Why newsrooms pursue membership when it's a fraction of their revenue

The Guardian began in 1821 as a broadsheet newspaper in Manchester, and it didn’t financially depend on readers until 2017, when its reader revenue surpassed that of advertising — in no small part thanks to its relatively new membership program. De Correspondent launched in 2013 as a record-breaking crowdfunding campaign focused on recruiting members before the ad-free site ever even produced its first article. In between, and beyond, these examples, there are countless forms of membership — mirroring the variety of news organizations that members help to support.

In studying journalism membership models for the past eight months, one of our New York University-based team’s biggest takeaways has been the sheer variety of forms that membership can take throughout the news industry. We initially thought we’d be able to simply map a few types, but the reality is much more detailed. Successful membership programs can be “thick” or “thin” in terms of the levels of journalist + supporter interactions they offer (or, more often, they have some thick aspects and some thin aspects). They can serve a geographic population or an interest-based one. They can make up an infinitesimal fraction of an organization’s revenue or wholly fund a publication (though, as we noted in the recent Guide to Audience Revenue and Engagement, the latter category currently describes only a handful of sites worldwide).

In this vast diversity, here are the two throughlines we’ve found:

1. Membership is always seen as a source of revenue that connects directly to and strengthens an organization’s mission.

2. Membership is usually an attempt — often one among many — to diversify an organization’s revenue.

Below and in our next post, we offer a glimpse at some of the ways we’ve seen robust membership vary across sites — in the overall budget breakdown of organizations, in how membership plays a part of various business models, and in how membership strengthens organizations’ individual missions.

GONZALO DEL PEON

Research Assistant
@gonzalodelpeon

Membership as a fraction of revenue

In most of the organizations we have studied, membership accounts for a small percentage of revenue. We estimate that news organizations receiving 10 percent or less of their revenue from members make up the biggest group of news orgs in the membership space. So why do so many newsrooms pursue membership even when it only modestly contributes to their bottom line, at least in the immediate term?

The Lens, a nonprofit newsroom that covers the New Orleans, Louisiana, area, is one such organization. Member contributions made up slightly under 10 percent of The Lens’ revenue in 2016 and were projected to bring in just over 10 percent of total revenue in 2017. But The Lens has seen striking growth in its membership program in recent years: the dollar amount and revenue percentage coming from members have each tripled since 2014, when membership made up about 3 percent of revenue.

Like many nonprofit newsrooms, The Lens counts on foundations and grants for the majority of its budget, and individual contributions have always accounted for a small portion of its funding. This funding structure has largely been a function of the community that The Lens serves, said co-founder Karen Gadbois. “It’s a low-income community — we’re not in San Francisco. We’re not exactly tapping into a large philanthropic pool here,” she said, noting that about 20 members give less than $8 per month, with some members giving as little as around $2 per month.

Despite the fact that members alone don’t sustain the site financially, membership and reader contributions have always been central to the site since its founding in 2009. “It's always important to have buy-in literally and figuratively from readers. I see us as a community project,” said Karen, who was (and still is) a textile artist and had no journalistic experience prior to founding The Lens. “It has always been important for credibility’s sake to get people behind us and be a part of what we do. Whether it's news tips, whether it's money, whether it's credibility in communities that we may not actually be a part of. Bringing people on is important to us.”

Rather than being founded by journalists and growing directly out of legacy newsroom cuts, in the way many local nonprofit newsrooms around the country have launched, The Lens emerged from the aftermath of “an unnatural disaster,” Karen said, referring to Hurricane Katrina. Karen herself started reporting on local land use planning in the rebuilding process post-Katrina, and The Lens emerged from there, reporting on various topics that Karen and her growing team saw as under-covered by other media. “I saw [The Lens] as a tool for citizen engagement,” Karen said. “Therefore the reader has always been challenged to be engaged.”

The membership program grew with the The Lens’ 2011 hiring of development director Anne Mueller. Anne turned a small operation that was open to the occasional donor into a more formalized membership program with tiers and established member perks including member events, newsletters, and recognition on the site. Membership revenue has grown by more than 60% since 2016, when The Lens joined the News Revenue Hub, which helped the organization with a “membership backend,” including payment processing and Salesforce as a CRM tool.

The Lens presents its speakers bureau as a “community service to bridge the gap between our readers and our coverage.” As the site has had an increased presence in New Orleans, Anne said The Lens is “able to add another dimension to [communities’] understanding of who were are, what we do, why The Lens is relevant and why we need their support.”

Foundations have continuously buoyed The Lens, and as it has matured as a nonprofit, grant funders have asked that The Lens diversify its earned revenue. In addition to formalizing membership, this also took the form of growing its sponsorship and events operations, and building an internal speakers bureau in 2014 to represent and promote its reporters and editors to speak locally and nationally at conferences, companies, other nonprofits, community organizations or other media.

The Lens offers sponsored workshops on public records requests, which have often been standing-room-only events, and regular member “coffee office hours” where members can stop by early in the morning to talk with the newsroom and give feedback and tips. The speakers bureau and events generate a small but steady stream of income, but Karen said they’re still vital to the work The Lens does.

“Any time we go out into the public and present what we do, we generate trust and buy-in for the mission. Especially in news, trust is a rare commodity,” Karen said. “We value that as much as we value the money that comes in — just giving people the opportunity to sit down with us face to face and discuss the topics that are a high priority for them. It's a high priority for us.”

Membership as a significant, but still minority, percentage of revenue

As far as membership for digital-first publications goes, The Tyee’s membership program is ancient, having been around since 2009 (six years after the publication was founded in 2003). The Canadian online news magazine’s members, called Tyee Builders, currently contribute about 37% of the publication’s revenue, according to The Tyee’s chief revenue officer Jeanette Ageson. The Tyee exemplifies how we have seen many news organizations start membership programs and grow them organically to have them become an increasingly larger portion of the pie — both in terms of revenue and in membership’s importance to the organization’s work.

When Jeanette began in her role in 2014, the Tyee Builders program made up 10% of revenue. Jeanette grew the program to surpass a third of the site’s funding mainly through a series of campaigns and constant communication with supporters.

Fundraising efforts at The Tyee have traditionally been most successful when they’re tied directly to the site’s work (something we’ve repeatedly seen at other organizations including The Guardian and Mother Jones, which have found that membership and fundraising appeals are most effective when they come from and connect to their best and most impactful journalism). The Tyee’s membership campaigns are specifically tied to topics such as special election coverage or a province-wide education investigation. Each time a reader becomes a Tyee Builder, they’re asked to select which topics they would most like to support, providing members with a voice from the get-go and the staff with guidance on what members want to see covered and what prompts them to give.

The Tyee asks new members to say which topics they most support through a “news priority survey.”

Jeanette also attributes membership growth to a deliberate communication strategy she has implemented at the site. Raising money and converting readers to members is only the first step, she said. The rest of the process is about maintaining a relationship with members and demonstrating exactly how their support makes The Tyee’s work possible. Jeanette said, “People know that you are going to do what you say you'll do with their money, not just treat them like an ATM and take off. It's about maintaining a relationship: saying thank you and articulating the value we produce.”

The Tyee is also funded by sponsored and ticketed events, advertising, ongoing investment from its owners, and its education program, The Tyee’s Master Classes. Events and advertising make up about 20% of revenue, while investment makes up 40%.

While the digital advertising market is increasingly competitive for news sites, The Tyee has used its public-service-journalism-centered brand to establish solid relationships with a slew of “values-based” local advertisers, like arts organizations, nonprofits, and “people who want to reach ethical purchasers,” Jeanette said.

The Master Classes — a longstanding education initiative at The Tyee originally inspired by The Guardian’s similar program, and since undertaken by organizations like The New York Times — are held in two “seasons” each year during the fall and spring. Classes are taught by Tyee staff, as well as what Jeanette calls people “in the Tyee universe” — made up of its community of supporters.

Classes are currently mostly held as webinars, and topics vary widely. Recent class topics have included photography, investigative reporting, community organizing, public relations, and data visualization. Classes are mostly targeted toward The Tyee’s community of supporters, but the site sometimes takes a B2B approach and sells Master Classes packages to companies as skill-building opportunities for their employees.

Although Master Classes generally bring in less than 1% of The Tyee’s revenue, they’re ultimately seen as a community-building initiative that can capture value and some revenue from the staff’s and community’s skills. They have also become central to how The Tyee differentiates itself and relates to many of its core supporters. “It’s a nice time to have some face time digitally with our readers and bring them in a little bit closer, and have a different relationship with them than a normal newspaper would,” Jeanette said.

Jeanette’s current focus is growing the Tyee Builders program. “It's just such a nice, direct relationship — it's very simple. It's essentially going to our readers and saying, ‘Do you want this to exist, yes or no? Okay, can you give us 5 bucks a month so that we can keep doing it?’”

Membership, Jeanette said, “really gives you the license and the responsibility to stay true to your mission and just deliver on what you said you would do, while knowing that you're backed by people who value your work.”

Jeanette hopes to keep growing the Tyee Builders program and would like for membership to soon comprise about 45% of funding. “Ideally, we'd be majority member-funded,” she said. But like all news organizations, the program’s growth is limited by resource constraints. Growing membership is resource-intensive, and putting more resources into membership directly would mean pulling resources from the newsroom that might otherwise be spent on reporting. “It's really tough with a small organization to take a chunk of money out of the budget, because that means that there's less reporting happening, and that's what people come to us for,” Jeanette said. “You always risk degrading the product if you take more money out of editorial and put it into business.” For The Tyee, as for many organizations, membership is an ongoing balancing act — one that is made easier by the fact that membership at The Tyee is closely tied to the newsroom.

Although The Lens and The Tyee are just two examples in the growing membership space in news, they are both great examples of how membership can be a small, but helpful, driver of revenue, while still being worthwhile to better serve news organizations’ communities and missions. In our next post, we continue to explore the continuum of what membership can look like with sites where membership accounts for the majority of revenue, and sites that are launching membership and aiming high.

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Emily Goligoski, Jessica Best, and Leon Postma contributed to this post.