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    Aug. 29, 2019, 9:44 a.m.
    Business Models

    “At 7,000 members our lives are already changed for the better”: How the Daily Maverick developed its membership program

    “Our weekly Insider meetings are attended by the editor-in-chief, CEO, membership manager, product manager, support manager, developer, marketing and design team, with occasional drop-ins from finance and events team reps. Of the 10 regular attendees, only three of those positions existed before the decision to move into membership.”

    On August 15, 2018, we announced to attendees of our Media Gathering event in Cape Town the start of our adventures into membership for Daily Maverick. At the time we weren’t entirely sure how we were going to fund December’s payroll. Now, with more than 7,000 members joining us and a 75 percent growth in headcount since we started, things look a lot brighter.

    If you’re not familiar with the challenges of the media industry in South Africa: Take the media apocalypse in the U.S. or Europe, subtract a lot of skills, and add a steroid injection of political chaos, all inside the decade of digital disruption. To say our industry is in a deep, dark hole from which it might never escape is downplaying the size of the problem.

    Daily Maverick is a digital-only news startup, founded in 2009 and born into the perfect storm I’ve just described. A South African digital news startup in the time of Google and Facebook, focusing on politics in the Zuma era, could well be the most bloody-minded foray into news media. We carved out our niche by offering quality, long-form analysis and opinion online and for free, in a time when newspapers were keeping all the good stuff for print.

    We described ourselves as a daily magazine (sans cover price) with a huge reliance on newsletter products, long before they became sexy. The eight years that followed were an exercise in extreme persistence — fundraising, bootstrapping, borrowing, and begging to square off against the monster of the 25th of each month and then promptly beginning the struggle for the next payroll.

    Venture capital in South Africa is barely a thing. Philanthropy focuses mainly on education, which, for all its support in the last 20 years, has returned one of the worst-performing education systems in the world. “Funding education” is also a safe statement; supporting a political and investigative news outlet has never been good for business or personal profile in a country as highly politicized as South Africa. The African National Congress, our ruling party, has regularly garnered 60 percent of the vote since 1994, when we held our first free and fair elections, and enjoys a near-total dominance over every aspect of the society.

    Government’s influence on the economy remains unhealthily large and businesses are loath to be seen supporting editorial operations shining a light on their malfeasance. Running lean was therefore not a strategy but a necessity, and every bit of the available budget was allocated to journalism. A scrappy junkyard dog (that now reaches 1.7 million monthly readers and 115,000 newsletter subscribers) would be an apt description of our time in the news media arena.

    Figuring out a plan: Membership vs. donations vs. subscriptions

    Toward the end of 2017, we were fast running out of friends, fools, and family to invest in or lend to us. We invested in an innovation tour of prominent U.S. media companies. That was expensive, but we needed help with lightbulb moments that we wouldn’t be able to find on our continent. I was surprised to hear and feel the sense of optimism that emanated from the organizations I visited that had solved the Rubik’s Cube of reader revenue. I returned with a sense of focus that we immediately needed to invest in two areas. Within weeks, we had hired more staff and starting planning improvements to our product efforts and a reader revenue plan.

    The debate over implementing a New York Times-style paywall was a short one. Over the years, many readers, funders, and experts had urged us to adopt a subscription paywall model for our quality editorial content. We long resisted this because South Africa is already a poor country. Allowing only those with means to access Daily Maverick content would make us even poorer. Luckily for us, some illuminating inroads into membership had already been made, thanks to the work of the Dutch startup, De Correspondent, and the Membership Puzzle Project, who helped us roll out some of our membership experiments as a grantee of their Membership in News Fund.

    On the reader revenue scale, imagine donations hugging the hippie left and subscriptions the capitalist right, with membership occupying the center. Donations have no expectation of anything in return for their contributions, while paywalls, the likes of which are employed by The Washington Post and The New York Times, exchange value through access to content. Membership implies an exchange of value beyond a transactional gateway to content, and in our opinion is the hardest of the three models to get right but carries with it the potential to be the most rewarding.

    As we waited for our site’s WordPress migration and major design overhaul to play out, we had six months to study and plan our march into membership. For this, we turned to the Tow Center/MPP’s Guide to Audience Revenue and Engagement, which quickly became our bible. (Thanks to the effort of Emily Goligoski at MPP and the Institute for Nonprofit News.) It mainly helped with insights that would not only significantly reduce the cost of our fees but also reiterate the mantra that membership is about more than collecting revenue from those formerly known as the audience:

    Membership is a social contract between a news publisher and its members who want to support and offer more than just finance for its sustainability and prosperity.

    It is this concept that underpins the entire existence of any membership program and its ability to succeed. If an organization cannot buy into this, it’s better off adopting straight donations or subscriptions as its method of choice. For Daily Maverick, though, this value system resonated with our beliefs and our journalism. We planned to make membership completely voluntary, allowing members to choose their level of financial support and involvement. They, in turn, would help keep our content free for everyone, especially those who can’t afford to pay.

    Guiding principles

    We designed the membership program around the cause of keeping our quality journalism and investigations free for all, helping us not only continue our role as a watchdog but also participate in our evolution as news media emerges from its post-apocalyptic period. It had to be more than just a subscription by another name, and the way we asked needed to connect with the part of the brain that deals in emotions. We employed a “you choose” strategy for setting prices as often as we could, from the monthly or annual membership options to events with a non-member ticket price. In many cases, we achieved more through this show of trust in our members than we would by peddling a fixed-price product or service.

    When we drifted from our cause — when we went product-focused in our marketing — we fell short of our goals. Staying true to purpose, and knowing what it is, has helped us on our membership mission: to grow our community through experiences and engagement with just one of the successful by-products being that of financial upside. This is a notion that is easily lost when the focus is on reader revenue, and we have to check ourselves often not to get carried away by focusing on our revenue goals. We also have to reiterate this internally with the rest of the team, and do it often.

    Learning as we go

    While there was research available and a team at MPP that we could reach out to, the plane had to be built while we were flying. With a small grant from the South African Media Innovation Program we cobbled funding together to build the launch technology, sewing together a series of WordPress plugins. Along the way, we learned some valuable and sometimes costly lessons.

    African audiences will pay for news (experiences)

    One of our MVP (minimum viable product) tests was to run an aggressive call for donations ahead of the launch of the membership program. It provided quantitative and qualitative feedback, notably that readers were willing to financially support a cause they identified with. For a long time there was a notion that South African readers wouldn’t pay for news content. [Editor’s note: Sixteen percent of South Africans pay for online news, according to the Reuters Digital News Report; that’s the same amount that pays in the U.S.] We wouldn’t know because we weren’t asking them to pay for news but instead offering the chance to be part of a community.

    Listening does work (especially if it’s someone’s job)

    In the weeks before launch, we surveyed donors, asking a variety of questions including which elements of membership they would value most. The top five items from that survey became the focus of our rollout efforts and settled internal debates about which direction to take: engaging with Daily Maverick journalists and staff, ad-free browsing, a members-only newsletter, invitation to events and discounted tickets, and the ability to comment on articles.

    With the success of Maverick Insider (200 people signed up on launch day) it became pretty clear, pretty soon, that we were going to need a bigger boat. We needed a community manager and we had no real idea of what that person would be tasked with on a daily basis. We knew event organization, communication, and lots of copywriting would be in their future, and we knew just that kind of person who was one of the first Insiders to sign up on launch day: Francesca Beighton.

    We now have e-commerce problems

    After years of B2B dealings, we suddenly switched over to B2C with only some appreciation for the challenges of having an always-on business. Abandoned carts, payment gateways and customer support are now the scariest words in my lexicon. They keep me up at night, but thankfully we still have the goodwill of the last 10 years and the authenticity to sometimes reach out to members and say: “I’m sorry that we’re sucking at this right now. We’re working hard to fix it, and sometimes the crappiness of our financial system has our hands tied.”

    Quality journalism is a revenue builder

    For years, news teams were seen as a cost center that brought the audience to the table for the rainmakers in sales and business development to do their thing. When the inevitable cost-cutting comes in a time of disruption, newsrooms are too often the starting point of the purge. With membership, we can draw a direct line from the revenue we generate to the newsroom and the quality of editorial. It is the perfect feedback loop that keeps us on our editorial mission. If we stray from the quality, independent, public service journalism that we provide, we’ll see it in feedback and decline in support from our members.

    Membership is good for business

    Many of our members are leaders in their small, medium, or corporate businesses. In addition to their membership, some also helped with advertising budgets that helped sponsor an entire new vertical of journalism for us. And though some corporations still shy away from placing advertisements alongside highly charged political analysis or investigations, some have helped by purchasing memberships on behalf of their employee, which also creates opportunities for us to share the Daily Maverick story or offer political analysis inside the workplace through smaller events.

    As our membership approaches the 10,000 mark and beyond, new commercial opportunities open up for us, like a printed product, a book division, and/or speaking engagements for our journalists. Our tenth anniversary book, out later this year, will most likely achieve most of its sales to members sold directly from our website.

    Financial and cultural benefits

    For membership to succeed, a news organization needs to buy into the concept completely. It cannot be something that a person or team does alone. Our weekly Insider meetings are attended by the editor-in-chief, CEO, membership manager, product manager, support manager, developer, and marketing and design team, with occasional drop-ins from finance and events team reps. Of the 10 regular attendees, only three of those positions existed before the decision to move into membership.

    Our next efforts have been to showcase the opportunities for engaged journalism to the editorial teams across our Johannesburg and Cape Town offices. It’s one thing to start a new operation with a set of editorial expectations to include readers and members like De Correspondent and Krautreporter, both European-based member-funded news organizations. It’s another to introduce what can feel like a foreign concept to begin with. For us, it has been a learning curve that requires illustrating through examples and experimenting to find the right ways for experienced journalists, under pressure from all sides, to try a slightly new way of doing things. I guess that’s why it’s called leadership and not dictatorship. And why it’s so damn hard.

    We knew pushing engaged journalism onto our editorial team from the get-go wasn’t the way to kick things off. The best bullshit-sniffing traits of journalists make change a little harder to broach than simply sending out an internal memo. So as the people (initially) responsible for membership, we took it upon ourselves to show how we could ask for more than just money from our members.

    Our biweekly members’ newsletter, showcasing the behind-the-scenes stuff we previously took for granted, served as the base from which we shared, asked, and fed back to our members. Open rates on this newsletter average 2.5 times our standard newsletters (>60 percent), with our callouts to members often blowing us away with their response rates. Tickets to our one-year celebration of Maverick Insider sold out within hours. For all the aversion we have talking about ourselves, people seem genuinely interested in our journalists and editors.

    Here are just some of the things we were rewarded with by reaching out to our members:

    1. Recruitment: our community manager was one of our first Insiders; if our books division gets the green light so will be the publisher/editor running that division;
    2. Free event spaces;
    3. Discounted office space;
    4. Volunteers at events;
    5. Survey feedback and testing of ideas;
    6. Comment moderators;
    7. Drone pilot;
    8. Offer to help fix an ongoing bug on our platform that we were struggling with.

    Also important: Building a recurring and significant revenue stream has been liberating. From the lack of transparency in the programmatic marketplace to media planners with directives and mandates not always congruent with public service journalism, it’s an area that we’d prefer not to depend on. Reader revenue has freed us from the shackles of others we can’t see or who don’t care. We’re taking back control of our own destiny through the direct relationship with our members.

    While our newsroom and our organization has indeed grown by 75 percent in the year since we started Maverick Insider, not all of that has been funded by readers. Philanthropic grants remain a big part of our revenue, as does commercial trading in advertising, events and other sponsorships. But reader revenue is growing and it is consistent and predictable recurring revenue for us. It now accounts for 30 percent of an enlarged payroll and 18 percent of all running costs. July’s reader revenue would have covered more than half of the August 2018 payroll, when we launched the program.

    Because philanthropy and advertising are such volatile beasts, we prefer measuring our ability to cover our humans and overall costs. Over time we’d like to reach an even split between philanthropy, advertising, and readers in keeping our revenue mix diversified. So while not all the growth has been funded by readers, having that security has allowed us to invest in the newsroom growth and experiment with a view to funding new sections through grants or commercial efforts. Without this support, for example, our ventures in climate crisis reporting would have been severely reduced.

    Where to from here?

    Membership has helped us change so much and yet not enough. We have some way to go before it becomes part of our DNA for everyone at Daily Maverick. Each new experiment or success story will help us on our way to making this a reality.

    In order to better utilize our members as editorial resources, we can follow the lead of the likes of De Correspondent, noting the experts in our membership community and how we could possibly use them in producing great content. Engagement will be top of mind as we look to fashion a new way of thinking and operating.

    At our current audience levels we’re guessing our paying Insider numbers will max out around 30,000 to 40,000. I say “paying” because we will also make moves to allow a wider range of membership access to those who wish to contribute in non-monetary ways, especially younger and student readers. At 7,000 members our lives are already changed for the better, so 5x could be industry-changing.

    When I stood up on that stage a year ago, asking those in attendance to join our cause, I mentioned that we could no longer do this alone and that we no longer wanted to do this alone. We believed that we would transform into a better news operation because of membership. That the time to fight this battle for the future of our country should not be shouldered by a brave few.

    As with most of society’s problems, we believe the news industry’s problems can be solved through service to community over the pursuit of individual benefit. Outside of the few global players winning in the subscription space, the news publications that seem to be carving out a sustainable model, and not reliant on a single type of funding, are those embracing the membership model. Not only can membership save journalism, but it will do so by helping it evolve.

    Styli Charalambous is the cofounder and CEO of the Daily Maverick, an investigative news site in South Africa.

    POSTED     Aug. 29, 2019, 9:44 a.m.
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