The Lenfest Institute advised The Baltimore Banner on revenue strategies, organizational structure, and more in advance of its launch.
The Baltimore Banner, a multi-platform nonprofit news organization established by The Venetoulis Institute for Local Journalism and funded by philanthropist Stewart Bainum Jr., officially launched on June 14.
The Banner has spent the past few months gearing up for this launch by hiring staff, acquiring an office space in downtown Baltimore, starting a newsletter, and announcing a collaboration with public radio station WYPR to develop joint programming.
They have ambitious goals. The Banner already has a newsroom of about 40 people, with plans to grow to more than 100. Its target is to attract 100,000 paying subscribers and 5 million monthly unique visitors to its website by 2025 in order to break even.
The Lenfest Institute is proud to have served as an advisor to Bainum and the Venetoulis Institute as they developed plans for and launched the Banner. Through Lenfest Advisory Services, a strategic consulting service, the Institute works with news organizations around the country to identify sustainable business models and best practices.
The Lenfest Institute’s CEO and Executive Director Jim Friedlich and Chief Operating Officer and Director of Operations Ken Herts spoke with us about their work advising the Banner team, and they shared insights into their revenue and subscription strategies.
The following conversation has been lightly edited and condensed for clarity.
How did you meet Stewart Bainum and get involved with his efforts to support local news, which initially was to buy Tribune Publishing and The Baltimore Sun?
Friedlich: The new CEO of the Baltimore Banner and the Venetoulis Institute for Journalism, Imtiaz Patel, reached out to us in November 2020 to introduce us to Stewart Bainum, a philanthropist and business person based in Maryland. Stewart was then trying to buy the Baltimore Sun and had a handshake deal to do so from Alden Global Capital. The conversation then was really specifically about replicating the structure of The Lenfest Institute. Stewart wanted the Sun to be under nonprofit ownership, he wanted to understand how that worked, and what opportunities that provided them. Under NDA, we talked about our structure, how it has allowed The Philadelphia Inquirer to continue to operate as a commercial entity but also to tap into community support and nonprofit tax deductible donations.
That discussion evolved rather quickly, as the conversation between Stewart and Alden devolved into a discussion of his taking over all of Tribune Publishing. We talked about many of the operational challenges and opportunities of owning all of Tribune Publishing and to what extent we could help find or make introductions to potential local owners in each of the Tribune cities. We had active conversations with teams in Allentown, Pennsylvania, in Hartford, Connecticut, and South Florida, in New York City, where the Daily News is owned by Tribune, and in Chicago with prospective buyers. Most wanted to turn their local hometown newspaper into a nonprofit, all attempting to mirror the success and lessons of The Lenfest Institute. Over time, it became clear that Alden would persevere and buy all of Tribune, and Stewart and Imtiaz reverted to the notion of creating a startup.
How has the Institute’s role with Venetoulis evolved going from trying to buy Tribune to creating a startup?
Friedlich: Throughout that time Stewart, who’s a very savvy businessman and mergers and acquisitions executive, had the question of “build versus buy” in the back of his mind. There were frequent conversations about “if this doesn’t work, we’ll start our own.” And so it wasn’t Monday morning after Tribune was purchased by Alden, it was throughout the process as a kind of conscious backup plan.
At a certain stage, Stewart commissioned a formal backup plan from Imtiaz, and we began talking to Imtiaz about what that might look like. What we had urged, and what Stewart’s instincts always have been, is if you’re going to do that, do it right, invest meaningfully up front and recognize that a city like Baltimore needs to be served at scale. His public statements correspond with that view. He has been talking about investing $10 to $15 million a year for the first three years. This is in contrast to most bootstrapped digital startups in the non-profit news space that start with two to three people. It is very much in line with, if not substantially smaller than, digital startups around e-commerce or social media platforms. Stewart has taken a more savvy, deep pocketed, venture investment perspective than is typically the case in local news. At the same time, he’s a philanthropist, he understands that the return on investment here is denominated in public good, good government, and accountability, not a gushing oil well of profits.
When Bainum and his team ultimately decided to start their own news outlet, how did The Lenfest Institute work to advise their planning? What did that role look like, and what were some of the key areas you focused on?
Ken Herts: For me, there were a few pieces of it. One, on nonprofit structures and the strengths and weaknesses of the Lenfest structure versus other structures, including the structure that they eventually chose. How independent is the publication from the nonprofit parent company? Or is the publication just part of the nonprofit parent? So we’ve talked a lot about that, [Lenfest Institute attorney] Richard Fox gave them advice about this as well.
The second area was focused on their digital subscription model. Imtiaz and I have known each other for about 15 years from our time together at The Wall Street Journal. We lived in the same town, and during COVID, we could meet outdoors. It was easy for Imtiaz to discuss choices he was making and to use me as a sounding board.
What do you see are the opportunities and challenges of this “build” approach? You have the opportunity to build a new culture, build a new type of newsroom from scratch, but also aren’t able to rely on the name recognition and the existing audience of a legacy publication?
Friedlich: The good news is, you don’t have legacy costs, printing facilities, layers of management, and the burdens of print. The bad news is you don’t have legacy recognition, audience, institutional authority, and a deep well of highly connected journalists. You want a smart, nimble, lean, flat digital organization led by people who’ve done that or native digital in the first place. At the same time, you want to build scale and institutional knowledge and audience as quickly and sustainably as you can.
What that comes down to in day-to-day tactical terms is hiring the right people, talking to the prospective audience, listening very closely, and then creating the right kind of product from scratch. Starting from scratch doesn’t mean winging it, it means taking full advantage of the time, capital and patience of the owner and all of the best practices in audience-centric design, news product development, and digital-first news content and workflows.
The Banner’s initial hires, notably, were business people — marketing, product design, subscription and, and general management people — first, before the editors. They’ve also hired Kimi Yoshino from the Los Angeles Times, a superb digital editor with a deep legacy, national newspaper background, as editor-in-chief. I think they are well positioned to attract both legacy news capacity and institutional savvy from the rest of the market as well as people with a digital startup mentality and expertise. They have done both impressively already.
How did Stewart Bainum come up with the idea for The Venetoulis Institute and its role with the Banner?
Friedlich: From the very first conversation, Stewart Bainum reached out in a desire to replicate the structure of The Lenfest Institute. He wanted to start a local nonprofit news entity that both promoted nonprofit news in the market and shared its lessons nationally. It turned out to be The Venetoulis Institute for Local Journalism, unabashedly mirroring The Lenfest Institute, which we’re both flattered by and appreciative of. We believe we can both learn from and add value to the new Institute.
The “Venetoulis” name pays homage to the late great Ted Venetoulis who passed away last year. He was deeply devoted to local news and owned a collection of newspapers that were eventually acquired by the Baltimore Sun. He was a state-level politician and progressive mover and shaker in the community. He started a movement that eventually opened Stewart’s eyes called “Save Our Sun” focused on trying to save the Baltimore Sun. He was deeply involved in all of our conversations, but he passed away suddenly a couple of months ago, and Stewart honored him by naming the Institute for him.
The Banner is wholly owned by the nonprofit Venetoulis Institute, similar to The Lenfest Institute’s ownership of The Philadelphia Inquirer. But unlike The Lenfest Institute, they have direct control over The Baltimore Banner, editorially and business-wise. Yet the Venetoulis Institute can, and I suspect will, do other things in local news, acquisitions, startups, etc.
The other interesting thing about the Banner is their public commitment to digital subscriptions as a primary revenue source. There will be a mix of advertising, sponsorships, philanthropy as well, which they’ve said has also been a goal. But it seems unique, at least among nonprofits, to be going the digital subscription route, as opposed to focusing on membership or small dollar donors.
Friedlich: That’s the most prominent experimental portion of what’s happening in Baltimore. The first is, how do you do this at scale? And what happens when you do so? Do you seize the day? Or do you squander a lot of investment because it’s available? I think they will be disciplined and seize the day. But that’s experiment number one: scale. Experiment number two is business model. They have said if it’s worth paying for people will pay for it, that membership versus subscriptions is not synonymous with nonprofit versus for-profit. You’re still paying for admission to a museum or a ticket to the symphony, each typically nonprofit.
They’re essentially saying if it’s worth paying for, then we’ll call it a digital subscription and the way in which you support local news will be by subscribing. And that can evolve over time — The Wall Street Journal, the original purveyor of digital subscriptions in 1997 among American newspapers, calls their subscriptions “memberships” because they have a number of other benefits. They may be positioned and packaged in a different way. But they’ve hired a premier digital subscription marketer as CEO, and I think they’re going to play through on that experiment. The goal is that they have enough digital subscriptions to pay for their newsroom. If that works, as the legacy newspaper continues to decline, that could be replicable around the country. It’s not just another startup asking for membership but giving away its content for free.
Herts: To some degree, it’s reader revenue in either case. Whether people are paying you as a subscription, or whether they’re paying you as a membership, I don’t know that there’s really that much difference between the effectiveness of the two. Usually nonprofits are mission focused and go the membership route. The staff at the Banner, Imtiaz and Chief Marketing Officer Klas Uden, both came from The Wall Street Journal circulation department, so they understand subscriptions really well. They felt comfortable with that and they felt good creating a very aggressive digital subscription plan.
Either way, you’ve got to generate the audience. You’ve got to generate the repeat audience who comes back on a regular basis. You’ve got to generate the loyal audience who cares about what you’re covering. And if you do that, you’ll get readers to pay for it.
The Banner is advertising their prices in weekly terms, but charging readers monthly or annually. What is your take on that, and are there benefits to this strategy?
Herts: They understand what they’re doing. If you charge people annually, you get the money up front and it’s really nice to have the money up front and that funds your operations. Newspapers have traditionally charged annually, so it’s a common thing to do. The counter to that is you’re hitting people with a very large charge all at once, and that might suppress acquisition rates. Some newspapers reported higher subscriber retention rates when they moved from annual to quarterly or monthly billing.
Is there anything else about The Baltimore Banner that we may have missed or that you’d like to add?
Herts: It’s kind of a mix of a nonprofit public service news organization with staff from a for-profit, revenue-maximizing background. We’ll see how that balances out over time. To me, that’s an interesting experiment. Stewart Bainum does intend that, within three to five years, the Banner will be profitable, supporting its 50 or 100 person news staff, and sustainable for the long term through its revenue sources. Stewart Bainum doesn’t intend to subsidize it himself over the long term or even provide it with an endowment. It’s going to pay its own way.
The other thing I’d say is that no digital startup has achieved the scale that this one is aiming at. Name all the nonprofit digital news sites with 50 or more reporters. Maybe the Texas Tribune, and few if any others. It’s a really good and interesting experiment because one thing that nonprofit and digital new startups have not been able to achieve is scale, and they’re trying to achieve scale. And they think that the best way to be sure of that is through great digital subscription performance.