Johanna Vehkoo and Clare Cook
- Many UK startups do not rely on advertising revenue. There are several who make their money from legacy media, showing that the relationship between startups and legacy media players is collaborative rather than competitive.
- The B2B (business-to-business) approach is very visible in the business models of our UK case studies. These are startups whose clients are either the traditional media or other bigger companies. It seems that there is more money in curation, aggregation and selling technology than in the high set-cost business of journalistic content creation. The hyperlocal scene is vibrant receiving much attention but sustainability is a struggle.
- Apart from the hyperlocals, it’s surprisingly difficult to find UK startups who produce their own content and sell it to a large or even niche audience.
- As our project contains no case studies from Scotland or Wales, this report mainly considers England. We also briefly mention an Irish case study, Storyful.
- The case studies include: Lichfield Community Media, Hackney Citizen, Scraperwiki, Storyful, Tweetminster, Demotix, Media Street Apps, Blottr Digital, Journalism.co.uk, Audioboo, Landscape Juice, Not on the Wires, Talk to the Press, Women’s Views On News, Alderleyedge.com.
It is common to divide British newspapers into two main categories: broadsheet or “quality” and tabloid – the latter being a reference to the style of content rather than format, as some quality papers are also smaller in size. The most popular printed newspaper is The Sun, with a circulation of 2,6 million in March 2012. The biggest publisher of local and regional papers is Trinity Mirror, which has 240 local titles in addition to its national titles The Daily Mirror and Sunday Mirror (Ponsford 2012). The British press is also known for its partisan political leanings, whilst the public service broadcaster, the BBC, strives to remain impartial and unbiased. The national newspapers in the UK have always been in fierce competition with each other, and this continues when they move online. Backed up with a comprehensive spectrum of news agencies and wires, for written and multimedia content, the national news market is fairly saturated and there is little room for new journalistic startups entering this particular market.
The online traffic of the national newspapers rarely reflects their print circulation. Whereas The Guardian only sells about 217 000 printed copies, it has more than 60 million unique visitors per month online (Halliday 2011). It has also built up a sound reputation for API (application programming interface) projects and has pioneered several initiatives to bring the newsroom closer to the audience, publishing newslists and hosting open days. Its reputation to embrace the grassroots and socially networked characteristics of the web have been further popularised not only by the direction of editor Alan Rusbridger, but by projects such as Zeitgeist to track online distribution. National newspapers have adopted various strategies for their online operations, from The Times’ fully closed paywall to The Guardian’s open journalism approach, where content and, famously, comment is free. The Daily Mail is now the world’s most visited online newspaper, surpassing The New York Times (Oremus 2012). The Guardian and The Daily Mail especially have opted to branch out to the US and the rest of the world as part of their strategy to attract larger audiences.
Despite the impressive visitor numbers, few legacy newspapers have managed to make a profit online. The only national paper considered to be a real commercial success online is The Financial Times which charges from £5.19 ($8) a week. This can be explained by specialised niche content, which is highly valued by business professionals and the high number of subscriptions purchased by companies and businesses rather than individuals.
There is little evidence publicly available on the overall success or failure of startups in the UK, although the field is receiving increasing attention from academic, civic and corporate players. The success of UK’s Wired magazine, launched in 2009, reflects the general zest in the UK tech and media start-up scene. UK-based author and academic Paul Bradshaw runs the extensive Online Journalism Blog as a forum for exchange and debate on the future of journalism. And there is growing emphasis on the role of journalistic enterprise for community development and engagement. Investment in supporting these enterprises is also high with revenue streams such as the Google-funded Media and Digital Enterprise project, run by the University of Central Lancashire, for 30 journalism entrepreneurs to benefit from structured business masterclasses.
Hyperlocal vibrant yet struggling
Whilst legacy players are looking outside the UK borders, small startups are looking even closer inside. The hyperlocal media landscape has been the focus of several reports and meta-journalistic commentary. “The local and regional media in the UK” -report identified several common threads across hyperlocal media (Ofcom 2009). A report commissioned by NESTA sets out the emerging hyperlocal media landscape to better understand its potential (Radcliffe 2012). A study in 2010 looked at the 160 different hyperlocal sites in London and noted the difficulty to “slot each example neatly into a category” (Flouch 2010). Attempts have been made to map the local regional landscape and alternative business models (Nel 2010). Yet we do not know as yet a precise representation of these sites and services in terms of proportion of the national media market.
Over the past five or six years, the UK has seen the emergence of hundreds of hyperlocal blogs and websites. Openlylocal.com lists and links to more than 500 of these websites. They may vary from one person blogging about their home village to a small business providing work for a few people reporting local news and selling advertising to fund it. In the first major review of the UK hyperlocal scene, hyperlocal is defined as “online news or content services pertaining to a town, village, single postcode or other small, geographically defined community” (Radcliffe 2012). Many hyperlocals are dedicated to a town (Blog Preston) or district (Lichfield Live), or sometimes part of a city. London has several hyperlocals for boroughs (Hackney Citizen) and even individual streets (King’s Street). The study (Flouch 2010) of London’s Digital Neighbourhoods mapped 160 citizen-led sites in London only. Some hyperlocals (Lichfield Live, SoGlos) are run by people with journalistic skills and background, but many (Hackney Citizen, King’s Place) are not.
Excitement in the hyperlocal scene is further evidenced by the creation of the organisation Talk About Local, created to teach people the skills needed to set up a local online publication. In 2012, NESTA, an independent charity, announced a competition to develop “next generation hyperlocal media services”. As part of its Destination Local programme NESTA offered ten organisations seed funding of up to £50 000. The competition was “looking for prototypes that make the most of mobile technologies to deliver geographically-relevant local media”. The results were announced in July 2012 with winners including Kentishtowner.co.uk, LocalSay, LOL! Leeds Online, and Papur Dre. In May 2012 Cardiff University in Wales announced its plan to set up a new centre for community journalism. The aim is to teach people who run hyperlocal outlets the essential skills to maintain these projects and become self-sustaining. Radcliffe cites ten reasons why hyperlocal media is gaining popularity in the UK presently: new routes to connect with geographic communities thanks to the Internet; reduced services, staff and revenues of legacy media; gaps in geographic coverage and content, particularly local reporting, have created a vacuum for new entrants, and concerned citizens, who are now responding to this challenge; new online services such as WordPress, Audioboo and YouTube have enabled anyone to create and distribute local content; an explosion in digital devices capable of accessing this local content, particularly mobile phones and tablets; social media and changing audience behaviours; opportunities for audiences to share and distribute relevant content to their own networks and communities makes local distribution easier too; new funding models and new revenue streams for niche, specialist businesses, including hyperlocal services; big business recognises the value of local content and is moving into the hyperlocal space alongside smaller citizen-led efforts; local issues, and locally-relevant content, continue to matter to audiences, perhaps more than ever in these turbulent times. (Radcliffe 2012)
However, hyperlocals have found it difficult to find a sustainable economic model. Even though there is no exhaustive survey about this, it is likely that most hyperlocals are run by enthusiastic individuals who work either for free or very little money, out of dedication to their community. They are facing many structural challenges, such as funding, discoverability, sustainability, and visibility (Radcliffe, 2012). Richard Jones, a freelance journalist and lecturer at Leeds university, sums up his endeavours running the hyperlocal site Saddleworth News, like this: “Despite my site’s reach of more than 20 000 unique users per month, in an area of only 24 000 people, I found it hard to persuade the butcher and the baker of the value of taking out an ad. Much easier for them to do what they’ve always done, and use the glossy magazines or the daily paper.” (Jones 2012)
Not all of the hyperlocal buzz is happening on the web. Print continues to play a role, as some find web-only doesn’t pay the bills. The Hackney Citizen, for example, makes more than ten times more money from print than online. Regional publisher Live magazines has branched into the county magazine sector with a series of profitable print launches in Lancashire, in the North West of England. Local television, too, has seen new players emerge. A small Sikh television channel, Sangat TV, gained fame for its coverage of the UK riots in the summer of 2011. The Government has announced its plan to award local television licenses by the end of 2012. Some of the most interesting local experiments are not seeking profits and cannot be classed as businesses at all – and therefore are not suitable for this study, such as crowdsourcing tool Help Me Investigate.
The regional press is ailing in the UK. Neil Fowler (2011) says that the regional and local papers failed to experiment with new business models and understand the changes in the marketplace. Many of the regional papers enjoyed very high profit margins for a long time, so they had the chance of making investments in the future when the times were good. Now, Fowler suggests that radical measures are needed to save what’s left of the local press. He writes in The Guardian (20 Nov 2011): “Manufacturing may have largely disappeared from these shores but it has, in part, been replaced by imports from China and elsewhere. When local and regional news goes, there will be no substitute. Bloggers will have their part to play, but the fundamental question remains: who will cover Hartlepool magistrates court on a wet Wednesday afternoon? It will not be a well-meaning amateur and has to be a professional journalist – the issue is how will it be paid for?” (Fowler 2011)
The enthusiasm around hyperlocal has not been left unnoticed by the regional press. The Birmingham Mail has been successful in harnessing some of the hyperlocal audiences by co-operating with more than 30 hyperlocal websites. The Birmingham Mail, and its Your Community section, has the permission to use the hyperlocal sites’ content both in print and online, properly credited and with links back to the hyperlocals. Northcliffe Media’s LocalPeople network, launched in 2009, has grown quickly to hundreds of local sites. All of these are completely reliant on user-generated content. The Liverpool Echo produces a print user-generated supplement in its city paper.
Despite the known difficulties of traditional regional media, at least one of the big national newspaper players has also dabbled in hyperlocal journalism online. The Guardian experimented for two years with Guardian Local, a project with three local correspondents, dubbed as beat bloggers, covering Leeds, Cardiff and Edinburgh. In May 2011 the local blogs were closed as The Guardian saw the project was not sustainable. The Guardian didn’t abandon hyperlocal altogether. In March 2012 it launched the hyperlocal publishing platform n0tice.com, an idea spun from one of the newspaper’s hack days. n0tice is described as “a platform which re-thinks local news for the social-local-mobile (so-lo-mo) world” and which seeks to answer the question “what’s happening near you?” It combines liveblogging, collaborative story gathering, and mobile reporting. The aim is to provide revenues for both The Guardian and the noticeboard creator, potentially a hyperlocal website, by sharing income from classified advertising.
Fowler may not see hyperlocal blogs and websites serving their communities as well as newspapers used to, but it seems that many hyperlocal advocates might disagree. Many see their role as filling in the gap left by traditional media, which has been cutting newsroom jobs and failing to understand their communities. As Paul Bradshaw told the parliamentary Culture, Media and Sports Committee in December 2009:
“For the hyperlocal publishers, bloggers, one key element of quality is transparency. If you report on a council meeting, then you link to the full minutes, you put all of that in its full form. It is interesting because I have been looking at a lot of council coverage in local newspapers and it is very much second and third-hand, you are getting very small quotes and it is not clear if that is from a press release, directly from a phone call or the meeting. A blogger would link to as much as possible and would link to the full transcript.” (Bradshaw 2009)
New platforms for new players
Several entrepreneurs in the UK are experimenting with new platforms. This appears to be the second main trend in UK journalistic startups, in addition to hyperlocals. Many of these new players also have fresh ideas about revenue models, as an alternative to reliance on advertising.
Audioboo is a social platform for sound. It’s a mobile and web platform that allows you to record and share audio with your friends anywhere. Journalists can use it for publishing interviews. Blottr is an open platform for citizen journalism. It has an interesting business model as it makes money by licensing its technology as a white label to other, different kinds of publishers. For instance, it has a cosmetic surgery magazine as a customer. This magazine has 12 000 of the world’s leading cosmetic surgeons reading their content. With Blottr’s technology they’re able to get those users to contribute as well.
Tweetminster curates news and opinion around any topic, industry or market. Its purpose is to help people and organisations know what is important for them to know. Tweetminster gives all things political for free on their public platform, but charges for analysing other kinds of content, which may vary from “Formula 1 to Middle East”, according to founder Alberto Nardelli. They too are a technology company. Demotix is an online platform that allows anyone anywhere to upload their news, video and images. The Demotix staff will then vet that material and then license it on to mainstream media. The company has many high profile partners from The Guardian to the Wall Street Journal. Essentially Demotix is a “citizen journalism AP” (= newswire). They split the revenue from sales 50/50 with their contributors.
There are also scalable platforms for hyperlocals: Focus Digital (which runs AlderleyEdge.com and other local websites), Media Street Apps and Talk About Local all work to make it easier to create new hyperlocal websites by basically copying an existing model to new locations and/or teaching the use of open source software tools.
Big media – friend or foe?
Many UK startups do not rely on advertising revenue. Tweetminster and Demotix make their money from legacy media, as does Storyful from Ireland. Tweetminster analyses trends in web content, Demotix works as a citizen journalism news agency and Storyful sells verification of content from the social web. This shows that the relationship between startups and legacy media players is collaborative rather than competitive which is contrary to hyperlocals who often see it as their job to fill in the gaps left by traditional media (although the tension between hyperlocal and the local press is diminishing as some hyperlocals now work in co-operation with traditional media).
Audioboo is one start-up that seized an opportunity. It is a mobile and web platform that effortlessly allows you to record and share audio for your friends and family. “In 2008 we were working with Channel 4 to do more recording with mobiles but the recession happened and it was clear they weren’t going to launch so we thought we would develop it any way. We put it in the App store and didn’t think much more of it. But then loads of journalistic producers found usage for it: during the G20 protests and amongst BBC Radio One listeners. So the growth was quite serendipitous as we realised we were hitting a great market.” (Rock 2012)
Audioboo’s key strategy is to see themselves not “as an Internet disruptor: we want to work closely with and complement existing media models in news and new areas. Audioboo pro is license deals – we want to work with big corporations to buy a bunch of functionality. It is about what we can offer to those media companies who already have significant audiences.” As well as partnerships, the business model is largely based on a freemium model. There are 400,000 users of which 5,000 have joined Audioboo plus. It is aimed at loyal users and podcasters. A new Plus tier, costing £60 annually, comes with 30 minutes recording time, updates to Facebook pages and extra iTunes podcast settings. The revenue model also relies on paying for content: like audio books and book chapters where they take a 30% cut.
The business-to-business approach is very visible in the business models of our UK case studies. These are startups whose clients are either the traditional media or other bigger companies. It seems that there is more money in curation, aggregation and selling technology than in the high set-cost business of journalistic content creation. Those who are producing their own content, they are also very much B2B and niche content, such as Journalism.co.uk – whose interest is the media and journalism itself – and Landscape Juice, which has the highly specialised audience of the landscape industry. For this type of businesses, the money doesn’t only come from selling niche content but also from events, training and consulting.
Increasingly, however, social media is helping to break down a “them and us” mentality. Big Media are working in partnership with smaller news producers in the UK, with The Guardian and the BBC both releasing APIs. These moves to increase collaboration can be a rich source of opportunity for the media entrepreneur under the umbrella of open innovation (Chesbrough 2003, Bessant & Venables 2008).
Apart from the hyperlocals, it’s surprisingly difficult to find UK startups who produce their own content and sell it to a large or even niche audience. Mostly the content comes from elsewhere, such as citizen contributors, or it is not really a selling point. Not on the Wires was an exception to this rule, but they ceased publishing as they realised the model could not be made sustainable and they couldn’t pay the contributors.
It’s particularly difficult to find successful websites who rely on quality niche content. One exception is Citywire.co.uk, which has been covering business news since the year 2000. The prominent political blogger Guido Fawkes has done well with Westminster gossip.
It seems that quality niche content – concentrating in doing one thing and doing it better than others – is a field mostly left unexplored in the UK and therefore full of opportunities. As the co-editor of the local site Blog Preston, Joseph Stashko, notes:
“But why don’t we see more of it (= startups) here in a journalistic sense? Many UK journalism schools are innovative, and the projects produced by some students are intelligent and unique ideas. Why then is the idea of working for a national newspaper or magazine still perceived as the Holy Grail? We live in an age where news is not defined by the platform, it’s defined by the content. Readers care less about where the news is coming from, and more about whether whoever is writing it has any authority. More and more, people are realising that non-traditional news organisations hold the key to a particular beat; take Guido Fawkes. Readers can deconstruct and take apart pieces that reek of inaccuracy; so we’re in an age where it matters less who you write for, but how good you are. Why is that important for trying to understand a startup culture? Because it reinforces the idea that the playing field is wide open… I fear that none of that will happen. Not because it’s unrealistic, but because the mindset required and facilities needed aren’t prevalent in the UK.” (Stashko 2011)
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