“The ‘oh, woe is me’ thing, we’ve just got to get over that. The world has changed. It’s happened.” So said Beth Frerking at a social entrepreneurship conference organised by students at Harvard Business School on February 27th-28th. The “it” in question is the shock to the news media caused by the combination of economic recession, the decline in classified print advertising and the rise of the internet, among other things. Frerking is a senior editor at Politico, one of three recently started entrepreneurial news organisations that were showcased at the conference.
The conference, with the theme of “Redefining Service for the 21st Century”, featured numerous panel discussions plus keynotes by Kiva’s Premal Shah; Goodwill Ambassador Lia Kebede; Sonal Shah, the head of the White House Office of Social Innovation; and (in conversation with Matthew) pioneering philanthrocapitalist, and now special UN envoy on malaria, Ray Chambers, who said that the world is on track to have “zero deaths from malaria by 2015” – which, if it comes to pass, will be truly amazing. The conference was extremely well attended: encouragingly, MBA students show no sign of losing their enthusiasm for social entrepreneurship.
It was good to see news recognised as a good that social entrepreneurs ought to be involved in providing. The three were a full-on for-profit entity, Politico; one, Global Post, that hopes one day to be profitable, but has been seed financed to the tune of $9m by investors who are believed to understand that they may never see a financial return on their money; and ProPublica, an investigative journalism organisation launched in 2008 and philanthropically funded by Herbert and Marion Sandler (whose fortune came from selling sub-prime mortgages, among other things -which they got out of just before the market crashed).
All three media outlets say they are doing well. According to Philip Balboni, a veteran journalist who launched Global Post in January 2009, there was initially lots of scepticism about the potential for an online publication dedicated to international news. A Harvard Business School professor, no less, predicted the Global Post would fail because ‘Americans don’t care about international news’. So far, he told the students, it has had 4m unique visitors, from 232 countries, and now has around 750,000 unique visitors a month. Balboni says he expects to be getting 1m unique visitors a month by the end of this year, on track for his goal of 2m-3m within a ‘few years’. As for the goal of profitability, it has struck partnerships with old media organisations such as CBS, PBS and the Times of India, syndicates its content to 30 other publications, and has received advertsing dollars from companies including Siemens, Bank of America, Liberty Mutual, Intel, Verizon and Singapore Airlines. Around 70% of its revenues are from advertising, and nearly 30% from syndication – with so far only a modest contribution from readers signing up to pay (though a relaunch of the membership strategy in April is intended to improve on this by offering unnamed special benefits to loyal readers). Balboni is hopeful that Global Post will be profitable by 2012.
Politico is already more or less profitable, Frerking acknowledged, thanks to its constant supply of political information, significant and trivial, to Washington DC insiders and those obsessed with what they are up to. In three years since it was launched by an established media holding company, its website has grown to 3.5m unique visitors a month, according to Nielson (and 7m-8m according to its own internal estimates), and its staff has grown from 50 to around 120. Intriguingly, given all the talk that ‘print is dead’, Politico prints and gives away within DC 35,000 copies of a tabloid version of its content every day that Congress is in session; this print edition accounts for around 60% of its revenues, thanks to what Frerking calls “advocacy advertising” (including full pages from Goldman Sachs, health insurers and so forth).
ProPublica, which we write about in the book, also claims to be making progress in its mission to fill a growing gap in investigative reporting caused by the increasingly difficult economics of the news business. Investigative journalism is expensive per story, and risky – in that the story may never be delivered. According to managing editor Stephen Engelberg, there have been a growing number of articles that deliver on its mission of generating “stories that create change”. One notable success has been uncovering a scandal over shooting by the New Orleans police in the aftermath of Hurricane Katrina. As yet, however, no revenue stream has been found, so ProPublica remains reliant on philanthropy, and is busily trying to find other donors to reduce its dependence on the Sandlers.
The difficulties of the news business has prompted growing talk that philanthropy or even government subsidy will be needed to ensure that society is properly informed. Watching how these three new organisations fare in the next few years – and all of the panelists are optimistic that ultimately a viable method of charging for content will be found – will provide important evidence on whether social entrepreneurs can come up with business models for news that work, whether they will be self-sustaining or if philanthropy will be needed – and if it is, whether that giving will be forthcoming. This week’s scoop? Some optimism may be in order.