MAKING MONEY

Regular Old CPM Advertising.
It's not exciting — and it's probably not sufficient — but the backbone of any plan to build a city-wide news organizations is going to be selling advertising.

Ancillary products.
We got this suggestion from a reporter at a major national newspaper, based on this observation, "Journalists tend to be bad product developers": "My suggestion would be to launch a mini-team alongside the news desk that would develop (and raise their own cash for) a product that would build on what the newsroom's developing. That could be some sort of local restaurant database (I would pay for NY mag's restaurant functionality just like I would Zagat's) or selling research reports to real estate brokers based on the crime blotter. But basically find something that the Post Chronicle does that no one else can and try to build a web service or proprietary software off that."

Community.
The heart of the Post Chronicle will be its readers, not the news staff. And done right, it's that reader community which will provide the real incentive for people to return day after day -- and to pay for participation. The SFGate site regularly gets hundreds of comments on ordinary news stories, which proves that there's a hunger for community. Yelp -- ditto. Why not harness that enthusiasm for community, and indeed make it the central focus of the Post Chronicle? Here's a 3-tier model that's open, encourage participation and includes some revenue opportunities:

• Anonymous participation. People can make comments anonymously, but that's it.
• Registered users. If you register, you can associate your comments with a username, track responses to those comments, follow friends or favorite reporters on the site, build a custom front page.
• Subscribers. In exchange for a monthly fee you become a full member of the Post Chronicle, with extra benefits -- eg the right to vote on what the paper should cover next.
  
• Models for this have been developed by several organizations. Finding the right tools for interaction between subscribers and newsfolks inside the organization will be key. Take a look at what Daniel Victor is doing at The Patriot News in Central Pennsylvania. As he put it, "My new assignment editor? You, the community. Beatblogging.org from NewAssignment.net is another great example of building the community right into the reporting.
• But the question becomes (this is the business model section, after all): how many people would be willing to pay for this kind involvement, assuming that it can be made to work? How much could you charge?
  
• What other services could be offered to subscribers? Are they the ones who get access to the information from the Semantic Desk? That information could actionable business and political value.
  

There's no such thing as local any more.
One of the biggest challenges the SF Post Chronicle needs to face is the fact that local media alone doesn't capitalize on the value/breadth of the digital audience. The way ad revenue is built is on the publisher's ability to package/sell its distinct audiences. So, as a key part of the evolution of local media, we must downplay local a bit, and upsell our distinct audiences through our differentiated content. Think of it this way: a great food column will have foodie readers interested from CA to Rhode Island. Thus, an advertiser will be more attracted to an audience based on behavioral targeting.

An idea: let's select 3-5 key content areas, of course, not ignoring local news, but building off of the distinct value of the Bay Area to the rest of the U.S. such as:

• coverage of Silicon Valley: tech/VC/innovation
• cleantech/green lifestyle
  
• health/fitness
• science/education

A counter-view is that local is a key focus and that a successful citywide news and information website should serve as a core to a local network of sites (both owned & operated and independent). Advertising sales resources and technology should enable monetization of the attention the core attracts and shares with the network regardless of where the audience visits on the network. By being part of every action on the network, the core business thrives while supporting a strong and flexible group of sites that can continually grow and change to meet the city's needs.

An events calendar (think a combination of Valleywag's former tech event calendar, myopenbar's listing of free/discounted events, and onlyinsanfrancisco.com hodgepodge of local, somewhat tourist-oriented events) might be an additional revenue-generating product by getting organizers to pay for sponsored listings. This would be particularly valuable if the calendar could be customized (by neighborhood, for example), allowing advertisers to better target their event marketing.

The above suggestions also play in to the Coverage Plan.

Advertising Models

I will always remember the full-page black-and-white ads for Denver's May D&F department store in the Rocky Mountain News when I was growing up. It's a wonder to think of how much time an ad like that has in front of the reader's eyes compared to the fleeting rotation of banner ads in Website sidebars and leaderboards. There's no slowing down the pace of page views or increasing the size of basic advertisements, so what else is there? As Cory Bergman puts so well in this short article, journalists need to get on board with the business side of publishing. "By splitting journalism and business into two buckets separated by a longstanding cultural divide, the two groups fail to collaborate on ideas that tap the strengths of both. Most journalists want to control the conversation. So do the sales folks. So you need a third element: creative technology folks, empowered with resources, who can infuse community in content and revenue generation, providing value to both users and businesses."

CPM/CPA/CPC: The cost-per-click (or per bundle of clicks) online advertising model is about as old as the Internet, and while it has generated revenue over the years for online businesses, there is certainly movement afoot to find more innovative (and effective and reliable) ways for advertisers to reach users. The model isn't dead and it would be throwing money away to refuse engagement with it, but it's only a slice.

Sponsored Content: It's increasingly common for advertising RFPs to propose content-based partnerships whereby the advertiser has visibility on a media platform without being the direct subject of a piece. While this works for non-news Websites sponsored content presents major ethical issues for a true news service. Is there any good way to enlist paid "sponsorship" that does not get in the way of journalistic ethics?

SPENDING MONEY

Journalists don't like to talk about cost control — maybe because it seems that's all the biz types do talk about — but if we're going to offer a workable model for the future of news, we've got to look the problem in the eye. We're assuming 140 employees, just for fun. Below, you'll find a possible distribution of employees with salaries attached. Perhaps this is completely the wrong approach. There are other models we could explore, say, bonuses — a la Gawker — for high-traffic stories?

In any case, this is probably wildly unrealistic in a lot of ways — please help refine it! — but we'll float it anyway, as a starting point for the conversation, knowing full-well that the true costs of this many employees are likely higher, maybe much higher. But let's take this as the order of magnitude and say, can we build a revenue model that brings in more than $7 million a year/ $20,000 a day in revenue?

One scary thought: this investing blog estimates that only five blog/blog networks — the Gawker network, HuffPo, Drudge, Perez Hilton, and Sugar, Inc — make more than $7 million a year.

Position	Number	Avg. Salary	Annual Cost
Ed-in-Chief	1	$200,000	$200,000
Managing Ed	1	$150,000	$150,000
News Ed	1	$100,000	$100,000
Editors	15	$65,000	$975,000
Reporters	35	$45,000	$1,575,000
Data reporters	15	$45,000	$900,000
Community mgrs	5	$45,000	$420,000
Semantic team	7	$60,000	$420,000
Copy desk	14	$45,000	$630,000
Photographers	10	$40,000	$400,000
Neighborbloggers	10	$30,000	$300,000
Int'l bloggers	9	$40,000	$360,000
Tech	20	$60,000	$1,200,000
Totals	140	$50,107	$7,200,000

Plus, as dtweney notes in a thread below, you're looking at an actual cost of something like $10 million or more, all-in.

Given how it looks, we might want to ask: what's the minimum number of people that could cover a city? 20? 40? 60?

Methods for Increasing Employee Cash Flow

The pay rates listed here, particularly for this city, ain't pretty. At this point, until we know which of the revenues models above actually work, it makes sense to keep salary assumptions low. But the PostChron could provide the opportunity for reporters to make more money outside the organization. After all, for many writers, their main gig is just one slice of their revenue pie. Clay Shirky sums it up, like he does, "We should be talking about new models for employing reporters rather than resuscitating old models for employing publishers; the more time we waste fantasizing about magic solutions for the latter problem, the less time we have to figure out real solutions to the former one."

The most common way of "paying" reporters without paying them is to incubate in them the idea of journalism's exceptionalism. What we do is special — IMPORTANT — so you don't need as much money. That's nice, but it doesn't put bread on the table. The ideas we'd Are there things we can offer other than money that would make the PostChron a desirable place to work — and increase how much money reporters make — without breaking the bank? Here are some ideas, please add more:

• The assumption of the right to work from home, reducing commuting costs and handing employees an extra hour a day
  
• Reprint rights that revert to the author of the article a week after publication
• One weekday off per week (replaceable with a weekend day) to work on freelance stories for other publications
• Actively encourage and promote writing books, speaking gigs, and other ancillary sources of writer revenue. A PostChron speakers bureau
• For photographers, the right to all of their photographs they take in the line of duty aside from the ones printed in the paper.
• Support for building personal brands online through Twitter, Facebook, web pages, and other means.