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Local news start up survey: Most publishers report revenue growth

by: Michele McLellan |

A new survey of online local news sites offers room for optimism: More than 60 percent of the publishers responding said they increased their revenues in 2013 over 2012. Still, it's a hard slog: Only one third reported turning a profit and nearly half reported $50,000 or less in annual revenue.

The survey was conducted in January-February 2014 as part of my database of news start ups, www.micheleslist.org. Publishers of 80 local online start ups responded, and 60 of them provided detailed revenue information.

Among those 60:

  • 62 precent reported revenue had increased
  • 23 percent reported no change
  • 15 percent reported revenue decreases

Among those that increased revenue, the average increase was 49 percent and half reported they had doubled their revenues. The average decrease was 20 percent.

Increases and declines crossed different revenue levels, all but four of the 14 sites reporting no change were at $50,000 or less. The question about revenue increases and decreases was new to the survey this year so I do not have comparable figures from prior surveys.

Bringing on business or development muscle is one way news start ups increase revenue. It's an investment up front that can pay for itself and then some.

Baltimore Fishbowl, with 2013 revenue in the top end of the $51,000-$100,000 range, doubled revenues by bringing on an ad sales person, according to editor and publisher Susan G. Dunn, a former Knight Digital Media Center entrepreneurship fellow who launched the site in 2011.

Dunn said she hired an ad sales person from the local alternative weekly with plenty of contacts and experience. Dunn said the investment in pay and commission was significant, but the sales person has made up for it by bringing more new advertisers onto the site.

Dunn said she recently hired a second ad sales associate. She said she believes Baltimore Fishbowl needs to develop other sources of revenue but for now she is focused on capturing as much ad revenue as possible. Baltimore Fishbowl is a for-profit operation.

The nonprofit Tucson Sentinel also reported doubling revenue, moving up from below $50,000 into the $51,000-100,000 range. Dylan Smith, the editor and publisher, said most of the new money came from a grant from the Ethics & Excellence in Journalism Foundation.

The site also derives revenue from sponsorships, memberships and providing Web services. Smith, who is also chairman of LION Publishers, launched the site in 2010.

Nonprofit sites often experience ups and downs from year to year when they are highly dependent on foundation grants or have a relatively small number of donors. Wyofile, for example, saw revenues decline by more than 30 percent in 2012 after a major donor pulled away, according to a study by the Knight Foundation. In 2013, Wyofile reported revenue increased by 50 percent to the top end of the $101,000-250,000 range.

Note: 57% of those responding were for-profit operations; 43 percent were nonprofit or awaiting nonprofit tax status. About half launched in 2009 or earlier; the remainder in 2010 or since.

Here are additional quick headlines about revenue from the survey:

(The percentage from last year's survey is in parentheses for comparison.)

What comes closest to describing the revenue situation for your site in the past year?

  • 32% (30% in 2012) - Has a steady flow of revenue and turned a profit last year.
  • 29% (34%) - Has developed a steady flow of revenue but is not yet profitable.
  • 18% (13%) - Is experimenting but does not yet have a model or profitability.
  • 13% (13%) - Is not yet developing significant revenue and is not profitable.
  •   7% (11%) - Relies on grants to break even.

As might be expected, nearly all of the sites reporting profitability were four years or older.

What was the total revenue of your site last year (2013)?

  • 48% (52%) - $50,000 or less
  • 23% (16%) - $51,000-$100,000
  • 14% (18%)  - $101,000-$250,000
  • 11% (14%) - $251,000-$500,000
  •   4% - More than $500,000

I will continue to study and report results from the survey in the coming weeks. In addition to questions about revenue totals, publishers report on revenue sources, sources of content, expenses and other issues related to their operations. Michele's List, which includes more than 200 independent news start ups, was developed with support from The Patterson Foundation.

Related - Pew: Smaller news sites are gaining ground

Michele McLellan

Michele McLellan is a writer, editor and consultant who works on projects that help strengthen the emerging local news ecosystem,
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