On 15 August 2018, we announced to attendees of our Media Gathering event in Cape Town the start of our adventures into membership for Daily Maverick. At the time we weren’t entirely sure how we were going to fund December’s payroll. Now, with more than 7,000 members joining us and a 75% growth in headcount since we started, things look a lot brighter.
A little bit of context
For most of you reading this, you may not be familiar with the challenges of the media industry in South Africa. Take the media apocalypse in the US or Europe, subtract a lot of skills and add a steroid injection of political chaos, all inside the decade of digital disruption. To say our industry is in a deep, dark hole from which it might never escape is downplaying the size of the problem. While Google and Facebook were doing their disruptive dance from offices thousands of miles away, our ruling party chose to engage in a 10-year looting spree that hollowed out our economy, our institutions and the soul of our media industry.
Daily Maverick is a digital-only news startup, founded in 2009 and born into the perfect storm I’ve just described. A South African digital news startup in the time of Google and Facebook, focusing on politics, in the Zuma era, could well be the most bloody-minded foray into news media. We carved out our niche by offering quality, long-form analysis and opinion online and for free, in a time when newspapers were keeping all the good stuff for print.
We described ourselves as a daily magazine, sans cover price; and a huge reliance on newsletter products, long before they became sexy. The eight years that followed were an exercise in extreme persistence — fundraising, bootstrapping, borrowing and begging to square off against the monster of the 25th of each month and then promptly begin the struggle to mount the next payroll.
Venture Capital in South Africa is barely a thing, philanthropy focuses mainly on education, which, for all its support in the last 25 years, has returned one of the worst-performing education systems in the world. “Funding education” is also a safe statement; supporting a political and investigative news outlet has never been good for any business or personal profile in a country as highly politicised as South Africa. The African National Congress, our ruling party, has regularly garnered 60% of the vote since 1994 - when we held our first free and fair elections and has since enjoyed a near-total dominance over every aspect of society.
Government’s influence on the economy remains unhealthily large and businesses are loathe to be seen supporting editorial shining a light on their malfeasance. Running lean was therefore not a strategy but a necessity, and every bit of the available budget was allocated to writing words. For 2 years we couldn’t afford office space, and despite the utmost respect in fulfilling our salary obligations to staff the same could not be said for that of the two founders. A scrappy junkyard dog (that now reaches 1.7m monthly readers and 115k newsletter subscribers) would be an apt description of our time in news media.
As the end of 2017 approached, we were fast running out of friends, fools and family to invest in or lend to us. It was time for some inspiration and we made the decision to invest in an Innovation Tour of the biggest media houses in the USA, hosted by the Poynter Institute. For a startup, the cost was more than significant, but we needed some help with light bulb manufacturing moments that we wouldn’t be able to find on our continent.
Expecting to hear tales of woe, I was surprised to hear and feel the sense of optimism that emanated from those organisations I visited that had solved the Rubik’s Cube of reader revenue. I returned with a sense of focus that we immediately needed to invest in two areas specifically, and within weeks had hired and starting planning around improving our product efforts and a reader revenue plan.
We will not build a great big wall
The debate over the possibility of implementing a New York Times-style paywall was a short one. Over the years, many readers, funders and experts had urged us to adopt a subscription paywall model, arguing that our quality editorial would be strong enough for the effort to be successful. We long resisted this because South Africa is already a poor country. Allowing only those with means to access Daily Maverick content would make us collectively poorer.
Luckily for us, some illuminating inroads into membership had already been made, thanks to the work of the pioneering Dutch startup, De Correspondent, and the spin-off research effort under Jay Rosen at the Membership Puzzle Project (“MPP”), who helped us roll out some of our membership experiments as grantee of their Membership in News Fund.
Membership vs Donation vs Subscriptions
On the reader revenue scale, imagine donations hugging the hippie left and subscriptions the capitalist right, with membership occupying the centre. Donations have no expectation of anything in return for their contributions, while paywalls, the likes of which are employed by the Washington Post and the New York Times, exchange value through access to content. Membership implies an exchange of value beyond a transactional gateway to content, and in our opinion is the hardest of the three models to get right. It does, however, carry with it the potential to be the most rewarding.
Research and design
As we waited for our migration to Wordpress and a major design overhaul to play out, we had the luxury of six months to study and plan our march into membership. For this, we turned to a piece of research, “Guide to Audience Revenue and Engagement”, which quickly became our bible. Thanks to this effort by the MPP (shoutout to Emily Goligoski here) and Institute for Non-Profit news we had a pointswoman steering us clear of tote bag offerings and other potential pitfalls. It mainly helped with insights that would not only significantly reduce the cost of our school fees but also reiterate the mantra that membership is about more than collecting revenue from those formerly known as the audience. Membership is a social contract between a news publisher and its members who want to support and offer more than just finance for its sustainability and prosperity.
It is this concept that underpins the entire existence of any membership programme and its ability to succeed. If an organisation cannot buy into this they’re better off adopting straight donations or subscriptions as their method of choice. For Daily Maverick though, this value system resonated with our beliefs and our journalism.
We planned to offer membership as a completely voluntary effort, allowing members to choose their level of financial support and involvement. They, in turn, would help keep our content free for everyone to access, especially those who can’t afford to pay, a notion critical in a poor country like South Africa.
We designed the membership programme around those wanting to join our cause: to keep our quality journalism and investigations free for all. To help us not only continue our role as a watchdog but also participate in our evolution as news media emerges from its post-apocalyptic period. It had to be more than just a subscription by another name. And the way we asked needed to connect with the part of the brain that deals in emotions.
With matters of money and price-setting, we employed a “you choose” strategy as often as we could. From the monthly or annual amount of membership plan to attending events that had a ticket price for non-members. In many cases, we achieved more through this show of trust in our members than we would by peddling a fixed-price product or service.
The times we drifted from our cause when we went to product-focused in our marketing were the times we fell short of our goals. Staying true to purpose, and knowing what that purpose is, has helped us on our membership mission. And that mission is to grow our community through meaningful experiences and engagement with our team. Financial upside is just one of the by-products that of effort.
This is a notion that is easily lost when the immediate focus is on reader revenue, and we have to check ourselves, often, not to get carried away by just chasing our revenue goals. We also have to reiterate this internally with the rest of the team that membership is firstly about community building and to repeat it as often as possible.
Learning as we go
While there was valuable research out there and an amazing team of people at MPP that we could reach out to occasionally, the plane had to be built while we were flying. No one, to our knowledge, had done this thing in Africa and there were only a handful of success stories around the world — so reaching out for a consultant was not an option. With a small grant from the South African Media Innovation Programme (“SAMIP”) we managed to cobble funding together to build the launch technology, sewing together a series of WordPress plugins. Along the way, we learnt some valuable and sometimes costly lessons.
What is innovation?
Innovation is butting your head against a wall for eight years and then figuring out the answer was there all the time. Without changing who we were, or selling our souls to one devil or another, we are able to unlock an avalanche of opportunity, financial and otherwise, by tweaking just a few things. Call it a pivot, or anything else you like, but the Maverick Insider programme is the most innovative thing we’ve done in our 10-year history.
African audiences will pay for news (experiences)
One of our MVP tests was to run an aggressive call for donations ahead of the launch of the membership programme. It helped provide quantitative and qualitative feedback for us — notably that readers were willing to financially support a cause they identified with. For a long time, there was a notion that South African/African readers wouldn’t pay for news content to the extent it could fund a news organisation when so much is available for free. Technically speaking, we still don’t know if this has been disproven because we aren’t asking them to pay for news but instead monetising the relationship around news.
Listening does work
In the weeks before launch, we surveyed donors, asking a variety of questions including which elements of membership they would value most.
The top five items from that survey became the focus of our rollout efforts and settled internal debates about which direction to take. Of course, in order for listening to work, we first had to ask….
With the success of Maverick Insider (200 people signed up on launch day) it became pretty clear, pretty soon, that we were going to need a bigger boat. We needed a community manager and we had no real idea of what that person would be tasked with on a daily basis. We knew event organisation, communication and LOTS of copywriting would be in their future, and we knew just that kind of person who was one of the first Insiders to sign up on launch day. Other positions like engagement editors are being mooted as the volume of work grows with the membership base and our editorial efforts embrace more engaged journalism opportunities.
We now have eCommerce problems
After years of B2B dealings, we suddenly switched over to B2C with only some appreciation for the challenges of having an always-on business. Abandoned carts, payment gateways and customer support are now the scariest words in my lexicon. They keep me up at night, but thankfully we still have the goodwill of the last 10 years and the authenticity to sometimes reach out to members and say: “I’m sorry that we’re sucking at this right now. We’re working hard to fix it, and sometimes the crappiness of our financial system has our hands tied. Please bear with us.”
Editorial is a revenue builder
For many years, news teams inside organisations were seen as a cost centre that brought the audience to the table for the rainmakers in sales and business development to do their thing. When the inevitable cost-cutting comes in a time of disruption, newsrooms are too often the starting point of the purge. With membership, we can draw a direct line from the revenue we generate to the newsroom and the quality of editorial. It is the perfect feedback loop that keeps us on our editorial mission. If we stray from the quality, independent public service journalism that we provide, we’ll see it in feedback and decline in support from our members.
Membership is good for business
Many of our members are leaders in their businesses, whether they are small, medium or corporate. In addition to membership, some also helped with advertising budgets that helped sponsor an entirely new vertical of journalism for us. And while some corporates still shy away from placing advertisements alongside highly charged political analysis or investigations, some have helped by purchasing memberships on behalf of their employees which also creates opportunities for us to share the Daily Maverick story or offer political analysis inside the workplace through smaller events.
As our membership approaches the 10,000 mark and beyond, new commercial opportunities open up for us like a printed product, a book division and/or speaking engagements for our journalists. Our 10-year anniversary book, out later this year, will most likely achieve most of its sales to members sold directly from our website. As many new opportunities open up, each requires an evaluation against our “Why” and whether we’re still maintaining congruence with our mission.
Membership as organisational culture
For membership to succeed, a news organisation needs to buy into the concept completely. It cannot be something that a person or team does alone or something that can be switched on/off. Our weekly Insider meetings are attended by the following people: Editor-in-Chief, CEO, Membership Manager, Product Manager, Support Manager, Developer, Marketing and design team, with occasional drop-ins from finance and events team reps. Of the 10 regular attendees, only three of those positions existed before the decision to move into membership.
Our next efforts have been to showcase the opportunities for engaged journalism to the editorial teams that work across our Johannesburg and Cape Town offices. It’s one thing starting up a new operation with a set of rules expecting to include readers and members in editorial work like De Correspondent and Krautreporter, both European based member-funded news organisations. It’s another introducing what can feel like a foreign concept, to begin with.
For us, it has been a learning curve that requires illustrating through examples and experimenting to find the right ways for experienced journalists, under serious pressure from all sides, to try a slightly new way of doing things. I guess that’s why it’s called leadership and not dictatorship. And why it’s so damn hard.
Non-financial ways we’ve engaged with members
We knew pushing engaged journalism onto our editorial team from the get-go wasn’t the way to kick things off. Journalists are at their best as wild, feral cats curiously sniffing out bullshit. The same traits make “change” a little harder to broach than simply sending out an internal memo. So as the people (initially) responsible for membership we took it upon ourselves to show the way in how we can engage, lean on, and ask for more than just money from our members.
Our bi-weekly members’ newsletter, showcasing the behind-the-scenes stuff we previously took for granted, served as the base from which we shared, asked and fed back to our members. Open rates on this newsletter average 2.5 times our standard newsletters (>60%), with our callouts to members often blowing us away with their response rates. Our one-year celebration of Maverick Insider booked out within hours. For all the aversion we have talking about ourselves, people seem genuinely interested in our journalists and editors.
Here are just some of the things we were rewarded with by reaching out to our members:
● Recruitment: our community manager was one of our first Insiders; if our books division gets the green light so will the publisher/editor running that division
● Free event spaces
● Discounted office space
● Volunteers at events
● Survey feedback and testing of ideas
● Comment moderators
● Drone pilot
● Offer to help fix an ongoing bug on our platform that we were struggling with
Building a recurring and significant revenue stream has been liberating. While digital advertising remains a high margin business, it remains a dirty place filled with dark spaces and some nefarious players. From the lack of transparency in the programmatic marketplace to media planners with directives and mandates incongruent with public service journalism, it’s an area that we’d prefer not to depend on. Reader revenue has freed us from the shackles of being slaves to others we can’t see or who don’t care. We’re taking back control of our own destiny through the direct relationship with our members. If we do our jobs well, they will come with us.
While our newsroom and our organisation has indeed grown by 75% in the year since we started Maverick Insider, not all of that has been funded by readers. Philanthropy remains a big part of our revenue as does commercial trading in advertising, events and other sponsorships. But reader revenue is growing and it is consistent and predictable recurring revenue for us. It now accounts for 30% of a much-enlarged payroll and 18% of all running costs. July’s reader revenue would have covered more than half of the August 2018 payroll, when we launched the programme.
Because philanthropy and advertising are such volatile beasts, we prefer measuring our ability to cover our humans and overall costs. Over time we’d like to reach an even split between philanthropy, commercial and reader revenue in keeping our revenue mix diversified and not overly reliant on a single source.
So while not all the growth has been funded by readers, having that security has allowed us to invest in the newsroom growth and experiment with a view to funding new sections through grants or commercial efforts. Without this support, for example, our new ventures in Climate Crisis reporting would have been severely reduced.
Where to from here?
Membership has helped us change so much and yet not enough. We have some way to go before it becomes part of our DNA for everyone at Daily Maverick. That will take some time and effort but each new experiment or success story will help us on our way to making this a reality.
In order to better utilise our members as editorial resources, we can follow the lead of the likes of De Correspondent, noting the experts in our membership community and how we could possibly use them in producing great content. Engagement will be top of mind as we look to fashion a new way of thinking and operating.
At our current audience levels, we’re guessing our paying Insider numbers will max out around 30–40k. I say “paying” because we will also make moves to allow a wider range of membership access to those who wish to contribute in non-monetary ways, especially younger and student readers. At 7,000 members our lives are already changed for the better, so 5x could be industry-changing.
When I stood up on that stage a year ago, asking those in attendance to join our cause, I mentioned that we could no longer do this alone and that we no longer wanted to do this alone. We believed that we would transform into a better news operation because of membership. That the time to fight this battle for the future of our country should not be shouldered by a brave few.
As with most of society’s problems, we believe the news industry’s problems can be solved through service to community over the pursuit of individual benefit. Outside of the few global players winning in the subscription space, the news publications that seem to be carving out a sustainable model, and not reliant on a single type of funding, are those embracing the membership model. Not only can membership save journalism, but it will do so by helping it evolve.