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An Appeal To All Friends Of Scoop - This Is Not A Drill

An Appeal To All Friends Of Scoop.co.nz - This Is Not A Drill - Please Pledge Today


....including, a Scoop finances FAQ + a brief history of Scoop's crowd-funding efforts to date...
A Special Message From Scoop Co-Founder Alastair Thompson

Dear Friends of Scoop,

I am writing to you today from a third-floor garret in the town of Dinan, in Brittany France. Through the window in front of me the 12th century St Sauveur Basilica is nearly close enough to touch.

I hope my message reaches you well in NZ where I gather autumn has now arrived.

If you are one of the 1500+ donors who have pledged to Scoop over the past two years this message is especially directed to you. It contains a detailed explanation as to why Scoop is crowd-funding again, and why we continue to need financial assistance from our readers and members.

I would ask that you please take the time to read at least to the end of the first passage in this rather long post. There you will find a series of questions that you may be interested in which link to the answers.

We know that those of you who have supported Scoop these past two years didn't do so lightly. We know you are interested in our progress and we understand many of you will have questions about matters like: For how much longer will donor support be needed? This post is answers those questions.

And if you have further questions you can reach me on twitter @althecat or by email at alastair@scoopmedia.co.nz.

I will be happy to answer any further questions supporters have.

Then, having had your questions answered, I hope as many of you as possible will then decide to donate to Scoop's "Opening The Election" PledgeMe Campaign. We are presently at 30% with just two weeks left to run. We will need at least 300 more supporters to step forward and contribute to reach our target.

On our PledgeMe Campaign Page you will see that Scoop is seeking $30,000 in funding to "supercharge our election journalism", and this is true. But it's a form of words that may understate the importance of this request for funding.

Without this funding we will be struggling to deploy the resources we will need to properly cover this - our 7th election - and our first in our new form as a charitably owned news company. We are very keen to put our best foot forward, and have exciting plans and collaborations brewing which we think you, our readers and supporters, will enjoy.

To put this super-charging a little deeper in context, we need this money to ensure we can focus on the election and not on keeping the wolf from the door. For example one of the first things we will do upon reaching the target will be to raise all staff wages to the Living Wage level. For us this will be an important milestone, far too long delayed.

In short my message to you today is that this is not a drill. We do need this money. Failure to achieve this target will constrain what we can provide.

To sweeten the deal for those of you are involved in, or supportive of political activism, we have also opened up a 2 million "ads for good" collective advert giveaway reward which will be activated when we reach our target.

But we also realise that rewards are only part of the equation for those deciding on whether to support a project such as this. Now after two years of asking for and receiving your generous support, a more fulsome explanation of where we are presently at, and where we are headed is needed – especially by those of you who have generously donated in past campaigns.

This post is the place to find out all the things.

Till now financial detail around the challenges Scoop has faced over the past two and half years have been closely held. Today however, all that can be, is laid bare.

For ease of access I have written this in the form of an FAQ. You can jump to the answer of the questions using the contents links below.

Contents:

APPENDIX


Kind Regards
Alastair Thompson
Dinan, France


St Sauveur Basilica, Dinan, Brittany
Click for big version

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Introduction

Spring has arrived here in France. Daffodils, cherries and magnolias led the charge, closely followed by the opening of remarkably intricate buds on the branches of countless trees. The light green shoots will soon become new branches and leaves – and the pageant of life will once again play out its cycle.

 

And top of my mind today as I write to you is the process of regeneration, the recycling of the old into new and in particular the tricky business cycle of Scoop.co.nz.

For the past decade every summer Scoop's customers have gone into a form of seasonal hibernation. And every summer this causes us considerable financial stress.

The inability to save sufficient funds each year to finance our summer down-turns has been the Achilles heel of our business. Almost all the losses that were incurred over the past decade occurred in the three months of summer.

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Why don't you just cut costs to cover the summer downturn & stem the losses?

The short answer is that we have now cut them as far as is possible. Scoop's revenues have fallen from $900,000 in 2007 to $250,000 now. Any fewer staff than we presently have would mean that we couldn't deliver the core services that the business is based around.

With the benefit of hindsight some deeper cuts earlier might have made a difference to the outcome – and this is something I take full responsibility for.

In the six years between 2007 and 2013 Scoop's revenues fell $400,000 to $500,000. During that period we were continually finding cost savings and reducing staffing, but we never managed to cut quite fast enough. We under-estimated the impact of the changes in advertising markets and over-estimated our ability to find replacement revenue.

Like most digital startups we concentrated energy on investing in developing and selling new subscription newsagent.scoop.co.nz and advertising products. This helped slow the decline but not enough to keep us afloat. That said this investment means we are now much better positioned for a turn-around than we would otherwise have been – and indeed the revenue growth on those products kept us alive.

Through the period from the GFC in 2008 through to 2013 we lost on average around $30,000 a year. These losses were covered by investors, mostly friends and family plus a significant outside investor in the period from 2012 to 2014.

Since the initiation of "Operation Chrysalis" in 2015 we have cut costs significantly further and as explained in detail in the next section, Scoop's losses are now small and shrinking.

But before addressing the question of how much we need to keep the lights on, I think it would be helpful to first address the question of why we think Scoop's lights are worth the candle.

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So why should Scoop receive support?

While ensuring the survival of journalism has been the clarion call in most of Scoop's fund-raising efforts these past two years, the effort to keep Scoop alive is not simply about journalism. It is equally about preserving an opportunity - Scoop's regular base of 500,000 monthly influential readers – which we believe can provide a magnificent foundation, foundation both economically and in terms of readership for a new journalism start-up to flourish.

But beyond that Scoop's existing core service is – we believe - also very valuable to NZ society.

Had Scoop's founders and supporters not thought this were the case we wouldn't have gone to all this trouble. And the fact that over 500,000 monthly readers engage with it, and that 1500 donors, and nearly 150 ethical paywall subscribers are now supporting it is testament this is not a mistaken belief,

For me keeping Scoop alive has always also been about enabling New Zealand's national discourse, or as Russell Brown once described it "NZ's national argument".

When you work at Scoop you see this unfold in front of you. A national debate over the current issues, punctuated by breaking news developments. Scoop hosts a real time news dialogue between the political, business and civil society spheres.

As our mission statement says – at Scoop we believe in the "power of compelling ideas to propel themselves into political consciousness if they are able to get exposure and be debated".

In other words, and we hope you agree, it is worth enabling a platform which provides the Scoop service because a democracy in which everybody has a voice, is a democracy that can thrive.

It is worth putting some metrics behind that for emphasis.

Each day:


- Our core editorial team of three publish around 200 items containing breaking news content from around 200 different Kiwi voices - no other publication has that breadth of contributors;
- 25,000 users read between 30,000 and 50,000 pages of content. This amounts to about 600 hours, or nearly a month of continuous reading time every day;
- Roughly 9000 of these users arrive to read something that they have been searching for on Google;
- Half a million links to Scoop.co.nz are displayed in the first page of Google search results pages for an astonishing range of queries;
- Google robotically reads around 120,000 pages to check for new material and whether old pages are still live (all Scoop's pages remain live back to June 10 1999 – and accessible via search.scoop.co.nz);
- Around 10,000 out-bound links on Scoop (to other sites in our networks, or linked in our content) are clicked.

When people want to know when something happened or what someone said, Scoop provides the answer, for free. This is a bulwark against misinformation and fake news.

And Scoop reaches the important audiences who need access to reliable factual information – which albeit perhaps counter-intuitively - is what press releases tend to contain.

Last week Scoop served at least[*]:


- 8869 pages to 3717 readers on Government domains
- 897 pages to 303 readers in Parliament (as well as 100ss of email alerts)
- 3002 pages to 1718 readers in Universities

[*] not all traffic is fully identified in server logs.

Back in 2007 Scoop was generating $60,000 in advertising revenue a month from this usage. And yet now - due to the rise of Facebook and Google - Scoop's steadily growing usage isn't nearly sufficient to generate the funds to make our operation commercially viable via conventional advertising.

But this is not a measure of Scoop's utility (or value) to New Zealand.

Neither as Scoop.co.nz is used now, nor as we may be able to come if we can complete our transition to sustainability over the next two or three years and serve as a foundation for new digital news startups.

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But why can't you support yourselves with commercially derived revenue?

This is a good question. And the short answer is that we expect to be able to support ourselves on commercial revenue shortly. We just haven't completed our transition yet.

Slowing that process down is the insufficiency of our sales resource. Whereas previously around half of my time at Scoop was spent in sales and business development, these days Scoop's business development team is a one-man band. Had we been more successful in our fund-raising efforts these past two years this is probably where we would have first invested additional funds.

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But Spinoff.co.nz and NewsRoom.co.nz are getting money, why aren't you?

Scoop would love to receive the robust levels of corporate sponsorship support that are now flowing to our industry colleagues at Spinoff.co.nz and NewsRoom.co.nz & our audience would certainly justify it. And we congratulate both our competitors for re-opening this source of income.

But sponsorship deals are far from easy to get over the line. The normal metrics of marketing spend do not apply and often the critical factor is who you know at the target company or organisation.

Being Wellington based, being known mainly as a press release publisher, and being nearly 18 years old all count against us too.

Sponsors tend to be attracted to the new and flashy and Scoop.co.nz is more like an old and trusty public transport service – we get you where you want to go, but most people don't tend to give a lot of thought to our upkeep.

In addition these new sources of funds for media are indeed new.

Sponsorship funding for news didn't really exist back in 2014. To the extent that it did so prior to that it was mainly on the basis of a traditional competitive marketing return-on-investment (ROI) basis, which the arrival of Google, Facebook and programmatic advertising models pretty much destroyed as a viable source of income for niche publishers in NZ.

In the three months after the 2014 election we sold no advertising or sponsorship at all. It was like the market had fallen off a cliff.

And so we made a conscious decision - which we still think is right - to try to find sustainability without being dependent on advertising dollars.

Its worth also pointing out that sponsorship sales efforts are expensive, sponsors need to be kept happy, jollied along, and even when you do so diligently a change of personnel can see them depart in a heartbeat.

So when we initiated "Operation Chrysalis" we decided to put our efforts into earning money from our core business, by finding a way of generating value from our existing large reader base with what is clearly a much used and highly-valued service.

From this came our new "ethical paywall". And since 2015 nearly all our limited marketing resources have been invested into that.

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So how is the Ethical Paywall going then?

Good, albeit not quite as well as we had hoped it would go.

To recap: Scoop's "sustainable" business idea, introduced in May 2015, was to change our terms and conditions of use. Legally if you or the business that you work for routinely uses Scoop for professional purposes – i.e. to check out what is going on in matters of professional interest to you or your staff – then you should be paying us.

So far 140 organisations have signed on to do so. But many hundreds more, including the vast majority of Govt. departments, local authorities, universities, law firms, PR companies, large corporates and accounting and consultancy businesses are not.

Were even a 10% of our corporate uses complying with our terms and conditions of use, we would be profitable today. And it is not as if the costs of professional use of Scoop are high. Meanwhile all these organisations continue to receive free value from us in the form of us carrying their communications to our large and influential readership.

The good news is that most of those who do sign on to, contribute towards the up-keep of a service they rely on are staying on board. Our commercial team (who can be contacted at services@scoop.co.nz) estimate we need to get another 100 accredited organisations on board to get to a sustainable break-even position.

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Ok then, but what about now? How big is the shortfall now?

I'll get to the answer to that in a second. But first I want to tell a little story.

Shortly before he died of leukaemia in early 2012 I bumped into Lloyd Morrison, the founder of Infratil and Morrison & Company, on the Terrace in Wellington.

Lloyd and I had become friends after he asked my assistance in an effort to save Air New Zealand for sale to Qantas. With Scoop's support Lloyd, Dr Ian Prior and I mounted what was ultimately a successful effort to help convince the Commerce Commission that having an airline monopoly in NZ and Trans Tasman wouldn't be in the interests of the travelling public.

"How's business," Lloyd asked me.

"Well not to bad I guess," I replied, and asked after his health.

Lloyd indicated he was still fighting on, before offering some advice that has stuck with me ever since.

"So the thing is Alastair," he said, "that's not the right answer. When someone asks you how business is? The answer is always 'great!' regardless of whether it is or not. That's what everybody wants to hear. People want to do business with people who are already winning."

I took Lloyd's advice to heart and I suspect that it was thanks to doing so that the sales efforts that miraculously kept Scoop alive through 2012, 2013 and 2014 came off as well as they did.

But the reason I recount that story as this entire story I am publishing today is breaking that rule.

Yet I have a strong feeling that now is the time that it is necessary to do so.

By now surely everybody understands just how perilous it is to be in the news media business.

Digital advertising cannot support news production in NZ – it is that simple. In the past month Fairfax has lost both its CEO and its chief commercial officer. After losing the CEO the Commerce Commission granted an extension to the time till it will deliver its verdict on the StuffMe merger. And last week after the commercial manager resigned it extended the deadline again.

Over the past two years I have lost count of the number of panel discussions held to discuss the funding crisis in the news business. And yet very little that is constructive is done.

The Green Party's election policy restoring funding to Radio New Zealand that was lost due to the National Party capping their funding is a step in the right direction, but not nearly enough.

And so all things considered, the dynamics we now face - running a business partially funded by donations, and owned by a charity requires a different approach. It is time to break Lloyd's golden rule.

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Ahem. How big is the shortfall?

So here's the skinny.

Scoop's current operating costs - mostly wages for four full time and three part time staff - are around $25k each month. For most of the year last year on a monthly basis our income exceeded this. But on an annual basis thanks to the summer down-turn we are continuing to experience shortfalls – and this latest summer just past that short fall was $20,000.

That said the shortfalls are falling. During 2015, the main year of transformation the overall shortfall in revenue met by crowd-funding was close to $80,000.

On an averaged out basis during calendar 2016 the shortfall was $2000 a month, or $24,000 in total. And more recently slowing sales over the 2016-17 summer period - incurred a further $15,000 shortfall.

And it is because of these shortfalls that we have had to come back to our supporters and readers this early in 2017 to raise further funds.

The good news is that sales in the month of March have already taken us back into the black, more than covering our costs with a small margin on top.

In the event we receive the expected growth in support from a professional users over the remainder of 2017 (please email services@scoop.co.nz if you think you or your organisation might be one of these users and would like to purchase a professional use license) we remain on track to reaching long term sustainability this year.

And if that is the outcome then it is likely that this be the only fund-raising effort mounted for Scoop Publishing Limited this year.

ENDS

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APPENDIX

A: A short history of Scoop's crowd/member/donor fund-raising efforts

When we embarked on "Operation Chrysalis" a week before Christmas we first held a meeting in the Scoop office to decide whether to try to keep Scoop alive or shut the doors. 2014 had been a very hard year for everybody in the team and so I wasn't sure how it would go. But Scoop's team is definitely not made out of quitters.

I began by explaining the dire financial situation we faced. We had made almost no advertising sales at all since the 2014 Election. We only had sufficient funds at that point to get through to January.

I then outlined the rescue plan.

We would try to turn Scoop's business model around whilst simultaneously turning the privately run business into a charitable foundation. I was open about the fact that we had a slim chance of success – internally I reckoned our chances of getting to the end of the year were about 10% at best. And there was every chance we might fail at the first hurdle.

The plan's success was dependent on running a crowd-funding campaign, our first ever, in early 2015 – to get the ball rolling. If that succeeded we then had to develop, deploy and quickly scale a brand new, un-tested business model. If that worked then we would raise some additional funds, again through crowd-funding to but the necessary time to grow the business model towards sustainability.

And we faced a significant additional challenge.

Because of the nature of Scoop's core wire service business – continuity of content publishing and supply is a must to maintain the confidence of existing clients.

As a consequence of this, the 180 degree pivot of Scoop's business model needed to take place while existing services continued undisturbed.

So what we set out to try to do was to build a new business engine for the Scoop train – untested - while we remained under full steam travelling down the tracks.

And there was no way we could do it without also developing a significant level of financial support from a group of readers and silent supporters who we had, till then, barely engaged with at all.

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B: The Near Impossible Comes Together

Scoop is now entering the third year of this transformation.

Last Wednesday passed was the second anniversary of the completion of that first PledgeMe campaign.

In the two years since we have run four further PledgeMe project campaigns, all of which have succeeded so far.

We have enjoyed the repeated support of many of our pledgers through these campaigns. Some have donated four or five times and contributed several hundred dollars to the cause. For this we are enormously grateful.

Without the financial support of these 1000+ Kiwis who care about the future of news Scoop.co.nz would not be around today.

Our first two PledgeMe campaigns, "Help Scoop to Fly" and "16 days of Scoop" raised just over $45k between them. These bought us time to implement the "ethical paywall" and complete the legal preparations for the launch of the Scoop Foundation for Public Interest Journalism at the beginning of September 2015.

The wonderful support and encouragement of PledgeMe'sAnna Guenther, Jackson Wood and Lisa-Marie Richan to teach us how to crowd-fund was a vital contributor to this outcome.

To coincide with the launch of the Foundation & with the much appreciated help of a team from the Enspiral network led by Damian Sligo-Green - we launched our first in-house fund-raising website takebackthenews.nz.

The site allowed for both donations and for people to sign up as contributors.

Between its launch and Christmas 87 new members signed up and we received 100 offers of in kind support or collaboration from 100 contributors.

Over the 10 month period from the launch of Operation Chrysalis to the launch of the Scoop Foundation the $48,000 in funds we received from in 525 pledges and 87 direct donations - covered roughly 25% of total expenses - including the costs of developing the new business model and preparing the legal work for the launch of the Foundation.

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C: The final big push

But this fund-raising hadn't paid off all of our creditors. And with summer fast approaching more money was needed to ensure we would get through through the downturn.

Our biggest PledgeMe campaign - to finance the launch of the Foundation - kicked off in October. It was the first fund-raising campaign mounted by the Scoop Foundation itself and it was by far the most elaborate campaign we had run -including a special run of art t-shirts and certificates with artwork by William Carden Horton, a public meeting, and a Friday the 13th costume party held at Dransfield House.

The $50k target in this campaign was the minimum that we needed to both cover our bills and get us through the summer. By now the team was nearly exhausted and running largely on adrenaline, I certainly was.

But fortunately by then we also had a fairly experienced team on the job including Steven Wood, Olex Cidor who made us a great series of videos shot at St Andrews on the Terrace to promote it, plus our database compiler Howard Davis, who has since become our arts editor was on the team.

Nevertheless it didn't get off to as fast a start as was needed.

Around half way through the campaign we decided our "Scoop's Solution to the News Crisis" messaging wasn't working and switched to the most successful campaign slogan we have used so far. A search for "1000 Kiwis who care about the future of NZ news media".

It was a line with legs and something very similar was used by NewsRoom's Tim Murphy when he announced his and Mark Jennings launch plans at the end of 2016 for the new NewsRoom.

"It [NewsRoomp] will be targeted at an audience that in broad terms we’ve defined as New Zealanders who care. News hounds. People who vote. People aware of the needs of good journalism in a democracy like ours."

A positioning statement which was eerily familiar.

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D: 2016 & a change of guard

Two weeks after the final campaign of 2015 closed, and after 16 years managing and editing Scoop.co.nz, I left Scoop and New Zealand for an extended overseas sabbatical. Hence my writing and publishing this from France.

I remain involved with Scoopin the capacity of volunteer acting as a Director of Scoop and as a Trustee of the Scoop Foundation. And these days my primary efforts are focussed on the thorny issue of achieving financial stability. I very much hope we get there soon.

That said it would be a shame having come so far to fail now.

Thankfully 2016 brought with it a significantly improved financial performance, and last years fund-raising was able to be conducted in a much more methodical fashion.

Joseph Cederwall joined the Scoop Foundation as our community engagement manager mid-year and led our online campaigning effort over the second half of the year.

Joseph designed the "Opening the Election" campaign which is now underway, launched Hivemind and built our new Foundation website. Recently following Gordon Campbell's decision to step out of the Editor's role to concentrate on reporting Joseph and on of Scoop's other co-founders Ian Llewellyn were appointed as Scoop's new co-editors.

In 2016 the Scoop Foundation Board set a fund-raising goal for the year of $60k. By the end of the year the Foundation had managed to raise half of this sum.

In May 2016 the Foundation launched a PledgeMe Membership Drive around our 17th birthday with the title "Journalism a New Model – Membership Drive". The target of $17,000 was met in 303 donations.

$7500 of these funds were used to fund three journalism project grants, to Alison McCulloch (Post Natal Depression), and Charlotte Graham and Veronika Meduna (both working on post-earthquake projects). Getting this grant based funding for public interest journalism underway in August was another significant milestone for the overall transformation project. As was the launch of our new mobile version of Scoop m.scoop.co.nz over summer by our new developer Wiremu Demchick.

And following that effort we focused our resources on building a new fund-raising portal for the Scoop Foundation at foundation.scoop.co.nz.

On the site we published our first Foundation annual report and set up facilities for donations. A fund-raising campaign followed at the end of the year which raised a further $12,000.

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