With this issue of the Independent, we begin Volume 3, having published two full years of weekly editions. It seems only right to pause and give you a report on how we think we are doing.
We often get comments from readers who say, “We love the paper. We’re so glad to see you have succeeded.” It’s nice to know that people think we’re doing good work, of course, but these remarks also make us feel a little queasy, because we’re operating at a significant loss. That’s OK. It’s what we expected and planned for, as a startup business that would take time to get on its feet. But we’re still a long way from having succeeded.
So many of you have helped us launch this newspaper — by subscribing, by becoming regular advertisers, by writing articles and letters and submitting photographs, by donating to our Local Journalism Project. We want to give you a full accounting of where the money comes from, where it goes, and why we are cautiously optimistic about what comes next.
In September 2019, as we were preparing our first edition, we drew up a five-year plan for the Independent. We projected three years of losses while we built up circulation and a capable staff of reporters, editors, designers, and business managers. We envisioned breaking even in Year Four.
To get to this point, the start of Year Three, we thought would cost about $450,000: $90,000 in pre-launch expenses, followed by operating losses of about $180,000 in each of the first two years.
We did not envision a pandemic hitting us six months after we started. Our projections — especially of advertising revenues — have had to be revised.
Nevertheless, we are remarkably on track. We spent about $20,000 less than we budgeted in pre-launch, and our operating losses were $127,000 in Year One and $154,000 in Year Two, with total annual income of $534,000 and $810,000, respectively. The total deficit to date is thus about $350,000 — $100,000 less than we expected.
We had hoped that advertising would account for 55 to 60 percent of the newspaper’s revenue. In fact, that percentage was just 37 in Year One, which included the first Covid summer. In Year Two, just completed, 43 percent of revenue came from advertising. Better, but not good enough.
We projected that 25 to 30 percent of revenue would come from circulation — subscriptions and newsstand sales. In fact, it has been about 35 percent.
Like our advertising revenue, our circulation is steadily growing, although it, too, is not where we hoped it would be by now. We projected 4,100 subscribers and total paid circulation of 5,500 by the start of Year Three. In fact, we have 3,630 subscribers and our total paid circulation is about 4,600.
A big reason for our survival has been grants: pandemic relief funds from the federal and state governments, and gifts from individuals to our nonprofit fiscal sponsor for the Local Journalism Project, our educational arm that embraces aspiring reporters. In Year One, 26 percent of the Independent’s revenue came from grants and gifts; in Year Two, it was 21 percent.
The Independent would not be nearly as good as it is, and our hopes for its future would not be nearly as high as they are, without the support of donors. Their gifts have paid for the work of 22 aspiring writers that has appeared in these pages and on our website. That experience has proved to us that there is a new generation of people who believe in independent journalism and want to pursue it for their careers. That is thrilling.
We have lost less money than we expected. But that is because we are bringing in less revenue than we hoped for and therefore spending less than we wanted. Staff salaries are not where we would like them to be, and we are not employing as many people as we planned. Our business plan called for a full-time staff of 15 at this stage; instead, we have 11½.
It’s inspiring to be working with the wonderful people we do have. But there are still essential jobs that we haven’t been able to fill. If we are to make it — and here I refer to both finances and stamina — to break-even, now projected to happen in Year Five, we have to find those people.
That $350,000 that we have spent came from our initial investors, who are listed on our website. We will soon announce a new round of investment opportunities, designed to greatly broaden community ownership of this newspaper and to carry us through the next three years.
Does the Independent represent a new business model for local newspapers? Maybe. We believe that the old business model still makes sense here compared to some places where newspapers have died. Our local economy is lively enough that we can ask for advertising support. We are also fortunate to have subscribers who believe in paying for the news and who appreciate print.
At the same time, we are looking to donors and philanthropists who believe in the civic value of nurturing aspiring journalists, engaging the community in that work, and playing a role in what has become a national movement to preserve and strengthen local newspapers as an essential foundation of a democratic society. There is still so much to be done.