. The rest comes from advertising, individual donations and income from events such as fundraising dinners. The organization recently hired a director of development to focus on raising funds.”

-Brian Wheeler of Charlottesville Tomorrow in Charlottesville, VA: “We launched as a non-profit because our initial funding included major gifts from individual donors and this allowed them to make tax-deductible charitable contributions…. Sources of revenue for 2010 are budgeted as follows: major gifts (73%); annual campaign gifts (4%); and grants (23%).

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Lauren Kirchner is a freelance writer covering digital security for CJR. Find her on Twitter at @lkirchner