LION’s DeRienzo: Programmatic Ads Will Be Part of ‘Indie’ Future

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Matt DeRienzo, the interim executive director of the Local Independent Online News Publishers’ association, is getting ready for what looks like a strong LION annual conference in Chicago on Oct. 1-3. Two features that caught my eye: Michele McLellan, author and arbiter of “Michele’s List,” will talk about best practices in revenue she’s seen at “indie” sites she surveyed. Jan Schaffer, director of J-Lab at American University, will moderate a panel of indie publishers who had to shut down their sites for financial reasons. Panelists will include Mike Fourcher, who published Center Square Journal and Roscoe View Journal on the North Side of Chicago for several years early in this decade, and David Boraks, who closed his nine-year-old and more recent in suburban Charlotte’s Mecklenburg County on May 29.

To see where LION is today and where it’s headed in the still-unsettled world of digital community news publishing, I put these questions to DeRienzo:

What does LION see as the most important element of its Chicago convention?
We’ve got a great lineup of speakers, but the most valuable part of the summit will be the opportunity for local independent online news publishers to network with each other, and share ideas and talk about mutual concerns. LION exists because these publishers have unique needs. Many are journalists-turned-businesspeople. They don’t have the support of a larger corporation when it comes to growing revenue, human resources, technology or dealing with legal issues. But because of their independence, and the fact they live in and care about the communities their sites cover, they share a passion for local news and making this thing work.

There’s been a lot of activity in independent community news in the past couple of years, with both positive and not-so-good results. Is the industry getting closer to developing a model (or models) of sustainability, based on proven practices?
We’re convinced that there won’t be a single model of sustainability. We are seeing multiple models that work for their communities, but might not work for others. LION’s membership includes both nonprofit and for-profit news organizations, running sites that range from a niche subject matter in a particular community or state (Spokane Faith and Values, Delaware Business Daily and North Carolina Health News, for examples), to those that cover a single neighborhood in a big city (Sheepshead Bites in Brooklyn or Mission Local in San Francisco), a rural region (Watershed Post or Fiddlehead Focus), a suburban town (Potomac Local or Redbank Green), a metropolitan city (The Lens in New Orleans or Billy Penn in Philadelphia) and an entire state (Oklahoma Watch or CTNewsJunkie).

Some are almost entirely supported by traditional advertising, others have membership programs and some foundation support, some have had amazing success with crowdfunding, while others are aggressively diversifying into a revenue model that draws on paid events, ad agency-type services, sponsored content and even clothing lines.

Two points should be made about sustainability. First, today’s model might not work tomorrow. For example, ad blocking technology ends up being a bigger problem than everyone thinks. The media world is accustomed to legacy organizations that have lasted for 100 years. They might be replaced by a collection of journalistic endeavors that come and go and have to adjust or be replaced. It’s messy, but there’s an emerging ecosystem there that can fill the void, and in some ways, improve upon what legacy outlets used to do. Second, it depends on your definition of “sustainable.” If that means huge profit margins, a big staff and “scale,” that might be unrealistic and not even the goal of local journalism entrepreneurs who are just trying to fill news and information gaps in their community and make a decent living doing so.

One of your conference speakers, Steven Waldman has a proposal calling for local news — even at for-profits — to be subsidized by philanthropies. What does this tell us about the outlook for the viability of local news?
What’s essential to improving public health? Information about public health. What’s essential to protecting the environment? Information about threats to it. What’s essential to the preservation of small businesses and local economies? Information about their health and the things that are threatening them. What’s essential to arts and culture thriving in a community? Explanation and criticism of the arts.

Lots of charity dollars go toward these issues, and so why wouldn’t charity dollars go to the journalism that’s essential in addressing them? It’s not — and maybe can’t be — the only model, but there’s a huge argument to be made for the expansion of nonprofit journalism in this country. And look at the for-profit news organizations which are exploring things such as public media-style membership programs. How much better would it be to have readers voluntarily giving you money because they love what you are doing and want to be part of a community you’ve built than complaining about a paywall or intrusive popup ads? There’s merit not only in what Steve Waldman is proposing, but also in for-profit news organizations seeing the value of the altruistic and community-building side of what they do and drawing strength and support from that.

I’ve contended that community news sites need a post-print vision for our digital age, and written that the majority-minority demographic transformation of America — which is having an impact down to the block level in virtually every neighborhood everywhere — could be the basis for such a vision. Do community news’ publishers need to do any major work on their mission?
You are absolutely right. Independent local publishers can and should lead on this, because they are closer to their communities than corporate legacy news organizations. Josh Stearns of the Geraldine R. Dodge Foundation, which is doing incredible work to strengthen and nurture indie online publishers in New Jersey, was spot on recently when he wrote that publishers who are not focusing on diversity, especially at this time of rapid change, are simply not serving their communities as well as they should be nor doing as quality journalism as they could be. Yet several studies publicized recently have shown that the smallest news organizations are often the least diverse, and that journalists of color are far more likely to leave the local news business than their white counterparts. One of the things we’ll be talking about in Chicago, a conversation led by one of our speakers, Tracie Powell of All Digitocracy, is what small organizations can do beyond hiring practices in diversifying their content and engagement.

“Local doesn’t scale” has been the byword of community news for several years. At the same time, we’re seeing some one-offs grow into clusters of three, four and more sites (e.g., in Brooklyn, metro D.C., Nashville). Is it time to do some rewriting of “Local doesn’t scale?”
LION has a number of members who have expanded to launch or acquire sister sites, usually in a directly contiguous geographic region around their original site. This can come from being horrified by the lack of local news coverage in a neighboring community and wanting to help, from seeing an entrepreneurial opportunity, or both. And no doubt about it, there are some drawbacks to being small. You might be able to keep a full-time sales rep employed with two sites when it seemed impossible with just one.

But by the measure of any big company that’s tried to “scale” local news — and, of course, failed at it — these efforts are still just simply “local.”

I don’t see any technology expert on your speakers’ list. How important is technology to indies?
Technology is hugely important for indie publishers for newsgathering, presentation and distribution, as well as any given revenue source and sales management itself. The problem is that building a great mobile app from scratch, for example, can cost the same for the Richland Source as it does the Boston Globe. Indie startups can’t afford to operate with that kind of overhead, and so, for the most part, they have to approach technology with a “software as a service” model and piece together the lowest-cost and most effective collection of CMS, CRM, hosting, mobile and other solutions. LION gatherings like our conference in Chicago are a great opportunity for publishers to compare notes, and for the increasing number of vendors who are focused on small publishers to present their products.

“Legacy” digital publishers — newspapers and broadcasters — in the Local Media Consortium are making a big effort to embrace programmatic advertising. Should “indies” get involved in programmatic?
Some LION members are taking advantage of programmatic advertising, but from both a hosting and selling perspective, the return is still dwarfed by CPM and sponsorship revenue from local businesses buying inventory on the local site that they and their customers value and want to support. Few indie publishers are playing the game of pumping up traffic with mindless clickbait in hopes of stacking up programmatic pennies. Their communities are better off for it, and it really doesn’t make a huge difference on the revenue side anyway.

Especially as programmatic technologies and offerings (native advertising, for example, and video) improve, however, I think you’ll see many indie publishers include it as an important piece of a diverse revenue strategy.

How many members does LION have today, and what does the current level of signups tell you about the future of independent community news?
LION has full publisher members from 111 separate news organizations in 30 different states and Washington, D.C. We’ve seen a huge uptick in applications in 2015. Contributing to that, no doubt, is the rapid decline of some legacy print newspaper companies. There are major holes in local journalism throughout the country, and people see both an opportunity and feel a sense of duty about stepping in to help. There are also some talented people losing newspaper jobs, and leaving newspaper jobs by choice to strike out on their own. The success of some LION members who are five, seven and even 10 years into local independent online news that pays for itself have given them confidence to attempt it.

Tom GrubisichTom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of hyperlocal news network Local America, and is also working on a book about the history, present and future of Charleston, S.C.