Thoughts on SustainabilityKCIC Bootcamp 2011<br />Ben Wirz<br />Director of Business Consulting<br />Knight  Foundation<br...
About Ben<br />Russia/Journalism/Investment Banking<br />Private Equity (11 Years)<br />Mgmt @ 2 start-up companies<br />B...
Trying to break 200 Twitter followers @bthewirz</li></ul>1<br />
Unless you push for sustainability, you are not ultimately helping to solve this problem.<br />2<br />The problem facing A...
Simplified News Business Model<br />3<br />Content Creation<br />Marketing & Distribution<br />Audience Engagement<br />Mi...
80’s Newspaper Revenue Model<br />Revenue<br />25% Subscriptions<br />75% Advertisement<br />Costs<br />15% Content Creati...
Mostly one-direction</li></ul>4<br />
But then along comes…<br />…the <br />internet<br />-Cost of distribution goes to 0<br />-Advertising divorces content<br ...
Online News Biz Model 1.0* (Approx.)<br />Revenue<br />Content Creation<br />Marketing & Distribution<br />Audience Engage...
Problems with Online News 1.0<br />Ad rates (CPMs) for traditional news are low.<br />Source:  “Lessons from the Trenches”...
Problems with Online News 1.0<br />2) Costs of creating news (particularly long form and investigative) are high<br />Samp...
In Online 1.0, only Big (10M+) and small (1-4 staff) are economic <br />9<br />Source: “The Story So Far”  2011, Columbia ...
Key Differences in Strategy<br />Small Strategy*<br />Big Strategy**<br />*eg Barista, Batavian, West Seattle Blog<br />10...
Sell ads on a non-CPM basis ($40-$1500/month)
Focus on short form local content
Keep staff minimal & productive (1-2 articles/day/staff member)
Keep CMS simple
Typical revenue of $50-100k
Market audience, not location
 Sell ads on CPM basis
Use technology/editorial to optimize content and drive engagement.
 Minimize costs by aggregating content and soliciting audience, advertiser content.
Tie reporter pay to page views.
Aggregate niche publications (eg AOL)</li></ul>**egHuffPo, Examiner, Demand Media<br />
Batavian – Revenue & Cost Strategy <br />11<br />Key Characteristics:<br /><ul><li>Minimal Cost Structure
Basic CMS
Non CPM Based Advertising
High Penetration
Based in Genessee County, NY, population ~60k
Founded in 2008, profitable by 2010
Upcoming SlideShare
Loading in...5
×

Thoughts on sustainability

744

Published on

Thoughts on challenges and approaches to making online news financially sustainable, focusing on nonprofit news organizations.

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
744
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
18
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide
  • Love and Guilt
  • -Note that the bulk of costs are now in content creation, put further pressure on traditional news.
  • Thoughts on sustainability

    1. 1. Thoughts on SustainabilityKCIC Bootcamp 2011<br />Ben Wirz<br />Director of Business Consulting<br />Knight Foundation<br />#kcsustain<br />The problem facing American journalism is not fundamentally an audience problem or a credibility problem. It is a revenue problem.<br />-Pew Project for Excellence in Journalism <br />
    2. 2. About Ben<br />Russia/Journalism/Investment Banking<br />Private Equity (11 Years)<br />Mgmt @ 2 start-up companies<br />Business Dvlt, Strategic Planning, Finance<br /><ul><li>Joined KF in 2010, focus on working with grantees on sustainability & growth challenges.
    3. 3. Trying to break 200 Twitter followers @bthewirz</li></ul>1<br />
    4. 4. Unless you push for sustainability, you are not ultimately helping to solve this problem.<br />2<br />The problem facing American journalism is not fundamentally an audience problem or a credibility problem. It is a revenue problem.<br />-Pew Project for Excellence in Journalism <br />$180M/yr invested in journalism by foundations 2007-2010<br />$1.6B/yr editorial cuts by legacy newspapers.<br />Source:”The Information Needs of Communities”, FCC, June 2011<br />
    5. 5. Simplified News Business Model<br />3<br />Content Creation<br />Marketing & Distribution<br />Audience Engagement<br />Mission/Brand<br />
    6. 6. 80’s Newspaper Revenue Model<br />Revenue<br />25% Subscriptions<br />75% Advertisement<br />Costs<br />15% Content Creation <br />75% Marketing & Distribution<br /><ul><li> High cost of distribution, natural geographic monopolies, limited audience choice & aggregated bundles of content
    7. 7. Mostly one-direction</li></ul>4<br />
    8. 8. But then along comes…<br />…the <br />internet<br />-Cost of distribution goes to 0<br />-Advertising divorces content<br /> -75% of online ads go to Google & FB<br />-Content is unbundled<br />5<br />
    9. 9. Online News Biz Model 1.0* (Approx.)<br />Revenue<br />Content Creation<br />Marketing & Distribution<br />Audience Engagement<br />0-10% Subscriptions<br />90-100% Advertisement<br />Content shared & aggregated<br />Social Sharing<br />Audience contributes content<br />Costs<br />60-70% Content Creation <br />10-20% Marketing & Distribution<br />*eg Salon, HuffPo, Alaska Dispatch, BaristaNet<br />6<br />
    10. 10. Problems with Online News 1.0<br />Ad rates (CPMs) for traditional news are low.<br />Source: “Lessons from the Trenches”, Salon Presentation, Nov. 2010<br />7<br />
    11. 11. Problems with Online News 1.0<br />2) Costs of creating news (particularly long form and investigative) are high<br />Sample Costs, released by Salon @ 5.5M monthly uniques & 45M PageViews<br />Versus RPM of $9<br />Source: “Lessons from the Trenches”, Salon Presentation, Nov. 2010<br />8<br />
    12. 12. In Online 1.0, only Big (10M+) and small (1-4 staff) are economic <br />9<br />Source: “The Story So Far” 2011, Columbia Journalism School<br />
    13. 13. Key Differences in Strategy<br />Small Strategy*<br />Big Strategy**<br />*eg Barista, Batavian, West Seattle Blog<br />10<br /><ul><li>Market location, not audience
    14. 14. Sell ads on a non-CPM basis ($40-$1500/month)
    15. 15. Focus on short form local content
    16. 16. Keep staff minimal & productive (1-2 articles/day/staff member)
    17. 17. Keep CMS simple
    18. 18. Typical revenue of $50-100k
    19. 19. Market audience, not location
    20. 20. Sell ads on CPM basis
    21. 21. Use technology/editorial to optimize content and drive engagement.
    22. 22. Minimize costs by aggregating content and soliciting audience, advertiser content.
    23. 23. Tie reporter pay to page views.
    24. 24. Aggregate niche publications (eg AOL)</li></ul>**egHuffPo, Examiner, Demand Media<br />
    25. 25. Batavian – Revenue & Cost Strategy <br />11<br />Key Characteristics:<br /><ul><li>Minimal Cost Structure
    26. 26. Basic CMS
    27. 27. Non CPM Based Advertising
    28. 28. High Penetration
    29. 29. Based in Genessee County, NY, population ~60k
    30. 30. Founded in 2008, profitable by 2010
    31. 31. ~$125k in revenue
    32. 32. 50k uniques/month & 500k pageviews
    33. 33. 2 person mgmt team + 2 part time staff.
    34. 34. 5 pieces of short form content added/day
    35. 35. 100 Advertisers
    36. 36. Advertisements priced at $40-260/month (effective RPM of $17).
    37. 37. All articles placed on home page
    38. 38. All 100 advertisers rotated equally across page.
    39. 39. Very Simple CMS
    40. 40. Daily Deals </li></ul>Source: “The Story So Far” 2011, Columbia Journalism School Study<br />
    41. 41. Online News Biz Strategies 1.5 (in process)<br />12<br />Content Creation<br />Marketing & Distribution<br />Audience Engagement<br />Mission/Brand<br />Different levels of sustainability requires rethinking each of these components to move beyond ads and subscriptions<br />
    42. 42. Most News Non Profits Only Monetize Mission/Brand.<br />Mission/Brand<br />13<br />RULE OF THUMB: Online Donations/Membership = $.30-$.80 per Monthly Unique Visitor (eg 1,000 monthly uniques ~ $500/year)<br />
    43. 43. A Few Are Also Monetizing Content<br />Mission/Brand<br />14<br />RULES OF THUMB: <br />1: Establish value early (invoice everyone, even if its free) <br />2: Syndicate with multiple partners (Reuters, Newscred, Digital Scirocco, AP, Kindle Singles, etc)<br />3: The more unique and/or analytical content is, the more valuable.<br />4. Aggregate/Share content from other sources to reduce your own costs <br />
    44. 44. Some have started to think strategically about audience.<br />15<br /><ul><li>Most Loyal visitors are a very small part of the overall audience
    45. 45. Fans make up 4% of visitors, but 55% of traffic
    46. 46. Fans are 38% more likely to donate than non-fans (per PBS)
    47. 47. Fans care about community and content and are looking for ways to participate online </li></li></ul><li>Key: Build a Community, Not a Portal<br />16<br />Note: Technologies to drive engagement are getting cheaper and can be used, increasingly, by smaller sites.<br />Check out: Parse.ly, Outbrain, Envolve, Double Recall,<br />OnePass, Press+ <br />
    48. 48. Monetizing Audience is still an open question<br />Mission/Brand<br />17<br />RULE OF THUMB: Pay metering (flexible pay walls) are NOT about making everyone pay for content, they are about identifying and isolating fans and enthusiasts and engaging them around their enthusiasm for the site. <br />RULE OF THUMB: Advertising not CPM based “The advertisers on our site are not doing it because they expect click-throughs and new customers; rather, they look at it as being a good civic-minded organization.” –GablesHomePage<br />
    49. 49. A handful are looking to leverage marketing/distribution capabilities<br />18<br /><ul><li>The Civic Commons
    50. 50. St. Louis Beacon
    51. 51. Oakland Local (for profit)</li></ul>The Civic Commons is more than just an online engagement platform. We work closely with stakeholders in the community to give as many citizens as possible a voice in the process. The Flats project is no different. We are conducting engagement activities at various locations in the Flats and conducting community meetings to engage residents, property owners and organizations in the Flats community.<br />
    52. 52. How to Figure It Out (Overview)<br />Start by monetizing the aspect of your organization where you think that you create the most value.<br />Integrate monetization efforts with the process of content creation, distribution and audience engagement.<br />Copy as much as possible from organizations that you think have a model that makes sense for you.<br />Practice some strategic “Revenue Promiscuity” <br />Think about trying at least one monetization technique from each bucket.<br />As much as possible, measure your success/failure in each of your monetization efforts<br />19<br />
    53. 53. Think of yourself as a startup (or Plato)<br />Accept that you don’t know.<br />Set out explicitly to figure it out.<br />Do not ignore the problem.<br />Stay lean.<br />20<br />A startup is an organization formed to search for a repeatable and scalable business model.<br />-Steve Blank.<br />
    54. 54. Expect to Solve Challenges through Testing & Iteration (like Aristotle)<br />Startups have problems in 3 key areas:<br /><ul><li>Management: Set Priorities, Define Key Metrics
    55. 55. Product: Build “Right” Features. Measure, Iterate.
    56. 56. Marketing: Distribution, Distribution, Distribution.</li></ul>(Search, Social, Mobile)<br />SOURCE: DAVE MCCLURE, 500 Startups, Metrics4Pirates Presentation, June 2011<br />
    57. 57. Postulate a Value Proposition<br />Who is your customer? <br /> A) The person whose life you’re trying to change<br />What are you offering that will make their lives better?<br />What minimum viable product will test this value proposition?<br />How will you know if customer’s life is better?<br />22<br />
    58. 58. What is Minimum Viable Product (MVP?<br />MVP = F(Customer, Problem, Time or $$$)<br />Focus on CUSTOMER<br />Qualitative Discovery, Quantitative Validation<br />Get to know habits, problems, desires (FUN MATTERS)<br />what causes pain?  what causes pleasure? <br />Define 1-5 TESTABLE Conversion Metrics of Value<br />Attention/Usage (session time, clicks)<br />Customer Data (email, connect, profile)<br /><ul><li>Revenue (direct or indirect)
    59. 59. Retention (visits over time, cohort behavior)
    60. 60. Referral (users evangelize to other users)</li></ul>Note: Paid Solutions drive FOCUS (& pay rent) <br />SOURCE: DAVE MCCLURE, 500 Startups, Metrics4Pirates Presentation, June 2011<br />
    61. 61. To test MVP, First Make Assumptions Explicit<br />24<br />How many monthly uniques/page views will you have<br />What % of readers will donate?<br />What % of registered readers will donate?<br />How many registered users will you need?<br />Is this realistic? <br />What % of target audience does this imply?<br />What growth rate will that require in registered users<br />What % of non registered readers will donate<br />How many non registered readers will you need<br />What growth rate will that require<br />What will average donation size be <br />Registered vs. Unregistered<br />Monthly/Annual/One-time<br />
    62. 62. Boil down assumptions to 5-7 key Metrics that you can measure<br />Seven metrics that matter: <br />Acquisition: (rate of gaining new users) <br />Engagement: (how deeply are you engaging users)<br />Virality: (new customers coming from existing customers)<br />Monetization: (% of total users participating in the business)<br />Churn: (loss of existing users)<br />Lifetime customer value (projected monetization returns by class of customers)<br />Program Productive (Yield on promotional activities, both paid and viral)<br />Source: Escape Velocity, Geoffrey Moore (2011)<br />
    63. 63. Launch early, iterate often<br />26<br />Today<br />Launch<br />Current Funding Horizon<br />Current Funding Horizon<br />2nd Iteration<br />etc<br />1st Iteration<br />Alpha<br />
    64. 64. Look for Product/Market Fit<br />PMF = F(Customer, Solution, Alternatives*)<br />Product / Market Fit occurs when:<br />Customers like your stuff better than other options<br />Not static, Not optimal – just Local Max 4 F(customers, solution, time)<br />make sure you’re moving in optimal direction 2 local max<br />Q: what competitive solutions are available? <br />… that your customers know about?<br />how are you diff/same?  <br />in ways that people care about? (will pay for)<br />KILL a FEATURE regularly (or rotate 1% tests)<br />Q: what is MOST $ cust pay 4 LEAST func MVP relative 2 BEST alt?<br />NICHE 2 WIN: RE-define cust + DIFFerentiated features<br />SOURCE: DAVE MCCLURE, 500 Startups, Metrics4Pirates Presentation, June 2011<br />
    65. 65. Develop a marketing strategy based on what customers are doing<br />Q: What channels? Which users? Why?<br />A: High Volume (#), Low Cost ($), High Conv (%)<br />Design & Test Multiple Marketing Channels + Campaigns<br />Select & Focus on Best-Performing Channels & Themes<br />Optimize for conversion to target CTAs, not just site/landing page<br />Match/Drive channel cost to/below revenue potential<br />Low-Hanging Fruit: <br />Blogs<br />SEO/SEM<br />Landing Pages<br />Automated Emails<br />SOURCE: DAVE MCCLURE, 500 Startups, Metrics4Pirates Presentation, June 2011<br />
    66. 66. Outcomes (from Best to Worst)<br />29<br />Success<br />Failure (allows for better resource allocation)<br />??? Not Sure<br />Be sure you know what success & failure look like!<br />This is more difficult in a nonprofit context.<br />
    1. A particular slide catching your eye?

      Clipping is a handy way to collect important slides you want to go back to later.

    ×