Business models and funding: UK hyperlocal media

This is the sixth extract from Where are we now? UK hyperlocal media and community journalism in 2015  a new report commissioned by the Centre for Community Journalism and supported by Cardiff University and Nesta.

Key Points

● There are a wide range of different business and service models across the sector. They are often unique to a given locality and not necessarily replicable or scalable.

● Publishers are embracing different income sources to achieve sustainability; although not everyone is doing this to make money.

● There is a strong current of volunteerism, but there is also a growing cohort of entrepreneurs who work full-time in the sector, often with little long-term job security.

Geographic coverage

Just as audiences have very different perceptions[i] of what constitutes local, so hyperlocal publishers also define their coverage locality in different ways.

“This suggests that the phrase “hyperlocal news” might be better understood as referring to an emergent generation of community journalists, and perhaps their approaches to news production, rather than their geographical space.”[ii]

howlocal

Figure 4: In general, which of the below best describes the sort of geographic area your content covers? (n=157)

Income levels

Not all publishers are involved in hyperlocal to make money, although some are. This finding from 2014’s Hyperlocal Survey found that “not enough time available” was the key barrier to expansion identified by publishers, rather than “more money”. Eight out of ten had ambitions to expand their site, but nearly three-quarters cited lack of time as the principal barrier to growth.[iii]

For those wanting to engage in hyperlocal media as a full-time, or part-time job, there’s no doubt that “making it pay” – in the form of grants, sponsorship or advertising – can be an issue. The number of publishers doing this full-time has grown, but “most community journalists cannot devote the same level of human resources to news production as their professional counterparts.”

Reasons for this include financial stability, the long-term sustainability of their business model and the lack of editorial and institutional support (e.g. legal, technical, business development etc.) that larger organisations enjoy as standard. These issues can lead to a vicarious existence.

“Around a third of our participants make money, mostly quite modest amounts: 12 per cent say they make less than £100 per month, for instance, but 13 per cent say they generate more than £500 per month.”

Others, accounting for nearly two thirds of respondents (63 per cent) reported that they pay all site associated costs themselves. “Just one in six,” the survey found, “make enough to return a profit, whether that is paid to themselves or others, or reinvested in the site.”

Costs

Figure 5: Do you pay all the costs yourself, or do you raise money from the site to cover them, however small (excluding the cost of your own time)? (n=171)

Income sources

Many hyperlocal publishers have become adept at creating a diverse income base. This can include print products, secondary consulting/training services and digital advertising for their primary online output.

In the past year we’ve also seen examples of successful crowdfunding efforts[iv] from both A Little Bit of Stone and Brixton Blog and Bugle to help cover staff costs.[v] The Crowdfunder platform has, to date, successfully supported seven UK hyperlocal initiatives, raising just under £40,000.[vi]

One of these, The Bristol Cable, raised £3,300 in April 2014 and now receives around £300 every month from regular membership contributions.[vii] It publishes a quarterly magazine with a print-run of 10,000, as well as online content.[viii] The resilience of print as a hyperlocal platform is noticeable, and a number of outlets have deliberately included this in their publication mix to attract digital-wary advertisers.[ix]

The hyperlocal publisher survey only found a “small sub-sample“ generating income. Those who did were asked about their sources; which were led by advertising and publishers own money.

fundingFigure 6: Which of the following are sources of funding for your hyperlocal site? (n=61)

Income potential

In 2013 Nesta published detailed insights, produced by Oliver and Ohlbaum,[x] into the UK’s hyperlocal advertising market. Prior to this there had been no independent assessment of the potential for the sector to attract sufficient revenues to grow and expand.

Nesta reported that “advertisers who are most likely to be interested in hyperlocal advertising are those who serve a small geographic catchment area.”[xi] However they also found that:

“The research we have published does not provide heartening reading for hyperlocal media services. It suggests that big brands will place their ads on location-based platforms rather than spend money with geographically-specific services. Facebook and Google are much more likely to collect advertising spend by providing content relevant to your location than, say, a blog about Birmingham.”[xii]

They also asked small, local, businesses across the UK if they advertised with local hyperlocal publishers. Responses revealed that although some do, these numbers were unlikely to increase significantly.

Any potential increase was likely to be instead of using current local advertising channels (e.g. directories, search, social networks or local papers) rather than supplementary spending, or through the identification of a new – as yet untapped – class of local advertiser.

The financial future

Nesta’s research, lessons learned at C4CJ, and the work of the Carnegie UK Trust in working directly with publishers, suggests that for the majority of hyperlocal publishers some sort of public financial intervention will be needed to help sustain – and potentially grow – the sector.

This may come from, as yet unexplored, sources of income, or areas where precedents for intervention already exist. This could include:

  • Usage of unallocated funds set aside for local digital television programme services (L-DTPS), from who the BBC can buy and publish/broadcast content.
  • Fair access to local government and NHS advertising budgets, including for health campaigns and statutory notices.
  • Partnerships with other local organisations – such as the Tinder Foundation and Digital Unite – who have an interest in community and capacity building.
  • Contestable funding, innovation prizes, a one-off contribution from Google and/or other intermediaries or industry levies.[xiii]

These approaches merit consideration given the continued precarious nature of most hyperlocal sites, including those that have been established for a long-time. Addressing this is important for the long-term sustainability of the sector as well as ensuring that old, experienced, hands – as well as new entrants – are all able to make hyperlocal a commercially viable reality; should they wish to do so.

 Recommendations

5.1  Successful business models need to be further analysed so that the lessons learned from these case studies can inspire, and inform, entrepreneurs and other publishers.

5.2  The financial value of the sector – in terms of hyperlocal advertising and volunteer time – is currently unknown. This would be valuable to understand and monitor over time.

5.3  There is a need for ongoing financial support to help fund the sector, using new – or tried and tested – interventions. This could aid salaries, overheads, training and other critical needs such as indemnity insurance and legal support.  

[i] http://stakeholders.ofcom.org.uk/binaries/research/tv-research/lrmuk.pdf

[ii] https://hyperlocalsurvey.wordpress.com/#audiences

[iii] http://www.communityjournalism.co.uk/wp-content/uploads/2014/07/Hyperlocal-Community-News-in-the-UK-Final-Final.pdf

[iv] http://www.communityjournalism.co.uk/blog/2014/11/28/crowdfunding-community-journalism-an-update/

[v] www.crowdfunder.co.uk/alittlebitofstone and https://www.indiegogo.com/projects/brixton-blog-and-brixton-bugle

[vi] http://www.crowdfunder.co.uk/campaign/hyperlocal/

[vii] http://thebristolcable.org/about/#faq

[viii] http://thebristolcable.org/about/#toggle-id-2

[ix] http://www.printweek.com/print-week/feature/1144797/micro-publishers-local-papers-headlines and http://www.bbc.co.uk/blogs/collegeofjournalism/entries/a6ef218c-09da-3cd9-b1fa-b8e987122046

[x] http://www.nesta.org.uk/areas_of_work/creative_economy/destination_local/assets/features/local_advertising_markets_and_hyperlocal_media

[xi] http://www.nesta.org.uk/publications/local-advertising-markets-and-hyperlocal-media#sthash.aIVn7f2U.dpuf

[xii] http://blogs.lse.ac.uk/mediapolicyproject/2013/05/31/nesta-research-public-interest-high-advertiser-interest-low-for-hyperlocal-media/

[xiii] http://mediastandardstrust.org/wp-content/uploads/2014/10/Positive-Plurality-policy-paper-9-10-14.pdf

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