In the current media landscape where online startups are looking to fill the void left by wilting traditional media, starting a business is only the beginning. Though first steps are important, many startups are starting to face problems in sustaining their enterprises. This is what a new study by the Renaissance Journalism Center seeks to understand. The study surveyed 32 media startups to see what challenges they are facing in terms of preserving and obtaining funds. What can we learn from these findings to help build sustainable journalism startups?
1. Be on the lookout for new sources of revenue
Most of the startups surveyed (71.9 percent) are non-profits that received initial funding in the form of foundation grants. But grants are more difficult to obtain for existing sites so many of the organizations are finding themselves short of resources. Foundations are more interested in funding new journalistic experiments, not helping existing ones survive. That means startups need to be resourceful: build relationships with local journalism experts from schools, trade organizations, and angel investor groups. Communicating with similar startups can encourage idea sharing about new streams of revenue.
2. Learn about advertising, marketing, business
The study showed that a typical management team is very experienced in journalism, but not so experienced when it comes to business, advertising, and marketing. Nevertheless, journalists still can be savvy business people. Building a diverse management team is one approach. Or hop on your kindle/head to a library. Who needs an MBA?
3. Have a business plan
Although almost 30 percent of those surveyed do not have a business plan, about 58 percent said that having a business plan helped attract funders and private donors. Fifty-three percent said that having a business plan was extremely helpful or very helpful to building a site. Who knows when you’ll bump into a potential investor at a conference or networking event—better give them a good reason to fund your endeavor. Having a business plan not only helps you stay on track, but can woo prospective financiers.
4. Seek potential funders, investors and banks
“Introductions to funders, investors, banks” ranked number one in helping an organization achieve sustainability. This is about long-term vision after receiving initial funding. Number two was “information about innovative revenue streams,” followed by “sharing of best practices.” There is no right way to go about achieving sustainability in the ever-evolving media world, and being open to new models and collaboration is a fruitful way forward. Out of all the organizations surveyed, 9.4 percent of them identified as “hybrid for-profit and non-profit.”
In a recent essay published in the Columbia Journalism Review, Tom McGeveran addresses the changing ways of money in journalism and the shift to non-profit funds. He writes, “What tends to be forgotten in all the praise for the philanthropic model is that big handouts can come with a price.” Money, no matter where it comes from, is tied to interests and agendas. A July study by Pew Research Center’s Project for Excellence in Journalism concluded that the most balanced, non-ideological sites had many funders and many revenue streams. And so, McGeveran stresses the importance of many small donors as opposed to big donors, be they for-profit or non-profit. “Lean operations of committed journalists, fiercely protective of their independence and eager for commercial success—but flexible in their planning and patient for growth—will create the next generation of quality journalism,” he writes. Losing that big chunk of initial grant funding may not be such a bad thing after all; with perseverance, it can lead to better journalism.