Joel Kramer, MinnPost founder, writes:

MinnPost is a national leader in building a new economic model for high-quality local journalism on the Internet. This is not easy to do. Our traffic is growing dramatically — we’ve tripled our page views in one year — but revenues from sponsors, advertisers, and our nearly 1,300 members currently cover only about 60% of our very lean spending.

One of the ideas floating around for financing journalism is “community-funding” — getting lots of people to donate small amounts to support a writer, a beat, or a specific story project they are interested in.

So we’ve decided to try this concept out with BrauBlog, since it’s our most popular feature on MinnPost, other than the home page itself. This is an experiment. If it works, we’ll brag about it all over the country, and pay some of our bills, too.

Kramer adds:

What you will NOT get is public recognition…because David Brauer does not want to know which individuals are supporting him.

The Harnisch Foundation also underwrites the Center for Sustainable Journalism here at Kennesaw State University. Here is what Ruth Ann Harnisch says about the matching grant to MinnPost:

I don’t read MinnPost.com — it’s local news, and I’m not a local.

But what happens to MinnPost.com is going to affect the future of local journalism everywhere.

People all over the world are looking at your community and wondering if MinnPost.com is going to succeed….

It’s your community, not mine — but I’m investing in your community’s bold experiment in journalism because it’s a beacon of hope on a bleak business landscape. If you succeed, others will follow. Who will pay for the news? I’ll pay for some. Will you?

I did not intend to say that the MinnPost business model is grim. I believe that the for-profit model for high quality regional journalism is grim. That’s why MinnPost has adopted a not-for-profit model — about which I am very optimistic.  

Update: June 5, 2008: I did a separate blog on this, after talking with Joel Kramer:

Yesterday I blogged that Joel Kramer, MinnPost publisher, spoke in a broad sense about the grim outlook for news business models. He said that’s not what he meant — if that’s how it was interpreted. Here is the message he wants conveyed:

I did not intend to say that the MinnPost business model is grim. I believe that the for-profit model for high quality regional journalism is grim. That’s why MinnPost has adopted a not-for-profit model — about which I am very optimistic.  

 Story 1: McClatchy Co., one of the nation’s biggest newspaper companies, reported sharply lower profit and revenue for its third quarter Tuesday and said it would take an accounting charge to reflect the poor conditions in the newspaper business and its falling share price.

Story 2: MinnPost.com (and a paper version known as MinnPost in Print) will launch November 8, it was announced today by Joel Kramer, CEO and Editor of the not-for-profit startup.

Kramer also said that in addition to the $1.1 million of previously announced major gifts, MinnPost has now raised more than $107,000 from 220 member-donors. This surpasses MinnPost’s projection of $75,000 for all of 2007, Kramer said. The smallest of these donations is $10. The largest is $36,000 — received recently from the Martin and Brown Foundation, a local family foundation.

“MinnPost will be about great journalists doing great journalism,” Kramer said. Six editors will oversee contributions from more than four dozen journalists, including two Pulitzer Prizewinners.

Story 3: As the Inter American Press Association, which focuses on freedom of the press in South and Central America, holds its general assembly in Miami, the Sun-Sentinel takes the moment to … say to hell with national and international news.

Story 4: The third wave in American journalism—that of the foundation press—may be taking form now thanks to Bay Area billionaires Herbert and Marion Sandler. Waving $10 million that they promise to replenish annually, the Sandlers have founded the nonprofit ProPublica to produce investigative journalism. (Usual suspect the John D. and Catherine T. MacArthur Foundation is also chipping in some money to the ProPublica kitty, as are the Atlantic Philanthropies and the JEHT Foundation.)

Today’s New York Times reports that ProPublica will soon hire 24 reporters and editors to create one of investigative journalism’s largest staffs. Based in New York City and led by former Wall Street Journal managing editor Paul Steiger, ProPublica promises to produce quality investigative journalism and give it—not sell it—to media outlets.

Story 5: NEW YORK — E.W. Scripps Co. plans to split into two parts, becoming the second media company in recent weeks to isolate fast-growing assets from the troubled newspaper sector.

The move would create one company with Scripps’ highly profitable cable-television networks and its shopping comparison Web sites, and another with its newspapers and local television stations.

The decision reflects the length companies will go as souring sentiment on the newspaper industry dents stocks prices of companies exposed to the sector. Shares of Scripps, which generates roughly one third of its revenue from
newspapers, have fallen 15% this year.

Story 6: Belo presents details on spinoff of newspapers (This is an interesting story with lots of newspaper and media publishing details as well as how having no debts on the newspaper side, it can be more nimble in making changes.)

Actually there are a few more stories linked at Romenesko that tell of layoffs etc. , but enough for one day.

 Leonard Witt: Hi Joel. Thanks for agreeing to do this. I read somewhere you made up to $8 million when the Star Tribune was sold to McClatchy for $1.2 billion. You have a place in  Montana, you have grandkids, correct? You could be retired leading the good life…why this? Have you lost your mind?

Kramer: My wife says retirement doesn’t suit me. Yet.

I care deeply about the future of serious journalism. This spring, when the Star Tribune announced its second round of buyouts (bringing the total for the year to nearly 75 journalists), a lot of people asked me if there was something I could do about the shrinkage of commitment to serious news. I thought about, explored it, decided there was an opportunity here, and that I was the best person to pursue it.

Witt: Why are you the best person?

Kramer: Because with my background as both editor and publisher of the Star Tribune, and my connections in the community, I could attract the financial support and the journalists to do it, and consequently foundation support to help get it started. I wasn’t sure I could do it, but I felt that this background gave me perhaps the best chance.

Witt: Sounds like you are the right person. One thing troubles me. When I think of the Internet, disruptive technology, I think young, vibrant, innovative, but when I look at the editorial names on your roster I see many long established Twin Cities names. What’s going to prevent the same old, same old traditional ways of doing journalism that is steadily losing market share?
Kramer: Our target audience is news-intensive Minnesotans.That’s perhaps 15 to 20% of the adults in the state. Some of what they want is the “same old,” i.e. hard-hitting, serious journalism that they feel they’re getting less of as the business model of newspapers deteriorates. They also want new things the internet makes possible, but only the new things that are high-quality. Our challenge will be to deliver both. To do that, we need a mix of experienced journalists AND people who understand the new medium’s potential and how people are using it. We intend to have both.
 

Witt: Sounds serious. Where will the fun reads be? What role will Britney Spears, Paris Hilton have in all of this? The garden, travel, celebrity mainstays? Or will serious news be enough?
Kramer: We’ll have fun. Even the New York Times found a way to get one Paris Hilton story on its front page — by focusing on the angle of celebrity justice in Hollywood. Seeing Paris Hilton on the front page of the New York Times is my idea of fun.

Witt: Speaking of the front page, when folks log on to MinnPost what will they see. Something like the New York Times or something very different? 
Kramer: The look will be more like a newsmagazine than a newspaper website. Fewer stories, better displayed. Quality over quantity. We want to create the feel that trusted editors are helping busy people focus on what matters.

Witt: I want to go back a second to your 15 to 20 % news intense adults. Tell us about those demographics. Are they geezers? Urban, rural? Rich, poor? Who are they?
Kramer: All ages, generally well educated, engaged in their communities.  They rely on multiple sources of news, and they care about quality and depth. Perhaps more likely to live in cities and first-ring suburbs, but news-intense people can live anywhere.

Witt: Yeah, they can live anywhere, but the Star Tribune and other large metros have said, “If you live outside the advertising hubs, sorry, no rural news for you.” How do you help the news starved folks in more remote areas?
Kramer: MinnPost is eager to serve people who care about the Twin Cities and Minnesota news, wherever they live. One of the charms of the Internet is that we don’t have to pay extra distribution costs to get another reader in Ely. On the other hand, we won’t provide news coverage that is of interest only in Ely.

Witt: You said you were interested in people “engaged in their communities.” Are you just going to serve them up the news and be done with them, as traditional newspapers do, or are you going to try to form communities, make them a part of the conversation, help them find solutions to common problems?
Kramer: We’d like to form communities and engage people in important conversations, but there is a challenge. In focus groups with people in our target audience, we hear a lot of respect for what professional journalists do, and a certain resistance to being forced to read the “opinions of amateurs.” We need to figure out how to deal with that dilemma. Our priority is quality, not maximum reader participation.

Witt: Interesting, that seems to be going against the news as a conversation mantra.
Kramer: There is no one definition of news. I think it’s a mistake to assume that because newspaper are struggling financially that people have stopped respecting what the good ones do on their good days.

Witt: Yeah, but how do you get the youth, the next generation of readers on board, if you follow the tried and true, but now faltering, path?

Kramer: Among young people, we find there is also a news-intense subset. It may be somewhat smaller than the news-intense subset of older people, but it’s still a significant target audience.  We intend to explore new forms of news, but always respecting the interests of this news-intensive group, whatever their age.

Witt: I would like to talk about the financial model, if we can. $1.1 million used to sound like a lot of money. It sounds like a lot less these days, how long can it sustain a viable operation?
Kramer: Most of the $1.1 million we’ve raised is intended to serve as a reserve, to cover early annual losses. Our annual operating plan will be funded by a combination of sponsorship/advertising revenue, donations from members (the public radio and public TV model) and foundation support. But we’ve told the foundations that by the fourth year — maybe even the third — we’ll be break-even just on the first two revenue categories, not relying on soft money from foundations for our basic operations.

Witt: I know lots of people are wondering how you can pull off a public TV model? How can you?
Kramer: We are confident that a lot of Minnesotans will be willing to pay to support quality journalism. We received three $5,000 annual membership commitments before we even announced our plans.

 Witt: Ah, yes, the good old Minnesota community spirit. Speaking of which, I noticed you and your wife Laurie, Sage and John Cowles, Vicki and David Cox, and Terry Saario and Lee Lynch and the John S. and James L. Knight Foundation all invested money in this nonprofit. Does that mean it’s just a donation, do you all get your money back, how does that work?
Kramer: All tax-deductible donations; we get nothing back. In addition, I am working without pay through at least the end of 2008, as is my wife, who is membership director.

Witt: A true Minnesotan — who happens to also lives in Montana. One final question, what effect will this have on the established papers: the Star Tribune, Pioneer Press, City Pages? Do you care?
Kramer: I want the newspapers to succeed, and I don’t think our little startup will have a major effect on their revenue streams.  But at the same time, I’m watching their business model deteriorate, and I want to make sure the community doesn’t suffer because of their shrinking commitment of resources to quality journalism.

Witt: You mention Laurie as the membership director. Awhile back I mentioned my Representative Journalism idea, where groups of people can fund a reporter who covers issues important to them. Did that resonate at all? I wonder because I am getting ready to write more about that topic in the days to come.

Kramer: I find it intriguing, but others mentioned risks associated with “strings”.  We’ll see. Gotta go to a late dinner, Len. Thanks. 

Update: Ken Doctor has an excellent analysis of MinnPost at Content Bridges.