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Online news startups explore revenue sources beyond advertising

by: Michele McLellan |

Revenue was very much on the agenda when more than 100 local news entrepreneurs gathered at the LION Summit in Chicago Oct. 1-3. There were encouraging, if fledgling, signs that some sites are looking beyond banner display advertising.

Supplemental sources include crowd-funding, membership programs, sponsored content, and events.

For now, however, banner display advertising is a mainstay. My annual survey of 100 digital native news sites found that 72 percent rely on advertising as a primary revenue source and 92 percent are selling traditional display ads.

That’s a vulnerability. If any source falters companies with diverse revenue sources have others to fall back on. Online display advertising is taking a lot of hits these days, including ad blockers, concerns about impression fraud, and concerns that people simply ignore banner ads.

Among supplemental sources discussed at the LION (Local Independent Online News Publishers) Summit (based on my notes from sessions I attended and group notes from the event):

Crowdfunding. Brian Wheeler of Charlottesville Tomorrow, a nonprofit site in Virginia, described three Kickstarter campaigns, two of which were successful.  One, to create a 3D model of a proposed road project, raised more than $7,000. Another, to fund an education reporter, raised $17,000. A third, to fund a redesign of the news website, went nowhere.

“It’s best to pick a project that addresses some community need,” Wheeler said. “You need to find the pain points.”

Similarly, The Lo-Down in New York City, raised $28,000 for yearlong coverage of problems facing local small businesses as the Lower Eastside sees new development. More info on LION conference blog.

Membership. While membership has largely been the province of nonprofit news sites, the for-profit Berkeleyside in the California Bay Area is building out a membership model. Wendy Cohen of Berkeleyside said the organization has 1,000 paying members and membership accounts for about 20 percent of total revenue. The site offers a range of prices, from $5 to $25 per month for membership. Berkeleyside membership page. More info on LION blog.

Events. Events have been mostly marketing opportunities for small local sites. But that may change. Jay Allred of Richland Source in Ohio said his organization and community partners are organizing a debate in the local mayor’s race. While there is no revenue attached to this event, Allred believes that if he and his team can demonstrate and value and popularity of such events, they will be able to line up paying sponsors. That’s a model that has worked for nonprofit sites such as Texas Tribune and Voice of San Diego.

Sponsored content. In my presentation at LION, I suggested the publishers take a look at sponsored content. I was initially skeptical of sponsored content, but I am starting to come around to the idea that this content – when it is transparent and done right – has value for reader and advertiser alike.

At the local level, organizations such as Richland Source ARLNow in Northern Virginia have begun offering local experts in the business community an opportunity share their expertise in sponsored columns that are not directly promotional or selling something. 

All of these sources show promise. The key for bootstrapped local sites is to figure out how to establish streams that supplement advertising and add value for readers without tying up scarce resources.

Many of the LION Summit presentations and discussions were videotaped. Follow #LION15 on Twitter for links.

Related: Josh Stearns at the Geraldine R. Dodge Foundation in New Jersey compiled New Revenue for News: 52 Business Ideas to Support Local Journalism.

Update: Nieman Lab post on #LION15 notes, rightly, that publishers should be talking more about mobile. I have found very few have a mobile ad strategy.

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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