Funding local news: Who are you going to serve?

It’s one of those stories founding LION members tell over whiskey, gin, and beer every time we gather: The first Block-By-Block conference, organized by Michele McLellan, brought together a wide array of local news publishers and aspiring local news publishers. At an open discussion on the first afternoon, one person stood up and said, “can’t we all just agree right now that advertising is evil?”

My response then is much like it is now: selling advertising is as much a part of serving your community as writing news. Small business owners need our support just as much as any other segment of our communities. Selling advertising, far from being evil, is a noble endeavor.

But some journalists turned publishers continue to struggle with the idea that it’s OK to sell advertising. Reader revenue — through memberships or subscriptions — is seen, for some reason, as untainted.

But as Bob Dylan explained, “You’re going to have to serve somebody.

Whether your primary source of revenue is a journalism foundation, well-heeled residents supporting your non-profit, teachers and accountants buying subscriptions, or pizza shop owners and real estate agents buying ads, or targetted Google Ads, you are going to find yourself shaping your coverage to serve the needs of your funding sources. Journalism foundations have their special interests they’re trying to promote, local donors have are only with you as long as they think you’re meeting their needs, and even readers can operate with a hive mind that will help bend your perception of what you should prioritize.

There is no ethically pure revenue stream whether you’re a for-profit or a non-profit.

One point I made about advertising in Chicago is if you have dozens local businesses supporting your coverage no one business owner is going to control your coverage.

At The Batavian, our policy for coverage of local business is we have no hesitancy to cover a small businesses’ “happy story” — grand opening, milestone anniversary, or significant expansion. This too is part of serving a community. In fact, some of our most popular stories are about new restaurants opening. If you’re giving readers the information they need to enhance their lives, aren’t you doing the ethical thing?

The flip side is, we will also cover the less pleasant news that befalls a small business or its owners. There have been a handful of local business owners in Batavia arrested over the past 12 years. On three occasions we’ve lost ad accounts because we published the arrest report of the business owner as a part of our police blotter. Last year a friend called and gave me a heads up that one of our larger advertisers had been arrested and it might be wise not to publish his arrest. “Nope,” I said, “we’ve got to publish it.” No fear. No favor. The first time we get caught shading coverage for an advertiser we jeopardize our credibility. (We published the arrest and lost the account).

We can afford to take the high ground because losing any single advertiser isn’t going to put us out of business. A wide array of small businesses supporting us, with their diverse and competing interests is the invisible hand that keeps us on the ethically straight path.

When you’re serving advertisers you’re also serving readers because if can’t attract and retain readers you won’t have advertisers. The diverse and competing interests of readers and advertisers are, again, the invisible hand at work. Of all the single-source revenue streams, advertising is the least ethically compromised.

I often wonder about the ethical compromises non-profits might need to make to keep two or three major funders happy. News sites supported by dozens of advertisers need not make those compromises.

The best way to fund journalism is the method newspapers have traditionally employed: With multiple revenue streams. The long-standing struggle of The Batavian, a bootstrapped operation, has been to find a revenue stream that isn’t retail advertising. We only we could have funded some of our better ideas … and, as I’ve said before, one of the bigness mistakes we made early on was not starting with a membership or subscription option.

Still not convinced? Look at it this way: If you succeed wildly with subscription, generate, for example, $250,000 in reader revenue, you can afford to hire X number of people. What if you added to that revenue stream another $250,000 in advertising. Now you can afford to hire X + Y number of people. And it’s a good bet, you will be in a position to hire people who can help you generate even more revenue, which means employing X + Y + Z members of your community.

I don’t understand new publishers, whether profit or non-profit, who forgo advertising. Generating reader revenue sufficient to support a modest news organization at the local level is far from a proven model. It’s a long, hard slog to build a subscription revenue stream. Local advertising? Slam dunk. If you’re serving a small business community with enough locally owned businesses, selling ads is the obvious path to supporting yourself and a small staff, at a minimum. Some LION publishers have done even better than that on advertising alone.

You’ve got to serve somebody. If you’re doing local publishing right you serve both readers and small business owners in your community. You sell advertising.

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