Oakland Local: Where’s the Money?
One of the major topics at the Sept. 24 Block by Block conference was money: how a locally focused online publication can support itself financially. Journalism master’s students from the Medill School at Northwestern University interviewed conference participants about their business and revenue strategies.
Stay tuned for a series of posts in the coming days. We hope these posts will continue conversations that started at Block by Block. If you have ideas that will help these and other online community publishers achieve their goals or questions about how they are doing that, please join the discussion in the comments. Thanks!
By Geoffrey Hing
(This Q&A with Susan Mernit, founder of Oakland Local, has been lightly edited for length and clarity.)
Is Oakland Local a for-profit or a non-profit site?
Susan Mernit: So Oakland Local’s a non-profit. Legally, we’re a project of a 501(c)(3). We have a fiscal sponsor right now: the Center for Media Change, which is the organization that is also the fiscal sponsor for Spot.Us.
Are you happy with that status?
Mernit: It was really important to me not to set up too much structure in the beginning because in 2008 I spent a lot of time and effort setting up a C-corporation for a tech startup I was doing and after six months I ended up shutting it down. So I felt really strongly I wanted to start the organization and then see where it was headed before I put any more formal structures around it. And we’re not even a year old yet. I feel strongly that, right now, being a non-profit is a really good fit for Oakland Local because of our focus on social justice and community empowerment. We actually are starting a for-profit division that will be a separate company that we’ll run some revenue strategies through, so I can talk about that plan.
Is the L3C model something that’s available yet in California?
Mernit: I believe it is available. My personal opinion is that it makes you unappealing to everybody [financial supporters]. I don’t think people really understand what it is. I don’t think they’re used to funding it. And I don’t think we have the kind of established clout [so that] it would be an asset.
Tell me a little bit more about the for-profit spin-off and then also the relationship with the non-profit.
Mernit: So let me first make it clear that Oakland Local started much more like a Silicon Valley startup. We got a $25,000 seed money grant from Jan Schaffer’s New Voices Project and we knew we were guaranteed $17,000 of that money. But it was all the money we were getting. So it was really clear that it was not going to be enough to live on. It was not going to be enough to pay anybody. So I knew that I would have to keep working while I was building Oakland Local. So basically, we don’t have an operating budget. The money that we have raised in addition to the money from Jan has been what’s called program money, where we get money to do cell phone research or to run a training program. So we don’t have any unrestricted or operating funds yet. So everything I’m saying about kind of where we are is on the backdrop of we don’t have an endowment, we don’t have a donor program, we don’t have full-time people with paid salaries. So we’re really at the point where we’ve developed this great product and now we have to find a way to survive.
So I’m doing two things at the same time. I’m applying for more grants for programs that we’d like to do but I’m also looking for money that’s operating money or unrestricted money so we can have more money to just put people on staff, at least part time. And then we’re developing a whole series of ways to get revenue. And some of the revenue ways will run through Oakland Local because they’re a very natural, traditional fit. So, we’re launching an advertising program, a sponsorship program and a program called Ads for Events and all that money will go through the Oakland Local nonprofit account. We’re also launching a program called For Profit Training and that, along with a group called the Social Media Services Group will go through a new entity that we’re forming called House of Local. And House of Local is actually a consulting cooperative that will have multiple members, including the three Oakland Local founders and we’ll do some training and some social media services work in the Bay Area and then we’ll do consulting on a national level. So it’s really an idea that we can take some of the things that we’re expert in and passionate about and even if we can’t funnel money into Oakland Local, we can funnel money into paying ourselves which then would support us as we work on Oakland Local.
Does your background in Silicon Valley position you differently than some of your peers at the conference today?
Mernit: I’m kind of a weird hybrid because I started out as a poet and arts organizer. I was on the Web very, very early. I ended up having a really meteoric corporate career in the Web, basically, and went from running the new media group at Parade Magazine to getting recruited by America Online to join Netscape.com to run the portal three weeks before the merger happened. So, you know, I’ve run businesses, I’ve had the P & L, and my passion for tech innovation and for problem solving has led me to become a lot of a user interface and product geek. So my last corporate job was at Yahoo! where I was the No. 2 person at Yahoo! Personals, which at the time was the world’s largest online dating site. I ran the product and the revenue optimization teams, and that was fantastic because it really taught me a lot about building large-scale data applications, both on the back end and the front. So, it really helped me [understand] application development and the processes of doing large-scale development as well as running a really profitable business. So, yes I probably have a lot of tech and business skills, as well as media background, [and] not everybody has the same mix. I know there are other people who also have really impressive hybrids. I’m not the only person with a cool background.
My impression is that there are a lot of media-based social-justice organizations that are looking to monetize themselves with a similar training-based model. Is that something that you’re seeing and does that put you in a competitive relationship with other organizations in your community?
Mernit: We’re very focused on collaborations. Two of the organizations that we’re aware of that have had long-time training programs, from long before we got there, are the Media Alliance, which focuses a lot on media training on things like copy editing, and then the Center for Media Justice, which we have really good ties with and we don’t have any overlap or redundancy with either of them in what we teach. And there are actually two newer organizations that we’re collaborating with. So one of them is focusing on basic tech literacy and the other is more about WordPress and kind of more like blogging geek skills. So what we’re trying to do is really identify the areas of expertise where we’re strongest and then play to those strengths and we’re happy to push people to other entities to do the things that they’re strongest at.
Is that by design, or is that just the way it’s worked out?
Mernit: We’re very much about playing to our strengths and not creating redundancies. As a new organization we want to do the things we do best, not take over someone else’s established ability to do something and interrupt them. We’re about coalition building so there’s no need to do that. And, the fact is, the skills that we have, where we’re really strong, are in how to tell a simple news story, a very Web-focused media literacy, using a lot of multimedia tools in a very inexpensive way — not the $6,000 camera — and I’m really using social media to organize and get the word out. And our team has people who train around the country doing these things. So we have a lot of expertise and a passion for it.
You mentioned earlier that Oakland Local has no paid staff. Both on the content side and on the training side, is it the case?
Mernit: So let me clarify what I mean by that. We have three co-founders, and two of the co-founders don’t take any salary from Oakland Local – myself and Amy Gahran. And Kwan Booth, who is the third co-founder, takes a small stipend every month. We pay our writers — we don’t pay them particularly well — but we don’t pay people who are volunteers or who work for nonprofit organizations. But people who are like community journalists or professional writers, we pay them. We don’t have any salaries. We can’t afford it. We pay them on a freelance model. And then because we have a grant to help fund this program, we pay our trainers and the person who’s administering the [grant-funded] program. So when I say we don’t pay people, what I mean is that the core people who are keeping Oakland Local going aren’t drawing salaries, not that there’s no money ever changing hands in any way. We love paying people. We would like to pay people as much as possible.
Who at your organization is the person who focuses on revenue?
Mernit: It’s me.
What does your day as the revenue person look like?
Mernit: Well, I’m doing a really bad job of it, because I’ve also been the editor in chief. I’ve been working really hard over the last year to kind of build a well-functioning editorial organization so that I can step more and more away from the edit side and focus on the revenue. The first thing we’re rolling out, which I’m very excited about, is a series of for-profit trainings for small businesspeople. And basically we’re teaming up with a local foundation that supports about 600 local merchants and they’re going to market these classes that we’re going to offer to the merchants in October and November, and we’ll do a three-session series as kind of a test. If it works, we’ll team up with some of these other partners I mentioned and offer more of like and end-to-end series of programs starting in 2011.
In conjunction with that, we’re going to launch these three advertising programs: the sponsorships, which are really where people can sponsor a section of the site, and that’s a longer-term sale. That’s Whole Foods sponsoring our food access section, for example. Then local advertisements. I think we’re trying to sell ads around some of the holidays coming up as a starter, like Halloween or like Christmas.
The third ad program is called Ads for Events. That will be about selling ads for weekly events that are going on in Oakland that need more promotion than they might get just on Facebook, but that people who are advertising in the alt weekly might find the price to be a little steep. And the goal there is to sort of train people that they can buy not just one event but almost like a book of events. So for a small fee they could buy a lot of events. So for, say, a party promoter, it would be a really good program.
How much revenue have you brought in from January to June this year?
Mernit: We’ve actually made no effort to bring in revenue in the past 10 months. We’ve made a lot of effort to develop viable revenue strategies. We’ve done a lot of research into what kinds of revenue acquisition strategies would have a good return on investment. There’s no group we could take ads away from in Oakland. There’s no online advertising giant like there might be in New York or even San Francisco. So we’ve had to really understand how you would develop a market, how you would identify prospects, what the education costs are. And, you know, being that we’re such a small entity, the research has been really helpful because we don’t have the money to spend. We want to kind of plan it and then strike. So a lot of the strategies we’re rolling out now are really based both on talking to people in the market in Oakland about what would work for them and then talking to practitioners around the country about what’s worked in other places.
Are you saying that your role’s going from strategizing about revenue to actually starting to build those relationships?
Mernit: I sold my first two ads last week.
Is there anything else that you think it’s important that people know about Oakland Local, at least from the business and revenue side?
Mernit: We have the kind of traffic that we can now monetize. Our page views are between 150,000 and 185,000 a month, with about 70,000 unique visitors. But in a town like Oakland, being known as an organization is also really important. What we’ve done to help build name awareness is we’ve become a media sponsor, with many events so that we can leaflet and get shoutouts and have co-branding with more established Oakland entities. What we found in the first six months we were trying to sell ads is that people don’t understand online advertising, they’d never heard of us and they had absolutely no interest in doing anything with us. We could have had a million page views a month and, like, they just didn’t know who we were. So, you know, that was a little upsetting. It was pretty upsetting to see. But then, once we understood that we had to build the recognition before we could really build the relationships and the sales, we just worked really aggressively on doing that. In the past four months, we’ve probably been media sponsors for like 12 different events and, you know, that’s really helping.
Are you media sponsors for events that are different than what the traditional, or even the independent media in Oakland would sponsor?
Mernit: I think we overlap in some ways. Three of the events we’re sponsoring that I’m really excited about — we sponsor an event called The Fresh Fest, which was a green youth hip-hop festival that happened in a park in Oakland. About a thousand people came — it was great. We’re a sponsor now of the Oakland stop of the Life is Living tour, which is a spoken-word slam poetry festival that’s organized by a group called Youth Speaks that’s done a lot with Russell Simmons and his kind of spoken word events. And these are both projects that focus a lot on people of color communities, on the arts on green eco-consciousness and on youth. So we’re not interested in sponsoring like a football game or a party. We want to support things that are tied to our values.
These interviews were conducted as part of a class at the Medill School of Journalism that’s focused on new approaches to hyperlocal publishing. To follow the class’s work, check out the class blog, Local Fourth.