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Beacon blog: Fun does not mean easy

This article first appeared in the St. Louis Beacon, Sept. 17, 2010 - We're proud to be one of the organizations attempting to handcraft a brand new business model for information and engagement. It's our work, and it's the most difficult business problem I've ever faced, but most days, it's also a lot of fun. That's the nature of trail blazing.

Like any business, we strive to maximize return on investment, optimize processes for efficiency and find the balance between over-frugality and spendthriftiness. Our newness and the newness of the very business we're in ramps up the difficulty quite a bit, because it eliminates meaningful benchmarks. As a result, our knowledge comes from experimentation. The following are some areas that are on my mind a lot; some are being actively honed and others will receive more attention later:

Earned Revenue Vs. Donations

How much of a nonprofit news organization's revenues should come from donations? There are lots of opinions on the correct value, but the implications are thorny. Developing products and services that can be sold requires a significant investment of money and time. If done correctly, the result is the ultimate compliment from a market economy: people paying for something we've created, proving we're on the right track.

In the short run, however, that same money and time could be allocated to soliciting donations and yield a higher immediate return. In the long run, that's probably not a sustainable model, but we've been fortunate so far to attract an enthusiastic donor community. With a limited history, donations can simply be unpredictably high or low. The government has a say in it, as well, in the form of rules around what a nonprofit can and cannot do - and those rules heavily favor donor solicitation.

Quantity Vs. Quality

Contrary to the traditional, and well accepted, model of maximizing website pageviews, we attempt to measure engagement. Unlike some of the issues discussed in this post, I'm not on the fence with this one. Long-term success depends on building metrics around engagement. Unfortunately, that not only means measuring activity that isn't easy to quantify, it also means educating those who are involved with the Beacon -- producers and consumers -- on the importance of these new metrics and the relative unimportance of the traditional ones.

Focusing our business on quality over quantity leads us to a model similar to Kevin Kelly's "1,000 True Fans"  - one of the best pieces on marketing ever written. As Kelly prescribes, we would prefer to have a small legion of devoted readers, attendees and partners who share our vision of meaningful discourse, rather than an army of disengaged passersby. As with any worthwhile effort, this is easier said than done.

Capacity Vs. Economy

Even better than a small legion of true fans is a large legion of true fans. For the most part, people interact with the Beacon via our website, so we need to be prepared for whatever traffic might come our way. It's hard to convert a passerby to a true fan when the page they want won't load.

Having the right amount of capacity is important because too little means the site will be slow or inaccessible, and too much means an unnecessary expense. But, website traffic growth isn't linear, nor is it predictable. And being ready for an unknown, and sometimes massive, spike in traffic can become costly. A common misconception in the online news space is that distribution becomes free. While it is a great deal less expensive and certainly easier logistically, we still have significant expenses for servers and bandwidth. This problem will become more acute as we add more videos, infographics and other interactive pieces.

Integrated Vs. Outsourced

For most businesses, outsourcing all non-core activities equates to better talent for less fixed expense. We attempt to outsource business functions where possible (as well as journalistic work through freelancers). However, outsourcing brings some loss of control, which can be a critical mistake in an organization executing a unique and focused vision. Until we get a better handle on what can be sourced externally and what must be done internally, we will continue to experiment.

Long Term Vs. Short Term

Really, all of these decisions can be characterized as some trade-off between long term value and short term economy. That's the nature of resource constraints. The tasks we complete from day to day, our software purchases, employee hires and vendor agreements are all subject to the tension between short term and long. As is true with many businesses today, these decisions are made particularly difficult because change occurs so rapidly. What we build today might not be useful tomorrow.

The hope, of course, is that the constraints add value; that the end product is improved by thoughtfully considering the long-term impact against the short-term need. Ultimately, that's the path to sustainability and replicability.

Shawn McGinness is the Beacon business manager.

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