Sources of Revenue
From Banyan Project
The Banyan Project expects its primary source of revenue to be the modest payments that a very large number of reader/users make to be members of the not-for-profit co-op that owns Banyan. This approach is what sets Banyan apart from newspapers and magazines, whose model is crumbling as the advertising that is their primary revenue stream abandons them.
Banyan will also rely on at least five additional but relatively modest revenue streams: advertising, payments for service from franchisee/licensees, crowdfunding, foundation grants, and ancillary sales.
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Co-op Memberships
Banyan's business rests on the premise is that at least a tiny sliver of the 57-million-strong Banyan Public will find its journalism and the community that forms around it to be valuable enough to join the co-op and pay at the vanishingly small rate of less than a dime a day, or $3 a month. If Banyan matures at 500,000 paying co-op members, that will yield $18 million a year, enough in itself to fund an ambitious if frugal news operation and to run plenty of servers.
Skepticism and Response
In a digital media culture whose mantra is "information wants to be free" the idea that people will pay for information tends to be met with skepticism -- and the idea that they'll pay for journalism online, including Banyan journalism, tends to be met with disdain. But people pay for information all the time: They pay for books, tangible magazines and newspapers, and millions pay for on-line subscriptions that offer journalism and information of special value.
Daily newspapers, struggling to find ways to replace vanished advertising revenue, are yearning to charge for the journalism they've long given away on line -- but, fearing failure because so much journalism is so widely available, few are venturing to try. Two online news startups started after The Rocky Mountain News went out of business also failed when projected subscription revenue failed to materialize.
Even though Banyan promises journalism and information of special value, it business model differs significantly from the dailies: They want to sell subscriptions to journalism that's otherwise sealed behind a paywall; Banyan wants to open its journalism to all comers but sell ownership shares in a consumer co-op that provides journalism and civic networking that reader/users value greatly and can't get anywhere else.
Sites that have had significant success with online subscriptions include:
• Consumer Reports -- 3.3 million online in addition to 4.6 million print readers (includes many who subscribe both in print and online); both print and online subscriptions grew by 300,000 in 2008.
• The Wall Street Journal -- 1 million online in addition to 2 million print readers (includes many who subscribe both in print and online)
• While Angie's List is far from being a newspaper website, it is essentially a stand-alone consumer-advice service feature; more than 750,000 members pay $6.95 a month or $53 a year to subscribe to it.
• Cook's Illustrated -- 260,000 online subscribers get access to recipes and other cooking guidance (another stand-alone consumer feature) for $35 a year; the bimonthly Cook's Illustrated magazine has 1 million bimonthly subscribers. Cook's accepts no advertising.
• Before The New York Times eliminated its Times Select service, which offered online access to a selection of its content including its columnists, it had more than 200,000 paid subscribers.
All five of these major on-line pay portals have something in common with Banyan: They deliver information from highly trusted brands -- and the Banyan economic premise rests on the value of the inherent integrity of its business model and the trust that engenders.
While Angie's List is a for-profit venture, its business model offers lots that Banyan can learn from: Its value is built on trust (and apparently on integrity); it successfully gets lots of people to pay and keep paying; it accepts advertising but screens out unworthy advertisers; Angie's List members engage interactively by offering their own ratings of businesses that they engage with.
Writing in The Wall Street Journal, L. Gordon Crovitz, its former publisher, defends The Journal's paid site by saying, "For years, publishers and editors have asked the wrong question: Will people pay to access my newspaper content on the Web? The right question is: What kind of journalism can my staff produce that is different and valuable enough that people will pay for it online?
"People are happy to pay for news and information however it's delivered," Crovitz says, "but only if it has real, differentiated value."
This is exactly Banyan's goal, but for a very different public than The Wall Street Journal serves.
Banyan and Cooperatives
As a not-for-profit co-operative, Banyan is essentially a macrocosmic crowdfunding venture, in which people pool their own money to make something possible that's of value to all of them. Banyan advisory board member Gar Alperovitz's fine term for this kind of economic activity is community wealth-building. By extension, all co-ops are capitalized by crowdfunding and thus represent community wealth -- and more than 100 million Americans belong to co-ops, largely credit unions.
Even though millions demonstrate that they'll pay for trustworthy information on line, and tens of millions have experience as co-op members, Banyan's central revenue premise is untested. Its Stage Two business planning goal will not be met until this premise, both in terms of price points and numbers of members, has been subjected to careful market research: The Banyan model pivots on the premise that hundreds of thousands of people will value Banyan's journalism enough to pay to make it possible.
Advertising
Advertising would provide a significant secondary stream limited by screening out any advertisers that subscribers might experience as exploitative, such as payday loan companies. The screening will largely be automated by features in Banyan's software.
Banyan will conspicuously publish its stringent ad policy; every page that contains ads will include a sidebar box that tells reader-users that the ads have been screened and that in the event an ad from an untrustworthy advertiser slips through they're urged to flag it; the box would also offer a link to another page with the ad policy and supporting material.
While this approach is sure to limit the volume of advertising, it should nonetheless mean that Banyan can mitigate the revenue diminishment by charging premium rates. That's because the ads will appear in an environment that ensures that the people who see them understand that they wouldn't be there if the advertiser were untrustworthy.
Franchisee/Licensees
The independent journalistic institutions whose reports will come together as Banyan's comprehensive report of the news will receive an array of turnkey services from Banyan: sophisticated 2.0 publishing and civic networking software, carefully managed national ad sales, sharing of co-op and advertising revenues based on reader engagement with pages each entity produces, back office services, promotion, etc. As franchisees or licensees, these entities will make volume-based payments to cover their share of this overhead.
Crowdfunding
The idea of getting readers-users to | chip in together to fund a reporting project is just getting started but appears promising. Local sites as well as the Center for Public Integrity, the venerable investigative reporting not-for-profit, are putting it to the test now. Here's a link to Spot.us a pioneering Bay Area journalism crowdfunding site.
All co-ops are large-scale crowdfunding efforts, so Banyan will engage at the macro level. At a micro level, it will use crowdfunding techniques for specific enterprise reporting projects, drawing contributions from reader-users with an interest in the issue the project will address.
Foundations
Because Banyan will be a not-for-profit, it will seek out philanthropic support for special journalistic projects.
Ancillary Ventures
As Banyan's brand strengthens and the number of reader-users grows, a broad array of ancillary venture will become possible. To be worthy of the effort, such a venture will need to meet two criteria: 1) it will be at least self-liquidating and 2) it will strengthen the brand. Here are some of the possibilities that have accumulated so far:
Wallposters: Large flat-screen displays presenting headlines and brief news articles in high foot-traffic locations that serve the Banyan Public such as Dunkin Donuts, 7-11 and similar retailers. The retailers would benefit in that the wallposter would hold customers' attention and thus make their customers' shopping experience more engaging; they could either sponsor the wallposters with advertising on the flat-screen frame or share in the ad revenue the wallposters generate. The wallposters would promote the Banyan Website by referring readers there.
Cellphone feed: The same brief articles that feed the wallposters could be fed to Banyan co-op members' cellphones, except that the members could have a choice of what kinds of news they want to receive on their phones.
Books: Banyan-branded paperbacks on topics of deep interest to the Banyan Public (or, alternatively, magabooks distributed through Banyan Public-oriented retailers where magazines are sold, such as 7-11 and other convenience stories). Some of these might be annuals, akin to the annual Consumer Reports Buying Guide, on health care tips for the uninsured or personal finance tips people of modest means.
Radio: a talk show on the economic realities of working class life hosted by a Banyan journalism figure.
Print: A national newsprint newsweeklies on a format akin to The Christian Science Monitor 's new venture; similar metro-scale newsweeklies in cities where the local Banyan site becomes a significant presence.
Television: A daily spot on a cable network or, later, a broadcast newsweekly show akin to PBS’s Washington Week tailored for the Banyan Public, also hosted by a Banyan figure.
