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Follow the money, part two: Where New Zealand's news media is finding pots of funding gold

Follow the money. It’s an axiom that journalists have believed in for years and a guiding light when it comes to holding the powerful to account. But that phrase is increasingly pertinent to those who run media businesses. As advertising money flows away from traditional channels towards large tech firms, the old business model of selling space around the news is creaking. And that has led to a range of experiments from publishers and broadcasters hoping to keep the lights on – and to keep shining those lights into dark places. Erin McKenzie dives into the local news media feed and finds plenty of experiments, but no simple answer to the funding conundrum.

By Erin McKenzie | September 13, 2018 | features

Read part one of Follow the Money here.

Donation stations

One funding model that doesn’t differentiate between content is voluntary donations, something most famously employed by The Guardian, which asks readers to support its mission in exchange for making content freely available to anyone who wants to see it.

PressPatron is one service allowing donations to be made to news media organisations and founder Alex Clark says for too long publishers have been making the assumption that they need to replicate the newspaper strategy online and force audiences into a fixed price. But that’s not how he thinks they should approach it.

His knowledge comes from study in digital media, entrepreneurship and internet law at Victoria University of Wellington, UT Austin and UC Berkley, as well as working as a media researcher.

In 2015, he was conferred the Master of Advanced Technology Enterprise having graduated with distinction for his thesis evaluating consumers’ willingness to pay for journalism under different funding models. In it, he asked 416 respondents which model they would be prepared to pay for when presented with 10 funding strategies and had interviews with news media organisations including The New York Times, The Economist, MediaWorks and Fairfax. 

Of those surveyed, 1.4 percent said “definitely” to making a voluntary monthly contribution to their favourite news website or blogger, with $11 being the average amount. 11.1 percent said “probably” to contributing.

While not high, the finding was significantly higher than the 0.24 percent who said they would “definitely” pay for a subscription to a website with content restrictions such as a paywall. 2.6 percent said “probably” to the idea of subscribing. 

"More respondents were willing to make voluntary contributions than pay for paywalls,” says Clark.

Armed with that knowledge, Clark created PressPatron. It allows news media organisations to crowdsource with supporters of journalism who make monthly or one-off contributions to their favourite media sites.

Clark too has been on the frontline of the print advertising freeze. He was editor of Tearaway magazine from 2007-2009, through the GFC, and he experienced first-hand the trouble news media organisation are going through. Clark watched the magazine drop from 64 pages a month to 28 and within a couple of years after he left, it went out of print. It does, however, remain online.

While Tearaway is not using PressPatron, over 18 local media websites are and it’s working to expand across the US and Australia. From those using it, Clark says its performance exceeded his research, with many supporting journalism and continuing to do so.

He says while it’s easy for monthly donators to cancel, the cancel rates are lower than those compared to paywalls, with 85 percent of those who signed up still contributing each month.

“It’s incredible – unexpected in terms of value. It’s exceeded research that I’d done.” 

It’s also benefitting the news media organisations as a way of revealing what their readers care about. This is seen in the influx of donations they will receive following hard-hitting investigations. And while clicks have long been a measure of success, PressPatron has introduced a new click to measure—the donation button.

“If you look at articles that have the most clicks on the donate button, it’s a better metric for quality than page views or time spent reading,” Clark explains. “That’s because when you measure clicks you are measuring curiosity, not what they care about.”

And that change of focus can only be beneficial to the quality of journalism produced, he says.

“A lot of sites have pursued the mass audience strategy because they are only pursuing advertising revenue and it’s distorted internally what they are focused on. They are prioritising clicks and shares on Facebook. And while it makes sense if they are only relying on advertising revenue, it’s nice there is another model that can help to refocus on the core mission of what media is all about.” 

But that’s not to say media outlets can’t still have ads. Because there’s no paywall, there’s no expectation that ads will be filtered out, which means PressPatron can be used to complement existing revenue streams. Newsroom is one of those and it sees over 500 fans donate every month alongside its Newsroom Pro subscribers. Murphy says those donations include $10, $20 and up to $100 per month, which to him shows supporters have faith in it to “keep going hard”.

The Spinoff is also using PressPatron to fund investigative long-form pieces and while the donations have seen it fund its own writers Alex Casey and Noelle McCarthy’s ‘In plain sight: behind the pages of Pavement magazine’ investigation, partnerships editor Simon Day points out PressPatron is encouraging for individual journalists.

“As a freelancer, it can be really difficult to fund your ability to do the much harder stories because you have to do a whole lot of legwork that’s unpaid before you get to a point where you are able to pitch an investigation,” he explains. “It can keep some freelance journalists afloat.”

PressPatron is also keeping afloat not-for-profit platforms, such as Crux and The Scoop Foundation. The former is owned and published by the not-for-profit Southern Community Media Trust, which provides issues and action focused public interest journalism to the Southern Lakes District, while The Scoop Foundation for Public Interest Journalism is a not-for-profit charitable trust with an aim of making information freely available to New Zealanders. 

Sponsors – a moral dilemma?

Like Newsroom and many other websites, including ICG Media brands StopPress, Idealog and The Register, The Spinoff’s PressPatron donations are supported by another revenue stream: sponsorships. 

Whether it’s one-off pieces or sponsorships of entire sections, Day says they are brands interested in facilitating interesting and modern conversation around the world and they include Spark, Kiwibank and founding sponsor Lightbox. For Spark, its sponsorship is seen in The Spinoff’s music section and that’s representative of its desire to foster and encourage great music experiences – a goal linked to its sponsorship of the Spark Arena and partnership with Spotify and Auckland City Limits. 

Meanwhile, when The Spinoff teamed up with Kiwibank in 2016, managing editor Duncan Greive wrote about the partnership, explaining the topics it will be covering about the economy are critically important to our society, so it has attempted to fill them with the chaos and humour the site is known for. 

“...I hope they travel a long way. Kiwibank’s aim and ours is to get our audience to be more conscious in their consumption and think about where the dollars are going, and what they’re fueling,” Greive said.

Sounds like a win-win for both parties. But that win-win does raise the eyebrows of some because they believe brands funding journalism throws up an ethical dilemma. Do they influence editorial decisions?

Day says: “We’ve never had a story jeopardised, or put back in the draw, or manipulated for the benefit of one of our sponsors.”

Evidence of the point can be seen in The Spinoff Bulletin, a curation of stories from around New Zealand media delivered to inboxes with the help of its sponsor Vector. Day says earlier this year when Vector was under fire for its post-Auckland storm response, The Spinoff included stories about it in The Bulletin.

Vice is another news media company with sponsors in its funding mix, and like Day, editor Frances Morton is adamant they don’t interfere with editorial decisions. When entering into a partnership, she says they will always ask themselves “will we be making this content anyway?” and put the interest of the audience first.

“I think that’s one of the reasons we are attractive to brands and have that strong relationship with our audience. There have been times in the past where we have turned down deals because we didn’t feel confident that we wanted to be putting out that content.”

For TVNZ, every partnership is entered into with great consideration because Gillespie says selling sponsorships is more than just a financial transaction. 

“The biggest thing we have to sell is out credibility,” he explains, “and if audiences think that’s been affected by a sponsorship or a logo that’s involved in bringing the news and current affairs then we are killing the goose that lays the golden eggs.” 

Looking at TVNZ’s offering as a whole, not news alone, according to its 2018 interim report, TVNZ enjoyed growth in TV and online advertising income, which contributed to total revenue of $170.4 million, up $1.6 million (or one percent year-on-year). 

Newsroom also relies on sponsors and Murphy joins the chorus in saying those sponsors do not interfere. He says the repercussions of interference are not positive for either party.

“Everyone is very mature and commercially aware: If you are getting into that zone of influencing content it’s not good for you.” 

Most say there is no interference from sponsors with this funding model and most sponsors understand that their connection doesn’t guarantee positive coverage. But many believe it’s more subtle than that. It’s often about the stories that might not be written when others are. Commercial and editorial departments were originally set up to be like church and state. And they were set up like that for a reason. 

As Chris Keall wrote on NBR: “Corporate sponsorships always come with subtle and not-so-subtle pressure, particularly as renewal approaches. And in my immediate experience, even when a company has mature leadership, there’s often at least one manager who thinks they can leverage the situation for influence.” 

But as Newsroom’s Murphy replied in the comments: “Your argument is completely disproven by the fact that we did an uncomfortable story involving one of our foundation supporters and treated them exactly the same as any other organisation or newsmaker. Fullstop. We ran what they decided they would say in response to detailed questions we put to them.”

Another issue is that sponsors have a habit of leaving as new marketers arrive, new strategies are implemented or goals aren’t reached. When a sponsor is integral to the creation of new sections, it becomes even harder. 

Want to read more? See the other chapters here.

This story was originally published in the 2018 Media issue of NZ Marketing. To subscribe, click here.

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