How to navigate the challenges of sustaining a startup news site

It seemed like an opportunity too good to pass up, a chance for a young online startup to pounce on a news niche that has proven popular across the country but was virtually abandoned by one city’s legacy media.

All across the United States, community newspapers and local websites alike seek readers by covering high school sports. In theory that makes a lot of sense, partly because it’s not just the players who want to read about their games, but parents and friends as well. And in many areas without a professional sports franchise, even people without a connection to the schools avidly follow local teams.

But in San Francisco, three-year-old online startup San Fran Preps recently shut down after finding local sports to be popular but too economically difficult to cover there.

What went wrong? What are other news organizations doing that makes them sustainable when other outfits fail?

The way things were supposed to go

Jeremy Balan/Photo by Tom Prete

Three years ago, Jeremy Balan looked at San Francisco’s prep sports scene and realized it was an open field.

The San Francisco Examiner and the San Francisco Chronicle both once covered local sports, but that was many years ago. The modern-day Examiner’s sports coverage consists largely of wire copy and columns, with maybe a brief freelance piece if a local team made it to the playoffs. The Chronicle has a blog about high school sports, but it covers a broad geographical area and San Francisco stories are few. And there weren’t any blogs or online news outlets of note picking up the slack.

It was during a citywide high-school football semifinal game that Balan first noticed how empty the San Francisco prep sports niche really was. While at the game as an Examiner freelancer, Balan said in an interview with Poynter that he realized he was the only person covering it.

A student wrapping up his journalism degree at San Francisco State University, Balan thought he had hit on a great opportunity. If he could pull it off, he’d be able to put his journalism training to work covering sports he loved, and make a sufficiently decent living that he could afford to stay in San Francisco.

He needed money to do it, but Balan said he knew he was no ad salesman. He wanted to concentrate on the content, not sell ads or go to potential donors asking for money to support a product he hadn’t yet built. So he concentrated on covering games, building a crew of writers and photographers, and going beyond the fields and courts to report on larger issues affecting schools and athletes.

Balan said that in 2011, he began the process of incorporating San Fran Preps as a nonprofit organization and raised about $60,000, primarily from a handful of large donors including some parents of student athletes.

It was enough to pay his freelancers, and to pay himself for running the operation. And San Fran Preps was turning into a popular source for serious local sports news, with stories often generating dozens of comments from readers.

“It never was a blog,” Balan said. “It was like a local daily newspaper covering prep sports.”

Things were looking up.

What went wrong

Balan’s fundraising for the newly incorporated nonprofit San Fran Preps was enough to keep the site operating and growing for a year. His plan was to look for grants from major journalism organizations to supplement that funding, and to guard against a drop in donations.

But his applications to grantmakers didn’t get any traction. Equally as bad, local donations fell. By early 2013, it was clear that there wouldn’t be enough money coming in for Balan to keep operating San Fran Preps, and in February he pulled the plug and now plans to move back to Southern California.

When Balan talks about why things didn’t work out, frustration bubbles up in his voice: frustration with an environment in which people have become used to free content, and even publications that know how much it costs to produce quality news aren’t paying enough to actually do it.

“Everybody likes the ideas,” Balan said. “Everybody wants it for a freelance fee.”

But when Balan acknowledges that the challenge also was bigger than he thought it would be, he sounds more weary than frustrated.

“I could have tried harder. I didn’t hustle for the money (over the past year),” he said. “I did two full years of hustling to keep the website alive. I just wanted to be a reporter.”

What’s working for others

San Fran Preps had a niche with little competition, a passionate founder and official nonprofit status (which can sometimes be difficult to get). Many potential founders of independent online news organizations perceive the nonprofit route as the best path to sustainability. But is it?

Scott Lewis, chief executive officer of the nonprofit Voice of San Diego, has no doubt that it is. The reason comes down to a diversity of funding sources open to nonprofits.

“You need myriad sources of revenue,” Lewis said. “What we call ‘revenue promiscuity’ in our little world.”

The Voice of San Diego’s nonprofit operation is built on a membership model, but Lewis said the Voice also gets funding from foundations, corporate sponsorships, benefit events and a partnership with the local NBC affiliate.

The Tucson Sentinel‘s support comes from a different blend of sources, mostly local business sponsors with a handful of events and virtually no foundation grants. Editor and publisher Dylan Smith, who’s also chairman of the Local Independent Online News Publishers trade group, says the Sentinel’s nonprofit status frees the organization from having to deliver big returns for investors.

That doesn’t mean local online news publishers can’t pay the bills with their publications, though.

“The reason we went as a nonprofit is we figured nobody’s going to get rich running a local website any time soon,” Smith said. “We did think there would be a decent living in it.”

Still, some for-profit online news publishers believe the nonprofit structure brings too many hoops to jump through and requires publishers to focus on a mission that’s just too confining.

“A nonprofit has to have a really narrow mission in most cases,” said Tracy Record, editor and co-publisher of the long-running West Seattle Blog.

Record says that in her view, nonprofit funders like to support work in particular subjects that might not fit with the needs or interests of a local publication’s readers.

“Maybe that’s a great topic area, but that’s maybe not where your goal was,” she told me.

Beyond the matter of methodology is the question of whether some sites start out with the cards stacked against them, regardless of how they’re structured.

In the case of San Fran Preps, both Smith and Record question whether the level of community enthusiasm for local sports found in many smaller towns is present in a city such as San Francisco.

“The first thing I would say to anybody [starting a local news organization] is be sure you’re solving a problem or filling a need,” Record said.

Lessons learned

Record, Smith and Lewis have different views about what makes a sustainable online news organization. Here’s their advice for startups searching for sustainability.

Record

  • Make sure your publication fills a gap that’s important to other people, not just something that interests you.
  • When applying for funding from national grantmaking organizations, don’t just ask them to pay for local news. Show them they’ll be funding work that other publications can draw upon to improve their own coverage or operations.
  • Always operate within your means. Don’t hire people or buy things based on money you expect to raise later.

Lewis

  • Constantly promote your publication and explain its value to the community it serves.
  • It’s unlikely any publication can get by with only one kind of funding.
  • Be careful of limiting yourself when setting a fee or price for something, including subscriptions. If you ask people for a set amount, that’s all they’re likely to give you.

Smith

  • You don’t have to take a vow of poverty, but you probably won’t make a ton of money.
  • Find the structure and blend of funding sources that works for you. Grants and events may work in one place, and events and advertising in another.
  • If you think you’re going to be able to just do the journalism, think again. Solid business skills are vital. “It’s not just about writing the cool stories, it’s about keeping the books straight.”

Do you work for a startup news site? Share your advice/experience with us in the comments section. 

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  • http://www.facebook.com/cproxmire Crystal A. Proxmire

    I run The Ferndale 115 News (www.ferndale115.com) and I sell “Thank You” ads to readers who want to show their support. This helps them get a personal connection to the website, and it also helps visually teach people that as a journalist I work for THEM and not big corporate advertisers. It’s been a humble start as several other “competition” sites and print papers have tried to come in and take over the market by basically re-hashing my work. But now after 3 years I am earning a living and being approached by interests in other communities that are willing to invest in having a “115″ site in their locations. I also earn money doing consulting and selling content elsewhere. You have to diversify. You can’t sell out. And you need to educate your readers about why supporting online news is essential. It’s not just about a business, but it’s about democracy in general. Remind them of this need.

  • http://www.stratpost.com Saurabh Joshi

    I’ve been running a niche website for almost five years now. Since I was able to keep costs low by managing on virtually nothing but the free tools on the internet, I was able to hang in there for a couple of years (though it got awfully tight, to put it mildly) until revenue started coming in.

    Two things worked out. Firstly, it was a domain I was passionate about and so I was fairly confident I could provide value in terms of content to others interested in the domain, like Record’s first point. Secondly, and crucially, it was a domain with good potential for generating ad revenue.

    It was more difficult and complicated than it sounds and there was obviously a lot more to it, but I hired my first full time employee eight months back with the idea of doing more in terms of content.

    My two bits to those planning a news startup. Make sure you or the editorial driver on your team is passionate about the niche (don’t even think of a general news website) so much so that you can provide greater value than anyone else out there. And make sure the niche has potential to generate revenue from ads, events, whatever. Although, I would be wary of any model that relies on grants or VC/angel funding. I don’t consider that revenue, only a means to generate revenue (I never received any grant or funding). If you only ‘kinda’ know where the revenue is going to come from or are otherwise vague about it, don’t bother starting up.

    Go with the assumption that all your content will be free. Forget about a paid site. And be flattered if you get copied or plagiarized, at least for the first couple of years. Try and get asyndication deal, even if it peanuts. You need the visibility. Earn the respect of older peers in the field.

    Like Record’s third point, ALWAYS find a way to manage with the cheaper or preferably free option. Use WordPress, learn a bit of HTML, tweak the code of a free theme, use a cellphone to take pictures (you can also file from it). DO NOT get into debt. It will affect your editorial work. Work on the principle that if you can’t afford it, you don’t need it. DO keep accounts as well as you can. Save all receipts.

    Stay passionate about editorial and deliver consistency. When it does take off, you will struggle to find time from marketing, accounts and general housekeeping to maintain editorial quality. This is what you’ve signed up for.

    Oh, and when you’re asking for money, whether quoting an ad rate or the cost of sponsorship, it is better to err on the higher side than on the lower. But when you do make a deal, always try and upsell by sweetening the offer. It works, sometimes.

    That’s all I can think of right now. Sorry, if I rambled a bit.

  • http://twitter.com/erikpalmer Erik Palmer

    I agree fully with Markham (and Christoph). I launched a niche sports site and scraped by for 11 years (1996-2007), and went through all the business models: ads, reader contributions, network syndication, and so on. The most successful business model we had was licensing our content for print. The key lesson to be learned: although I know of a few scattered exceptions, I believe it’s basically impossible for one person to be effective as both the business leader and the content leader of a niche news site. Giving inadequate attention to either role is a formula for failure, and both roles are typically so consuming that it is extremely unlikely that one person can do both jobs. If you really want to do this thing, make sure you pick an audience with good demographic features, and have a really flexible and competent business development partner on board.

  • Markham Hislop

    Nice little piece, but it misses the main point and draws all the wrong lessons. Here are the points he should have made:

    1. Online media need a revenue model. Just because there are few barriers to entry and costs are ridiculously low doesn’t let you off the hook. Media is a business and you should figure out early how to make money at it. (I don’t like the non-profit model, in case you were wondering)

    2. Minor sports parents are a great demographic. Advertisers love 30-55 year old women. According to one of my agency clients, women make 47% of ALL household decisions on their own. 60% of our soccer readers are women. They’re highly educated and 26.5% live in households with annual incomes of $150,000+.

    Why try a non-profit model when you’re generating a readership advertisers will actually pay a premium for?

    Investors should never give journalists money to start up online media. They may as well take everyone down to the local pub and have a piss up…more fun and less aggravation when the money is eventually wasted.

    Canadian start up Openfile was supported by a “significant investor” (read: millions) and blew it all in three years, closing its doors a few months ago.

    I supported my little start up with revenue, proceeds from the sale of our house (ask my wife if that was a good idea) and about as much investment as Balan raised. Almost five years later, we have a nascent revenue model that is generating enough to support 14 staff.

    I’ve lived Balan’s story since 2008. Believe me, he did it all wrong.

    That should have been the hook for Poynter’s story….

  • http://twitter.com/CTrappe Christoph Trappe

    Nice read and a reminder of the nine-month I ran http://EasternIowaNews.com in 2009. Overall, it was a success, more than 100,000 people visited and it made some money. It also filled people’s interest in news that wasn’t covered other places.

    The biggest challenges:
    Keeping up with all the submissions from correspondents and contributors. The site had 2,700 posted articles. Many were submitted by others.

    Revenue. I did run the site mostly as a hobby, but played around with selling ads. When it’s just you you are editor, publisher, writer and ad salesman. And did I mention that this was just on the side?

    Selling ads while doing others things, however, does work. Somebody is talking about something on Facebook? Ask them if they are interested in an ad. Same in real life as you are doing other things.

    As you may imagine, though, it can become quite time consuming.

    Christoph
    @ctrappe

  • http://twitter.com/tomprete Tom Prete

    Thanks for your comment, Jesse (and others). I still think it’s an open question whether there’s sufficient interest to support a successful outlet in the Bay Area, but it certainly would require a really sharp businessperson. For example, Richmond Confidential covers local sports heavily, but then it’s supported by U.C. Berkeley’s journalism grad school so it might not do so if it didn’t have that support. Jeremy Balan, for his part, seems convinced that the fall of San Fran Preps wasn’t about having an audience, but rather was down to his own hustle.

  • http://www.facebook.com/jesse.garnier Jesse Garnier

    Great piece, Tom.

    Here at http://SFBay.ca, we’re sorry to see Jeremy squeezed out of the Bay Area media landscape, much like the excellent Sportsyard before it. Outside of a few high-profile programs —which are relatively spread out, geographically — there sadly doesn’t appear to be a critical mass of interest in HS sports in the Bay Area to support commercial success.

  • Ed Pierce

    Our startup news website will be a year old in April and is thriving and prospering in a market against a well-established Gannett paper/website, four TV news sites and another independent online news site. It is possible to succeed against the competition with a clear and concise direction and goal, a great platform and embracing new technologies. See what we are doing here — http://www.spacecoastdaily.com

  • http://www.facebook.com/people/Darren-Johnson/1610561440 Darren Johnson

    I do not do startup news web sites (well, I have made a lot of web
    sites, but they don’t make much money), but have started up a couple of
    one-person print newspapers in recent years (supplemented by freelancers). I don’t know why more people don’t go this route. It
    doesn’t cost a ton to do newsprint. In any case, one of my publications
    has done well with ads; the other not so much and is being retooled. A
    lot of the advice above is what I have been considering, including
    nonprofit status. Thanks for putting this article together. It’s excellent.