A new survey of more than 90 “born on the web” local news sites shows most are growing revenue, but they remain quite small both in revenue and reach and remain highly dependent on local display advertising.
The survey, conducted between Feb. 28 and April 29, 2015, provides a window into the progress and vulnerabilities of an emerging sector of the local news ecosystem – local news and niche websites.
Eighty publishers representing 94 sites responded to the survey. It was conducted on Michele’s List, a database of sites that is produced in collaboration with the Tow-Knight Center for Entrepreneurial Journalism. Digital media consultant and researcher Michele McLellan created and manages the list and the survey with assistance from journalist María Villaseñor.
The purpose of this summary is to highlight survey results, particularly in the areas of revenue and financial sustainability, – and to identify key questions suggested by the survey that would benefit from further research.
Often founded by journalists who have no business or sales experience, these ventures struggle to develop revenue and establish a stable business.
What stands out from the survey is that most of the sites are tiny and they are potentially vulnerable because they rely heavily on a single revenue source – advertising. At the same time, many are also dependent on volunteers for content and a significant number of the publishers are not yet paying themselves.
- Two-thirds (66 percent) make $100,000 a year or less in annual revenue and more than half (53 percent) make $50,000 or less. About a quarter (24 percent) make between $100,000 and $500,000. Nine percent make more than $500,000.
- 70 percent reported revenue increases in 2014 compared to 2013, including 17 percent (15 sites) who said it nearly doubled.
- 47 percent said they turned a profit in 2014 and another 22 percent said they had developed a steady flow of revenue but were not profitable.
- Age doesn’t guarantee more revenue. However, most of the younger sites (five years or less) report significantly less revenue than older sites. Of those established in 2011 or later, 79 percent reported annual revenue of $50,000 or less. Among those established in 2010 or earlier, 33 percent reported annual revenue of $50,000 or less.
- Few report much diversity of revenue sources and they are highly dependent on local advertising that they sell directly (as opposed to network ads). Seventy-two percent listed local advertising as their primary source of revenue (defined as half or more of their total revenue). Another 22 percent derive some revenue from local advertising. Other sources include membership, sponsorship, foundation grants, donations, and events
- Among those that reported on their advertising products, 94 percent sell traditional web display advertising and 29 percent sell only that. Other products include video advertising, business directory, sponsored content, contextual advertising (such as Adsense).
- About a third (32 percent) report they operate partnerships with other organizations or institutions, including local newspapers and broadcast outlets, nonprofit media centers, and universities.
- Only 17 percent rely exclusively on journalists as their primary source of content. The rest have other contributors, including community members, students, and partner organizations. Nearly half, 46 percent, rely on a combination of professional journalists and community members who are not journalists.
- Just over a third (36.5 percent) have full-time paid staff as content contributors. Two-thirds rely on freelance or part-time paid staff. (Survey asked them to identify top two contributors so percentages add up to more than 100.) About 45 percent rely on volunteers as a primary source, including 11 percent that rely exclusively on volunteers.
- On the business/marketing/sales side, 46 percent have full-time paid staff, 70 percent have part-time staff or paid contractors, 23 percent rely on volunteers, including 15 percent that rely exclusively on volunteers, nearly all of which have revenue of $50,000 or less.
- Only about a third of the publishers draw a full-time salary from their site. 40 percent of the publishers are not drawing any salary and 24 percent only draw a partial salary.
- Most of the sites have limited reach. Two thirds have fewer than 50,000 unique visitors each month. Only two sites reported more than 500,000 uniques.
- 80 percent said they produce some investigative reporting but for most it is occasional or infrequent. 10 percent said it was their primary focus.
The results suggest avenues for research that would help us better understand and, perhaps, assist this emerging sector, including:
- Trajectory of sites that have surpassed a $100,000 revenue threshold. A study could identify those sites and chart the actions and best practices that helped them progress. There appears to be a cohort of sites that are stuck below $50k – a subset of this study might be to identify factors that prevent them from progressing.
- Impact of market factors, particularly the type of market (town, suburb, neighborhood), size of market and its economic base. If the model, for now, relies heavily on advertising, what are characteristics of markets where sites thrive or struggle? In what types of markets do other revenue sources have more potential? Conversely, how can we identify communities or markets that will need non-commercial innovation to supply news and information?
- Role of partnerships and volunteers. When can either play a significant role? What are best practices for managing them? Are nonprofits are more actively engaged with partners and volunteers and can for-profits learn from them?
- Type of content they produce. In addition to the question about investigative journalism, survey captures major topics of coverage for each site. A study could quantify what topics receive a lot of coverage and where there are gaps.
- Challenges & progress. The survey collects open-ended comments on where the publishers think they are succeeding, where they are challenged, what they need to learn to progress. This can be quantified and reported – and used to inform training.
About the survey
The online survey was conducted between Feb. 26-April 29, 2015. Eighty publishers who own a total of 94 sites participated. (Six publishers operate multiple sites.)
More than half (54 percent) launched in 2010 or later. Another 20 percent launched in 2009 alone, the most in any year. Sites are located in 26 states with the most in New Jersey (13) and Massachusetts (10).
Some 81% are for-profit, including 13 percent S corp, and the rest LLC or sole proprietor/no specific tax status. Nineteen 19% are nonprofit or operate under umbrella of a nonprofit. Unlike previous years, when organizations reported long delays in getting non-profit status from the IRS, no one said they were awaiting that status in this survey.
Nearly half (47 percent) cover a “community or town;” 22 percent cover a metro or large city; smaller numbers have a different focus, including statewide or state government, ethnic niche audience, suburbs, or neighborhoods.
Survey data available
Much of the data collected about each site is public. It is published to a site profile on Michele’s List. The 2015 survey dataset is also available for download as a spreadsheet. Fill out a request form here. Additional confidential information that provides more detail about revenue and expenses may be provided on a case-by-case basis to qualified researchers who agree not to disclose confidential site-specific information.
This is the fifth survey McLellan has conducted since 2010, when the project originated at the Reynolds Journalism Institute. See previous surveys here.