May 17, 2022

The 12-year-old news site learned that ‘sometimes you can get more just by asking.’

It is axiomatic that digital startups, besides valuable journalism, need to find a sustainable mix of revenue. For those relying on paid subscriptions, Mary Walter-Brown, CEO of the News Revenue Hub, has a message: “Sometimes you can get more just by asking.”

Case in point: Honolulu Civil Beat, an early startup dating to 2010, launched by eBay billionaire co-founder Pierre Omidyar. As a philanthropist, Omidyar wanted sponsored organizations to become self-sustaining businesses, even those offering the public service of a serious news alternative to shrinking commercial newspapers.

So Civil Beat went with a paywall and $19.95-a-month subscriptions. After emphasizing dialogue in discussion chains after each story, layering in events and other membership benefits, making the paywall more porous, and dropping the price to $4.99 a month, Civil Beat still found itself with only a few more than 1,000 paying subscribers in 2016.

Enter Walter-Brown. As publisher and chief operating officer of Voice of San Diego, a successful even-earlier local startup, she had already been volunteering advice. She flipped that into the News Revenue Hub, a nonprofit business, and made Civil Beat one of her first five clients.

In a white paper released Tuesday, the Hub argues that “just asking” proved the better course. Civil Beat has parlayed that with a strong newsletter and an expanded series of events to achieve fast growth.

Ben Nishimoto, Civil Beat’s vice president of operations and philanthropy. told me that the great majority of the 1,000 subscribers were converted to donors and, on average, doubled what they had been paying. The turnaround has been gradual rather than instantaneous. Civil Beat has worked up to 35-40% revenues “without Pierre” in 2021, Nishimoto said, and is on course to only 50% reliance on his philanthropy.

Markers of big progress are already there. The number of donors will be between 7,200 and 7,400 in 2022, he said, with another 25 to 30 foundation donors. Civil Beat’s revenues will rise this year from $1.8 million to $2 million with a total budget of about $5 million and a staff of 28.

Nishimoto came to the job after time as an advancement officer at PBS Hawaii. He didn’t need convincing that the public media model would fit the publishing nonprofit. It offered escape from a transactional approach to audiences, instead soliciting and acknowledging their help. (The Guardian has had success on a huge scale, keeping its content free and developing more than a million donors.)

Longtime editor Patti Epler, who succeeded original editor John Temple, has kept Civil Beat’s content mix consistent through all 12 years.

Like other early startups, Civil Beat purposely broke with the something-for-everyone approach of newspapers. No national news, no daily sports results, no advice columns. Instead it promised to focus on five topics: Honolulu, the state of Hawaii (politics and policy issues in both instances), education, land and money.

Tuesday’s lead story on the site touched on several of those themes and was headlined “This Stunning Big Island Valley Is Drawing Bigger Crowds — And Controversy,” with a subhed explaining, “Concerns about public safety and disrespect of cultural sites and private property are mounting, but so far a workable solution has been elusive.”

Part of the 2016 transition was strategic for Civil Beat, crafting and refining the right sort of message to potential donors (as The Guardian has done).

But there is a “science and tech” tactical side as well. That’s where the News Revenue Hub comes in. Walter-Brown does not care for the term “vendor,” but the Hub does charge clients. That makes up 60% of its revenue, the other 40% from funders like the Knight Foundation and the Google News Initiative.

The Hub provides something analogous to what Mather Economics does in the for-profit sector with newspapers that are trying to build a paid digital audience — a series of tested strategies along with benchmarks built off shared data from a pool of clients.

Its own growth curve since a 2016 start is impressive — now up to 70 newsroom clients and 20 employees.

During her years at Voice of San Diego, Walter-Brown developed a model — 25% small donors, 25% larger local donors, 25% institutional giving and 25% ads and sponsorships.

“We found out the hard way about overreliance” on big-ticket donors, Walter-Brown said, when one of two lead funders pulled out “and we had to pivot in a hurry.”

In her view, “membership is the North Star; it’s the calling card for everything else.” It sends the message to bigger donors that the publication “provides something worthwhile” that people pay for voluntarily.

The operational side of success also requires a specific tech stack, she said, and the Hub asks potential clients to complete an eight-week onboarding process before they are accepted. Once in, they are free to compare notes with others in a Slack channel.

Walter-Brown said that the Hub has found its approach works “surprisingly the same across the board” — at smaller and larger startups, rural or big-city.

What are the most common mistakes? “Not asking, not asking often enough, not having an easy ‘press the button and donate’ feature.”

My takeaway is twofold: As digital startups have grown from a niche to a mini-industry, a variety of support groups have sprung up. The Institute for Nonprofit News, Local Independent Online News and the Local Media Association all provide general business support and pooled legal or accounting tools a small organization could not afford.

The Revenue Hub goes a bit narrower, but the devil is in such details. They explain the difference from other groups as “all of the services the Hub provides end with a $.”

More broadly, as I wrote recently, a fork in the road seems to be developing between projects like the portfolio of the American Journalism Project, whose 30-plus member sites all offer their main content for free, and others like The Baltimore Banner, which expects half of its revenue ultimately to come from paid subscriptions.

Early days still, however, to say whether one of those models will definitively prove superior. Maybe either can work. Or a third option, which cultivates both kinds of reader revenue, can too.

This article was updated to clarify Civil Beat’s revenues vs. budget. 

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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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