Community: A New Business Model for News

A few years ago, Public Radio International coaxed its most popular host, Ira Glass of "This American Life," into digital cinema. Ira had already expanded his famed radio program into a traveling stage show that toured a dozen cities a year. With this new idea he would perform one show and beam it live to hundreds of movie theaters around the United States at the same time. Efficient, yes, but would it be appealing, Ira wondered.

After all, people came to see him and even hoped to meet him. Radio is an intimate medium, and with Ira, so is a live show. What would be appealing about watching him on a screen from thousands of miles away in the company of a hundred strangers? This wasn’t a sporting event—the main draw for digital cinema—it was journalism, storytelling journalism. And people could already watch Ira on DVD.

So would they come and pay $20 a ticket?

They came in droves. More than 30,000 watched the first digital show at hundreds of theaters across the U.S. and Canada in the spring of 2008. The next year, 47,000 turned out. They came to be with other fans, experiencing something they all loved together. The success wasn’t so much the power of Ira, but the power of his community.

This isn’t a brilliant new insight. We have long known communities are powerful and that local media thrive when they bring together and serve their community. Somehow though when it comes to the challenge of online media, we forget this. We search for new business models that involve paywalls, more video, the iPad, and wealthy donors, while the most powerful emerging business driver in the new economy is community.

Scenes from “This American Life” in digital cinema promotions.

Connection as a Strategy

We are social beings. Three-quarters of all American adults belong to voluntary or organized groups, according to "The Social Side of the Internet," a study published this year by the Pew Research Center’s Internet & American Life Project. In fact, today’s social media culture may be reversing the decline in social behavior that Robert D. Putnam documented in his book "Bowling Alone." While 56 percent of non-Internet users belong to a group, 80 percent of Internet users participate in groups, according to the study.

Clay Shirky, a professor at New York University who studies the effects of the Internet on society, writes eloquently of how technology is unleashing the greatest wave of social communication and collaboration in our history. The companies flourishing in today’s digital, social culture provide more than valued content to people. They deliver valued connections. And they turn this community, the content it creates, and the trust it engenders into money.

Facebook, LinkedIn and Twitter are the icons of the social economy. Even Google, the organizer of digital information as opposed to people, upended the search business with its algorithms that tracked connections—the links people share with others. There are hundreds and thousands of lesser known, quickly rising businesses that are, at their core, built on community even when it isn’t obvious. Here are just a few examples:

Angie’s List has more than 1.5 million members in over 150 cities who pay about $10 to $60 a year to be part of a community in which members rate and review service providers (plumbers, doctors, etc.) to help each other. In the face of free alternatives, Angie’s List has turned its community into annual membership fees in the $50 million range and an even larger income stream by allowing companies that are highly rated by members to pay Angie’s List for the privilege of offering discounts to its members.

PatientsLikeMe, a seven-year-old company, helps 100,000 patients find others with the same illness to share experiences, treatments, successes and setbacks. In today’s culture of baring and sharing all, many people still treat medical information as highly private. At PatientsLikeMe, members are told that the company makes money by aggregating the shared patient experiences, removing identifying information, and selling the data to medical and pharmaceutical companies that want insight into patient experiences.

Red Hat has built a billion-dollar business on the Linux open-source operating system. Linux is free, created and constantly updated by a huge community of volunteer software developers. Red Hat sells support services to companies that run their systems on Linux. By serving as the corporate help desk for Linux, Red Hat has made it possible for Linux to spread into the corporate world, which makes the skills of the volunteer Linux software developers more valuable. Red Hat uses some of its profits and staff to mentor and contribute to the community, advance open-source code, and organize community events.

Groupon has become a collective buying powerhouse with more than 50 million registered users by offering people a deal a day from a local business. This model has spurred many copycats. To ensure that the novelty doesn’t wear off, Groupon is now working to turn its users, whose only tie is a desire to find deals, into a community. It is introducing G-Team campaigns, which range from spurring flash mobs to fostering local collective charitable action. "Every G-Team campaign connects you with enough people to achieve something awesome that you couldn’t have done alone," the Groupon website explains.

The new business model for news and journalism is beckoning from every site that seeks first and foremost to build a community. Games like Farmville and virtual worlds like World of Warcraft and Second Life are no fun on their own. Their value comes from their communities. Their rapid growth results from network effects, where each new user/member/player makes the service more valuable for everyone else.

Second Life becomes more interesting as more people build virtual homes and businesses. Angie’s List becomes more useful to members as the number of reviewers goes up. As membership increases, it also becomes a more important resource for businesses so they are more willing to pay to advertise and offer discounts to members. That attracts more members and fuels a virtuous circle—the hallmark of creating network effects.

Community, Not Audience

To harness this model, news organizations need to think of themselves first as gathering, supporting and empowering people to be active in a community with shared values, and not primarily as creators of news that people will consume. Public radio has created a huge virtual community of people who feel they have shared interests and values, evidenced by the millions of dollars donated during painfully long pledge drives. Still, public radio has hardly tapped the revenue potential of its audience, for it has yet to engage them as a community and let that community organize itself and find novel ways to create value for the group.

NewWest.net, TED and BlogHer run lucrative conferences and events where members and fans meet, learn and plan collaborations. LinkedIn offers paid services that make it easier for users to connect, share advice, hire and be hired. Zynga’s game players pay real money for supplies that give them higher status within a community such as Farmville. On Facebook and other social spaces, people pay to send digital tokens of affection or admiration, which only mean something within the community. The annual U.S. market in these virtual goods is estimated by Inside Virtual Goods to be $2 billion and growing.

Sites with active communities also succeed better in media’s traditional revenue hunting ground. They often get higher advertising rates because members are more likely to click or buy from advertisers when they feel invested in the site. Smart advertisers also have the opportunity to study, understand and cater to the community.

If media organizations are going to tap the new community business model, they will need to avoid mistaking their audience for a community. Fans become a community when they have the freedom to explore their interests and connections and organize themselves. That freedom is why Facebook has more than 500 million members.

The digital screenings in 2008 and 2009 tapped a desire by Ira’s fans to be part of a community. Yet fans are really only a potential community. Media organizations need to create the tools and foster the mindset to understand, activate and serve their communities, without trying to control them. People relate best to other people, not institutions.

Some news organizations are pursuing the community-building model, such as the Lawrence Journal-World, which created WellCommons as a health community and just launched a community site around sustainability. Without a doubt, some won’t get it right or, like the Washington, D.C. website TBD.com, will fail to find sustained management support to put community at the heart of their strategy.

But if there is a common thread that weaves through Foursquare, Facebook, Zynga, Twitter, BlogHer and many other pioneers in the social economy, it is this: Creating community engenders value for people. And providing value is the heart of any successful business model.

Michael Skoler, a 1993 Nieman Fellow, is vice president of interactive for Public Radio International. He researched new business models as a 2009-10 Reynolds Fellow at the Missouri School of Journalism.