Incubation and Traction: Best Practices for Digital Media Start-ups

Frank may add some additional notes; here are some rough notes from me.

— Bill

Geoff Samek and Kwan Booth offered great lessons learned from their two successful start-ups, Oakland Local and Sacramento Press. Examples: Social media training is emerging as a valuable sideline for Sacramento Press (now providing an estimated 25 percent of revenue). One way to think about this might be news-as-loss-leader, with little or no direct revenue attributable to the reporting but establishing the wherewithal to offer such expert services as social media training. Kwan pointed out that this approach works for individual bloggers as well, e.g. they make little or no money from the blog itself but it establishes them as valuable thought leaders capable of charging significant fees for their consulting services.  In addition, Kwan described the benefits of including someone who’s been-through-it-before in a leadership position. In the case of Oakland Local, that would be Susan Mernit.

Geoff argued in favor of a pro-am model, pushing the term amateur (the root of which connotes love) as opposed to citizen journalist.

Geoff said Sacramento Press has discovered that some sorts of reporting don’t typically lend themselves well to amateur reporting, includi ng stories about city politics and business development that require well-developed sources over time. Sacramento Press has added some professional journalists and is spending about $60,000 a month on its news operation. The operation, including its social media coaching initiative, is generating about $30,000 a month in revenue. Sacramento Press can afford to run this deficit, Geoff pointed out, because its founders are independently wealthy and are prepared to make a big investment.

Other revenue streams for Sacramento Press include banner advertising and a local advertising network called SLOAN, which Geoff said now represents the third largest online audience in Sacramento (after the Bee and (not sure of the second) a TV operation?)

Participating publishers get 60 percent of the ad revenue generated, with Sacramento Press getting 25 to 35 percent and third party vendors the remainder. Adify provides the network services.

Kwan encouraged media entrepreneurs to take advantage of centers providing training and advice, especially the Knight Digital Media Center. I pitched the Bottom Line News seminar we have coming up at Poynter July 12-16: www.poynter.org/bottomlinenews.

Geoff raised the idea of finding a hole in the market and filling it, also described as finding market pain and easing it. In the case of Sacramento Press, he said the Sacramento Bee closed its regional bureaus, creating the need for coverage of lots of local developments.

As the session drew to a close, we identified a range of unanswered questions for another day:

• If you’re running as hard as you can to develop revenue streams to pay the bills, how do you make sure to carve out enough time for journalism — and not just journalism, but journalism that matters?
• What non-financial incentives work best for content contributors? (Amanda Michel of ProPublica has addressed this elsewhere, noting that most of the volunteers she worked with at Off the Bus (HuffPost) and now at ProPublica are not so much interested in writing as in contributing their other talents of information collection, analysis, etc. They often derive satisfaction (key to incentives) from a sense of worthwhile work completed, participation in a larger initiative that matters. etc.
• How big does any given start-up need to be?
• And perhaps most importantly, what’s the best way for a start-up to pose and address the core question: what’s our journalistic purpose?