What support do independent news services need to stay afloat?

18 months ago, during the first covid-19 lockdown, Joshi Hermann started up a local news publication with the aim of providing a real alternative for his local readers in Greater Manchester.

And so he founded The Mill. What set it apart from local news competitors was that it is based on Substack, a popular newsletter platform that allows readers to subscribe for content. In other words, the money goes directly from the reader to the journalists or media company, instead of being filtered through advertisers.

"I had this feeling for a while that you could do a really small-scale subscription-funded media company if you focused on quality with a really small team, and you tried to differentiate hard from what was out there already," says Hermann, speaking on the Journalism.co.uk podcast.

"One of the big issues in local news is that reporters are having to write more and more stories, churning out content because they're in smaller teams, because the strategies of the company demand they publish in a very high volume on the website to get web traffic."

Indeed, it was only earlier this month that UK news group Reach Plc announced new performance metrics for reporters, meaning they need to reach page views targets on their articles by the end of the year, depending on their title and role. For The Mill, it is quality over quantity.

The newsletter is heavily focused on feature writing, which may include original investigations, but often within narrative storytelling which Hermann says is lacking in local news. His offer brings back the classic bundle of local theatre reviews, "news in brief" items, letters to the editor, and in-depth features.

This has helped The Mill to attract 17k subscribers to the free email, and 1,250 paying members to the premium newsletter at £7 per month. That is run by Hermann and two full-time staff, plus freelancers. Due to way newsletters are forwarded to friends and family, the extended audience is anywhere from 50k to 100k readers, he claims.

Despite high engagement with their content, money is tight. He says that the model is fully funded by those reader subscriptions, but that means Hermann is not paying himself much and even dips into his own personal finances from time to time to prop up the publication. It has however seen the expansion of two new sister titles last year, The Tribune in Sheffield and The Post in Liverpool, each with a full-time editor, and with 600 and 200 paying subscribers respectively, thanks to support from Substack's local news fund.

Such is the success, that its local competitors have copied tactics. Last month, it emerged that Reach plc, which owns the nearby flagship title the Manchester Evening News, launched a 12-person newsletter team to rival The Mill, funded by the Google News Initiative.

Whilst imitation may be the greatest form of flattery, it raises the question of whether big tech companies should be propping up legacy titles, rather than helping innovative forms of local news thrive.

"What we need is a lot more small-scale upstart media ventures that have a different model based around subscriptions, events or whatever else, rather than this digital ad model that creates a race to the bottom," says Hermann.

The barriers to growth for The Mill and its sister titles are trying to persuade the 17k free readers to take up a paid subscription, given that just 8 per cent of Britons pay for news. That much is harder when the local news has been free online for readers for so long due to the dominance of the digital ad model.

"We are asking people not just to pay for local news, but re-evaluate the value of local journalism," he concludes.

Time and money

Independent publishers require both time and money to overcome this hurdle, according to David Floyd, managing director of Social Spider, also on the Journalism.co.uk podcast. Social Spider is a community-interest company that runs five non-profit community news organisations in London boroughs. It started with Waltham Forest Echo in 2014 and other titles followed: Tottenham Community Press, Enfield Dispatch, EC1 Echo and Barnet Post.

Most of their money currently comes from print advertising. Digital advertising is in growth but it is from such a small starting point that it barely makes a difference. However, over the last three years, it has run a paid, voluntary membership scheme. This mostly means readers get the papers delivered to their doors. Currently, 350 members are signed up across five titles at £5 per month. With the salaries of 15 staff to pay plus overheads, this revenue only goes so far.

What would they have to do to grow that membership? Floyd argues that an area like Barnet, with a population of 400k, only needs around one in 400 people to pay for news to have a high quality, sustainable local newspaper.

The problem is getting to that point. Independent news outlets would burn through too much cash (cash they do not have) to test and experiment with this model. They are also too short-staffed to concentrate on growing out these models, and they cannot afford to risk putting core areas of their business on hold in the meantime.

Floyd suggests that the UK government could provide a small pot of money to enable independent local news organisations to create more innovative models.

A £5m fund, for example, exclusively for independent news providers would be transformative for the sector and relatively modest in terms of governmental spending. One previous innovation fund, Nesta's £2m Future News Fund, was set out on with a broader remit of eligibility and was hindered by the pandemic. Floyd worries that if such a fund were created for the independent sector, it would soon become subject to pressure from the big local news publishers to get an even cut.

"It is, to some extent, the government’s problem of setting the landscape, not to pay for news, but to make sure the market conditions it creates are fair and a level playing field," says Floyd.

Scottish solutions

It is not as if support for the local media has not been forthcoming in recent years. The Cairncross Review into a sustainable future for journalism made nine recommendations to the UK government, of which eight were carried forward in one way or another.

But the one that did not become reality was the proposal to establish an Institute for Public Interest News, a dedicated body to amplify efforts to ensure the future sustainability of public-interest news, working in partnership with news publishers and the online platforms as well as bodies such as Nesta, Ofcom, the BBC and academic institution.

Scotland, however, might be getting their own version of this institute. As a devolved nation, Scotland can make their own decisions on public funding.

The Scottish Government last year created the Scottish Public Interest Journalism Institute, with a range of stakeholders involved from well established local newspapers, News UK representatives who have Scottish editions, and other industry groups, like the Public Interest News Foundation (PINF).

Jonathan Heawood, executive director of PINF, said on the Journalism.co.uk podcast that the group has a range of recommendations to help public interest. This will allow Scotland to consider making non-profit news providers eligible to benefit from charitable status, and embed media literacy in the school curriculum.

There is also a proposal for community buyouts of local commercial newspapers which are on the brink of collapse. In a step towards media consolidation in the UK, regional news group Newsquest bought out rival group Archant this month.

In Scotland, there is a long tradition of preserving struggling businesses which are defined in law as community assets, like pubs or village shops. An independent publisher is not in the position to stump up millions of pounds to take on the liabilities of a business like Archant, but such a model might mean it can receive governmental or philanthropic support to buy out a title which has longstanding trust in the region (like Archant does in East Anglia). The recommendations expect to receive a formal ministerial response soon.

Heawood is also vying for a better deal for the UK's version of an Australia-style News Bargaining Code, introduced to level the playing field between tech and publishers, and allow news organisations to negotiate more revenue for clicks to their site. But only those who earn more than $150,000 (Australian Dollars) - around £80,000 - are eligible. That is precisely the bracket that few independent publishers fall into. Such a model in the UK would exclude most independent news outlets.

"We have got to look at the detail of that code and how it develops to make sure it doesn’t entrench the dominance of the big players," says Heawood.

"This isn’t an altruistic point about smaller publishers who happen to be about at the moment, this will just make for a healthier market. That’s just good capitalism. if you entrench market power based on people who have already built-up scale, you will create an ossified industry and there’s too much of that already.

"We have to make sure this new system is friendly towards new players, startups and people trying to grow from the small to medium."

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