In 2015, German neuroscientists Han Langeslag and Maren Urner were exploring ways to launch an expert-focused, solutions-oriented site. Han and Maren had limited experience in journalism but identified a disconnect between how academics talked about societal problems — including possible solutions — and how journalists framed these same problems, often with less optimism. They first explored traditional startup funding avenues, including courting investors. “But we quickly figured out that membership would be the best way of doing it,” Han said. “Our responsibility would be to the readers — they would be the ones carrying this project forward.”
After a few months and a successful crowdfunding campaign that brought in 12,000 founding members, Perspective Daily was born as a kind of site rare in the news industry — one solely funded by its members.
In part one of this discussion on the variety of membership as a portion of revenue, we looked at sites with missions, communities and business models that call for them to have membership programs that are small relative to their cost structure. What about the handful of sites that are mostly dependent on membership?
When it comes to the portion of news organizations’ revenue that comes from members, the influence of organizational culture can’t be overstated. It’s no surprise that organizations that were founded with membership baked in at their core are largely, and seemingly most easily, dependent on member support. If your organization wants to grow membership and you don’t have access to a time machine to launch your site again from the start, don’t fear (but do know the work that’s involved). There are important lessons to be learned from sites that mostly depend on their members, and from those that are starting membership from scratch but aiming to become member-focused.
GONZALO DEL PEON
Research Assistant
@gonzalodelpeon
Membership as a majority of revenue
Membership is often a supplementary means for operating capital for news sites. Perspective Daily — a Münster-based German news startup focused on constructive journalism (journalism focused on presenting solutions to the problems being covered) — faces the opposite challenge of most member-funded sites: a little over a year since it launched, it has been 100% funded by its members, and the site is actively exploring ways to diversify its revenue for stability and to help further fund future growth.
“We knew lots of academics who are doing really cool things to make the world a better place and had all these ideas that could explain things in society much better than the day-to-day news,” Han said. “I learned much more from public talks [in academia] than from the standard news.”
After their successful crowdfunding campaign, the site launched in 2016 and publishes only one in-depth piece daily (which helps the site meet its mission of giving experts the time and space to explain issues in an in-depth way). Perspective Daily is premised on the fact that its staff and contributors — which include neuroscientists, physicists, lawyers, Islamic scholars and Germanists — are experts in the topics they cover, and they all focus on constructive journalism.
Being member-focused from the beginning and depending on a crowdfunding campaign to launch was beneficial to the site because it allowed the founders to shape Perspective Daily from the ground-up into what prospective members felt that they needed in their news diets. The public response to the crowdfunding campaign reinforced their desire to deliver constructive journalism and be expert-focused.
During the campaign and in the early days of the site, Han was bracing himself for criticism and people questioning why non-journalists were starting a news site. “But it’s mostly been people writing to us [to say] ‘you always give me more hope during the day,’ and, ‘I feel that I just need your bit of information, and that's fine for the day, instead of being overloaded with information," Han said. Starting out with membership at its core has also allowed the site to have an organic, robust community. Members, who are able to share articles in an unlimited capacity with non-members, have built an active community through discussions in the site’s comments section.
Although the site has been successful in its first year, Han admits that being 100% reliant on member revenue has limited the site’s growth. The site launched with its 12,000 founding members and currently has about 13,000 members, Han said. Before the launch of the site, the founders optimistically projected the number of members to double in three years. Within the first few months, projections had to be adjusted. “However, right now we are pretty much hitting our targets for the past year and we are working hard to see where else we can find growth,” Han said. “Most of the growth right now still comes from member recommendations. While it’s the best way to gain loyal members, it is also the most difficult growth to control.”
To finance future growth and become increasingly sustainable, Han, Maren, and their team are currently exploring ways to diversify Perspective Daily’s revenue, and expect to announce new initiatives in the coming months. Han said that although the team is currently exploring various other revenue and growth opportunities, they are certain that they will remain majority member-funded. “There's this freedom that we think is made possible only if you are financed by members.”
When Dutch journalists Rob Wijnberg and Ernst-Jan Pfauth were employed by newspapers, they became acutely aware of how a business model dependent on advertising didn’t serve the journalism their publications put out into the world. “Even if you say there is a Chinese wall between editorial and commercial, the two still sometimes influence each other” to the detriment of the journalism itself, Ernst said.
When Ernst and Rob set out to co-found their own publication in 2013, they knew they wanted it to be ad-free and funded by their readers. Almost five years later, De Correspondent has 60,000 paying members and has become a much-lauded example of a member-funded digital news publication. (The site is a founding partner of the Membership Puzzle Project, and you can read more about their members’ motivations for supporting the site.)
De Correspondent’s success as a for-profit endeavor depends largely on members, and as the company grows and its business model evolves, it’s recalibrating to keep its members and mission at the center of everything it does.
Currently, 68% of De Correspondent’s revenue comes from memberships. Its internal book publishing business accounts for 14%, foundation grants make up 10%, its speakers agency is 5%, voluntary donations are 2%, and 1% of revenue comes from events and the syndication of their work.
Given that De Correspondent emerged from a crowdfunding campaign, it began with 100% of its revenue coming from members and has since diversified. “The revenue we get from memberships is growing in absolute numbers, but proportionally it's getting smaller,” Ernst, who is De Correspondent’s CEO, said.
Ernst described De Correspondent’s revenue diversification as “intuitive” rather than planned. The site’s book publishing business began in 2014 when one correspondent, Rutger Bregman, asked if he could write a book based on his reporting for the site on universal basic income. “We said, ‘well of course it's okay. But please write it for us, because we can sell directly to our members,’” Ernst said.
The site has now published five books (with a sixth on the way) — on subjects ranging from privacy to employee burnout — all of them best-sellers in the Netherlands. The internal speakers bureau emerged in the same organic way, with the company realizing that more and more correspondents were being asked to speak at conferences or to companies, and that an agency for correspondents’ speaking engagements could be a viable revenue stream.
But 2018 is bringing a shift to De Correspondent’s revenue model: they’re planning on scaling back on their supplementary revenue streams and focusing more deeply on memberships and book publishing.
“You can say that the speaking agency, for example, is in some ways too successful,” Rob, who is the site’s editor-in-chief, explained. “We had a lot of requests for correspondents to speak everywhere — so many that it distracted them too much from writing stories, doing research, working together. For some Correspondents, speaking became almost like a full-time job, which was not the idea.”
Rob Wijnberg, editor-in-chief of De Correspondent. Photo courtesy of Bas Losekoot
De Correspondent will still have a speakers agency and hold events, but they’re recalibrating how these parts of their business fit with their mission and ideal business model. The speakers agency will be more embedded into the newsroom and will focus on finding speaking engagements that align with correspondents’ beats and help them as journalists, “to reach a certain network or to get more knowledge out of a conference,” Ernst said.
When it comes to events, the company frequently sells them out and overall breaks even. “But organizing events is basically like running a second company,” Ernst said. “We’d rather invest those resources in something that benefits 60,000 members or millions of readers.”
In contrast, Ernst and Rob see book publishing as a revenue stream to continue to grow alongside the site’s membership. “Books [fit into] the same journalistic mission because it introduces our journalism to a lot of new people,” Ernst said.
Editorially, books are a product of work done for the site, as all of the books that De Correspondent publishes emerge from work that correspondents already publish on the platform. “You could say we publish twice. In articles as shorter stories on the platform, and then in a book as well,” Rob said.
Revenue-wise, the book business has paid off — it’s grown from 4% of the company’s revenue just a couple years ago to 14% today, with over 100,000 books sold. “Book publishing leads to more visibility for De Correspondent, but also to better content,” Ernst said. “It's a great way for us to promote the journalism, and we also see it as a good form of journalism itself.” And, Ernst added, because the publishing business is internal, De Correspondent doesn’t have to pay a percentage to an external publisher.
It also helps that members have helped to propel each published book to national best-seller lists. “That's the secret sauce,” Rob said. “Because we already have readers that buy books from us, once they hit the bookstores, we’ve already sold a few thousand. We automatically end up in all those top 10 bestseller lists.”
These business model shifts aim to align the entire company with its core: its members and its journalism. This is also reflected in shifts to De Correspondent’s internal editorial process and the deeper integration of all parts of the site.
Correspondents are now expected to regularly meet with the speakers agency, the book editor, the social media team, and the conversations editor, a position added in 2018 to help correspondents make the most out of conversations between members, experts and correspondents on the platform, all to strengthen the journalism.
“If a correspondent says ‘I'm going to write about healthcare bureaucracy and I want to talk to more hospital managers,’ the speakers agency could see if there are any hospital conferences coming up, reach out to those organizations, and ask if they need a speaker,” Ernst said. Similarly, the book editor will keep an eye out for when a series has book potential, and the social media team and conversation editor will ensure that members and wider readers can add to the journalism whenever possible.
This integration between departments and the shifting of revenue sources all ultimately aims to better serve readers. “We just want to completely focus on readers,” Ernst said. “And to really turn journalism into a service that adds value to their daily lives.”
Starting from scratch and aiming high
Two successful for-profit news startups, Discourse Media in Canada and Spirited Media in the US, have been rapidly experimenting with different business models in their short lifespans. They’re now both placing high hopes on new membership programs to fund their reporting and better serve their respective communities.
Erin Millar co-founded Discourse Media in 2014 because she felt that the established business model for journalism didn’t ultimately serve communities or public service reporting. As an experienced education reporter, she had long felt the conflict inherent in an ad-based business model to fund reporting. “All the work I was doing, I felt like I was just being pushed, and pushed, and pushed to get vanity metrics that advertisers favor,” she said. “I was serving them.”
Erin, who is now Discourse’s editor-in-chief, and her co-founders started Discourse as a vehicle for in-depth reporting on complex societal issues — ranging from education to the environment to Indigenous issues — removed from the daily news cycle.
Mission-aligned revenue experimentation has been at the core of Discourse since its inception. Erin and her team have experimented with media commissions, workshops, events, intelligence products, crowdfunding, and sponsored content. In experimenting and tweaking their business model, the one constant has been having all revenue streams align with their mission to advance the public discourse in Canada, Erin said. “Everything that we make money from has to do that. That's our biggest test. I do think that our intelligence products can do that. Our event products can do that. Some of the sponsored content did not do that.”
“We have three values that anything we do has to pass through,” Erin explained. “Number one is it reveals a hidden truth. Number two is that it breaks down complexity. Number three, is that it inspires action or shows you something that you could do — being constructive.”
Most of Discourse’s revenue so far has come from what Erin calls “collaborative media campaigns,” or sponsored partnerships with nonprofits, foundations and corporate social responsibility arms to fund in-depth reporting on certain issues (which must respect Discourse’s editorial independence). These partnerships plus funding from foundation grants have made up roughly 75% of Discourse’s revenue in its first three years.
Discourse Media’s projections outlined in its investment campaign
Now, after growing recognition, dozens of partnerships and various awards for their work, Discourse is looking to be funded by the very public it seeks to serve. In November, Discourse launched an investment campaign to raise money for its planned expansion and upcoming membership program. It sought to sell $500,000 in shares to an investor base made up of individual and diverse Canadians who believe in Discourse’s mission. This campaign will be followed by the launch of Discourse’s membership program in the spring, which Erin projects will shift Discourse Media toward being at least 60% member-funded.
In a post published in January, Erin wrote that Discourse missed its target for its investment campaign but raised $350,000 from 300 investors, who ranged from “court judges, students and Indigenous leaders to tech startup founders.” Erin said plans for the membership launch are still on track for 2018.
As Discourse seeks to expand to have twenty reporting units throughout Canada, Erin sees incorporating a financial stake from communities as crucial not just to Discourse itself, but to the public service journalism sector more broadly. “At the high level, which issues are being investigated is being determined by private money, as opposed to by regular communities,” she said, referring to the fact that, globally, digital investigative journalism has largely been funded by foundations and grants. “Fundamentally, there's a bit of a system problem with that. However the dollars are paid is who you end up serving.”
Spirited Media, the parent company of three hyperlocal news sites, has been steadily growing since it was founded in 2014. It started with Philadelphia’s Billy Penn, launched the Incline in Pittsburgh in 2016, and it acquired Denver’s Denverite in 2017.
Given the instability of the local news landscape, however, Spirited Media’s business model has changed dramatically since its launch. In 2015, events made up more than 80% of its revenue (most of it events sponsorships), with site advertising making up most of the rest. By 2016, events accounted for 65% of revenue as the company’s traffic grew and it sought to maximize site advertising revenue.
2017 saw declining advertising revenues and layoffs for the company. Events, shifting increasingly toward ticketed events, comprised 55% of revenue, and the rest came from advertising, according to founder and CEO Jim Brady. But Spirited Media laid the foundation to shift yet again, as it joined the News Revenue Hub in 2017 to prepare to launch membership programs for each of its sites in 2018. Jim said the company is aiming to earn about 80% of its revenue from both events and membership.
Despite a shifting business model, Spirited Media’s mission has stayed consistent: to build quality local news sites to serve the communities in its cities. Although its revenue makeup has fluctuated, events have remained “the lion’s share of the company” since it launched, said Chris Krewson, Spirited’s vice president of strategy. The company held about 60 events in 2017, and events across all three sites vary widely and range from industry-specific networking happy hours, to galas, to scavenger hunts and cooking demonstrations, to panels focused on local issues, like homelessness and local philanthropy.
The Incline’s “Who's Next: Technology” event in March 2017. Photo courtesy of Chris Kewson.
Jim said that events have purposely been central to Spirited since the beginning. “The future will require newsrooms to have a much deeper and more direct relationship with readers, and what better way to exemplify that than by getting your readers to show up somewhere, and not only interact with our staff, but also with each other.”
Membership fits perfectly into the relationships the sites have already built with their audiences, and many readers have often approached staff to ask how they can directly support the sites, said Dave Burdick, Denverite’s editor-in-chief. “The thing about membership that fits so well with us is that we already have a closer relationship with our audience than I have had in any other place I've worked,” Dave said. “In all of our cities, our audience has had a pretty big role in several of our biggest stories or several of our most significant pieces of the year. I think that that is a pretty wonderful relationship to nurture.”
Dave sees events and membership as aligning with Spirited’s mission for how it allows the sites to be funded by their communities. “I think accessibility is also a huge part of it,” he said, adding that readers frequently reply to newsletters and correspond with staff, and they show up at events to talk with reporters about the beats they cover, often giving tips and thanking staff for their work.
Upon launch, each membership program will be premised on the fact that there will be no paywall or restricted access on the site, but members will receive perks like access to certain events and early access to stories. Dave and Chris said that the membership programs will be tailored to each site and will adapt based on member responses and needs; like Spirited’s events strategy, sites will learn lessons from each other and they will apply best practices across the company.
Denverite’s membership program launched in early February, Pittsburgh’s in mid-February, and Philadelphia’s launched in late February.
“As you probably know, 2017 was a challenging year for us,” Dave wrote to Denverite’s readers upon launching Denverite’s membership. “We had to get smaller and let go of some talented journalists. But we’re coming out on the other side committed to being transparent and intentional about the next phase of Denverite. We are setting out to build something sustainable and, to put it simply, we need to diversify our sources of funding… When you support Denverite’s journalism, we’re even more accountable to you, our readers. That’s exactly where we want to be, and it’s why we started Denverite in the first place. We get up every day excited to tell you what’s going on in Denver, to report, write and deliver news in ways that serve you best, and to directly involve you in the process when we can.”
Jim sees membership as the next step in meeting Spirited’s mission to best serve its cities. “I don't think most newsrooms will be able to survive unless they connect with readers in much more direct ways than they generally have,” Jim said. “We can't just be of the people; we have to be with them.”
So, what can we learn from sites that are, or aim to be, majority member-funded?
They have a member-focused organizational culture. If membership is going to play a prominent role in your funding structure, it should be a prominent part of your organizational culture as well. De Correspondent’s staff are expected to spend much of their time in dialogue with members, and as the company grows and changes, it’s recalibrating its operations and revenue streams to ensure that members continue to be well served.
They study and work to meet the needs of their core communities. A robust membership program serves and strengthens the communities that it serves to the point of being fascinated with them. De Correspondent and Perspective Daily each serve interest-based communities and are creative about putting their members’ expertise to work. Spirited Media’s three sites serve hyperlocal communities and use geography as a way to learn about what their readers value. Each of these sites aims to not only serve their users but to become a destination where their respective communities can connect and learn through in-person events and/or online dialogue.
They have diverse sources of revenue. Having a diverse set of revenue streams allows a site to be more sustainable — whether your site is like Perspective Daily, looking for new revenue opportunities after establishing membership as the core, or like Discourse Media, building a membership program from the scratch after years of funding experimentation.
The examples we examined here and in the previous post only scratch the surface of the various forms of membership we’ve seen in this growing space within the news industry. If you're seeking more examples, see our continuously updated membership in news database.
Emily Goligoski, Jessica Best, and Leon Postma contributed to this post.