I can’t stop reading this analysis of Gawker’s editorial strategy

In January, newly minted Gawker editor A.J. Daulerio announced an experiment: Each day for two weeks, a single staff writer would be assigned “traffic-whoring duty.” [Language alert.]

A different staff writer will be forced to break their usual routine and offer up posts they feel would garner the most traffic. While that writer struggles to find dancing cat videos and Burger King bathroom fights or any other post they feel will add those precious, precious new eyeballs, the rest of the staff will spend time on more substantive stories they may have neglected due to the rigors of scouring the internet each day to hit some imaginary quota.

It’s the New Gawker, the Gawker that values original content more than over-aggregated “gutter journalism,” or as Daulerio called it, “snappy snarky snarking snark-snark shit.” Snarky snark pays the bills, though.

Because Gawker Media publishes traffic data on all of its sites — pageviews and new visitors are right there on the story page — my boss came up with an idea: Let’s measure the impact of this experiment on traffic. I wrote a bookmarklet that helped me capture the stats from all posts written by a staff writer during the experiment, according to the schedule Daulerio posted, and then dumped it into a Google spreadsheet. (We threw out data from the second week; Daulerio did some “editorial reshuffling” — which included the departure of staffer Jim Newell — and the experiment did not proceed in the same neatly defined way as in week one.)

For our purposes, since we need terms that don’t involve “whoring,” let’s call them pageview-duty days and off-duty days.

On their assigned pageview-duty days, Gawker writers produced a cumulative 72 posts — about 14 posts per writer per day. On their off-duty days — and remember, each had four off days for every “on” day — the same writers cumulatively produced 34, or about 1.3 posts per writer per day.

A sampling of some of Gawker’s hilariously specific, SEO-rich headlines from pageview-duty mode that week (pageviews parenthetical):

I don’t think I have laughed so hard on an assignment.

Those 72 pageview-duty posts produced a combined 3,956,977 pageviews (as of the days I captured data, Friday 3/9 and Monday 3/12), a mean of 54,958 pageviews per post.

“The writers at Gawker actually seem to have fun these days. I don’t think they ever did before, not even in the halcyon days of Choire Sicha.”

The 34 off-duty posts produced 2,037,263 pageviews, a mean of 59,920 pageviews per post.

That’s higher, but only marginally so — hardly the stuff statistical significance is made of. And while you might be able to squeeze an extra five thousand pageviews out of an off-duty piece, the allure of that cheap content — I Can’t Stop Looking at This Weird Chinese Goat, 46,358 pageviews — is in its higher apparent return on the investment. Why bother working all day on a piece if something you throw together in 20 minutes will get the same attention from the world?

The argument for pageview-duty was even stronger if you look at the data from Nick Denton’s preferred metric of new visitors. Pageview-duty posts that week attracted 703,476 new visitors (people who viewed a post that had never visited Gawker before, or at least who didn’t have a cookie set). That’s 9,770 per post. Off-duty posts attracted 289,996 new visitors altogether, or 8,529 per post.

Finding the balance

The key to the balance probably doesn’t lie in raw numbers, though. A Gawker that was only weird Chinese goats would likely, over time, bore its readers. The more substantive stories serve as tentpoles for the entire site; once in a while, they’ll blow up huge, and they’re probably more appealing to the kind of brand advertisers Gawker seeks. (A sampling of current advertisers: Virgin Mobile, Samsung, Corning, Bonobos, AMC, BlackBerry. Gawker sells itself to advertisers by promoting the fact that its readers are both younger and richer than The Huffington Post’s, People’s, Slate’s, or TMZ’s.)

It also at least has the potential to lead to happier writers who know when they need to chase pageviews and when they don’t.

“Traffic sex work is exhausting, but it’s fun, and on other days it’s nice to have extra time to put the extra effort into important and newsworthy stories about which fast-food restaurants use aborted fetuses in their meals,” said Max Read, who obviously writes for Gawker, based on that quote.

Everyone talks about happiness, how happy Gawker writers are now. Chief gawker Denton, in a typically terse email, endorsed the experiment thus:

“The writers at Gawker actually seem to have fun these days. I don’t think they ever did before, not even in the halcyon days of Choire Sicha,” he told me. And indeed, Gawker has long been known for pulling in strong writing talent and burning it out.

Sicha, the former Gawker editor who cofounded The Awl, responded in an email to me: “I do think the staff is the happiest it’s been in a while — certainly happier than they were last year.” (Sicha actually had a great, longer response about Daulerio-era Gawker — it’s at the bottom of this piece.)

“There is a benefit to always mouthing off on the Internet. I just think the priorities need to shift.”

I called Daulerio to ask how the experiment had gone — but he told me it’s still going. In fact, the pageview-duty rotation is more or less the permanent workflow at Gawker now.

“The days that people are actually doing the traffic-whore days, it’s almost like a relief. There is a benefit to always mouthing off on the Internet, having fun with it. I’m not anywhere against that — I just think the priorities need to shift a little bit,” Daulerio said.

“I don’t want [the writers] to feel limited by Gawker. I don’t want them to think that if they accrue the most uniques per month that that’s going to give them a great standing at the company.”

Quality or quantity? Both.

It’s a weird moment for the quality-vs.-quantity debate. Last month, we wrote about Salon’s #winning strategy to prioritize quality over quantity. BuzzFeed, the aggregator to end all aggregators, is hiring journalists like crazy and producing original content alongside Watch Urkel’s “Dancing With The Stars” Debut. Yahoo News, known for its expert repurposing of wire copy, nabbed the NYT’s Virginia Heffernan.

Do those data points mean we’ll start seeing less What Time Does The Super Bowl Start? No. But we might see a few more like Hamilton Nolan’s 3,800-word exposé on journalism junkets in Las Vegas, too. That piece, posted during the first-week experiment on a day when Nolan wasn’t chasing eyeballs, has attracted 30,242 pageviews as of this writing. Not a slam dunk — pretty good, but still 20,000 pageviews below average for the period. That interplay of short-and-long, cheap-and-expensive, aggregated-and-original is something lots of outlets — from web-native sites to The New York Times — are trying to figure out.

Monday’s fine Deadspin piece on Joe Quigg, the Tar Heel who denied Wilt Chamberlain a national title, weighed in at 1,700 words. (Deadspin is Gawker’s sports site, which Daulerio used to edit.) Applauds one commenter:

I don’t know how many comments this series will or won’t get. But regardless, as someone who’s hung out at this place, at least periodically, a long time, I’d just like to say it’s terrific, and more, please. Well done.

So far, two comments. The other: “Seconded. More of this please.”

Some readers want more of this, but the numbers don’t back it up. Total pageviews for the Deadspin piece: 14,308. New visitors: 756.

Gawker’s attitude about pageview-chasing has evolved. Pay-per-pageview came and went. Quotas have been lifted; here’s uber Gawker-watcher Felix Salmon two years ago:

The fact is that while chasing pageviews like this worked well in the early days of the blogosphere, when Nick Denton asked his editors for at least 12 posts per day, it’s much less sustainable today — and the Gawker post quotient has been abolished, with layers of editors on top of the writers who bring the average number of posts per editorial employee per day lower still. Today, if you want to compete on who can produce the most SEO-honed content per day, you’re going to lose, and people like Demand Media are going to win.

The kind of “post-blog,” TV-inspired form that Gawker’s controversial 2011 redesign was pushing toward relies on exclusives and stories with a little more weight.

And in December, ReadItLater data showed that Gawker Media writers were among the most-saved and most-read on its platform. Presumably the articles being saved for later consumption aren’t pics of weird Chinese goats.

In the old days, it was easier to justify “eat your vegetables” journalism to skeptical editors (or shareholders). But with a pageview number staring you in the face, it’s hard not to make a judgment on a story’s potential ROI.

“I am very, very pro-original content,” Daulerio told me. “I am not a type of person who wants…everything up first. If we’re going to create a new identity with Gawker, I think it’s really gotta start with [the writers] first.”

Meanwhile, enjoy the most adorable cat video you’ll see all day.

Here’s the full text of Choire Sicha’s email to me:

AJ’s a genius and he can do no wrong. In addition, he has a formidable secret weapon in his brilliant deputy, Emma Carmichael. I do think the staff is the happiest it’s been in a while–certainly happier than they were last year.

And AJ’s definitely already seen a traffic up-tick for February, a nice rise from the early winter’s mini-plateau. But while I am definitely on board with AJ’s approach–go wild! Have a blast!–I don’t really think you can call it “traffic-whoring” if it doesn’t get any traffic. At least, not the traffic that Nick Denton cares about. In February, 2012, Gawker had just 5 stories in the top 50 stories at Gawker Media, at least judging by Denton’s favorite metric, “new unique visitors.” (That’s even though Gawker makes up about 24% of Gawker Media’s total traffic.) The site’s biggest story in February was “Chinese Twitter Says Kim Jong-Un Was Assassinated This Morning In Beijing”; after that came “The Awful Cover Letter All of Wall Street Is Laughing About”–and this was, I thought, a pretty solid classic Gawker endeavor, and very well handled. But then number three on the list was “J.Lo’s Oscar Dress: Nipple or Shadow?” (By the way, if you look at Gawker’s February traffic, it’s basically the Adrien Chen show. Who knew?)

But while some of these top stories are wily or original or reported or even exciting (The Man Behind Horse eBooks!), lots are just hot SEO or gossip sheet standbys. (“Rick Santorum Made Entirely of Gay Porn”; “Meet Whitney Houston’s Rumored Lesbian Lover.”)

Still, Gawker beat its traffic target for February by a healthy 19.06%. (The Gawker network average was +13.20%.) But then, every site in the stable beat its traffic target, save one, which had a good excuse. For all Denton’s bluster about getting sites to perform, he’s not actually that harsh a taskmaster.

The most telling thing about the instability of Gawker Media and its contrasting missions–greatness versus traffic–can be summed up quite nicely in the network’s biggest story of February. That’s Jezebel’s “This Coffin Photo of Whitney Houston’s Dead Body Is Now on Newsstands Everywhere,” with more than 324,000 new unique vistors. Now, this was a decent piece of media criticism by a really smart writer, Dodai Stewart. But you know that’s not at all why it got all those visits. And also, it did serve up a copy, at a tasty 640 pixels wide, of the criticized picture of a dead Whitney Houston.

Photo of “weird Chinese goat” by Andrew J. Cosgriff used under a Creative Commons license.

Typographic capitals: ProPublica shares a tool for easy state maps

I’m pretty sure there isn’t a category for Best Use of Webfont Formats, so ProPublica will probably have to remain happy with the two Pulitzer Prizes it’s already won. But a tiny little project out of the nonprofit news giant is worth an attaboy.

ProPublica just released StateFace, a webfont that, in place of standard letters, contains maps of the 50 states. (Plus the District of Columbia. Sorry, Guam.) Dingbat fonts are nothing new, and Unicode has helped bring font-characters-as-tiny-graphics closer to the mainstream.

But StateFace is purpose-driven, marrying typographic technology with editorial needs. ProPublica’s using it as an easy way to get state maps onto its Super PAC tracking page. You embed the font files as you would any other webfont, with a simple CSS call from your server.

Here’s the Gulf Coast, for instance. (Warning: This won’t look right in an RSS feed or some other non-web environment, I’d wager.)

qRYBJI

On the back end, those states are really just the random-looking string “qRYBJI”; R equals Louisiana, J equals Georgia, and so on. You can select them with your mouse and copy them into a text file if you want.

And the glyphs are detailed enough that they can be scaled up quite large. Here’s Louisiana at 300-point, and just for fun, crawfish red:

R

(We Louisianans wish our southeastern coastline was still that lush and full, but that’s another story.)

The vagaries of web typography also mean you can do things like italicize a state — imagine a strong breeze was coming in from north Texas:

R

ProPublica’s Scott Klein is proud of the little details:

From what I can tell from the github repo, Jeff Larson and Klein were the main drivers behind the project. (An exercise left to the reader: Be the first person to make a complete map of the United States using this webfont and CSS absolute positioning.)

Now, I imagine that “making fonts with tiny maps in them” probably didn’t rank high on the Sandlers’ wish list when they gave the initial gift to fund ProPublica. But nonetheless, once the developers went through the trouble of solving their own problem, they took the extra step of releasing their work for others to use.

It remains one of my favorite things about ProPublica that it is so committed to sharing both its work and the tools it builds to create that work. Read its Nerd Blog and you’ll find tools like Simple Tiles (a map imaging tool), a small stepper graphic library, TimelineSetter (for, duh, timelines), a guide for scraping data from the web, a tool for connection graphics, and more.

Those are all valuable additions to the journalist-coder toolkit. So even though I don’t imagine I’ll ever have a use for an inline map of New Mexico, I raise a toast to the open-source sensibilities of ProPublica’s nerds.

State Integrity project builds off a nonprofit news network

When the Center for Public Integrity and Public Radio International sought to create a wide ranging investigation into transparency and corruption at the state level, they knew they were at a disadvantage.

The project, which also brought in the expertise of Global Integrity and funding from the Omidyar Network, among others, was centralized in its inception and direction — but needed to be decentralized in order to work. If you’re running a project meant to look at the risk of government corruption across 50 states you need to be in…50 states.

The State Integrity Investigation officially launched to the public today and offers a kind of corruption risk index for government in each state, complete with a report card grading for areas like legislative accountability, lobbying disclosure, and public access to information. (Surprisingly enough, according to the project, the most transparent and accountable state is…New Jersey. Check how your state fares.) The information underlying these reports all came from journalists, and interestingly, some of it from nonprofit journalism organizations. As a result, the State Integrity project was a kind of network test of the expanding collection of nonprofit journalism sites sprouting around the country.

If you take a look at the list of journalists who collected data for the project you’ll find an impressive roster of experienced reporters, many operating out of organizations like the New England Center for Investigative Reporting, IowaWatch, and the Wisconsin Center for Investigative Journalism, among others. This probably shouldn’t be all too surprising, since CPI and PRI touted their mini-hiring spree when the project was announced last year. Nonprofit investigative startups have had a way of attracting veteran newspaper reporters, who already know their way around the state house.

“Most state publications don’t have the budgets to do this deep reporting in their own state, they don’t have the manpower,” said Randy Barrett, communications director for the Center for Public Integrity. When they set out to staff up for the project they wanted to cast as wide a net as possible to get the best talent for the job. Barrett said it just made sense to tap into the Investigative News Network’s pipeline to find people in particular states. The goals for many of those organizations aligned well with the State Integrity investigation’s; as Barrett told me, “We’re trying to help fill that vacuum in state house reporting and focus a lens on transparency.”

In that way, State Integrity is also helping many of these nonprofit news sites generate additional stories that could draw in readers. While the State Integrity content is not exclusive to the journalists and organizations that participated, it could represent a wealth of new story possibilities for nonprofit sites, which often operate with small staffs. Michael Skoler, vice president of interactive media for PRI, said they worked with the partner journalists and more than a dozen public media stations on how the data from the project could be used in reporting going forward. In the case of the public media stations, each agreed to do at least six stories based off the report, Skoler told me.

“We want to make sure this isn’t just one-shot coverage, that a lot of media organizations are invested in covering the honesty and effectiveness in state government,” Skoler said.

Passing the nonprofit test: A guide for nonprofit news outlets on how to get 501(c)(3) status

Nonprofit news organizations were supposed to be journalism’s next great hope. Like a rocket shooting from the dying planet of print news, nonprofit outlets were supposed to be able to focus on the tough, gritty investigative reporting newspapers were no longer doing enough of while not being beholden to advertisers.

But the past few months have seen the nonprofit news sector take some big hits. In December, Voice of San Diego had to layoff staff when fundraising totals didn’t hit targets. The came the impending merger of the Bay Citizen with the Center for Investigative Reporting. And then the demise of the Chicago News Cooperative.

But beyond money issues, there’s a structural problem nonprofit outlets are dealing with: getting all-important 501(c)(3) status from the IRS. Many nonprofits (or nonprofits-to-be?) have arrangements with existing entities that allow them to receive donations. But 501(c)(3) status is the key to standing on their own and cementing an operational structure. And at the moment, the IRS appears to have a rising backlog of journalism groups applying for nonprofit status, with waits approaching two years. And the question on many minds is: Why?

Our friends over at the Digital Media Law Project (formerly the Citizen Media Law Project — they’re in the process of rebranding) decided to take a deeper look at this issue; they’re planning on releasing a report in the next few weeks that can serve as a guide for journalism organizations trying to apply for nonprofit status. Reviewing decades of case law around nonprofit news organizations as well as previous IRS rulings, the guide tries to make the complex 501(c)c(3) process less of a mystery.

“It seems to us there’s a lot of confusion about why the IRS is asking certain types of questions, applying certain standards, and reaching certain results,” Jeff Hermes, the project’s director, told me.

While DMLP puts the finishing touches on its report — “Guide to the Internal Revenue Service Decision-Making Process under Section 501(c)(3) for Journalism and Publishing Non-Profit Organizations” — Hermes shared some of the key points with us.

Education, not journalism

The single biggest problem for news organizations seeking 501(c)(3) status, Hermes said, is that they don’t properly identify themselves when applying. Namely, they make the mistake of calling themselves journalism organizations. That’s a problem, because the IRS doesn’t recognize journalism as one of the defined categories eligible for nonprofit status. But what is eligible? Education. And civically oriented news organizations can make a very strong case that what they do qualifies as educational.

The problem is that some journalists, in their applications, are willing to leave that journalism-to-education up to interpretation — as a step for the IRS to take. Wrong: The IRS doesn’t deal in interpretation. “If you have journalism listed as your purpose, the IRS will look at that and say, ‘journalism isn’t on my list of eight categories,’” Hermes said.

(The eight categories? “Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations.”)

Any journalist can make the case that their work is educational in nature, but in this instance it really does have to be spelled out, Hermes said. “The key to passing this side of the test is whether journalism is your purpose or the method by which you’re achieving the educational purpose,” he said. Think journalism as tool for education.

Who’s wearing what hat?

In keeping with the educational standard, potential news nonprofits have to pass a kind of organizational test that shows they are structured to educate the public. What does that look like? Hermes said the IRS will look at whether you provide researched, factual information to a specific audience and are not engaging in advocacy. They’ll also want to know how your work is being distributed and whether you are trying to reach a targeted group or mass audience. As an educational entity, journalists fill the role of researchers and experts — the kind of structure the IRS is looking for, Hermes said.

Another note on that advocacy issue: Hermes said the IRS scrutinizes groups for whether they are lobbying for specific political candidates or campaigns. That means no editorial-page-style endorsements of candidates.

About that money

Another point on the organizational issue: How closely does your shop resemble a commercial newsroom? If your publication looks and acts like a newspaper, only with a big “nonprofit” sticker slapped across the masthead, that won’t suffice. Specifically, if your group plans to (or already does) generate revenue through subscriptions or advertising, that’s a red flag that could sink your application, Hermes said. “There’s a common misconception among applicants that it’s okay to earn advertising revenue and other revenue as long as you pay taxes on it,” Hermes said. “That’s not quite right.”

While nonprofit news organizations are allowed to do those activities, they typically fall under what Hermes calls “unrelated taxable income.” What that means is any taxable dollars made by a tax exempt group. The catch is that the income should not be connected to the main work an organization does. So selling stories or other content can be permissible, as long as it’s not the main source of money for an organization. In other words, advertising, subscriptions, or other sales must be in addition to your main source of revenue, like say memberships and foundation support, Hermes said.

Again, it’s not that more traditional means of money aren’t allowed — it’s that they can’t be the bulk of how you get paid. “The IRS wants to see you try to use traditional nonprofit sources of funding before turning to regular commercial revenue models,” Hermes said. “It will help if you are using commercial revenue models to augment your nonprofit style fundraising or show you tried nonprofit fundraising and failed.”

The business of experts

In looking at the organizations that have been granted 501(c)(3) status, Hermes and his team found that having a specific focus and area of expertise can make a difference. If your news organizations is designed to report on specific issues — say, politics, the environment, health care, or a limited community — that can help. Also, a specific focus, such as investigative reporting or other watchdog work, can help. This ties into the organizational structure (do you have an experienced, expert-like staff?) as well as meeting the overall idea of an educational purpose. “The organizations that are most successful are those involved in investigative journalism and show some institutional expertise in researching particular topics,” Hermes said.

Hermes said they are currently reviewing the final report, as well as talking with foundations that support journalism to they could add further insight to the report. There’s clearly a lot at stake here — even as some nonprofit news shops merge or close, new ones are starting up. In the eyes of many journalists as well as some charitable groups, nonprofit news remains one of the more viable ways of supporting journalism going forward. Hermes said that even with a guide and concrete suggestions in place for news outlets, the 501(c)(3) process will remain byzantine in how it applies to journalism.

“The current structure is very complex in terms of standards the IRS applies — it’s not always intuitive,” he said. “The mixing of consideration of content-related issues — what the content of your publication is — with issues of your business model and where you’re getting revenues give rise to what sometimes look like contradictory results.”

While Hermes didn’t want to speculate on the IRS motives or reasons for the delay, one possibility for what looks like increased scrutiny could be last year’s FCC report on the information needs of communities, which discussed the need for support of nonprofit journalism. The IRS, like most federal agencies, wants to be very careful around setting precedent, Hermes said. “They are sensitive to the fact that ruling on these things can have a dramatic impact on an entire industry,” Hermes said.

(One final note: Nonprofit news organizations struggling these issues — along with waiting to see the full report — might consider reaching out to the Online Media Law Network, a DMLP project that connects online news outlets to attorneys willing to do legal work for them, often at no cost. Helping with 501(c)(3) applications is one of the areas where OMLN can provide help.)

Image by arsheffield used under a Creative Commons license.

Passing the nonprofit test: A guide for nonprofit news outlets on how to get 501(c)(3) status

Nonprofit news organizations were supposed to be journalism’s next great hope. Like a rocket shooting from the dying planet of print news, nonprofit outlets were supposed to be able to focus on the tough, gritty investigative reporting newspapers were no longer doing enough of while not being beholden to advertisers.

But the past few months have seen the nonprofit news sector take some big hits. In December, Voice of San Diego had to layoff staff when fundraising totals didn’t hit targets. The came the impending merger of the Bay Citizen with the Center for Investigative Reporting. And then the demise of the Chicago News Cooperative.

But beyond money issues, there’s a structural problem nonprofit outlets are dealing with: getting all-important 501(c)(3) status from the IRS. Many nonprofits (or nonprofits-to-be?) have arrangements with existing entities that allow them to receive donations. But 501(c)(3) status is the key to standing on their own and cementing an operational structure. And at the moment, the IRS appears to have a rising backlog of journalism groups applying for nonprofit status, with waits approaching two years. And the question on many minds is: Why?

Our friends over at the Digital Media Law Project (formerly the Citizen Media Law Project — they’re in the process of rebranding) decided to take a deeper look at this issue; they’re planning on releasing a report in the next few weeks that can serve as a guide for journalism organizations trying to apply for nonprofit status. Reviewing decades of case law around nonprofit news organizations as well as previous IRS rulings, the guide tries to make the complex 501(c)c(3) process less of a mystery.

“It seems to us there’s a lot of confusion about why the IRS is asking certain types of questions, applying certain standards, and reaching certain results,” Jeff Hermes, the project’s director, told me.

While DMLP puts the finishing touches on its report — “Guide to the Internal Revenue Service Decision-Making Process under Section 501(c)(3) for Journalism and Publishing Non-Profit Organizations” — Hermes shared some of the key points with us.

Education, not journalism

The single biggest problem for news organizations seeking 501(c)(3) status, Hermes said, is that they don’t properly identify themselves when applying. Namely, they make the mistake of calling themselves journalism organizations. That’s a problem, because the IRS doesn’t recognize journalism as one of the defined categories eligible for nonprofit status. But what is eligible? Education. And civically oriented news organizations can make a very strong case that what they do qualifies as educational.

The problem is that some journalists, in their applications, are willing to leave that journalism-to-education up to interpretation — as a step for the IRS to take. Wrong: The IRS doesn’t deal in interpretation. “If you have journalism listed as your purpose, the IRS will look at that and say, ‘journalism isn’t on my list of eight categories,’” Hermes said.

(The eight categories? “Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations.”)

Any journalist can make the case that their work is educational in nature, but in this instance it really does have to be spelled out, Hermes said. “The key to passing this side of the test is whether journalism is your purpose or the method by which you’re achieving the educational purpose,” he said. Think journalism as tool for education.

Who’s wearing what hat?

In keeping with the educational standard, potential news nonprofits have to pass a kind of operational test that shows they are structured to educate the public. What does that look like? Hermes said the IRS will look at whether you provide researched, factual information to a specific audience and are not engaging in advocacy. They’ll also want to know how your work is being distributed and whether you are trying to reach a targeted group or mass audience. As an educational entity, journalists fill the role of researchers and experts — the kind of structure the IRS is looking for, Hermes said.

Another note on that advocacy issue: Hermes said the IRS scrutinizes groups for whether they are lobbying for specific political candidates or campaigns. That means no editorial-page-style endorsements of candidates.

About that money

Another point on the organizational issue: How closely does your shop resemble a commercial newsroom? If your publication looks and acts like a newspaper, only with a big “nonprofit” sticker slapped across the masthead, that won’t suffice. Specifically, if your group plans to (or already does) generate revenue through subscriptions or advertising, that’s a red flag that could sink your application, Hermes said. “There’s a common misconception among applicants that it’s okay to earn advertising revenue and other revenue as long as you pay taxes on it,” Hermes said. “That’s not quite right.”

While nonprofit news organizations are allowed to do those activities, income from those areas can’t make up the main source of money for an organization. What the IRS is looking for is whether or not your organization makes money like most nonprofits (memberships and foundation support for instance) instead of like a commercial business.

Ads and subscriptions typically fall under what Hermes calls “unrelated taxable income,” or, taxable dollars made by a tax exempt group. One exception is if your advertising is connected to your work (and is educational itself) and doesn’t just support your operation.

Again, it’s not that more traditional means of money aren’t allowed — it’s that they can’t be the bulk of how you get paid. “The IRS wants to see you try to use traditional nonprofit sources of funding before turning to regular commercial revenue models,” Hermes said. “It will help if you are using commercial revenue models to augment your nonprofit style fundraising or show you tried nonprofit fundraising and failed.”

The business of experts

In looking at the organizations that have been granted 501(c)(3) status, Hermes and his team found that having a specific focus and area of expertise can make a difference. If your news organizations is designed to report on specific issues — say, politics, the environment, health care, or a limited community — that can help. Also, a specific focus, such as investigative reporting or other watchdog work, can help. This ties into the organizational structure (do you have an experienced, expert-like staff?) as well as meeting the overall idea of an educational purpose. “The organizations that are most successful are those involved in investigative journalism and show some institutional expertise in researching particular topics,” Hermes said.

Hermes said they are currently reviewing the final report, as well as talking with foundations that support journalism to they could add further insight to the report. There’s clearly a lot at stake here — even as some nonprofit news shops merge or close, new ones are starting up. In the eyes of many journalists as well as some charitable groups, nonprofit news remains one of the more viable ways of supporting journalism going forward. Hermes said that even with a guide and concrete suggestions in place for news outlets, the 501(c)(3) process will remain byzantine in how it applies to journalism.

“The current structure is very complex in terms of standards the IRS applies — it’s not always intuitive,” he said. “The mixing of consideration of content-related issues — what the content of your publication is — with issues of your business model and where you’re getting revenues give rise to what sometimes look like contradictory results.”

While Hermes didn’t want to speculate on the IRS motives or reasons for the delay, one possibility for what looks like increased scrutiny could be last year’s FCC report on the information needs of communities, which discussed the need for support of nonprofit journalism. The IRS, like most federal agencies, wants to be very careful around setting precedent, Hermes said. “They are sensitive to the fact that ruling on these things can have a dramatic impact on an entire industry,” Hermes said.

(One final note: Nonprofit news organizations struggling these issues — along with waiting to see the full report — might consider reaching out to the Online Media Law Network, a DMLP project that connects online news outlets to attorneys willing to do legal work for them, often at no cost. Helping with 501(c)(3) applications is one of the areas where OMLN can provide help.)

Image by arsheffield used under a Creative Commons license.

Village Soup’s hot pursuit of a hyperlocal model goes cold

It wasn’t that long ago that Maine’s Village Soup was being lauded as a model for what a print/online hybrid strategy for local journalism could look like. That optimism took a big hit late Friday with the abrupt closure of Village NetMedia’s newspapers and their related websites.

Fifty-six Village Soup staffers got word on Friday evening, via email, that the Bar Harbor Times, Capital Weekly, Village Soup Gazette, Village Soup Journal and the Scene would immediately cease operations. The papers’ websites had been taken down and replaced with a message from Village Soup owner Richard M. Anderson about how “profound changes in the newspaper publishing business, a weak economy and our investment in new products created severe financial challenges” that made survival impossible. Employees were told that a deal that could have saved the papers — some of which were launched in the 1820s — had unraveled.

“[Anderson] got the word at the close of banking hours on Friday that this negotiation was not going to proceed, and I imagine he probably spent the next couple of hours trying to figure out how to tell us,” Shlomit Auciello, a former reporter and photographer for Village Soup Gazette, told me. “We are a little bit of a petri dish here right now.”

Anderson didn’t respond to my attempts at an interview. (His blog, Sustainable Journalism, was last updated in September.) But yesterday the Bangor Daily News found Anderson and quoted him saying he felt awful about the closure, adding, “Nobody did anything wrong.”

In the latter part of the last decade, he was a frequent speaker at future-of-news conferences, promoting the Village Soup model, which relied on getting local advertisers to pay for the right to post press releases and other messages alongside news content, along with a heavy focus on aggregating citizen content. Village Soup’s peak moment probably came in 2007, when it received a $885,000 Knight News Challenge grant to create an open source version of Village Soup’s underlying software.

Online origins

Anderson began his experiment in local news in the late 1990s, when he launched a website that would eventually become VillageSoup.com. The idea was to facilitate online interaction between members of the community, including giving advertisers a way to interact directly with potential customers. Here’s how Anderson explained it in a 2007 piece for Nieman Reports:

If we didn’t get their buy-in and support, we knew we wouldn’t have a sustainable way to share news and information for people who live in these places. So we created browser-based tools to help the business people answer simple, frequently asked questions, such as: What are your specials today? What waterfront property is on the market? What are your business hours? Are you available?

Gary Kebbel, now journalism dean at the University of Nebraska, was Knight’s journalism program director at the time of its grant. He says Anderson was way ahead of his time even in 2007. “In terms of the development of online community and social media, 2007 is like 1990. It was just so long ago,” Kebbel said. “The grant was made based on the fact that Village Soup had a business model that we hadn’t seen anybody else have.”

It was a time when “hyperlocal was sort of the ‘in’ word,” he said. “They were very local and close to their community, so we thought they would also have particular expertise in advertising. That’s still the Holy Grail that has not been found: How do online news sites get community advertisers?”

Anderson’s model also involved taking advantage of print. First, that meant creating two print newspapers to republish some of the material produced by Village Soup websites in Maine. Then, in 2008, he purchased six struggling weekly newspapers in the region to put more of the ad market under one roof. As he told CJR in 2010: “Print plays a very important role. It does something for advertisers that online will never do. And print does something for readers that is going to be hard for online to ever do.” Whatever the motive, the timing was terrible, buying flailing weeklies on the eve of the recession. But at least one Maine journalist, Down East magazine’s Al Diamon, has doubts there was ever much of a business there: “In retrospect, Anderson’s ever-changing vision of what he wanted to accomplish never coalesced into a viable business plan. Managing by mercurial changes rarely results in progress, no matter what the economy looks like.”

Kebbel says he’s not sure whether anyone actually used the open source software that Village Soup produced with the grant money. (It was last updated in 2009; the most recent release has been downloaded less than 200 times.) But Kebbel praised the company for finding an additional revenue stream by also offering a premium iteration of the platform. A Village Soup website lists nine sites that use the premium service. The publisher of one such site, Delaware’s Cape Gazette, says the “folks at Village Soup” had assured him that the service would continue, even with the closure of the Maine newspapers. “My understanding is that it’s not going to affect the outlets that are using the Village Soup platform,” Dennis Forney said. “They tell me that I shouldn’t worry about our platform, and so far I’m taking it at face value.”

Filling the news hole

In the statement he posted online, Anderson says he’s “confident that others will step forward” to fill that void that Village Soup leaves behind in Maine. And it appears that’s already started to happen.

Nathan Greenleaf, the owner of a Maine-based commercial refrigeration company, launched a website called Pen Bay Today on Sunday as a way to help the community “move forward” post-Soup. He says the site has had more than 14,000 hits since it went live (and is quoting Shakespeare to rally support). Greenleaf told me he’s willing to invest about $35,000 in the project, but that his understanding of journalism comes primarily from “noir books and movies.” He’s hoping to find reporters who will “work for nothing” at first.

And it appears the president of another Midcoast Maine weekly newspaper will purchase Village NetMedia’s assets and revive most of them. Reade Brower, founder and president of The Free Press, has signed a letter of intent and tells the Bangor Daily News he plans to revive two of the newspapers as soon as next week, closing the others.

This Week in Review: Newspapers’ culture clash, and paywalls pick up momentum

[After a week off last week, this week's review covers the past two weeks.]

Cultural roots of news’ revenue problems: Pew’s Project for Excellence in Journalism released this week one of the more interesting of its recent studies on the financial state of newspapers: It used (anonymized) private data from 38 newspapers and numerous interviews to paint a picture of how newspapers are fitting together the revenue puzzle online. The news, as usual, wasn’t good. The big takeaway stat is that for every dollar newspapers are gaining in digital revenue, they’re losing $7 in print revenue.

The Lab’s Justin Ellis pulled together some of the other highlights from the report: Mobile isn’t big money yet, digital revenue is still dominated by classified and display ads, and most newspapers have adopted Groupon or one of its daily-deal clones, with mixed results. PaidContent’s Staci Kramer critiqued the study for not touching on paid-content plans, but came up with a good (though depressing summary): “some papers are less screwed than others right now; all of them face a reckoning but some will postpone it longer than others; some papers have lots of room to grow with digital revenue because they’re so far behind; and some view running a modern newspaper as the equivalent of strip mining.”

Based on those dispiriting findings, Gawker’s Hamilton Nolan offered a few predictions for the next several years of the newspaper business: Newspapers will survive and eventually stabilize, but with much smaller staffs, ubiquitous paywalls, and a few mid-sized metro closings.

Another area of the study that got a lot of attention was its emphasis on “culture wars” between print and the web as a persistent obstacle to change. Poynter’s Rick Edmonds said a faster culture-change approach seems to be working at previously struggling properties like the Journal Register Co., but outfits that still have strong print operations need to strike a tougher balance. GigaOM’s Mathew Ingram said the best way to fight cultural inertia is to put the digital folks in charge, and Michele McLellan of the Knight Digital Media Center advised news orgs to stop ostracizing the innovators and start ostracizing the curmudgeons.

More momentum for paywalls: A year after The New York Times launched its influential paid-content plan, newspaper paywalls may be reaching critical mass. The Los Angeles Times announced a new paywall that launched this week, and like just about everyone else right now, it’s following the Times’ metered model: 15 free articles each month, then an initial charge of 99 cents a week that goes up to $1.99 a week (with a Sunday newspaper thrown in). The Times is calling its plan not a paywall, but a “membership program,” which Spot.Us’ David Cohn saw as an important rhetorical shift.

Several other papers announced moves into paid content, too: As Poynter’s Jeff Sonderman noted, the Washington Post’s new politics iPad app charges users $2.99 a month for its full features, the paper’s deepest foray yet into charging for digital content. Rhode Island’s Providence Journal launched a paywall built around a digital replica of the print edition. Gannett also announced its coming company-wide paywalls last month, which, as the Lab’s Justin Ellis reported, may be banking on the success of its smaller papers. And at News Corp., the hard-paywalled Times of London is watching The New York Times’ metered model closely, and Search Engine Land’s Danny Sullivan noticed the paywalled Wall Street Journal is pulling back on what Google readers can see for free.

All these varied developments, of course, make what the news industry calls a Trend™, so we had features on the rise of newspaper paywalls in the Wall Street Journal, Christian Science Monitor, and The Wrap. The (paywalled) Journal was pretty bullish on their prospect, while the (mostly non-paywalled) Monitor and Wrap emphasized the continued skepticism. Several small-newspaper execs chimed in supporting paywalls, including Keith Foutz at Editor & Publisher and others covered by NetNewsCheck, as did Warren Buffett, new owner of the newly paywalled Omaha World-Herald. GigaOM’s Mathew Ingram pushed back against Buffett in particular.

The Lab’s Ken Doctor took on some of the fears regarding paywalls, and Poynter’s Rick Edmonds pointed out an interesting element of the paywall rush—many of these regional newspapers are developing their plans in close consultation with one another. He focused on the Milwaukee Journal Sentinel and Boston Globe’s roles as models for other regional newspapers. Poynter’s Mallary Jean Tenore, meanwhile, looked at a practical aspect of paywall implementation—how those newspapers’ social media efforts work with (and around) their paywall plans.

Apple’s new iPad and new warning: Apple unveiled the newest version of its iPad this week, as well as an update to Apple TV. Bloomberg and The New York Times have the best summaries of what exactly Apple announced and how it differs from what came before: As the Times’ Sam Grobart wrote, this was a “plumbing event,” where the biggest innovations were under the hood with the infrastructure of Apple’s products.

For Apple, the event was about trying to push the iPad as the gateway to the “post-PC” world: It pointed out that it sold more iPads last quarter than any PC manufacturer sold of their PCs. At TechCrunch, MG Siegler said that rhetoric (and those stats) need to be taken seriously, and ReadWriteWeb’s Dan Frommer said this could be Apple’s chance to build something bigger than the PC market ever was. Larry Dignan said it’s not just PCs that the new iPad is competing with, but pretty much everyone, and Slate’s Farhad Manjoo marveled at how thoroughly Apple is dominating the tablet market.

Unfortunately for Apple, there was other news about the company this week. The Wall Street Journal reported that the U.S. Department of Justice has warned Apple and five of the nation’s largest book publishers that it’s planning to sue them for antitrust violations regarding Apple’s model for iPad ebook prices that allows wholesalers to dictate prices directly. PaidContent has a handy Q&A on the issue, and Wired’s Tim Carmody looked at the uphill battle the DOJ may be facing.

News Corp.’s culture of corruption: The developments in News Corp.’s ongoing scandal are still coming fast and furious. The biggest of those in the past two weeks was the news that Rupert Murdoch’s son, James, was stepping down as head of News International, the company’s British newspaper arm that’s been at the center of the scandal.

As The New York Times reported, the company portrayed the move as a routine jump across the Atlantic to work on its international TV properties, but others saw it as an attempt to protect James Murdoch from the scandal’s fallout. Disgruntled shareholders are still working to oust James from the company altogether, and the BBC’s Robert Preston pointed out that rather than receding from the spotlight in the wake of the scandal, the 80-year-old Rupert is actually taking on even more control.

James Murdoch’s move came after some new allegations last week from a top police investigator that News Corp.’s Sun had a “culture of illegal payments” to a broad network of government officials from the paper’s highest levels. According to the Guardian, those new allegations increased the chance of a possible U.S. prosecution of News Corp., and an 11th Sun reporter was arrested in Britain for illegal payments last week. Meanwhile, we’re finding out the phone hacking may have extended to competing British newspapers, and Britain’s judicial Leveson Inquiry, which is investigating News Corp., is also preparing to call top News Corp. execs, including Rupert Murdoch, for testimony later this spring.

The public and professional value of linking: The intermittent debate over the relative value of linking in journalism flared up again last week, leading to some particularly thoughtful pieces on the subject. It started after the Wall Street Journal didn’t credit tech blogger MG Siegler for a scoop he had, prompting a lengthy discussion on Twitter, Storified by Mathew Ingram, over whether news orgs should link to competitors who beat them to a story.

Ingram argued in a subsequent post that even if scoops aren’t as important as journalists think they are, the failure to link to a competitor’s scoop is a dishonest suggestion that they came by the information independently. Reuters’ Felix Salmon responded with an insightful piece on journalistic sourcing that concluded that such linking is usually more of a courtesy: “commodity news is a commodity: facts are in the public domain, and don’t belong to anybody.”

Mother Jones’ Kevin Drum and Poynter’s Steve Myers agreed with Salmon, while Digital First’s Steve Buttry and web philosopher David Weinberger echoed some of Ingram’s points. Weinberger argued that places like the Journal are failing to link based on a need to protect their authority over knowledge, rather than sharing it with the public, and that “Links are a public good. They create a web that is increasingly rich, useful, diverse, and trustworthy. We should all feel an obligation to be caretakers of and contributors to this new linked public.”

WikiLeaks’ Anonymous partnership: WikiLeaks made its latest document release last week with five million emails from the private global intelligence firm Stratfor, acquired by hackers from the group Anonymous who breached the company’s servers late last year. WikiLeaks worked with 25 media partners on this release, including McClatchy and Rolling Stone in the U.S. Wired’s Quinn Norton reported on the connection between Anonymous and WikiLeaks, which Gawker called the most interesting thing to come out of this leak.

Others seemed to agree — mostly on the boredom of the rest of the leak. Reuters’ Jack Shafer and Foreign Policy’s Daniel Drezner gave it a yawn, while the Atlantic’s Max Fisher called WikiLeaks a “joke” for taking Stratfor seriously. Yossi Melman of the Israeli newspaper Haaretz told the story of how he became an enemy of WikiLeaks’ Julian Assange by getting his hands on the diplomatic cables, and with WikiLeaks on the wane, GigaOM’s Mathew Ingram asked what the organization means in the long run.

Reading roundup: I’ve tried to cram a ton of news into this week’s review, so I’ll run through the miscellaneous bits pretty quickly:

— Conservative digital media mogul Andrew Breitbart died suddenly last week at 43. His imprint on the online news environment was sizable — he helped launch the Huffington Post, helped undermine the traditional media’s gatekeeping authority, and made it his career goal to “go out and create our media.”

— It’s been two weeks now, but I wanted to note that NPR put out a new ethics policy focusing on balance, transparency, and clarification, among other principles. J-prof Jay Rosen loved the changes, calling them a win for truth-seeking over “he said, she said” journalism.

— The discussion of Google+ as a “virtual ghost town” continues, with the Wall Street Journal reporting on the social network’s struggles and Google countering that image by reframing Google+’s purpose. TechCrunch’s Josh Constine explained why Google may not care if people stick around at Google+.

— Last week’s monthly Carnival of Journalism focused on the digital trends that are likely to shape journalism over the next few years, and Steve Outing’s Storified list of the predictions is a great array of thoughts about what’s next in the field.

— Finally, a couple of cool resources: One from the Columbia Journalism Review on countering misinformation in the news, and another huge set of tools and tutorials for journalists and programmers from last month’s NICAR conference.

Rupert Murdoch photo by World Economic Forum, chain link photo by Cayusa, and Anonymous mask photo by Luciano Castillo used under a Creative Commons license.