This week on Media Finance Monitor
My favorite impact indicator is somebody paying
Europe is not yet an audience
Local news needs investors who can wait
35 active calls (4 new)
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My favorite impact indicator is somebody paying
(by Peter)
Switzerland’s Republik is asking its members whether they would agree to pay more. The proposed annual membership would increase from CHF 240 to CHF 260: an 8.3% hike after almost nine years at the same price, voting closes on 22 November.
According to co-founder Richard Höchner Gallicani, the proposal came from the cooperative’s members’ council. Readers suggested giving the newsroom more money to spend on journalism.
I’m a fan of Republik, which we studied in Capital Stacks of Journalism. Its participatory model is central to the proposition, and its rules give members the decision on pricing. For most publishers, however, charging another CHF 20 after nearly nine years would be a management decision and I think that is fine.
Even experienced publishers can be uncomfortable stating what their service is worth. In Capital Stacks, we repeatedly encountered businesses that had underestimated what readers would pay. Raising prices did not typically send readers away, they valued the product enough to stay.
I was thinking about this over the weekend in Siracusa, Sicily, at the 10 Points Unconference, where the subject was journalism’s impact and how to measure it. I arrived one step short of tattooing Milton Friedman on my lower back: my favourite impact indicator is somebody paying.
The first benefit of reader revenue is, obviously, the revenue. As someone who receives it, I can confirm that this is a very attractive feature. But payment also sharpens your attention. Someone has decided that what you produce deserves a place in their budget. You have to think about what they are getting, whether you are delivering it and why they might renew.
This is not a complete measure of journalism’s value. Willingness to pay depends on ability to pay, and useful reporting can benefit people who never read it. An investigation can change an institution without everyone affected becoming a subscriber.
Still, I have developed a mild allergy to claims of impact that float free of any recognisable audience benefit. Few people consume the work, fewer support it, but somewhere, apparently, democracy is experiencing a substantial improvement.
That is how you end up with Potemkin media projects: convincing accounts of public value attached to organisations whose public is difficult to identify. Social benefit can exist without payment, but invoking it can become a way to avoid finding out whether you are really useful to your audience.
But Giorgio Romeo, editor-in-chief of Sicilian Post and one of our hosts, gave an opening speech that made me feel like Scrooge McDuck for a brief moment, and not in a good way.
He argued that society cannot simply be the sum of individual interests. We need to understand problems affecting people we have never met. Sometimes we need to discover that something we had not considered important deserves our attention.
I still think the sector would benefit from more attention to individual usefulness and fewer abstract declarations of democratic importance. Payment is evidence worth taking seriously. Its absence deserves a question, even when the answer involves something other than a subscription.
But Giorgio is right that it cannot be the whole framework. We should be able to ask what changed because of our journalism, and for whom, without requiring every answer to appear in the accounts.
Europe is not yet an audience
(by Peter)
I follow events in Budapest because I was born here, I live here, and I want to know whether Uniqlo will finally open a store. Vienna matters because I have a business there and strong opinions about frittatensuppe and kaiserschmarrn. Brussels gets my attention because people there make decisions affecting my work. But getting me interested in Lisbon, Warsaw or elsewhere in Europe requires more editorial effort.
This is what I like about The European Correspondent: its ambition to build journalism for a European audience beyond the people professionally obliged to care about Europe. They are trying to tackle a difficult problem I very much want someone to solve.
There is a clear market for European information that helps people do their jobs. Building a general-interest product across countries is a lot harder. Language matters, but even perfect translation leaves the question of relevance. Europe may share some problems, institutions and interests but European audiences are still very much fragmented.
Their latest crowdfunding experiment is PocketPaper, a monthly print edition: 12 issues for €120, with a target of 3,000 subscribers by 30 November. Readers will only be charged if the target is reached. That would represent €360,000 in annual subscription revenue, before the considerable business of producing and delivering anything.
I am less convinced about the paper than the European ambition. I read this partly as an attempt to turn an existing relationship with readers into revenue. But readers can already pay for useful digital journalism. Print adds production and distribution costs, along with operational complexity. It needs to bring enough additional revenue or loyalty to justify them.
I ran a quarterly magazine for a while as part of a broader membership offer. It did reasonably well, but my takeaway was that many members would have paid us anyway. The useful question is how much additional revenue the physical product brings in, and what it costs to produce and sell it.
Crowdfunding also feels considerably harder than it did ten or fifteen years ago, the novelty has worn off. A campaign needs attention, marketing and staff time, all of which have costs. It can still be worthwhile, including for the awareness it generates, but the money raised is only half the calculation.
Still, asking readers before committing to the printing bill seems sensible. Here is the product, here is the price: will you buy it? I admire their willingness to keep testing answers to a difficult question.
(The European Correspondent is part of the CSM Partnership Programme, but they haven’t asked me to cover them or their print experiment. I just have opinions.)
Local news needs investors who can wait
(By María)
Social Finance has launched a $21 million investment fund for US local news organisations, backed by the MacArthur Foundation, Knight Foundation, Press Forward and other partners. It plans to offer loans and equity financing, mostly between $500,000 and $2 million, to independent nonprofit and for-profit outlets with credible prospects for revenue growth and profitability.
Consider a publisher operating several local news sites. A membership programme has attracted paying readers at one of them, and the company wants to extend it across the network. The rollout would require upfront spending on subscription technology, marketing and staff before knowing whether audiences elsewhere would respond in the same way. The business may cover its operating costs without generating enough surplus to fund the expansion.
External capital could make the project possible without drawing on cash needed for day-to-day operations. A conventional lender, however, might consider the projected membership revenue too risky to justify a loan. A venture capital investor, meanwhile, might see too little potential for the rapid growth and lucrative exit it seeks.
By contrast, impact investors may assess the same opportunity differently. Because they consider social benefits alongside financial returns, they may be willing to accept greater uncertainty and wait longer for returns. Social Finance is applying this approach, bringing together investors who recognise the public value of local news to offer publishers patient, flexible capital that can support their long-term sustainability.
Our Capital Stacks of Journalism research shows how a commitment to independent journalism has helped attract investment in Europe. Many of the news ventures we studied were backed by people who trusted their founders or believed in their work. Several became profitable and used their earnings to finance further growth. Some investors even recovered multiples of their initial investment, sometimes through share buybacks that also allowed publishers to regain greater control over their businesses.
Social Finance wants to demonstrate that local journalism can be a viable investment and attract more capital to the sector. That is an ambition we certainly share.
(This piece is part of a series focusing on local and community journalism and is supported by the LimeNet project and the European Union.)
Here are the 35 active calls (4 new), with the largest at the top: