October 2, 2018

As local newspapers and their reporting and editing staffs continue to shrink, a perennial question has become even more relevant: How big is the new network of local sites springing up to provide serious local coverage?

The Institute for Nonprofit News, a group of 180 such organizations, took a stab at sizing the sector in a survey released Tuesday. The results are encouraging: estimated revenues of $325 million to $350 million and staffers numbering 3,000 — with 2,200 of those journalists.

The survey, called the INN Index, also quantifies the frequent claim that these organizations, unburdened by paper, presses and home delivery, can devote a much higher share of the money they take in toward reporting and editing.  Two-thirds of resources go to editorial operations, according to the index, versus about 15 to 20 percent at a typical legacy newspaper.

That is a bit of a mixed blessing, however. INN has found that developing sites can hit a wall if they do add specialists at developing revenue streams like memberships and sponsored events.

Though still comparatively small, more than half of the organizations generated revenue of more than $500,000 in 2017 and a third topped more than $1 million. A 2015 INN survey found that fewer than a third hit the $500,000 mark and many were below $1 million.

Even as the organizations mature and continue to draw foundation support, the report suggests that there are several other areas for potential growth:

"Individual donors and particularly major donors are relatively undeveloped revenue sources for news nonprofits, making up one third of total revenue for the organizations in the INN Index. By comparison, individual donors provide more than 70 percent of revenue for all nonprofits across the U.S., according to Giving USA.

Earned revenue efforts also are nascent and show significant room for growth. With just 10 percent of revenue from fees and services on average, most news nonprofits lag the leaders in their own field and the charitable world overall in developing earned revenue streams."

The report is not a fully comprehensive look at the local digital media field.  Another organization  — Local Independent Online News — has a similar (and partly overlapping) group of  members, but includes many for-profit entities.

As 2018 proves an especially trying financial year in the legacy sector, studies like INN's, experimentation with business models and direct philanthropic support all seem to be picking up momentum.

Jesse Holcomb of Calvin College, formerly associate director of Pew Research's journalism division, published a big study just last week of the digital sites of 2,000 national and local news outlets for the the Tow Center for Digital Journalism.

Also last week, an effort to raise a $1 billion fund for local non-profit news growth headed by Elizabeth Green, CEO of Chalkbeat, and John Thornton, a venture capitalist who backed the launch of Texas Tribune, was announced.

In markets like Denver, where deep newsroom cuts slashed the newsroom staff of the Denver Post to 65 or so, there are both fresh start-ups and a move to measure the overall adequacy of local news resources rather than just the size of the newspaper and its sites.

The full INN survey includes detail that can help member sites compare themselves to others in terms of journalism ambition and revenue growth strategies. It establishes baseline numbers so that it can be repeated in future years and chart the growth of the sector.

Deep in the report, a weakness is identified. While most accommodate comments and some sample story suggestions with services like Hearken, efforts at audience engagement remain pretty basic. Data on "distributed use" of the journalism is often not tracked, and sites may lack the resources for any but the simplest promotion on social media.

The survey was primarily underwritten by The Democracy Fund and written by Holcomb and MIchele McLellan, who has been working in the nonprofit news field for more than a decade and has compiled her own list of such groups.

In an introduction to the Index, INN executive director and CEO Sue Cross describes the growing group of non-profit sites as "beacons of quality journalism."  The report itself concludes:

"These newsrooms and the news entrepreneurs who lead them have created a collective incubator for the future of public service journalism, finding new ways to share knowledge, include and engage people in civic life and strengthen our communities."

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Rick Edmonds is media business analyst for the Poynter Institute where he has done research and writing for the last fifteen years. His commentary on…
Rick Edmonds

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