Business Models for Local News: Building Products to Increase Revenue and Engagement

Part Five of “Business Models for Local News: A Field Scan” from The Shorenstein Center and The Lenfest Institute.

This post is one section of a new report published by the Shorenstein Center on Media, Politics and Public Policy at the Harvard Kennedy School and The Lenfest Institute for Journalism, “Business Models for Local News: A Field Scan.” On May 18, 2018, Shorenstein and The Lenfest Institute gathered industry leaders discuss prospects for finding and seeding new business models for local journalism — and how best to support those working in communities across the country to facilitate change. The report is based on those conversations. The full report is available here.

The Issue: In the shift from ad-driven to reader-supported revenue streams, news products must be something people are willing to pay for and support. But currently, smaller local newsrooms do not have the internal resources to experiment with new news formats, and practically build out, manage, and convert readers into subscribers.

Key Takeaway: The field of local digital newsrooms needs both an affordable and centralized content management system (CMS) built specifically for producing and distributing journalism, and a consumer relationship management (CRM) platform for tracking current and potential readers. There is an urgent need for collaboration among news organizations to share resources and for outside companies to produce these tools to help the field drive audiences down the subscriber, donor, or member funnel.

Existing Experiments and Initiatives

It’s difficult for a digital newsroom today to function without an integrated CMS and CRM. A huge challenge around this is integrating the proper Key Performance Indicators (KPIs) into the design and functioning of the software. “To date, KPI’s have not standardized throughout the industry,” noted a representative from Distributed Media Lab in our discussions. “Newsrooms can have different features for their systems, but everyone on that system needs to have the same data. The trend so far has not been that. Publishers [who don’t rely on open-source or commercial products] have mostly been building their own proprietary CMS. Unless you are marketing that software to other publishers, there is not evidence that publishers can significantly make money out of their investment in a proprietary software, or whether such software is necessary.”

There are a few organizations building integrated CMS and CRM platforms that meet the particular needs of reader-revenue-driven newsrooms.

On the CMS side:

  • WordPress, in partnership with the News Revenue Hub, the Shorenstein Center, Spirited Media, and The Lenfest Institute, is designing and developing a template optimized for the funnel; this template would be easy to distribute and benefit small to midsize newsrooms.
  • Arc, built by the Washington Post, and Chorus, built by Vox Media, are two commercial content management systems built by media companies and used by medium and large newsrooms.
  • The News Project, headed by journalist and business executive Merrill Brown, is building an integrated CMS and CRM for managing news subscriptions and other sources of revenue.

On the CRM side:

  • Jason Bade and Nick Chen co-founded Pico, a company focused on building a CRM specifically for news, after a successful round of funding from seed investors.
  • The News Revenue Hub maintains a custom integration of Salesforce (CRM), MailChimp (email marketing platform), and Stripe (payment processor) for small and midsize newsrooms.

Beyond the core CMS/CRM technical stack, there are a variety of other tools for newsrooms which are being tested and developed. Our participants identified a handful in the following categories:

Fact-checking and misinformation

  • The Associated Press is working on a product to identify trending false stories and explain what is false, the background to the story, and then promote a corrected story.

Engagement

  • The Shorenstein Center’s Single Subject News Project is building an email benchmarking toolthat will analyze a newsroom’s MailChimp data, sending back the most important engagement analytics while comparing them against other newsrooms in the data set. This tool automates some of the metrics built into the project’s Python Notebooks for email analysis and elaborated in a white paper on using data science for email audience analysis.
  • Hearkenoffers a set of engagement tools to include audiences in each step of the story production cycle. The company is building out its toolset over the course of this year, and is planning to include newsletter integration.
  • The Coral Project maintains a suite of open-source tools for news organizations to host and moderate comments on their own sites.
  • Local publishers are using Facebook Groups to increase engagement, to aggregate local content of interest, and to foster dialogue.
  • The Tow Center and the Membership Puzzle Project published a Guide to Audience Revenue and Engagement which helps news organizations build product and content strategies that link reader engagement and revenue.

Collaboration tools

  • Public Media Company built ChannelX as a multimedia content-sharing platformthat connects story producers with outlets that license and broadcast their work. Though not fully open yet, clusters of public media journalists are beginning to work together on stories using the platform. Initially capitalizing on the public media business model, the platform is looking to diversify its content partners outside of the sphere and scale up.
  • Project Facet is a collaboration platform for newsrooms that want to write and publish stories together.

Content tools

  • The News Inequality Project, a grantee of the Knight Foundation, is building tools to help newsrooms understand how they are covering different communities.
  • The platform Vigilant(which has a variety of funders including The Lenfest Institute) uses automation and machine intelligence to review public records and flag potential stories for journalists.

Publishing tools

  • UNC’s Reese News Lab is working on an integrated local news and push notification app, among other projects.
  • Old Town Media is working with Civil, a blockchain platform for newsrooms to publicly archive their work that also encodes a novel governance systems to ensure quality and trustworthiness.
  • American Public Media’s Glen Nelson Centeris working on a voice-enabled news publishing product for home speakers.

Opportunities and Challenges

Building products to serve newsrooms’ publishing needs

The product needs of small newsrooms are similar to those of large newsrooms, however enterprise software systems are often too expensive, too complex, and too unwieldy for small, overworked staffs to manage. Participants discussed the value of creating a database of available publishing tools for smaller organizations to help them allocate their technology resources more wisely. One participant offered, “A foundation could easily provide support to build this sort of data repository of tools and [a guide to] what works and what doesn’t.” In general, attendees felt the development of low-cost, shareable publishing tools would help relieve the financial burden many small newsrooms face in making technology development decisions.

Zooming out from the local journalism sector, participants agreed that digital publishing products are not often flexible enough to address the needs of every newsroom. That being said, they were open to closer collaboration between platforms and newsrooms on product design. The challenge of building anything for large tech platforms is not unique to the news industry, shared one participant: “It is a conversation that is familiar to all small business industries beyond local news. This is true for small businesses as a whole.” Collaboration between small players is one way to address this problem of scale. “You can find partners that already have a business within your areas of coverage and build products together. You don’t have to replicate what they do, just work with them,” said one person.

Another opportunity for collaboration is among journalists and product developers. Attendees advocated for the creation of a product development manual with standards for journalism, imagining that such documentation could help editors and developers understand each other better — and maybe even help news organizations better understand their readers.

A strong open-source community in news product development could seed the kinds of collaborative product development that participants envisioned. “News organizations need to drop the act of how special they are while working around each other. It will be great if there is a one CRM tool instead of 50,” shared one industry veteran.

Building products to better serve audiences

At the level of platform products, participants were interested in the next generation of news experiences, beyond search and social. “I am interested in seeing how we power sites for people who don’t want to read an essay in every topic,” said one person. News publisher participants were also excited about email as a product for building loyalty and conversion, and about the possibilities for improving search engine news products to increase personalization and conversion. The most in-demand products, participants discussed, are those that both increase engagement and have the ability to attract new audiences and revenue streams. Podcasting is quickly growing into another product that can both attract new audiences and diversify revenue.

Attendees also identified the (often missed) opportunities publishers have to create new products out of their existing resources. For example, archives are a rich source of material for new product development, if those archives are in a structured and accessible database. Large sets of publicly available data or crowdsourced data can likewise form the basis of new products. (ProPublica has done some groundbreaking experimentation around product development in crowdsourcing investigative data.) One participant asked, “How can you go beyond thinking of news as the only product from your organization?” Pico, for example, is building a CRM for newsrooms that will allow publishers to experiment with the monetization of products beyond paywalled content.

Perhaps a missing piece of the product conversation was deeper questioning around just how much people want to read news in traditional text and article formats. It is clear we need more innovation in news formats that meet the needs of users. Podcasting is becoming one such innovative format for news delivery, with products like The New York Times’s The Daily podcast enjoying immense popularity. There are many ways to imagine a next-generation set of news products and experiences which are user-centric and context-specific.

There are, however, many caveats when it comes to designing, building, and testing new products for driving revenue. One participant said, “Even our most sophisticated audience-supported publishers like The New York Times or NPR still struggle to convert a significant amount of their audience” to paying subscribers. Another participant pointed out that building products for conversion requires not just product expertise but “understanding the behavior of your audience and what journey they take on before and after they subscribe.”

Ethics of personal data collection and storage in the development of news products was also highlighted as a pivotal issue. “News organizations are built on trust,” commented one participant, “so how do we build products that use personal data ethically?” Attendees wondered if there would be an ethical way for news organizations to share information about their readers with each other; The Information Trust Exchange is building mechanisms for doing just that.

Finally, some attendees emphasized the importance of thinking through the implications of paywalls writ large. In many locations, Facebook functions as the mainstream media, because it’s free to access. Paywalls force a measure of inequality in news consumption that is based on users’ willingness to pay: “In all this conversation of paywalls, are asking ourselves as well what is going to happen to those who cannot pay for information?”

More technical and product development training in newsrooms

While not everyone in a newsroom needs to know how to code, all journalists should be familiar with the basics of product and software development cycles, design thinking, user experience, and publishing technologies. Part of teaching a product mindset involves not just helping journalists understand design and technology for human interaction, but also the business implications of products and the different business models that can support them. There is much potential for collaboration between large and small newsrooms in sharing best practices for product development.

This is the final section of the report. You can find the executive summary, with links to the other sections, here, and the full report is here.

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