Can Digital Business Models Save Local News?

As advertising support continues to dwindle, NJ's news operations flirt with fresh revenue options.

local news
Illustration by Iain Ogilvie; NJTV News Business Correspondent courtesy of NJTV; other images via Shutterstock

New Jerseyans have always been hungry for information. When the Covid-19 pandemic hit in March, it added a new sense of urgency to their hunger, driving up visits to websites offering state and local news. But growing demand brought little comfort  to the state’s many print and digital media outlets. Their traditional means of supporting news operations—advertising, primarily—has been shrinking faster than ever. 

News organizations in New Jersey and across the nation have grappled with declining ad revenue for more than a decade. For traditional daily and weekly newspapers, that has meant layoffs, consolidation and closures. As a result, New Jersey has become a laboratory for new business models to support the news, with organizations trying a variety of alternative funding streams, from membership programs to franchising to foundation grants.

The stakes couldn’t be higher. 

“Studies have shown that when local news is deficient, fewer people vote, fewer people volunteer, fewer people run for public office, and governments wind up spending more money because there isn’t a journalist there to hold them accountable,” says Mike Rispoli of Free Press Action, a group that advocates for local news.

There was a pre-digital time when daily and weekly newspapers kept a sharp eye on state and local news, supported by advertising. But as news migrated to the Internet, the ad dollars did not always follow. During Covid-19, many reliable ad buys simply dried up as restaurants, retailers and other businesses went into lockdown. The response at Gannett, owner of several major New Jersey news operations, was typical. Advertising declines during the pandemic prompted Gannett to make nationwide expense cuts in excess of $100 million. The belt-tightening included layoffs, furloughs and pay cuts.

Over the past two decades, an estimated 2,000 New Jersey media jobs have been lost, according to Free Press Action, including hundreds of newsroom jobs, leaving fewer reporters to keep an eye on topics like politics, education, health, the economy and local news.

Despite its population density and relative affluence, New Jersey has always been a difficult news environment. The state is squeezed between the major media markets of New York City and Philadelphia, and is divided into no fewer than 565 municipalities in 21 counties. Many of those local governments now have no journalistic watchdogs. 

“Without local coverage, it’s going to become a glorious era for anybody who wants to rip off the people,” warns Steven Miller, director of undergraduate studies in Rutgers-New Brunswick’s journalism and media department. Miller has followed New Jersey journalism for more than three decades. 

“There’s millions of tax dollars being spent with no one watching,” agrees Stefanie Murray, director of the Center for Cooperative Media at Montclair State University, a nonprofit founded in 2012, and funded by the Geraldine R. Dodge Foundation and other philanthropies. The center supports local journalism by offering training, advice and small grants.

The center often hears from news organizations fretting over finances. “The most questions we get are about business sustainability,” Murray says.

The center’s largest project is the New Jersey News Commons, a network of organizations that share content. At the height of the Covid-19 outbreak, the News Commons served as a kind of wire service, allowing members to use, for example, photographs from inside hard-hit Holy Name Medical Center in Teaneck and news from the nonprofit website NJ Spotlight.  

Recognizing the state’s ethnic diversity, the center has also given small grants to ethnic media organizations to help them tell stories about this year’s U.S. Census, and has paid for translations of stories to and from Spanish, Korean and Chinese.  

The New Jersey news landscape is varied, according to Sarah Stonbely, the center’s research director, who has identified 779 information outlets that serve New Jersey, including more than 100 ethnic news providers. 

While that seems like a large number, many of the sites don’t give the context and depth that a traditional and experienced staff of beat reporters—with inside knowledge of local issues and personalities—can bring to readers. 

And the actual amount of local news can be thin. For example, in Clifton, with a population of nearly 85,000, the formerly independent Clifton Journal used to be chockablock with local news, sports and obituaries. Now readers complain the weekly—owned by Gannett, a national media company based in McLean, Virginia—is filled with news from throughout Bergen and Passaic counties culled from the flagship daily, The Record, which has also cut back significantly on coverage of individual towns.

[RELATED4 New Jerseyans Devoted to Sustaining Hyperlocal News]

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As older news organizations struggle, digital alternatives are percolating—including the many Patch and TAPinto websites, which operate in individual markets and specialize in local news. But such sites are not precisely a replacement for traditional newspapers.

“People have to be willing to take the time to find Patch and TAPinto,” says Miller. “They don’t land on your doorstep.”

Former AOL CEO Tim Armstrong launched Patch nationally to significant fanfare in 2007. The platform faltered across the country by 2014, and deep cuts were made. An investment firm took over and now claims the 1,200 sites nationwide are turning a profit, using the old-school model of advertiser support. 

Patch has 100 localized sites in New Jersey; some are said to be among Patch’s strongest. The Toms River and Brick sites in Ocean County drew many readers anxious for news when Hurricane Sandy devastated the area in 2012. Similarly, the coronavirus has boosted readership throughout the state, says Tom Davis, a veteran journalist who serves as state news editor.

Since March 1, the Patch email newsletter claims to have added 72,000 subscribers, pushing the total above 400,0000. “We’ve connected with the public; the numbers show that people are relying on us,” Davis says. 

TAPinto sites are similarly focused on a specific community, but each is franchised to a local owner/publisher. There are now nearly 80 TAPinto sites in the New Jersey network, including sites in the state’s largest cities, says Mike Shapiro, founder and CEO of TAPinto. 

Some franchise operators handle both news and advertising, while others maintain a separation between the two—the model for traditional media outlets. Others have opted for a nonprofit or community advocacy model. For instance, the Southern Ocean County Chamber of Commerce plans to launch two TAPinto sites this summer, Shapiro says.

TAPinto dates to 2008, when Shapiro launched The Alternative Press in three Union County towns. Lately, he has expanded his franchising into New York and Florida.

But the quality of news coverage at Patch, TAPinto and other so-called hyperlocals tends to be uneven; some smaller ones and those with less-experienced staffs appear to rely on press releases, rather than independent reporting.

TAPinto sites also have varying degrees of financial success. Readers’ growing use of mobile phones as news sources makes the sale of traditional ads even more challenging.

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In her survey of the New Jersey news landscape, Stonbely found that about 40 percent of news outlets are part of larger, conglomerate-owned, corporate families. There are big names like Gannett, owner of 22 dailies and weeklies, including The Asbury Park Press and The Record of Bergen County; and NJ Advance Media, owner of The Star-Ledger, Jersey Journal, Trenton Times, and others. There are also names you may not have heard of unless you read one of their publications, usually a weekly: Community News Service, NJ Hills Media Group, Straus News, Micromedia and others.

“There are 20 different mini-conglomerates operating in New Jersey,” Stonbely says. “They have, generally, between 5 and 20 publications in their portfolio.”

Princeton-based Reporte Hispano claims to be the largest locally owned general interest newspaper and website for Hispanics in New Jersey. According to owner and publisher Cara Marcano, the print edition, mostly in Spanish, circulates 55,000 copies weekly. Its website, in Spanish and English, is seen by about 25,000 readers each day.

Latinos make up about 20 percent of the state population and are the majority in many zip codes in Northern and Central New Jersey.  

“This is one of the largest Hispanic media markets in the country, and a lot of people who live here have very high income,” says Marcano, who partners in Reporte Hispano with her husband, Kleibeel Marcano. 

But Reporte Hispano faces many of the familiar financial challenges. 

“As the media has gone more digital, the revenue hasn’t followed into local journalism brands online,” says Marcano. Large companies, like Google and Facebook, control significant portions of digital advertising buys in local markets, making it difficult for locally owned publishers to compete, she says.

Marcano has lately focused more on subscription revenue, but says, “It’s a tough go.” 

The state’s largest newspaper organizations have also been pushing for more subscribers, after a long period when readers expected to get the news for free online. 

“It’s pretty clear that the pandemic accelerated the need for organizations like ours to find nontraditional means of support,” says Kevin Whitmer, longtime editor of The Star-Ledger and now senior vice president for content, expansion and development at NJ Advance Media, which supplies local news to the paper and nj.com. (Whitmer’s title alone provides an indication that the business model is evolving.) 

“It’s been a rough 15 years,” he allows, adding, “We will get to the other side.”

NJ Advance Media has launched niche sites that require subscriptions—one on the cannabis industry, with marijuana legalization on the ballot this November, and another, primarily video site, focusing on high school sports. Whitmer says both have exceeded “the most optimistic revenue expectations” and drawn new readers and viewers. If the pandemic forces everyone to avoid large gatherings for a while, news organizations could generate new revenue by broadcasting sports, remote learning and other events, he adds.

Having reduced its local coverage, nj.com aims to produce timely statewide journalism, such as a recent piece on inadequacies in the state’s unemployment insurance system, which was severely overburdened as layoffs soared in the spring. 

The news staff at The Star-Ledger and its affiliates is a fraction of what it was 20 years ago—a pattern that is similar at other large newspapers in the state, including The Record and The Asbury Park Press.

“It’s safe to say we are several hundred journalists below our peak,” Whitmer says.

To help fund its editorial efforts, Advance Media in April began seeking voluntary subscriptions to nj.com. More recently, it began labeling select online stories as subscriber exclusives. In a story posted June 17 at nj.com, Whitmer explains that those stories eventually will be available only to paid print or website subscribers.

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Many former newspaper journalists have gone on to run smaller news sites, including Kevin Coughlin, formerly of The Star-Ledger and now editor of the site Morristown Green, and Joe Malinconico, also a former Star-Ledger reporter who is now running the Paterson Press.

Former Star-Ledger journalists founded the nonprofit news website NJ Spotlight in 2010 to cover statewide issues, including education, health care, energy and the environment, public finance, politics, housing and transportation. NJ Spotlight was formerly owned by the nonprofit Community Foundation of New Jersey, and supported by foundation grants, memberships and advertising. In 2019, New York–based WNET acquired NJ Spotlight and merged it with New Jersey’s public television station, NJTV, which was seeking to strengthen its digital reach. 

The combined organization has a news staff of about 15, and prides itself on its reach and the in-depth reporting that is NJ Spotlight’s specialty.

“How many news organizations cover the entire state?” asks John Servidio, NJTV’s general manager. He says the website has gotten many more viewers—and younger viewers—since Covid-19 hit.

For NJ Spotlight, the merger adds some financial stability by linking it to WNET’s large fund-raising team.

“It gave us all kinds of resources to do stuff without losing what we’re all about—good stories about important topics,” says John Mooney, one of NJ Spotlight’s founding editors, of the merger.

National nonprofits like ProPublica—funded largely through foundation grants—also can support in-depth reporting in the state. Last year, ProPublica partnered with reporters at public radio station WNYC to produce a multipart series called “The Real Bosses of New Jersey,” which examined how political power brokers leveraged state tax breaks. This year, the group has worked with The Asbury Park Press in continuing its investigation of alleged police misconduct in the state.

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One major effort to support local news is on hold. The New Jersey Civic Information Consortium was signed into law in 2018, with the idea that the state would fund assistance to news organizations, through a board tied to five state colleges. So far, however, no money has been appropriated. The state had budgeted $1 million for this year, but those funds evaporated when Covid-19 and the resulting lockdown smashed a hole in the state budget.    

Government funding is controversial in journalism. Many journalists say it’s tough to hold government officials accountable if you depend on them financially. Rispoli argues that there are ways to insulate journalists from political pressure, such as independent boards to oversee the arrangement. He points to institutions like public radio and TV.

The debate continues on the best models to sustain local news, but advocates insist there is a pressing need to find a way.

“We suffer from a dearth of local news coverage,” says Brandon McKoy, an Essex County native who heads New Jersey Policy Perspective, a think tank. “People don’t know enough about how their local governments work.”

Chris Daggett, a former commissioner of the state Department of Environmental Protection, feels so strongly about local news that he spearheaded an effort to support it during his time as head of the Morristown-based Geraldine R. Dodge Foundation.

“If people are not informed, they’re not engaged,” he says, “and if they’re not engaged, there is no democracy.” 


Kathleen Lynn and Patricia Alex are New Jersey–based reporters and editors. Both formerly worked for The Record of Bergen County.

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