Members Only

This past week I found myself in a flood of articles on membership, subscriptions, paywalls and the monetization of online journalism.

An opinion piece in this morning’s Wall Street Journal makes the argument that consumers are willing to pay for news. Peter Funt argues that we’ve already seen consumers are willing to pay for television if it includes “convenience, commercial-free viewing, high video quality, plus various ‘bonus’ features that (create) perceived value.” The same is true with radio when it has “high-quality audio, largely free of ads, with a vast array of channels to please many tastes.”

Funt is correct in pointing out that in paying for television and radio programming that has traditionally been free, consumers expect added benefits in terms of quality and exclusivity. DVDs, HBO, satellite radio all improve the experience of watching TV and listening to music or talk radio. What can news outlets do to improve the experience of reading or watching the news?

Sites like The Texas Tribune and MinnPost are looking to answer that question and pick up revenue in the process via membership. Ken Doctor explains the state of membership in a recent piece for the Nieman Journalism Lab. According to the article, The Texas Tribune has 1,700 members, with a goal of reaching 10,000 members. Members, on average, pay $100. Over at MinnPost, there are 2,000 members. In 2009, membership brought in $360,000 for the site.

Doctor then gets into some interesting math. MinnPost found people who visited the site at least twice a month were the most likely to sign up as members. Of those 40,000 visitors, executives hope to turn 5 percent – 2,000 people – into members.

GlobalPost is another news site that is pursuing membership as a revenue source. Phil Balboni, who runs the site, hopes to get 1 percent of his 900,000 unique monthly visitors to become members. With each member paying $30, that would generate $270,000.

After reading these articles, I started playing around with some numbers for Project Goldfish. I am proposing that the revenue streams for the site be:

• Advertising
• Membership
• Subscription

My current proposal and business plan call for all articles to be free and available to everyone. Membership would provide access to the online community, The Watercooler, where readers could pose questions, converse and debate with other audience members. I would hope and expect that with paying customers posting under their real names, the conversation would elevate above derogatory and off-topic comments.

To figure out how many members I can expect, I first had to estimate the overall traffic to the site. Using Compete, I researched traffic metrics for 27 news sites in Los Angeles. Specifically, I looked at unique visitors. My goal with Project Goldfish is to have 100,000 unique visitors two years out from the launch date. That would put my traffic somewhere between The Jewish Journal and LAObserved.

With 100,000 unique visitors in mind, I used a 1 percent conversion rate and 5 percent conversion rate and assumed members would pay an annual fee of $30:

Membership, I think, would appeal to individuals.

A subscription would appeal to firms and corporations. A subscription would provide access to pay:

• PDF copies of ordinances, government reports and non-confidential correspondents
• Budgetary documents and amendments
• City contracts
• Complete listing of City Hall council and committee meetings
• Complete listing of Neighborhood Council meetings and events
• Weekly video chats with newsmakers
• Access to early morning and late-night news roundups via email

It is basically an aggregation of documents, both paper and electronic. Think of it as a one-stop reference tool. The subscription would cost $100 a year.