Core strength - Efficiency
(NOTE: Yes, this post is about the nonprofit world but I fully recognize that there are small business and large for profits involved too (think Patch vs. Batavian). I am actually very bullish on a marketplace for journalism as well - but that is a separate post.)
More and more this country is betting on nonprofit news organizations to fill the gap left by commercial media. I think this has lots of potential, but it could be a lost opportunity if we don't play our cards right. I don't claim to know how to play our cards, but we should at least acknowledge that these players from Block by Block are in the deck.
As Susan Mernit noted in her post, "we have a movement, but we have no tangible support."
I see the strength of these players as efficiency. The SF Public Press (disclosure, I'm on the advisory board and Spot.Us has raised money for them on several occasions) is operating on roughly $70,000 this year. That is up from roughly 30k last year.
That gives it a burn rate of about $5,800 a month. Average unique visitors is around 12,000. Divide one by the other and and we can crudely say they spend about .48 cents to acquire each reader.
Compare this to The Bay Citizen which has an operating budget of over $5,000,000 a year (from what I understand Warren Hellman has promised them this kind of budget for the next five years - please correct me if I am wrong on this).
That makes for a burn rate of $400,000 a month. At a booksmith event Lisa Frasier said their traffic was about 175,000 (note: This is probably growing since they are a young organization. This also doesn't count NY Times traffic).
This means The Bay Citizen spends $2.2 to acquire a reader. Even if we double their traffic numbers, assuming the NY Times brings in another 175,000 unique readers, their cost is $1.1 per reader - still twice that of the SF Public Press.
(Again note: I haven't contacted The Bay Citizen to confirm their monthly burn rate and I'm basing their traffic on something that was said by Lisa Frazier at a booksmith event. I know - this is shoddy reporting, but I don't work for CJR anymore. I am not a media reporter. This is what I'm doing while in Europe - so please excuse me for wanting to explore Germany in the few remaining daylight hours and crank this post out instead of arranging interviews).
(UPDATE: See comments via Rose from The Bay Citizen. Thanks Rose! Again, I hope you saw my disclosure of shoddy reporting from the start.)
I'd bet we'd find similar breakdowns between Twin Cities Daily Planet/MinnPost, Texas Watchdog/Texas Tribune and other small vs. large nonprofit organizations. For the record - Spot.Us' "efficiency rating" is between .21-.55 cents depending on our monthly traffic and I have ideas on how to lower that. In fact, it was this efficiency rating that inspired me to build Spot.Us as a platform NOT a news organization.
Here's the Rub: Nobody is wrong, Nobody is right, Nobody is sustainable.... yet.
I am not for a second suggesting that The Bay Citizen, ProPublica, MinnPost, Texas Tribune, etc are a bad idea. To the contrary - as somebody who is caught up in these times I want as many experiments as possible and I think the folks at these organizations are doing good work. I consider many of them colleagues and friends. It is natural that some of these experiments will be large and costly (we haven't even hit the journalism community's Manhattan project.... yet).
I think there is also something to be said in the breakdown above about amassing a larger audience. There is a value to that which is not measured in dollars. While this and other "X factors" won't show up in my obviously crude efficiency rating (monthly traffic divided by burn rate), it does create unmeasured value which should be considered.
All this is to say - the answer isn't (a. ditch these large nonprofit efforts. Equally it isn't (b. to ignore these smaller players.
They are two extremes. Neither are wholly sustainable. One is too small to scale. They operate on volunteers and struggle to get by. The other probably can't support its own weight and drops money on either side - money that could be used to support more reporting.
The Rub for Foundations
Giving away money is a tough job. I got a glimpse of this as a reader for the Knight News Challenge the last two years. You'd think it would be easy. You are sorely mistaken. The problem is that there is more need than can ever be filled through philanthropy. The hope, as the old proverb goes, is "to teach a man how to fish" rather than give him a free meal."
When foundations see the Sandler family put down 10 million a year, they take notice. That's a big bet. Perhaps by doubling-down they can help that organization reach a level of sustainability.
To me there is a tension between the notion of funding a few huge nonprofits with millions of dollars so that they can become "sustainable" when their existence from the start was based upon the philanthropy of a handful of rich people. These large nonprofits are, by design, going to have large burn rates. Meanwhile organizations that can run for a year on 150-70k or less can't get funding because they haven't amassed enough money to perhaps become sustainable. I'm not saying the reverse course is correct (fund the small players and let the large ones eat their young) just recognizing the tension and "the rub" for foundations.
Syllogism time.
IMPORTANT: All of the arguments for A, B and C below are on shaky ground. This is not to argue for any kind of universal syllogistic truth ("Man is mortal, Socrates is a man.....) but to show one train of thought played out to its logical conclusion. I myself can imagine a very different syllogism based on counter-arguments.
- A = Journalism isn't "sustainable" in the true sense of the world.
- B = The aim of philanthropy is to get maximum impact of $'s.
- C = The efficiency rating I created above (Monthly traffic/burn rate).
Argument for A: On a cynical day when I think about the nonprofit news model trend I see journalism becoming closer to the arts.
Let's face it - the high arts (poetry, orchestra, visual arts) have never really been "sustainable." But we aren't worried about their disappearance. It could be that "high" journalism has also never really been "sustainable." Sure, the classifieds and advertisements placed around it was lucrative - but the journalism itself was a loss leader. I think everyone can agree to this.
The uncoupling of advertising and content has shifted journalism closer to the high art world. Think poetry. Thus we see a rise in nonprofit news philanthropy. Talk about sustainability is really about squeezing revenues out of something that is inherently not sustainable. Again disclosure: This is on cynical days. Catch me on a good day and I'll have you investing in one of my for-profit journalism ideas ;)
B: The aim of philanthropy is to get maximum impact. In journalism this is a difficult choice because we aren't sure what will maximize impact at this point in time. I think this is precisely why the Knight News Challenge was a brilliant use of funds. It placed some wide bets and shifted the journalistic conversation to recognize risk-taking.
But if (and that's a BIG IF) A is true, then it would seem the efficiency rating would play a bigger factor in deciding what bets to place.
A + B = C
Reads: If journalism is not sustainable in the true sense of the word then to maximize impact in journalism foundations should give to organizations with high levels of efficiency.
Remember my "C" is crudely calculated and there are other X factors (amassing a large audience, what audience you serve, your level of reporting) that aren't numerically valued - but certainly there is a way to factor.
Quick plug: Collaboration is Queen
I give The Bay Citizen credit for their openness to work with community partners. They are one of the few large players who have made an earnest attempt at this and so far are doing great. Perhaps it is through this middle road that both sides can find a happy medium. Because the Bay Citizen is still new (as we all are) it's difficult to know where that medium ground will lay. They've started by offering $25 a post to community partners. I don't know if and where the needle will move in the future - but the point is that at least we see a needle.
Comments
Hi Dave, good article. As
Hi Dave, good article. As usual, lots of food for thought. I do, however, want to correct a couple of things about The Bay Citizen.
Warren Hellman and his family foundation have generously made a one-time seed funding donation of $5 million, which is roughly the size of our annual operating budget. He has not promised this amount for the next five years. In fact, we at The Bay Citizen are trying to move toward a membership-supported model. We view community support from many small individual donations (similar to NPR and, in a way, your own Spot.Us) as a more sustainable, long-term model for nonprofit journalism.
Re: the cost to acquire a reader, this is a really interesting analysis. I would like to point out, however, that your analysis does not include the 65,000 New York Times households who read our Bay Area pages on Fridays and Sundays. Nor does it include the hundreds of thousands of people who read our articles on NYT.com's Bay Area section.
I also don't know that it's apples-to-apples to compare The Bay Citizen's operating expenses with those of other primarily volunteer-run nonprofits, like SF Public Press (based on my understanding of their model). The Public Press does good work - in fact they are one of our 25 community partners that you mention in your post - but The Bay Citizen has a different model. We have a newsroom of 17 full-time, paid journalists that we hope to continue expanding.
Thanks again for the article, and congrats on your fellowship,
Rose
Thanks for the comment Rose.
Thanks for the comment Rose.
Again - I want to stress the reporting disclosures that I put above. I noted that the traffic could be higher via the NY Times.
I am surprised to hear that Hellman has not committed sustained support for The Bay Citizen. Wouldn't that put The Bay Citizen in a deep pickle in just seven months (if not less)?
As for the apples-to-oranges. I can see your point a bit. But at the same time - the SF Public Press (and many of the Block by Block members that I wanted to highlight in this post) are volunteer efforts not by choice - but because they have no funding.
Obviously their "efficiency index" would go up if they were able to hire people. The question is at what point do we hit a maximum level of efficiency coupled with impact?
As always - I never claim to know how to play our cards - I just think we should take stock in all our cards.
Hi Dave -- Fascinating
Hi Dave -- Fascinating analysis, and I thank you.
Apples and oranges are spoken for, but I think I see a pomegranate mixed in with the cumquats:
MinnPost is quite unlike Bay Citizen, Texas Tribune and ProPublica in that it has had many funders from Day One and it does not pay its CEO an outlandish salary. In fact Joel Kramer put up some of his own money to launch MinnPost and now works for zip. And he's making progress in a smart and relentless campaign to become sustainable.
I put the millionaire-funded CEO-enrichers in their own category -- unsustainable unless the founding multimillionaires want to keep on pumping in the millions, something that few ever do.
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