Rethinking Sustainability Strategies for Small Independent Media in the Western Balkans

In the region of the Western Balkans, donors and international implementing agencies have played a crucial role in supporting the development of independent media – i.e. media free from government, business, or political influences over editorial decisions. These are mostly small classic media outlets, such as local or regional radio and TV stations, but also include various thematically specialized web-only outlets that might be run by commercial companies or civil society organizations (all of these are here referred to as independent media). They perform an important public service function by providing content that is often missing from the mainstream media: for example, balanced information, educational programs, coverage of human rights issues, and content addressing the cultural and other needs of marginalized groups. Although important results have been achieved, there is criticism as to how sustainable such endeavors are, once donors retreat or shift priorities. Financial sustainability is considered here to be the capacity of an organization to secure a continuous stream of income that enables it to service its beneficiaries, while fulfilling its organizational mission in a long-term perspective. Numerous examples of independent media outlets shutting down, becoming excessively commercialized, or aligning themselves with one or the other political party after donor money dries up contribute to such criticism. 
 
Consequently, both consultants and donors see the commercialization of services and diversification away from donor funding as strategies to follow. A standard set of recommendations includes, inter alia, the introduction of new commercial services; charging users for premium content; diversifying into related businesses such as public relations and marketing; and developing a variety of audience engagement strategies, such as crowdfunding, to monetize mission, services, or content.
 
Often, however, independent media remain reliant on donor grants to deliver their public service content. Attempts at substantially diversifying away from donor grants frequently underperform, for many reasons that include:
 
  • Media markets are small and oversaturated, limiting access to commercial revenues. In addition, small local and regional outlets are largely off the radar of advertisers and advertising agencies.
  • Media outlets and sources of advertising revenues are often highly politicized and captured by vested interests. Independent media are not competing in a level playing field, but in a severely skewed market that favors those with powerful financial and political backing. In such a market, commercial success comes with strings attached, and might contradict the mission the media outlet strives to fulfill. 
  • Independent media often cater to small audiences that might be highly price-sensitive and reluctant to pay or donate for media content, even though the audience might appreciate localized content. This might be because the audience has numerous opportunities to access similar types of content for free or is simply unable to afford it due to dire economic circumstances. Some examples from around the world show that membership-based funding models can work, but that the motivation for most paying members is often philanthropic. Illustrative is the experience of Pablo Isaza, executive director of Columbian politics news site La Silla Vacía, who explains: “People aren’t paying to access more or new information but to make information available to everyone in Colombia” (quoted in Oliver 2021).
  • Finally, smaller independent media are, by definition, severely under-resourced in terms of available in-house expertise, infrastructure, and investment capacity, which limits the chances of successful commercialization. Venturing into new commercial activities might take resources away from core operations, to the detriment of its organizational mission. 
 
Trying to achieve commercial viability while retaining editorial independence in such circumstances is often a contradiction in terms. It is thus not surprising that despite efforts by independent media outlets to do so, donor funding seems to be their best bet. Project grants provide a much-needed corrective to unfair competition and market limitations, and at least some compensation for the lack of resources and the absence of state support for what are essentially public services that can hardly be commercialized.
 
Therefore, it is more likely that their financial sustainability is to be achieved within a hybrid business model that relies on donor funding, with some components of commercial revenues, which do not replace but rather add to grants from donors. Such business models must establish a smart balance between donor funding and commercial revenues that ensures financial sustainability and resilience, while enabling organizations to retain their editorial independence and stay true to their mission and programmatic orientation. 
 
The nature of a donor-focused business model 
Organizations that are donor-funded and not-for-profit are often seen as non-market organizations by practitioners, consultants, and even donors (see Hersberger-Langloh 2019). That is why it is suggested that financial sustainability cannot be achieved if the organizations continue to depend on donor grants. Within such a perspective, beneficiary organizations are seen as not having a ‘business mindset’ while donor funding is perceived as temporary and unpredictable, and therefore not a viable source of financial sustainability. 
 
However, independent media that are relying on donor support must be seen as market-oriented organizations that do have a ‘business mindset’ – just a different one from profit-oriented companies (Hersberger-Langloh 2019). How would one otherwise explain the fact that so many non-profit organizations, including many independent media in the Western Balkans, successfully develop and maintain their operations for decades, primarily through donor grants? Their business model is focused on international aid programs supporting democratization, human rights, civil society, and media, which is a vast market that has been growing in scope and available amounts of funding for the past 30 years. For example, various US state agencies allocate more than $2 billion annually through foreign assistance funds for democracy promotion activities (Congressional Research Service 2019; on EU funding, see for example: Godfrey & Youngs 2019), while overall global democracy assistance exceeds $10 billion (Carothers 2015). This is a highly competitive market, both among beneficiaries seeking funding, and among donors looking for organizations to support, thus requiring a specific set of skills, resources, and strategies for success. It is therefore not surprising that independent non-profit media can still be, and often are, financially sustainable (see for example: Breiner 2021). 
 
Relevant literature on not-for-profit organizations recognizes that they are indeed market organizations. They operate within so-called ‘two-sided markets’ or as ‘two-sided platforms,’ and their financial sustainability strategy should focus on how to succeed in such a market (See Hersberger-Langloh 2019).  
 
Two-sided markets exist when there is an intermediary platform that facilitates interactions between different groups in the market, which find it cheaper to interact through such an intermediary rather than directly. Two-sided platforms charge each side of the interaction, since members of both groups benefit from the existence of the other group and from the interaction facilitated by the platform. Typical examples of two-sided markets include credit card companies (connecting consumers and retailers); real estate agencies (connecting property buyers and sellers); and employment agencies (connecting employers and jobseekers). In many cases, one side of the market is highly price-sensitive, and its usage of the platform is subsidized by the income generated on the other side of the market. Hence, often the most challenging thing is to get the pricing right. Typical examples include social media such as Facebook or Twitter, and classic media outlets (connecting advertisers and consumers), which offer free or reduced-price access to its content for users while subsidizing it through income from advertisers (See for example: Hersberger-Langloh 2019; also see Eisenmann et al. 2006).
 
Independent media that are funded from grants fulfill the characteristics of two-sided market platforms. On one side of the market are donors, and on the other side are consumers of media services and products – the audience. 
 
Towards Sustainability Strategies for Independent Media
Given the nature of the businesses operating in two-sided markets, and the constraints that small independent media face in transitional societies, financial sustainability is a complex feat. For independent media that operate within two-sided donor-funded markets, financial sustainability should at least entail the following components: diversifying funding sources so as to not depend on only one or a few donors; ensuring longer-term funding prospects; and creating safety reserves significant enough to serve as a cushion and ensure continuity of operations in times of crisis. This can only be achieved by understanding where and how value is created for donors as the main paying clients within such markets. 
 
Based on the explanation from the previous section, we can identify at least four core strategies for value creation from the donors’ perspective: (1) Ensuring donors’ reach to target groups in order to facilitate the impact of their programs and projects; (2) Eliminating information costs for donors; (3) Providing return on investment for donors in terms of results and overall implementation of projects; and (4) Promotion of donors’ brand and activities. Such strategies might result in a compounding network effect, where many donors and implementing agencies gravitate towards those organizations that offer the greatest value in exchange for their support. 
 
There are a variety of complementary strategies that can be deployed to ensure diversification of funding sources for financial sustainability, while retaining the editorial independence of independent media. However, even in the best-case scenarios, where an organization has secured financially sustainable operations through a variety of donor grants, it would be advisable to make sure that funding sources are as diversified as possible, including commercial revenues. The business model should be oriented towards generating some income beyond donor grants, not necessarily as a substitute, but as a way for creating savings for strategic investment in internal capacities, such as equipment and the development of new skills, as well as financial reserves for times of crisis. This is essential, as donor grants might not be well-suited for these due to their budgetary restrictions and relatively short lifespans. Moreover, donors themselves might be the cause of financial instability for their beneficiaries, as they may suddenly shift their priorities due to leadership change, or other political or economic reasons that are beyond the control of individual organizations. 
 
Nevertheless, attempts at diversifying away from donors’ funding through commercial offerings must be done carefully to avoid undermining the existing business model. This might happen, for example, if resources are diverted from essential processes; if too much effort is invested into non-viable commercial propositions; or if the proposed monetization strategy ignores the nature of the audience or the market, which may result in a loss of audience or jeopardize the media outlet’s independence. Just because certain commercialization strategies work in other contexts, or for mainstream commercial media that cater to large audiences, does not mean that the same approaches will be successful in another country, or for small media outlets that want to keep their editorial independence while performing a public service function for a community. 
 
The nature of two-sided markets and the experience of over three decades of development of donor-funded independent media in the Western Balkans indicate that a financial sustainability strategy is best sought within a hybrid business model. Such a business model must be built upon a robust strategy for diversification of donor funding, combined with venturing into commercial sources of income without jeopardizing editorial independence. It is a delicate balancing act, but given the market constraints for a normal functioning of independent media, it seems to be the best bet for achieving financial sustainability while remaining true to their programmatic orientation.
 
Sources
Breiner, James (2021). 5 Keys to Making Quality Journalism Sustainable, The Fix, September 10, 2021, URL: https://thefix.media/2021/09/10/5-keys-to-making-quality-journalism-sust...
Carothers, Thomas (2015). Democracy Aid at 25: Time to Choose, Journal of Democracy, January 13, 2015.
Congressional Research Service (2019). Democracy Promotion: An Objective of U.S. Foreign Assistance, URL: https://fas.org/sgp/crs/row/R44858.pdf). 
Eisenmann, Thomas, Geoffrey Parker, and Marshall W. Van Alstyne (2006). Strategies for Two-Sided Markets, Harvard Business Review, October 2006, URL: https://hbr.org/2006/10/strategies-for-two-sided-markets
Godfrey, Ken & Richard Youngs (2019). Toward a New EU Democracy Strategy, Carnegie Europe. URL: https://carnegieeurope.eu/2019/09/17/toward-new-eu-democracy-strategy-pu...
Hersberger-Langloh, Sophie (2019). Between Donors and Beneficiaries: A Conceptual Approach to Nonprofits Operating in Two-Sided Markets, URL:
Oliver, Laura (2021). How Mission-Driven News Sites Are Betting on Reader Revenue in Latin America, Global Investigative Journalism Network, August 31, 2021, URL: https://gijn.org/2021/08/31/english-reader-revenue-in-latin-america/
 
This is shortened and edited version of the article ‘Rethinking sustainability strategies for small independent media in the Western Balkans’ that was originally published on the Journalift web platform.
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