Public interest news requires £10m-a-year to sustain innovation, a report finds

When Dame Frances Cairncross called for a sustainable funding model for high-quality news in her 2018 Review, the state of the UK media sector was already pretty dire, especially at the local level.

So the following year, innovation charity Nesta was given £2m of government money to launch Future News Fund, a scheme aimed at boosting innovation within public interest news, and test whether such model could support the industry in the future.

20 UK journalistic organisations were awarded grants to explore and secure new business models and editorial operations. Nesta has now released a report examining what they have achieved during the past year despite the pandemic and decline in advertising revenue.

What worked?

One grantee, a digital wallet tool Axate, was awarded £70,000 to integrate its pay-as-you-go system into four digital news websites. One of the publishers acquired 1,000 new users in the 90 days of trialling the product. Some articles also generated a higher gross revenue through small payments than through advertising.

"Axate's project shows that reducing the barriers to payment can significantly increase access to a reader revenue stream, with the potential to surpass advertising revenue relatively early," the report reads.

"If it does work at scale, the potential impact of this shift is significant in terms of enabling publishers to focus existing resources on producing content that readers want to read and enjoy supporting."

But there was more to the Future News Fund than developing innovative business models. It also focused on the growth of community-led news organisations, improving diversity in the media, reaching new audiences and helping journalists and citizens gain better access to information.

To that end, co-operative membership news organisation Bristol Cable got their audience engaged in news-gathering with a new tool; non-profit organisation mySociety developed a tool to simplify how journalists and the public can access and contribute to FOI requests; and lifestyle publication for black women Black Ballad has grown its membership by 30 per cent and has been able to hire regional editors.

What is still needed?

This was made possible with a £2m pot - a fifth of Cairncross' initial £10m recommendation.

"We can use this to learn what works and what doesn’t, with hopefully a larger amount available [next year]," Valerie Mocker, Future News Fund project lead, told Journalism.co.uk.

Now that the pilot fund has found its feet, Nesta is talking to the Department of Culture, Media and Sport (DCMS) about stepping up public support for high-quality public news.

"We hope that the report has made a clear case for significant public investment and intervention from the government to ensure public interest news thrives and this is even more pressing given the impact the pandemic has had on the industry. The sector is at a critical point and if the government does not invest now, we could see a shrinking of the industry as we’ve never seen before," says Anna Hamilos, senior programme manager at Nesta.

The report highlights that with minimal funding and support, the shoots of a media innovation ecosystem are already forming.

"The creativity and energy are there," it reads, "but now we need to get behind innovators with an annual investment – set as Dame Frances Cairncross recommended at a minimum of £10m a year – for the next decade."

Nesta has already shown that the UK is "lagging behind" other countries in funding of public interest news and sustainable funding is needed to fully support local news organisations.

The charity also backs the idea of an Institute for Public Interest News (IPIN) - previously rejected by the Government - that would be funded by a two per cent levy on the UK revenues of tech companies in online search and social networking markets.

"For news to survive, we have called on the Government to set up a sustained financial support package which would see regular innovation funds released to stimulate ideas in the sector," Hamilos continues.

The report comes at a time when the local news industry has been hit hard by the coronavirus pandemic and a sharp drop in digital advertising revenue.

Nesta recommends that Her Majesty's Treasury (HMT) issues an immediate rescue package for public interest news organisations, particularly at a local level, which would extend the 100 per cent business rates holiday for news publishers and maintain it for at least one year.

It also recommends that HMT explores other financial holidays, such as the continuation of VAT zero rating for online payments, waiving PAYE, National Insurance (NI) contributions, or pension recovery plan deferrals. It should also ensure that accredited news organisations have access to low-interest lines of credit to prevent insolvency in the second half of 2020.

"We are hopeful about the future after the pilot highlighted the incredible range of ideas and innovation within public interest news. We can imagine towns and cities where decision-making is transparent, where everybody can easily access information and where newspapers were the conduit of this information," Hamilos concludes.

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