Summer 2011 | Online Exclusives

Community: A New Business Model for News

‘… the most powerful emerging business driver in the new economy is community.’

By Michael Skoler
A few years ago, Public Radio International coaxed its most popular host, Ira Glass of "This American Life," into digital cinema. Ira had already expanded his famed radio program into a traveling stage show that toured a dozen cities a year. With this new idea he would perform one show and beam it live to hundreds of movie theaters around the United States at the same time. Efficient, yes, but would it be appealing, Ira wondered.

After all, people came to see him and even hoped to meet him. Radio is an intimate medium, and with Ira, so is a live show. What would be appealing about watching him on a screen from thousands of miles away in the company of a hundred strangers? This wasn't a sporting event—the main draw for digital cinema—it was journalism, storytelling journalism. And people could already watch Ira on DVD.

So would they come and pay $20 a ticket?

They came in droves. More than 30,000 watched the first digital show at hundreds of theaters across the U.S. and Canada in the spring of 2008. The next year, 47,000 turned out. They came to be with other fans, experiencing something they all loved together. The success wasn't so much the power of Ira, but the power of his community.

This isn't a brilliant new insight. We have long known communities are powerful and that local media thrive when they bring together and serve their community. Somehow though when it comes to the challenge of online media, we forget this. We search for new business models that involve paywalls, more video, the iPad, and wealthy donors, while the most powerful emerging business driver in the new economy is community.

Scenes from “This American Life” in digital cinema promotions.

Connection as a Strategy

We are social beings. Three-quarters of all American adults belong to voluntary or organized groups, according to "The Social Side of the Internet," a study published this year by the Pew Research Center's Internet & American Life Project. In fact, today's social media culture may be reversing the decline in social behavior that Robert D. Putnam documented in his book "Bowling Alone." While 56 percent of non-Internet users belong to a group, 80 percent of Internet users participate in groups, according to the study.

Clay Shirky, a professor at New York University who studies the effects of the Internet on society, writes eloquently of how technology is unleashing the greatest wave of social communication and collaboration in our history. The companies flourishing in today's digital, social culture provide more than valued content to people. They deliver valued connections. And they turn this community, the content it creates, and the trust it engenders into money.

Facebook, LinkedIn and Twitter are the icons of the social economy. Even Google, the organizer of digital information as opposed to people, upended the search business with its algorithms that tracked connections—the links people share with others. There are hundreds and thousands of lesser known, quickly rising businesses that are, at their core, built on community even when it isn't obvious. Here are just a few examples:

Angie's List has more than 1.5 million members in over 150 cities who pay about $10 to $60 a year to be part of a community in which members rate and review service providers (plumbers, doctors, etc.) to help each other. In the face of free alternatives, Angie's List has turned its community into annual membership fees in the $50 million range and an even larger income stream by allowing companies that are highly rated by members to pay Angie's List for the privilege of offering discounts to its members.

PatientsLikeMe, a seven-year-old company, helps 100,000 patients find others with the same illness to share experiences, treatments, successes and setbacks. In today's culture of baring and sharing all, many people still treat medical information as highly private. At PatientsLikeMe, members are told that the company makes money by aggregating the shared patient experiences, removing identifying information, and selling the data to medical and pharmaceutical companies that want insight into patient experiences.

Red Hat has built a billion-dollar business on the Linux open-source operating system. Linux is free, created and constantly updated by a huge community of volunteer software developers. Red Hat sells support services to companies that run their systems on Linux. By serving as the corporate help desk for Linux, Red Hat has made it possible for Linux to spread into the corporate world, which makes the skills of the volunteer Linux software developers more valuable. Red Hat uses some of its profits and staff to mentor and contribute to the community, advance open-source code, and organize community events.

Groupon has become a collective buying powerhouse with more than 50 million registered users by offering people a deal a day from a local business. This model has spurred many copycats. To ensure that the novelty doesn't wear off, Groupon is now working to turn its users, whose only tie is a desire to find deals, into a community. It is introducing G-Team campaigns, which range from spurring flash mobs to fostering local collective charitable action. "Every G-Team campaign connects you with enough people to achieve something awesome that you couldn't have done alone," the Groupon website explains.

The new business model for news and journalism is beckoning from every site that seeks first and foremost to build a community. Games like Farmville and virtual worlds like World of Warcraft and Second Life are no fun on their own. Their value comes from their communities. Their rapid growth results from network effects, where each new user/member/player makes the service more valuable for everyone else.

Second Life becomes more interesting as more people build virtual homes and businesses. Angie's List becomes more useful to members as the number of reviewers goes up. As membership increases, it also becomes a more important resource for businesses so they are more willing to pay to advertise and offer discounts to members. That attracts more members and fuels a virtuous circle—the hallmark of creating network effects.

Community, Not Audience

To harness this model, news organizations need to think of themselves first as gathering, supporting and empowering people to be active in a community with shared values, and not primarily as creators of news that people will consume. Public radio has created a huge virtual community of people who feel they have shared interests and values, evidenced by the millions of dollars donated during painfully long pledge drives. Still, public radio has hardly tapped the revenue potential of its audience, for it has yet to engage them as a community and let that community organize itself and find novel ways to create value for the group., TED and BlogHer run lucrative conferences and events where members and fans meet, learn and plan collaborations. LinkedIn offers paid services that make it easier for users to connect, share advice, hire and be hired. Zynga's game players pay real money for supplies that give them higher status within a community such as Farmville. On Facebook and other social spaces, people pay to send digital tokens of affection or admiration, which only mean something within the community. The annual U.S. market in these virtual goods is estimated by Inside Virtual Goods to be $2 billion and growing.

Sites with active communities also succeed better in media's traditional revenue hunting ground. They often get higher advertising rates because members are more likely to click or buy from advertisers when they feel invested in the site. Smart advertisers also have the opportunity to study, understand and cater to the community.

If media organizations are going to tap the new community business model, they will need to avoid mistaking their audience for a community. Fans become a community when they have the freedom to explore their interests and connections and organize themselves. That freedom is why Facebook has more than 500 million members.

The digital screenings in 2008 and 2009 tapped a desire by Ira's fans to be part of a community. Yet fans are really only a potential community. Media organizations need to create the tools and foster the mindset to understand, activate and serve their communities, without trying to control them. People relate best to other people, not institutions.

Some news organizations are pursuing the community-building model, such as the Lawrence Journal-World, which created WellCommons as a health community and just launched a community site around sustainability. Without a doubt, some won't get it right or, like the Washington, D.C. website, will fail to find sustained management support to put community at the heart of their strategy.

But if there is a common thread that weaves through Foursquare, Facebook, Zynga, Twitter, BlogHer and many other pioneers in the social economy, it is this: Creating community engenders value for people. And providing value is the heart of any successful business model.

Michael Skoler, a 1993 Nieman Fellow, is vice president of interactive for Public Radio International. He researched new business models as a 2009-10 Reynolds Fellow at the Missouri School of Journalism.

10 Comments on Community: A New Business Model for News
Mark says:
April 25, 2014 at 9:16am
Very interesting, community not audience. I have often worked in terms of audience, but with growing social media, no doubt community is huge. This will help people with marketing and upselling. There's a "new model" for making money online called a "no cost system." It is virtually about making money without having money. It is a course designed to instruct people how to upsell their investments for profit. I'm trying it out now and find it to be successful because many people who want to work online don't have a lot of capital to get started with. By focusing on community, I think it will work great.
Work Online Academy is a strong start.
sally duros says:
May 30, 2012 at 4:17pm
"The key is that you need to empower the community and let it organize, manage and lead itself."

yes, allow true self organization.

"Then be creative about ways to monetize the value they create, as RedHat did with developers and Patients Like Me did with patients."

I don't think the path to monetization has been invented yet.

"A big challenge for newsrooms is cultural, which is why few seem to be using community as a business model."

You are right about the cultural challenges. Newsrooms are used to trickling down from a bully pulpit and not gathering messages at ground level.

"If you try to control or own the community or content, you will likely kill the value of it."

This is essential to understand deeply all communicators - internal and external, not only journalists need to really get this. This is why I think the solution for funding journalism will be something totally different from advertising as it has been developing online. If the strategy tries to "squeeze" money from the community, us, we will leave. But if the strategy understands the community is the driving energize, honors that and taps into it, we will have a winner.
Catherine Cole says:
November 17, 2011 at 7:11pm
What are some more current examples and some profit posting on same? Making money or contributing to a specific "greater good" are the name of the game here.
Charlie Beckett says:
June 22, 2011 at 12:35am
Thanks for the article. These are lovely case studies, although they are the same ones that are always cited. Do we have any figures on the proportion of the economy that has these so-called 'community' elements? Also, Groupon, for example, is not a community in any sense except commercial collective buying is it? It stretches the word to include that with a discussion of 'identity' localism etc. Another query. This works well in the States because you have such a massive single market. It's much harder to reap the marginal gains of collaborative, large-scale schemes in single, smaller states like the UK (and these enterprises struggle to cross language and cultural borders in the so-called single market of the EU).
Michael Skoler says:
June 17, 2011 at 4:28pm
David's link to the blog on Storyful is a must-read on appreciating a community built around a news event. Would love to hear ideas on how these instant communities might be sustained and what type of revenue model could support them. Andy Carvin's Twitter curation for NPR generated requests from people who wanted to send money to support it.
Michael Skoler says:
June 17, 2011 at 4:11pm
Jimmy, your question is the right one. The first part of “how” is to find or build a community that grows from passion. The companies I name in the article have done that. I learned much from studying the open source developer’s community. The key is that you need to empower the community and let it organize, manage and lead itself. Provide a few tools that help the group do that – allowing different roles, tracking member status, reporting when people break norms. Then be creative about ways to monetize the value they create, as RedHat did with developers and Patients Like Me did with patients. A big challenge for newsrooms is cultural, which is why few seem to be using community as a business model. If you try to control or own the community or content, you will likely kill the value of it.
david clinch says:
June 17, 2011 at 8:57am
Have you read about @Storyful and the "human algorithm"
Stacey says:
June 17, 2011 at 6:59am
I have to agree with Jimmy. Would love to hear more about the research on the 'how'. Are news organizations branching out into other sites such as the 'WellCommons' example? How are news sites doing this within their own sites?
Sharon McNary says:
June 15, 2011 at 12:32pm
Interesting examples. This helps focus an idea I've been working on to pull together the artists in our source network. I had been looking at them as feeders of information to our newsroom, but now I'm thinking of ways to put them together with each other.
Jimmy says:
June 15, 2011 at 8:19am
This is a good article, but it says why and not how. What did you find in your research on new business models that would help an organization build or nurture a community?
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