Why do reporters take the risk to start a media business? These answers might surprise you.
The business models for journalism startups are not all that complicated after all: Here’s why dozens of reporters got started on their own enterprise.
After more than three dozen interviews with experts, I believe to a greater extent than ever that there is a growing acknowledgement and excitement that the media ecosystem of tomorrow — in the U.S. and Canada specifically — will include a significant number of news startups started by passionate reporters.
(There are deniers — like PostMedia Network’s CEO Paul Godfrey who believes funding startups is a “waste” — but they are the outliers.)
These startups might look like small-but-growing national undertakings like CANADALAND, mostly-one-person hyperlocal operations like The Tyler Loop, or experimental media companies like Where By Us. And there are likely many forms that we’ve not even seen yet. But they will be focused on digital, extremely nimble, and audience-centric.
For those who want to believe in this future, the synthesis of these interviews illustrate one powerful idea: the business models for journalism startups are not all that complicated after all, and there are some powerful reasons for starting them.
When I asked for input on the questions “What might be effective ways to inspire and support reporters to start a media business of their own?” and “How do we encourage people to take a risk to kickstart the journalism ecosystem of tomorrow?,” I stopped counting the responses after twenty and they keep arriving.
The self-reported needs that reporters mentioned were fairly consistent, e.g.:
“A solid website, a CRM, legal help with corporate / nonprofit entity set-up, branding, a simple marketing engine, a pitch deck, market-sizing research, a simple business plan.”
“The best platforms to use, how to target my audience, and how to raise money, as well as monetize.”
Still, I wanted to dig deeper into the actual motivations that get reporters thinking about starting their own business in the first place. As I described to Adam Thomas at the European Journalism Centre recently, I am looking for the early signals of a successful journalism entrepreneur — what are the personality traits and skills that can help lead to success?
I asked this question of Corey Ford at Matter.vc, Jessica Lessin at The Information, Mark Briggs of the Entrepreneurial Journalism book, and several others in the business of supporting reporter-entrepreneurs. Then I went and asked the reporters who’ve actually started businesses.
Here’s what I discovered:
Two motivating factors: inspiration, or desperation
Almost all of the entrepreneurs I interviewed came from reporting jobs at larger news organizations, often traditional print-first media, but also online media like AOL’s Patch initiative. Without fail, they had all worked in a news-producing environment. In some cases, the entrepreneur didn’t go to journalism school or work in a daily newsroom, but nonetheless they had earned their reporting pedigree by — no big surprise — reporting a lot of stories. If there are journalism startups started by business people, I didn’t find them on this pass (and, if you know them, please drop me a note).
So, what inspiration — or desperation — was sufficiently powerful to convince these individuals to take the risk? Here are just a few answers:
- Frustration with the freelance lifestyle: Reporters are tired of pitching stories in an environment of shrinking editorial budgets, and — once accepted — waiting several months to get paid. I’ve witnessed “pitching burnout” directly and it ain’t pretty.
- Disillusionment with the profit-obsessed aspects of the news business: Writing stories that are optimized to capture clicks so as to meet advertiser expectations around ad-unit views is probably not what most people were thinking about when they applied to J-school — and yet it’s the reality in many larger news operations.
- Tired of writing about “beers and bars:” Many reporters have a beat or two that they’re passionate about, and yet shrinking newsrooms have meant that many reporters need to report on increasingly broad topics to justify their salaries. The sentiment “I wanted to write the stories that I believed were important and being overlooked” came up several times in the interviews.
- An evident market need: On the “inspiration” side of the column, several of the people interviewed spoke to the opportunity in their community for better coverage. Sometimes this was because a local or regional newspaper had shut down. Other times it was because the incumbent news organization hadn’t prioritized a digital experience and audiences were being underserved online. Either way, there was an opportunity to address a market need that wasn’t being met.
- Nobody was watching the watchers: Similarly, holding the media themselves accountable was a market opportunity for CANADALAND. And one could argue that the declining trust in media is, in part, the result of decreased pressure on media organizations to maintain high standards and a focus on holding the powerful accountable. The trusted media ecosystem of tomorrow needs strong voices that will keep watch on the watchers, and hold them accountable — not only the accuracy of their reporting but also the diversity of their reporters and narratives.
- The 2016 U.S. election outcome: It’s probably no big surprise that an unexpected political event could inspire people to take matters into their own hands, and this was true with the more recent startup founders I spoke with. Recognition that important stories were not being told, and that large parts of the U.S. were not being served by the mainstream media, spoke to their sense of purpose while at the same time they saw a market opportunity to help people make sense of the political situation.
I’m curious: do any of the above resonate with you or your current situation? If so, please drop me a note in the comments or in any of the usual places.
Building a one-year runway
Whether inspired, or desperate, to start something, here’s a sobering fact: the risk is significant to would-be journalism entrepreneurs. The risk is not only having to face down a business failure, but also the risk to personal reputation. For example, just moving from a traditional newsroom to online journalism could be seen as a “step down” professionally by some in the industry. And covering government and powerful business interests (including other media organizations) comes with its own serious risks when outside the protection of a larger news organization, e.g., lawyers, insurance, etc.
There are strategies to mitigate these risks, which we’ll get into in another post, but — not surprisingly — the biggest risk by far is financial security in the first year.
So how did these journalism entrepreneurs fund their startup’s first year? Here are a few key themes from our conversations:
- Starting part time / a part-time income: Several people mentioned variations on part-time income while they were in the initial year of their startup. This could be moving to part-time at a current job, or simply working evenings and weekends. Others cited income from established freelancing arrangements. In some cases, the other job was unrelated to journalism. Sometimes, where there is a will, there’s a way.
- Personal savings: Whether severance from a buyout, or simply wise investing, some funded their ventures from personal savings. A few reached out to friends-and-family for an “angel round” of funding, and some simply used credit to get things moving. All of these come with financial risk. (Surprisingly, I did not speak to anyone who went to a bank for a small-business loan. If you know of anyone who’s done this, please shout.)
- A benevolent partner: In a handful of cases, the founder was in the position to have a partner whose income could support two people for six months or more. Often this was in a smaller, less-expensive part of the U.S.
- An investor/angel: In a couple of cases, the founders told me that they had succeeded in finding seed investment. One was approached by an investor who wanted to see a local news operation in the community, the other sold a sponsorship to a business person they knew in the community that they considered an angel investment. In both cases, that investment provided a very short runway to reach sustainability and ultimately that revenue needed to be replaced with other sources of income.
Have you experienced other funding models for very early-stage funding of a reporting startup? I should mention that I’ve specifically left crowdfunding out of the above because, in my experience and in the interviews, crowdfunding was rarely the first form of funding for a news undertaking and often came after months of planning and market testing. I’ve also left out grants because I believe that for-profit news business are not only possible, but a necessary part of the news ecosystem of tomorrow.
As suggested earlier, the business models for journalism startups — at least for the first year — are not all that complicated. And getting from year one to ongoing sustainability is far more challenging — I’ll cover that in a separate post dedicated to business models.
However, there are hard questions still around how these financial requirements create significant barriers to entrepreneurship in underserved and systemically shut-out communities; there are no easy answers there (if you have one, please share in the comments below).
Jump aboard, there’s more to come
The interviews didn’t stop there, but — in the interest of your limited attention — I will conclude the post here. Upcoming posts will synthesize what these journalism-entrepreneurs had to say about:
- their biggest challenges in the first year beyond financing;
- the types of coaching, mentorship and support they received;
- as well as what advice they have for other reporters who are thinking of starting a news business.
As part of this JSK Fellowship, I’m working to improve the amount of “thinking out loud” that I do. This post is part of that effort and it works like this: I throw out some roughly formulated ideas that I’ve been considering, and you provide me with input to make them better. In the process, we’ll learn from each other, and you will be the first to try the resulting output: a product, an event, a course, etc. If that sounds good, you should consider following me to receive updates.