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The membership model is one bright spot in the crisis in local journalism

There is a crisis in local journalism across the English-speaking world.

While those in the trenches – jobbing journalist and editorial management alike – try to keep a stiff upper lip, the crisis is undeniable. In the US, some 1,400 cities and towns have lost a newspaper in the last 15 years, according to the Associated Press.

While the US media market is often its own special basket case, cuts and consolidation have rolled across other English-speaking media markets. Last year, Australia’s oldest newspaper company, Fairfax, merged with the Nine television network. In the UK, you only have to look at the bondholder buyout of Johnston Press to bring the group out of bankruptcy as an example of the challenges facing local journalism.

And 2019 has begun by serving us a stark reminder that the disruption flowing through media does not discriminate between legacy or digital.

The latest example – the pivot of Spirited Media from running local news sites to consultancy – is an extension of the issues that we saw hit a number of venture capital-funded outlets earlier in 2019. US digital media veteran Jim Brady launched Spirited Media in 2014 with his own money after he left as Editor in Chief of the ironically named Digital First Media, which had pivoted away from an aggressive digital strategy and towards the milk-the-papers-for-cash strategy of its hedge fund owner, Alden Global Capital.

Digital First Media has now become known not for being particularly digital but for the swingeing cuts they have meted out at their papers including the Denver Post, the St. Paul Pioneer Press and the San Jose Mercury News. The Denver Post made waves when they created a video showing how the newsroom has been decimated since it won a Pulitzer in 2013. The cuts continue.  

Spirited Media’s pivot and failed funding round

It could have been a story of poetic justice when Brady’s Spirited Media expanded into Denver after merging with the Denverite’s parent company, Avoriaz, in 2017. It was part of an expansion enabled by a major investment by US giant Gannett in 2016. In those heady days of 2017, they hoped to expand quickly, with the goal of adding a fourth city by the end of the year. To fund that, they were looking to raise a $3m Series A round of funding.

The outlook quickly changed. Just eight months after the merger, instead of expanding, it went through a round of layoffs. And now the group has decided to pivot after the funding didn’t materialise. CEO Jim Brady said on Twitter, “Cliff Notes version: Local news is hard. Fundraising for local news is harder.”

Spirited Media Vice President Chris Crewson said in a Tweet that with major chains like McClatchy, Tribune and Gannett trying to buy each other, it made it more difficult for small companies like theirs to close funding rounds. Journalism education centre Poynter said that Spirited Media was only able to raise half of the $1.5m it was looking for in its latest funding round.

In a Medium post, Crewson added, “The latest pivot reflects the reality of being a startup in these difficult times for the local media business.”

But Brady said that they were starting to earn “considerable” money “helping others with digital strategy, editorial and product consulting, so we’re focusing on that and looking to leave our sites in reliable hands”. It was only last September that Brady said that Spirited Media had already spun up a six-figure consulting segment of their business.

The membership model shows promise

In that same Medium post, Crewson also hinted at the future for at least one of its sites, The Denverite, which had launched a membership program and already boasted 1,200 members. Spirited Media had put all three sites up for sale, and already had a buyer for The Denverite: Colorado Public Radio, another member-driven media organisation. In the US, public media, both National Public Radio and the public television network PBS, get a significant level of support from members.

Colorado Public Radio’s purchase of a local digital news outlet is just the latest example of this trend of public media groups bolstering their local digital news output through mergers or acquisitions of local digital media start-ups.

St. Louis Public Radio was one of the first movers, placing a big bet in December 2013 by merging with the St. Louis Beacon, a site founded by journalists who used to work at the St. Louis Post-Dispatch newspaper.

Its general manager, Tim Eby, currently a board member of National Public Radio, has long been a digital pioneer. Eby said at the time of the merger that St. Louis Public Radio wanted to offer “a stronger local service” than it had been. “And we could have taken years to grow the capacity of our news organization. But here was the Beacon sitting here doing a lot of the same things that we were doing,” he said.

Eby’s long-term bet has paid off, he said in an interview marking the recent fifth anniversary of the tie up, but that bet did not come without its risks. They added 15 people to their staff along with all the related costs that come with that. Up until the fiscal year that ended in June 2018, St. Louis Public Radio ran a deficit.

But the station is operating in the black again. The tie-up not only helped the station expand its local and regional news coverage but it also allowed them to expand their donor support.

“At the time of the merger we were raising $3 million annually from donors, and today it is over $5 million,” Eby said in the interview for St. Louis Public Radio.

Since that early move by St. Louis Public Radio, other public media groups have expanded their digital coverage by merging or acquiring local digital media start-ups. Last year, WBEZ in New York, WAMU in Washington and KPCC in Los Angeles acquired the -ist network of sites last year – Gothamist in New York, DCist in Washington and LAist in Los Angeles. And WNET, the largest public TV station in the US, just announced that it had acquired NJSpotlight, a membership-supported news site covering New Jersey.

Public media in the US has something that local news digital start-ups have struggled to find: stable sources of funding that allow them to give digital start-ups the runway they need to succeed.

Colorado Public Radio outlined that kind of funding in announcing the Denverite acquisition. “Support to cover operational costs for Denverite came from multi-year philanthropic gifts from the Gates Family Foundation and Bonfils-Stanton Foundation totaling $350,000, as well as a gift from the Ellenoff Family Fund. The support will help CPR sustain Denverite’s newsroom until the expenses can be added to the operational budget,” CPR said.

These tie-ups also show the ambitions that the public broadcasters have in the US when it comes to meeting the challenges of the crisis of local journalism. In coverage of the CPR acquisition of The Denverite, it was noted that CPR could fill gaps in coverage as The Denver Post continues to face Alden’s axe. And in WNET’s announcement, they want to both expand coverage but also launch new and innovative products.

So there are some green shoots in 2019 from these new public media-digital startup hybrids, but there are also lessons here for others seeking a model for growth in these changing times.

Local digital media benefit from a stable source of funding to experiment and build a foundation for membership. Public media in the US has deep experience with membership models and also access to funding that can provide the runway startups need. It won’t solve the crisis in local journalism entirely, but it’s a hopeful start.  

Disclaimer: Kevin Anderson is the managing producer for digital media for ideastream, a regional public media group in the US that serves almost 3m people across digital, two radio stations and five television channels.

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