Co-op Ownership
From Banyan Project
Banyan’s journalism will be free and open to all. But reader/users who become co-op members, and thus Banyan's owners, will also have the benefit of access to the community that forms around the journalism and to other benefits as well.
Cooperative ownership provides a rock-solid foundation for the integrity that is the source of Banyan's trustworthiness and for its distinctively relational and accountable approach to journalism. And payments from co-op members are crucial to Banyan's business success.
Banyan holds fast to the belief that paywalls ensure failure, if not for all journalism, certainly for journalism whose aim is to inform and engage a broad audience. But Banyan also believes that marketing can be conducted with integrity -- and that the Banyan co-op offers benefits ample enough that sensitive and well-thought-through marketing will attract a large number of reader/users who will pay to own a share. Finding out whether enough readers will buy shares to make their payments Banyan's primary revenue stream awaits testing through pilot sites.
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Importance of Co-op Structure
The idea of a co-op as the structure for Banyan's business model grows organically from its value proposition: Members of the Banyan Public will find its journalism relevant to their lives, respectful of them as people, and worthy of their trust. Cooperatives are, quite simply, the most trustworthy ownership form.
Every important aspect of Banyan fits with co-op ownership:
• Banyan will be a consumer co-op, meaning that to own a share you must be a reader/user. This ensures that Banyan's editors will be directly accountable to their reader/user/owners, rather than to advertisers and to corporate executives who are accountable in turn to Wall Street. This structural conflict of interest plagues the mainstream media but Banyan has no such problem -- its reader/user/owners must come first. This direct editor/reader relationship, enriched by feedback through Banyan's sophisticated software, makes it possible for Banyan's editors to deliver on the promise of its value proposition: that the less-than-affluent public it serves will find its journalism relevant to their lives, respectful of them as people and worthy of their trust.
• The trustworthy structure will remove friction from the online community that will form around Banyan journalism, making its civic networking more effective and thus of greater value to Banyan readers/users.
• Banyan's primary revenue source will be a continuing stream of small payments from it's reader/owners. This will free it from primary reliance on advertising, which will be only one of its six revenue streams. So it is crucial that Banyan's editors and executives create and convey such a powerful sense of value that readers will step up to become owners.
Banyan co-op owners will be true shareholders, in contrast to "members" of public radio and television stations or of membership not-for-profits such as Consumers Union. Other true consumer co-ops include credit unions and food co-ops. Banyan's charter will restrict each reader/user/owner to one share of ensure that no one can buy up control and subvert Banyan's accountability relationship.
Attracting Members
Banyan has no interest in trying to sell its journalism to the public it seeks to serve. But to attract and hold members of the co-op that will own Banyan and provide its primary revenue stream it will use sophisticated marketing to sell co-op memberships by offering value available nowhere else:
1) A sense of community and civic potency from engagement in the Banyan online community.
2) The trustworthiness of Banyan information in an age awash in exploitive and manipulative messages.
3) A sense of ownership in an institution that makes a difference in a shareholder's life and community.
4) Financial benefits.
From a marketing perspective, this is little different from automobile manufacturers selling cars by offering a sense of masculine or feminine potency, trustworthiness in the form of reliability and safety, and/or family usefulness through excellent interior features. Or a car dealer offering an attractive price.
The first task of marketing Banyan is to attract as many readers as possible by providing an array of viral tools for existing readers to use to bring other people into the gravitational field of Banyan's journalism. The second task, getting the readers to sign up to be owners, will be a greater challenge. The software will do much of the work:
When a reader first clicks to rate an article or engage in the Banyan community, the software will respond in a minimally intrusive way to welcome the new reader and start getting them acquainted with Banyan as a co-op that supports its readers and their community. Details remain to be worked out, but the plan is for the software to get the reader acquainted with of the benefits of membership and to explain that the first 30 days of membership will be free but that at the end of this introductory period the new member will be asked to become a shareholder.
Banyan's servers will place a cookie in each new provisional member's computer so the server can conduct an automated sales pitch that will proceed through several steps as the reader's free membership period elapses. Optimizing this will require no small amount of testing both before and after the pilot sites launch.
It is anticipated that at least as large a percentage of Banyan readers will become share owners as PBS viewers become pledging members. The more deeply engaged in Banyan's community reader/users are, the likelier they are to become shareholders. Drawing the reader/users into deep civic engagement is a double success: It better achieves the Banyan mission, and it improves the chances of the reader becoming a member.
Membership Benefits
Banyan must deliver powerful benefits so that a significant fraction of its reader/users will find the prospect of being a continuing part of the co-op -- and making the required continuing small payments -- irresistible. Some Banyan benefits:
• The journalism must make reader/users' lives better in ways they recognize and value to the point that they want to do their part in ensuring that Banyan endures.
• The online community must give reader/users a sense of civic potency that they could not achieve without Banyan.
• Local Banyan franchisee/licensees must, as part of their franchise agreement, establish relationship with trustworthy local merchants to give discounts to Banyan shareholders.
• In pursuit of further benefits, Banyan will work with visionaries trying to develop ways people can sell their attention to advertisers, which could create credits that reader/users could use to offset membership payments. It will also explore relationships with emerging technology that could ensure that its members have relationships of integrity in their Web commerce, including the Information Card Foundation, and the Information Valet Project. Banyan will also explore serving as an incubator for the emerging Vendor Relationship Management approach to customer-seller relationships and VRM's rel-button.
In keeping with the Banyan value proposition of relevance, respect and trustworthiness, co-op membership will include a covenant of behavior to ensure that the online civic networking community will be a safe space. The covenant will start with using one's true identity (but with provisions for protecting one's privacy). Persistent violation of the covenant will result in expulsion, with any subscription money refunded.
Price and Payments
Banyan will test many membership price points and payment options. As a rule of thumb, we envision charging reader/user/owners at the rate of a dime a day, a vanishingly small amount in today's economy. Several payment formats will be offered. A software development challenge will be to minimize friction and maximize automation of payments.
A dime a day, rounded down, is $3 a month or $36 a year; if Banyan matures at 500,000 co-op shareholders, that would yield a primary revenue stream of $18 million a year.
One of the software development challenges will be to remove every obstacle to payment.
Holistic Approach
The following analysis of co-op ownership's potential to strengthen journalism, written by Banyan president Tom Stites, was prepared for a meeting to explore new business models at the Berkman Center for Internet & Society at Harvard University:
The big challenges in the search for new models for quality original journalism –- 1) getting the reporting done, 2) paying for it, and 3) getting it distributed to a broad audience –- are deeply interrelated and thus best addressed by the holistic solution cooperative ownership offers.
Why cooperative ownership matters is addressed in the final bullet of this section, after the first four establish the context:
• The biggest yet least addressed of the three big challenges is achieving broad distribution quality original reporting. Fundraising is certainly a challenge, but enough money flows now that not-for-profits including the Pulitzer Center, the Center for Public Integrity and Pro Publica are turning out a modest stream of excellent original enterprise journalism. The problem is that so few people get to read or watch this excellent journalism that what should be high-impact stories only modest impact.
• A solution to both the distribution and revenue challenges could grow from a broad Web 2.0 community arising around quality journalism produced by a new entity that’s devoted to serving its community with consistently relevant and trustworthy news and service journalism. It’s safe to say that some members of the reader/user community will pay to receive quality journalism, but how many is untested. But Banyan seeks not to sell journalism per se, but rather to will offer its reader/users -- and no one else -- ownership shares in an institution that improves their lives. Adding foundation grants and ad revenue would yield a budget that could support a newsgathering organization robust enough to include not only community-level coverage but also real investigative and foreign reporting. Attracting foundations grants should be less difficult if funders could be confident that the reporting they were supporting would reach a broad audience.
• Once the revenue is flowing, getting the reporting done ceases to be much of a challenge –- seasoned reporters and editors with a broad range of skills can be expected to line up to work for such an entity, both as staffers and freelancers. It would also tap the community that forms around its journalism for crowdsourcing and other collaborative citizen journalism techniques that could enrich the reporting.
• The most important ingredient for cementing relationships with a broad audience that will pay for journalism on the Web is trust. It is through trust that Consumer Reports, The Wall Street Journal, and The New York Times (before it stopped charging to see the Times Select assortment of content on the Web) managed to attract huge paid audiences for access to journalism through a medium where most people don’t pay for information of any kind. A new 2.0 Web entity like Banyan will lack the base of trust the major web subscription-sellers have earned over many decades, so to succeed it would have to quickly prove itself to be relevant, useful and, especially, trustworthy. In this era of endemic distrust of media and other major institutions, achieving trust will require deep integrity and sophisticated marketing and brand-building (no, these don’t have to be mutually exclusive!).
• The need for integrity is what brings the discussion to co-op ownership. The current ad-revenue-based model of commercial newspaper publishing and commercial broadcasting has a built-in, structural conflict of interest and thus a lack of integrity: Publishers and broadcasters constantly address their readers and viewers as if they come first, but when push comes to shove, as it has now that advertisers are stampeding to the Web, it becomes plain that advertisers and shareholders do. True integrity in journalism means the publisher/broadcaster has no built-in conflicts and the reader really does come first. If the owners of the journalism entity are its core reader/users -– members of its community who step up to buy shares in the co-op -– no structural conflict is possible. The relationship is one-to-one; no third party has the standing to intrude on this; such an entity may accept advertising, but in its integrity it would turn away any that would exploit its community. Integrity yields trust. Thus co-op ownership lays down the foundation of trust that a large-scale Web 2.0 publishing venture needs if it is to attract a significant revenue stream from the community it serves.
