The news outlet started up with big donations but has diversified

Jacob Grant is a senior at the Missouri School of Journalism. His community newspaper class looked for case studies of news organizations doing interesting and innovative things. Here’s one. 

The Daily Memphian is one of several digital startups that have popped up in metro areas with existing legacy newspapers to fill gaps by the contraction of those outlets. The Memphian is a prime example of how diversifying revenue streams and leveraging nonprofit status improved its access to grants and helped it better solicit donations.

Started in 2018 as a nonprofit organization, the Daily Memphian entered the Memphis market that includes a legacy newspaper in the Commercial Appeal and MLK 50, another nonprofit newsroom. The Memphian started with the mission of providing news to the community,  with high-quality in-depth investigative journalism. 

CEO Eric Barnes credited the organization’s start to a $6.7 million donation from the Greater Memphis Community Foundation. The Daily Memphian also received support from local organizations such as The Assisi Foundation, The First Horizon Foundation, and The Lenfest Institute. While other organizations play a big role in funding operations of the Daily Memphian, individual donations are also helping sustain the news outlet. According to the Daily Memphian’s website, over the past two years, it has received 90 donations of $1,000 or more from individuals. Barnes said that $400,000 in donations has come from 300 individuals so far this year. The organization has increased the number of donors every year.

The startup, though, doesn’t want to rely just on donations. That is why it made the immediate decision to implement a paywall in hopes of achieving its financial sustainability.

I think the No. 1 thing is that we are subscription paywall first, and that’s why we rely less and less on fundraising. If you look at a lot of nonprofit news sites that rely solely on fundraising, they’re the ones that tend to run into trouble.

Eric Barnes, CEO, Daily Memphian

“I think the No. 1 thing is that we are subscription paywall first, and that’s why we rely less and less on fundraising,” Barnes said. “If you look at a lot of nonprofit news sites that rely solely on fundraising, they’re the ones that tend to run into trouble.”

A major misstep by newspapers in the internet age was giving away content for free. The Daily Memphian didn’t want to be a part of the trend that decimated the community news industry. So when the paper launched, it decided to give out three free articles, and then the subscription was $7 a month. The price, just like the paper, has evolved, and is now $14.99 a month.  Another thing that it has implemented is having premium articles. It allots 20% of all articles on its website as premium, meaning those using free articles are unable to read without a subscription. These premium articles are not selected based on the section that the article falls into but more to highlight stories that may be exclusive to their paper or might be written by one of its more popular reporters or columnists.

The rise in subscription rates hasn’t slowed its growth. According to Barnes, at the end of the first year, it had 7,500 subscribers. Now, the Daily Memphian has 18,260. In over four years, it has more than doubled its subscribers. According to data provided by Barnes, the Daily Memphian has subscriptions in 4% of the households in the Memphis area. Now in comparison to other major cities similar in population size such as Atlanta, New Orleans, and Minneapolis, it is right in the middle. The Atlanta Journal-Constitution has a penetration rate of 2.8% of households, NOLA is at 4.4% and the Minneapolis Star Tribune is at 7.2%.

Professor Damon Kiesow, the Knight chair for journalism innovation at the Missouri School of Journalism, specializes in aligning community information needs and business strategies in support of sustainable local journalism. One of the key points he emphasizes is revenue  diversification. In other words, making sure donations, subscriptions, advertising, and any other revenue streams get just as much attention as the other ones. “We’ve always done that,” Barnes said. “We from Day One have always offered subscriptions. We’ve sold advertising, we’ve done events, and we’ve sold sort of ancillary consulting services and a small part of the business and then donations. So we’ve always had diverse revenue streams.”

By the end of the year, Barnes said, 80% to 85% of expenses will be covered by earned revenue. 

 “In the first year, I think we were 15% on earned revenue and 85% fundraising,” he said. “It’s just a matter of, you know, continuing to increase earned revenue, so we’re less dependent on fundraising.” 

The Daily Memphian has also offered all schools (public, private, and charter schools), libraries, and senior living facilities free access to the website. Some of its donors, like  the Assisi Foundation and The Hyde Family Foundation, are known for supporting free access programs and coverage of underserved areas of Memphis.

According to its website, it currently has a staff size of 38. This includes its chief executive officer, editors, columnists, reporters, and its digital department. 

Aarron Fleming, who is the courts and public safety reporter, said: “It’s cool to be a part of a company that is only a couple of years old and is continuing to evolve.”

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Cite this article

Grant, Jacob (2024, May 28). The start and sustainability of the Daily Memphian. Reynolds Journalism Institute. Retrieved from: https://rjionline.org/news/the-start-and-sustainability-of-the-daily-memphian/