For-profit news startups are more likely to succeed than other small businesses, but many owners aren’t getting rich.

I’ve been tracking these local, independent, digital news outlets for more than a decade and started Michele’s List in 2010. Now, with an assist from the Donald W. Reynolds Journalism Institute, I updated my database and surveyed 100 publications.

Key takeaways:

1. A boom of for-profit local news startups: More than two local commercial news publications launched each month on average for a decade starting in 2008. This is based on 329 for-profit sites for which I have launch dates – there could be considerably more. (A recent study that I worked on for the Institute for Nonprofit News showed more than one nonprofit outlet on average launched during about the same period.)
2. The outlets have staying power: Among the for-profit sites, four out of five have been active for five or more years. This suggests they are more resilient than a typical small business. According to the Small Business Administration about half of small businesses fail in their first five years. By my (rough) estimate, about one in five sites listed in my database failed over the course of nearly a decade.
3. They are small: Most cover small cities or towns, neighborhoods, suburbs or rural areas. The median population served is 72,500. (In this, the for-profit publications contrast with their nonprofit news cousins, who mostly cover national and state affairs.) While some of the for-profits are in competitive markets, many are the only highly local news source in their community.
4. They’re not getting rich: All have some paid personnel but only a third of publishers draw a full-time salary. Three in five said they turned a profit in 2018. At the same time, three in five also reported revenue of $100,000 or less a year.
5. Advertising rules: They remain highly reliant on advertising revenue, with two in three publishers saying locally sold advertising is their primary revenue source. Other sources include national advertising, small donations, subscriptions, membership, business services, sponsorship, web services. The local ads are often sold by monthly contracts at higher rates than the typical rate based on impressions.  But heavy emphasis on a single source of revenue can be a vulnerability.

About the database: Launched in 2010, the Michele’s List database was my project as a fellow at the Reynolds Journalism Institute in 2009-10. It started with about 100 outlets that met a set of criteria and has grown to more than 460 outlets, including both nonprofit and for-profit sites.

The survey was conducted in spring 2019 with support from RJI and assistance from Krystal Knapp, publisher of Planet Princeton. It reflects responses of 92 publishers representing 100 independent local commercial online news sites in the U.S. who provided financial and operational data for fiscal year 2018. A total of 375 for-profit publishers were invited to complete the survey.

For more information, see this presentation for the LION Publishers Summit on Oct. 25, 2019.