Innovation in journalism: two media start-ups booming despite challenges

Independent digital media tend to have the biggest political and social impact despite operating with shoestring budgets.

These were the main findings of the Inflection Point International report, published last month by the non-profit organisation that supports entrepreneurial journalists, SembraMedia. The report, based on 200 interviews with digital native media in Latin America, Africa and South-East Asia, also found that more than 60 per cent made less than $50,000 in revenue in 2019 and more than half were subjected to online attacks.

Despite this, around 85 per cent saw the real-world impact of their reporting, such as increased civic engagement, a higher level of activism amongst audiences, and a change in laws or the legal system.

Pay-what-you-can membership model

One example comes from South Africa's The Daily Maverick, whose recent investigation of the health minister Zweli Mkhize led to his resignation. This speaks to the calibre of journalism that South Africans need today, but the country faces economic hardships which make journalism difficult to monetise. The country has 35 per cent unemployment and 70 per cent youth unemployment, which means that there is a limited reader revenue market. Domestic companies also have small advertising budgets and newsrooms struggle to recruit the right talent in a competitive landscape.

Founded in 2009, The Daily Maverick has spent 10 years operating in survival mode. That was until 2019 when it launched its membership offering, Maverick Insider, as its first step to sustainability.

The programme currently has 17k members signed up on a pay-what-you-can-basis, as the publication does not want to deny readers access to crucial information with an inflexible price plan. It has a sliding scale of what they can contribute and articles include a pledge to sign up at the end, much like The Guardian.

Screenshot of Daily Maverick's pay-what-you-can membership offering

Speaking on the Journalism.co.uk podcast, the CEO Styli Charalambous said that asking readers to sign up to a hard paygate would have yielded more revenue faster. But they wanted to target the most loyal and engaged readers and those who read right to the end of articles is a good place to start.

That also explains why only about five per cent of people cancel their subscriptions, though that is also due to an undeveloped payment ecosystem that cannot mitigate expiring credit cards and failed transactions in South Africa. Inspired by the Membership Puzzle Project, they have also incorporated a flexible, 'cancel anytime' option for members.

"We try to position this as an emotional purchase rather than a transactional one where you are paying for access to content. [Readers are] taking this out of the goodwill part of their household budget, rather than the subscriptions part," says Charalambous. The Maverick Insider tagline reads: "It’s more than just a good deal. It’s a good cause."

Leading this membership requires an 'always on' campaign mentality, as readers grow tired of the same messaging. You cannot afford that fatigue to set in too deeply, and so The Daily Maverick is always thinking about growing the top of the engagement funnel. Sign-ups often pick up around significant investigations, but marketing teams also need to be showing the existing members the work that is being done thanks to their contributions.

Like for many other publications, the pandemic has boosted public interest in The Daily Maverick's journalism. Newsletter subscriptions shot up by 60 per cent, the number of monthly unique visitors doubled and the publication had its highest membership conversion in a single month on record.

That 'coronabump' is starting to wane but these were not conversations they were having two years ago. The downside is that higher demand from members requires more technical expertise from staff; the upside of memberships is that it can provide some options.

Unlike a donations model where the relationship starts after the transaction, members are assessed upon sign-up for any "superpowers" they have. That can prove useful for recruitment as well as editorial teams. One of the first members was a mental health practitioner who has gone on to write for the website and provide in-house counselling, as Charalambous could see a mental health epidemic brewing when covid-19 entered the fray.

All of The Daily Maverick's key metrics over the next five years aim to be increased fivefold. That means growing from 17k members to 100k members by 2027. The publisher is confident this will happen because it currently has 130k people who visit the site more than 15 times a month, which means that the loyalty is growing. Newsletters are a large focal point too and they convert 10 per cent of subscribers into members. The goal is to have 1m newsletter subscribers by 2027.

But memberships alone will not keep the organisation going. Three years ago, the publisher decided it needed six diversified revenue streams: two within each of the categories of philanthropy, commercial and memberships. It calls this its 'three-to-six' model. This prevents over-reliance on any one revenue stream and protects against market shocks.

The main challenge so far has been accessing grants and philanthropy, which allow the organisation to absorb the costs of expensive investigations, which often result in legal threats and challenges from those opposing their reporting. Whether it is climate crisis coverage, internship development or civil society reporting, grants make a lot of their wider work possible too. But they are not a long-term solution. In South Africa, these opportunities for media and journalists have a hard ceiling. As the organisation charts its future revenue split, grants and philanthropy are not expected to branch out much more.

In the years to come, the number of revenue streams may increase to ten. But that is not just quantity for the sake of it, it needs to be aligned with the aims of the organisation. All of its wider ideas up to this point, from book publishing to long-form documentaries, to events, to licencing out its in-house tools, have fed into its mission to make a difference in South Africa. Other business concepts have been refined along the way.

For instance, before it delved headfirst into the membership, it tested out individual microtransactions two years ago to incentivise the ad-free experience, (and by extension, the user experience on the website and long-term loyalty). Now, that approach has largely been scrapped in favour of including the ad-free experience as a perk within Maverick Insider.

Fast-tracking business growth

The Inflection Point International report also talks about the importance of accelerators. A key example is Velocidad, launched two years ago by SembraMedia and the International Center for Journalists, financed through philanthropic group Luminate.

Velocidad — Spanish for velocity — provided $1.5m USD to digital news start-ups to fast-track their business models, as well as 1,600 hours of consultation with a range of experts on entrepreneurship and protective measures.

The reason for this is that while socially-minded media startups can have a tremendous impact with their inspired (if unorthodox) alternative to the mainstream media, the journalists leading the companies often lack business skills and funds to reach their full potential.

Take Paraguayan news organisation El Surtidor, for example, which was one of the grantees of Velocidad. When it launched six years ago, it was a vibrant visual journalism enterprise, mixing memes and graphic novel-style illustrations with quality reporting. A good example is its coverage of Gran Chaco, the second largest forest in South America, behind only the Amazon rainforest, and one of the most deforested areas on the planet.

Screenshot of "Grand Theft Chaco II" on El Surtidor

The publication knew, prior to applying to Velocidad, that the 7m population in Paraguay was not a big enough market to achieve long-lasting sustainability. It was thinking about opportunities in neighbouring Spanish-speaking markets but lacked the expertise and bandwidth to devise and execute a plan. Velocidad simply opened the door through its connections and helped create two critical revenue sources for El Surti (as it is nicknamed).

The organisation managed to create a new consulting unit that takes on commissions for visual projects for clients ranging from corporations to non-profit organisations to other socially-minded media outlets. It also went regional through its Latinográficas programme, which saw their in-house professionals provide masterclasses on visual media projects which were then co-published by about 20 media partners including Salud con Lupa, Efecto Cocuyo, Maldita, Chequeado and CONNECTAS.

Speaking on the Journalism.co.uk podcast, the co-founder and editor of El Surti, Jazmín Acuña said that thanks to Velocidad, the organisation has done in two years what would have taken them around 10 years. Media startups can be very passionate about their work but lack the focus on the bottom line, she said. The reason journalists leading media startups struggle to develop their businesses is that they are unwilling to make the sacrifices.

"What happens with independent media organisations is that we're just a bunch of journalists and illustrators who are good at what we do, but we're definitely not so good with thinking about numbers and sales, growth. But that's a core part of the organisation," says Acuña.

"It's a sacrifice that sometimes journalists don't want to make, but you have to decide if you're also going to put effort and time into thinking about the future of your organisation and the people you're responsible for. We did well to change that mindset, I put off my desire to just be a journalist and editor, and now I'm a director that needs to think about sales and investment."

Before Velocidad, they had one staff member in charge of sales and accounts. Now they have four, and command a visible presence in their newsroom. For the future, accelerators like Velocidad will continue to be important as new threats emerge, to stave off the prominent danger of media capture; when organisations are bought out by private investors who change their editorial focus.

Velocidad's mission was always to bring about greater editorial independence through greater financial independence. Acuña says that she is seeing the difference now as she can consider research projects, collaborations and independent reporting that was not possible before.

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