20/5/2013

How to Make Money with Data Journalism in the US and Europe

 

After I gave a lecture at the University of Madrid entitled How to make money with data journalism (find the slides here), Liliana Bounegru of the European Journalism Centre asked me to sum up in an article how companies and individuals could create revenue streams from data-driven journalism (DDJ). What's more, she asked me to find out why we in Europe had so many agencies dedicated to DDJ while American newsrooms were doing everything in-house.

US, Europe, same story

My hypothesis was that American newsrooms were more organized in the way they dealt with data journalism. To test this hypothesis, I asked several data journalists if their company maintained a distinct accounting for data-driven projects. After all, if you want to know how profitable your data-driven operation is, you have to know how much you spend on it in the first place. I sent out a short questionnaire to 22 fellow data journalists among my Twitter followers. 18 answered, from as many newsrooms in 12 countries [1].

Even though this falls short of statistical significance, the Anglo-Saxon divide I was hoping for failed to materialize. It turns out that most newsrooms do track their data journalism expenditures, in the US as in the rest of the world.

CAR culture

Another hypothesis I formulated was that US newsrooms had a history of computer-assisted reporting (CAR) and that decision-makers had some experience in setting up a data-driven reporting operation (or at least knew where to look for). I did not run another survey to test this but I emailed Philip Meyer, author of Precision Journalism and CAR superstar. CAR did play a role to explain the current situation, he wrote, and added that American journalists benefit from strong countrywide organizations like IRE and NICAR, which, together with the experience-sharing programs of large news companies such as Knight and McClatchy, helped spread data-driven journalism. So far, Europe has no EU-wide organization that could stand the comparison.

Meyer added that journalism schools had close links to the news industry, which pushed them to teach skills in demand on the job market. Although it would take lots of data to prove that European journalism schools are lagging behind the needs of the market, it is true that CAR classes are a novelty here.

However, the lack of skills among European management and journalists is only part of the story.

It's the venture capital

When a US news nerd goes entrepreneurial, chances are she will focus on building a prototype, raise funds and deliver a product. Publish2, a publishing platform, Spot.us, a now-defunct crowdfunding solution or Backfence, a failed hyperlocal news portal, were all started by journalists.

In Europe you build a prototype, find no funds to raise and go into services to keep developing your product. Vizzuality in Madrid operates CartoDB on this model, as does OpenDataCity in Berlin with Lokaler (both are mapping solutions). Scoopinion, a news start-up financed by a Finnish grant, is a notable exception. Datawrapper, a visualization service for journalists, was started thanks to the help of ABZV, a German foundation. It is now maintained in part by Journalism++, a network of data journalism agencies.

The lack of venture capital, together with the lack of in-house skills, explains why Europe has much more data journalism agencies than the US. These agencies, in turn, help create the demand for their products.

No golden eggs

I then asked my fellow data journalists if they thought they were profitable [2]. Most agree that their apps will not dramatically impact the P&L [profit and loss statement] of their companies. So much for the idea that data was going to save the newspapers industry.

Respondents thought that the best possible sources of revenues were sponsoring and paid-for applications, before advertising. This is surprising given that 14 out of the 18 newsrooms surveyed still rely on advertising as a major source of income. The discrepancy shows that journalists are well aware of the need for new business models. Several respondents insisted on the fact that data journalism should be seen alongside investigative reporting as an image-enhancing endeavor rather than a cash cow.

Not everyone can invest in 'image'

Indeed, advertising is a poor way to monetize labor-intensive content. BuzzFeed, which is rumored to be profitable, will probably never put a team of several reporters to work 4 months on a data-driven story. Unless it is committed to quality journalism like ProPublica or ICIJ (of Offshore Leaks fame), few newsrooms have the willingness or resources to invest significantly in data-driven investigations. News companies evolving in competitive markets like the Guardian and the New-York Times or public broadcasters with deep pockets like the BBC or France Télévisions also set up teams of developers to work alongside journalists.

Non-profit outlets rely on public service information to justify their subsidy or grants. Companies that are competing for readers and advertisers have an incentive to nurture respectable brands by investing in prestige projects: they command a premium on advertising. The situation is quite different in most other newsrooms that still think of themselves as monopoly operations, for which image is much less of a driver of advertising prices.

It would be foolish to assume that there is a strong demand from newsrooms. Data journalists do not come in an plush and affluent environment where they can easily sell their creations.

Developers with journalism in mind

Lorenz Matzat of OpenDataCity, for instance, explains that they are diversifying away from service for newspaper companies. "We are trying to be a publisher on our own, organizing our own ads or sponsors for a data journalism product", he said in an email interview. Journalism++ follows the same path. The Stockholm chapter of the brand works predominantly with Swedish and Finnish media outlets, but the Paris chapter moved away from working with media outlets and diversified its sources of revenues (non-TV media companies account for less than 7% of its income).

Journalism is a mindset rather than a clearly defined job. Developers of all stripes actually go into journalism once in a while. The best example of this trend is Pitch Interactive's drone story. The data visualization studio does client work for media companies and others. But in this case, they simply wanted to shock and alert people on the problem. They wanted to tell their own story.

Everyone is a media. This is also true for data journalism: Every team of nerds can become a data journalism outlet.

Corporate data

After image project and self-financed stories, the third and most promising source of funding for data journalism lies in corporate data. Companies have a lot of exclusive data to mine. From this trove, they could tell a number of stories. OK Cupid, a dating website, started to analyze its own database to explain patterns in US sexual behavior. The results were published on a blog, OK Trends. It did not reveal data from the marketing or finance department that could have jeopardized the firm, nor did it use private data from clients, as Bloomberg allegedly did. The stories were so good and so widely read that at some point they were responsible for over half of the leads on the site. A typical lead in dating costs between 2 and 5 dollars. Do the math and you will see that data journalism was immensely profitable for the dating website.

Other examples abound. The Facebook Data Science team, for instance, regularly publishes articles that give insights on current developments, like same-sex marriage or sports. Twitter hired DataDrivenJournalism.net's board member and former Guardian data journalist-in-chief Simon Rogers as Data Editor.

It is just a matter of time before gas utility companies mine smart-meters data and tell us about who's most sensitive to cold. Or before transportation companies tell us which destinations are becoming more hip based on customer data.

 

[1]: from the newsrooms of The Center for Investigative Reporting, La Nacion (Argentina), Der Standard, The Age, Zeit Online, Helsingin Sanomat, Le Monde, AskMedia, Wired Italy, Nu.nl, Financial Times, BBC World Service, Media Wales, Bloomberg, ProPublica, The Washington Post, L'Avenir and NZZ.

[2]: 2 of the 3 non-profits in the sample answered this question as well, probably keeping in mind that 'profit' in their case translated into 'impact'.

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