With changing business models, critical, independent news media need to balance a multiplicity of revenue sources with finding and keeping audiences.(Oupa Nkosi)
No matter how you frame it, someone has to pay for news
In the toxic atmosphere left by the unfortunate closure of online news outlet New Frame we in the news media run the risk of not learning valuable lessons.
One obvious lesson of the New Frame failure is not to rely too much on any one funder, however committed to your news enterprise they might seem to be. New Frame closed when the single source of philanthropic money declined to continue funding. However, we should not play down the difficulty of finding philanthropists willing to fund critical, independent news media.
Another less obvious lesson is that all news organisations need to be completely transparent about their funding.
It is ironic that transparency about funding has been used to attack independent media outlets that have written about the New Frame closure, while New Frame itself did not disclose its funding. It would be tempting to think, incorrectly, that disclosure simply makes organisations vulnerable to attack. Non-disclosure of funding or ownership by any news organisation creates even higher risks. Secrets make stories. What is perfectly innocent can be made to seem perfectly perfidious.
Why do news outlets even need donor money? The reason is the shattering of an old business model. For example, when most print media in South Africa relied on advertising income, having many different advertisers meant independence from any one commercial interest and little reliance on the government – though the government can use advertising to try to whip some news organisations into line.
Moving from print publication to the online environment has slashed the revenue of commercial news organisations, on which we have relied for the production of a great deal of news, and competition for the remaining ad revenue has intensified. A look at newspapers in the local shop, if you can find the paper you’re looking for, shows how starved they are for advertising. As anyone who has been poor knows, having little cash makes you vulnerable.
The waning of revenue for commercial print media organisations means donor money can seem like a godsend to independent news outfits that want to continue to do public interest journalism, essential for our society and defined in my recent report on the State of the Media for the South African National Editors’ Forum.
The growing non-profit news media has enriched the media ecosystem, making hard-hitting investigative journalism possible and increasing media plurality and diversity. But donor funding does come with its own problems.
Donors, as New Frame journalists discovered, can be fickle.
As important is how donor money shapes editorial decisions. Even where the people providing the money have a stated commitment to editorial independence, the effect can be subtle – influence rather than direct instruction. However, someone is always paying for journalism. For example, taking money from advertisers enmeshes your publication in the capitalist system. Direct government funding, on the other hand, can produce bland news that toes the official line. We don’t expect state-owned newspaper Vuk’uzenzele to do investigative journalism.
Commercial online news outlets mostly pin their hopes on the audience paying for news through subscriptions. On the face of it, this might be ideal, but even here the idea of “audience capture” rears its head. Your paying audience might resist important news that makes them uncomfortable by presenting them with facts that challenge their view of the world.
The answer, as the New Frame management discovered too late, is having a multiplicity of revenue sources. For donor-funded outlets, no one funder should dominate. In general, the ideological stance of the publisher or broadcaster and that of donors have to align. But if any one of them decides to interfere in editorial policy by suggesting you run anything composed by the CIA or the Chinese Communist Party you can stop taking their money.
Mia Malan, founder of donor-funded health journalism outlet Bhekisisa, points out that small, specialist news outlets might not have much choice but to rely on one big donor. Bhekisisa makes no secret of being funded by the Bill & Melinda Gates Foundation, although it also gets money from a range of smaller donors. Bhekisisa outlines on its website its policy of protecting its independence, only taking “funding from donors who guarantee us that they will not attempt to influence our reporting, our choice of topics or our editorial decisions. Our donor contracts, therefore, include clauses, signed by funders, that they have no right to interfere with our editorial decisions.”
Investigative non-profit organisation amaBhungane and online news site GroundUp are examples of funding transparency.
amaBhungane has an extensive and ambitious stated funding policy which aims to “limit our exposure to any particular grant funder to 20% of our budget”. It does not accept funding from governments or corporates, restricting itself to “reputable grant-making organisations with a credible track record of funding media or social justice causes”. The investigative newsroom, as it styles itself, produces comprehensive annual financial statements detailing income and expenditure. Notably, relatively small individual donations from supporters contributed about 24% of operating expenditure in the 2020-21 financial year.
GroundUp publishes a list of funders and specific amounts donated by institutional investors, including the EU, on its website. Its biggest funder in 2020-21 was the British The Sigrid Rausing Trust, which contributed about 21% of the total of about R8.7-million. GroundUp founder Nathan Geffen believes the organisation cannot afford to be as “pure” as amaBhungane, though it is careful about funding and has rejected money from what he calls “dodgy” funders. Unusually, the NPO publishes the salary bands of its staff, showing the editor earns about 4,5 times the pay of the lowest-paid reporter.
As important as diversifying funding are multiple sources of revenue. In the face of a broken business model of relying only on online advertising, some news outlets, notably the Daily Maverick and The Guardian newspaper in the UK have chosen a membership model. This means using a close relationship with the audience to solicit cash contributions from small to substantial amounts.
The Daily Maverick is a private company with a 25% plus ownership by non-profit company Inkululeko South Africa Media. DM publishes funding information on the “About Us” section of its website, contrary to claims that it hides its funding, including who its bigger donors are. The DM states: “Daily Maverick journalism is funded, mainly, by three sources: philanthropy, commercial activities and support from our readers. By design, we do not have an overreliance on any single revenue source to reduce the impact of any market shocks.” Importantly, “No individual donor contributes more than 5% of our total income.”
In South Africa, the country’s oldest news organisation independent of the major publishers is the Mail & Guardian, which is also a private company, but is majority owned by the non-profit Media Development Investment Fund. It receives funding for projects like The Continent, its pan-African WhatsApp publication. The Mail & Guardian discloses its funding on the About Us page of its website.
Sustainability, in the end, is as much about finding and keeping the audience as about funding. News outlets rely on having audiences that donors and/or advertisers want to reach. If you sacrifice truth for click-bait, unverifiable, sensationalist stories your audience is likely to disappear sooner or later.
And if you want a subscription or hybrid model, with a fair chunk of your money coming from members, then you cannot risk alienating the audience with shoddy or unethical journalism. Also, having members or subscribers shows advertisers and donors that your audience sees some value in what you are doing.
The audience does not comprise empty vessels waiting to have ideas and opinions poured into them, the so-called “hypodermic injection” theory of media. They are more likely to accept some versions of the truth because these fit their world view, such as that South Africa’s hard-won democracy needs to be defended against would-be dictators and their acolytes or that the infiltration of the state by organised crime should be exposed.
While funding of news is important it’s only one side of the equation. The audience cannot be overlooked and, without an audience, publishers and broadcasters are shouting into the void. Audiences cannot be taken for granted – as shown by circulation figures, which record astonishingly steep decreases for publications that once used to be dominant.
Reg Rumney is a research associate in the Department of Journalism and Media Studies at Rhodes University where he founded the South African Reserve Bank Centre for Economics Journalism. He is a writer and teacher of economics journalism, corporate social responsibility and media management, and a former business editor of the Mail & Guardian.
The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.