The number of media start-ups is at an all-time high, according to Jan Schaffer, executive director of The Institute for Interactive Journalism’s J-Lab. But “the only way you can [sustain] that is to figure out what your revenue streams are going to be,” she said in a talk with 16 Latin American journalists who are in the U.S. as part of ICFJ’s “Digital Path to Entrepreneurship and Innovation for Latin America” program.
A Pulitzer Prize winner for The Philadelphia Inquirer, Schaffer left the traditional newsroom in 2002 and launched J-Lab to help incubate news entrepreneurs and teach newsrooms how to use digital technologies to expand their reach.
In an interview with ICFJ, she talks about ways to create sustainable revenue for news organizations -- and who's getting it right.
Why is sustainability so important for journalism?
We’re seeing right now that media entrepreneurship is at an all-time high. We’re getting big media startups funded by venture capitalists but we’re also getting very small media startups funded by individuals, often bootstrapped out of their pocketbooks or their savings.
The ideas are there and you want it to continue on. And the only way you can do that is to figure out what your revenue streams are going to be. It’s fine to say ‘Oh I’m going to get a grant, I’m going to get a grant,’ but most of these startups are for-profit, they’re not non-profit, so they’re not even eligible for a grant.
So you have to start thinking from the get-go how you’re going to create not just a work of art, which is journalism, but how you’re going to create a business that will provide value to your community in terms of news or information or knowledge in some fashion.
What are the most reliable ways to create revenue?
You have to think of micro-streams of revenue. It’s very rare that a startup is going to get one major infusion of revenue from either a foundation or a venture capitalist. Some will but for the most part, most startups are going to need many streams of revenue that they develop. Certainly the most prevalent ones coming on the scene now are things like:
- Sponsored content.
- Native advertising, which is advertising that kind of masquerades as editorial. So you have to struggle with not only creating it, but also distinguishing it for your readers. But it’s very lucrative.
- Events are another big revenue stream where people are both selling tickets to an event and getting corporate sponsors for an event so we’re seeing a lot of activity around that space.
- We’re seeing things like niche newsletters coming on board, which you can monetize by selling sponsorships to newsletters.
- We’re seeing a lot of membership models come on board, where you have different tiers of membership that cost different amounts of money and each tier membership may come with a different perk, different bells and whistles that make you feel a part of the media community that you’re joining.
You mentioned events as a revenue stream for news organizations. How do they pertain to journalism?
Well I’ll credit Evan Smith, the editor of the Texas Tribune, with saying that events are journalism. And I think people can learn about things by reading about them or going online or watching a video. But you can also learn about things person-to-person. Coming into a room and listening to a news anchor or an author or a candidate or legislator talk about things. And that’s just another way to understand what’s going on in your community and in your world.
How can news organizations take advantage of niche audiences to bring in revenue?
You have kind of your mass media that everyone wants to read but then you have certain verticals that certain slices of your audience want to know more about. Maybe it’s parenting or climate change, maybe it’s food or fashion or politics. And if you can pull together the coverage that you’re already doing, assemble it all together and email it to that person, you not only provide a valuable service for them, but you’ve created an opportunity to mine data about your consumer that could be valuable to other advertisers who want to reach that same consumer or that same demographic.
What is the future of creating sustainable revenue for journalism?
Well I think it’s certainly a value proposition – you have to be doing something that people find valuable. It certainly has to be high-quality content. And it certainly has to be ever clever about finding ways to bring in revenue.
In the video below, Schaffer talks about which news organizations are getting it right.