Block Club: Pioneers of a New, Ad-Free Business Model

Fuller mugBY JIM FULLER, Daily Herald Senior Writer and NINA Board Vice President

It’s exciting to be on the innovative track for the future of our industry.”

— Shamus Toomey

The sudden closure of DNAinfo last November may become the best “worst thing” that ever happened to the founding members of the new Block Club Chicago and journalism itself.

If Shamus Toomey, Jen Sabella and Stephanie Lulay succeed where DNAinfo failed, the team may prove to be pioneers in a new, ad-free, business model for news delivery.

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Toomey (CREDIT: blockclubchicago.org)

For five years, DNAinfo brought a focus to neighborhood news unavailable through competing journalism outlets. But when the company folded shortly after the newsroom moved to unionize, the outside perspective seemed to indicate a failed product.

Toomey said DNAinfo’s readers convinced him, Sabella and Lulay that wasn’t true.

“When we shut down, we heard from our readers immediately,” Toomey said. “They picked us up off the mat and showed us that if we were to start a similar organization they would be behind it and they would buy a subscription. We had a ready-made audience out there.”

Toomey also had a love of local news embedded into his personal DNA. He forged his journalism career with time at the City News Bureau and the Daily Herald, two organizations focused on the kind of local news Toomey believes Block Club Chicago must deliver to fulfill the promise it makes to readers who buy a subscription.

Screen Shot 2018-07-16 at 10.46.08 AM“Our reporters cover two or three neighborhoods apiece,” Toomey said. “The marching orders are to go treat those neighborhood as if they were your own community. The alderman is the mayor. And then there’s the local chamber of commerce, schools, parks and neighborhood leaders who are all key elements. We want our reporters to be the expert of that little area they write about.”

The founders knew Block Club would never succeed with a soft launch that only covered a couple neighborhoods. But it would be unlikely the finances would be so robust off the bat that Block Club could pick up everywhere DNAinfo left off. That’s where web analytics came in.

“We knew what neighborhoods got the most traffic and interest at DNAinfo by the number of subscribers to each individual newsletter, number of page views and what sort of stories did well versus what didn’t do well.”

With the model for how to run the newsroom in place, the team then set about figuring out the business side. First up was keeping those old DNAinfo readers invested in the rebirth by giving them a direct role in it.

A Kickstarter campaign provided that avenue. Within 36 hours, the campaign raised $100,000 en route to $183,000 in pledges. For perspective, an annual subscription to the Block Club Chicago is $59, roughly $5 per month.

It was the most successful local journalism campaign in Kickstarter’s history. Even more gratifying, many of the pledges came from other journalists hoping to see Block Club succeed.

Screen Shot 2018-07-16 at 10.46.24 AM“It’s been wonderful to see not just the reaction from readers but from our journalism friends,” Toomey said. “It showed what a tight-knit community the Chicago journalism world is, including the support from people we would compete against. Journalists know the more eyes that are out there, the better we are serving the community.”

The Kickstarter campaign also built on the reader-guided/supported business model by polling supporters about what neighborhoods they wanted Block Club to cover as the campaign hit various stretch goals. But Kickstarter pledges wouldn’t be enough to fund an entire news operation.

The Block Club founders decided on a not-for-profit model that would allow them to seek out funding through a variety of foundations. Even more novel, the team decided their website would not feature any advertising.

Screen Shot 2018-07-16 at 10.48.10 AM“It’s difficult to support full-time journalists on banner ads and click-throughs,” Toomey said. “Instead of relying on local merchants to support us and hope our readers go buy their stuff, we decided why not go right to our readers and say, ‘Hey, is this worth 20 cents a day to you?’ I’ve bought many $9 beers in the city, and I don’t even think twice about it. We hope that unique news delivered to them daily that isn’t reported elsewhere is worth it to them.”

Block Club also received both startup funds and a publishing platform from a company called Civil. The company has allocated $1 million to support about 100 full-time journalists across 15 newsrooms around the country. It uses blockchain technology to provide both financial transparency as well as freedom from potential editorial influence by advertisers.

The company has a full white paper (https://civil.co/white-paper/) that goes into depth about its own business model and vision for the future of journalism.

“Civil is building a community of supporters who can buy their token and use to help with governance of the entire network,” Toomey said. “You can use it to vote on new newsrooms who want to join the network or remove a bad actor who is spamming people. And there are important distinctions between stocks and the tokens. The tokens are more of a way to buy into the governance rather than the equity of the publications.”

If you think that seems novel and somewhat risky, Toomey would tend to agree. But he hopes its a risk that pays off with a stable future for quality journalism. If that happens, it will be worth the risk and mark a long-overdue evolution in journalism

“The news is the news, and the core ways we go about reporting it haven’t changed for hundreds of years because it works,” Toomey said. “What does change is the way we deliver it and the way we fund it. It’s exciting to be on the innovative track for the future of our industry.”

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