A new installment in the “news desert” research project explains how rural areas are being left behind by digital news outlets as well as traditional media.

Hundreds of digital news startups emerged as the newspaper industry melted away over the last two decades.

But more than 90% are clustered around metro areas where there’s more funding available, Penelope Muse Abernathy writes in an update to The State of Local News 2022. It found two-thirds of the nation’s counties now have no daily newspaper and fewer than 100 of those have a digital substitute.

Abernathy, a principal author of the report, is a visiting professor at Northwestern University’s Medill School which now hosts the “news desert” project documenting the local news industry’s decline.

The deep dive into digital was one of two updates to the Local News report in the last week. Another offered a few examples of successful models that could be emulated by other outlets.

Both updates highlight the need for local ownership and multiple funding sources, which is especially difficult in rural and lower-income areas that especially need the service provided by local news outlets. Another takeaway is that news outlets being online isn’t by itself a solution to the local journalism crisis.

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The growth of local-news startups appears to have plateaued. The report found the number of state and local digital news sites “has remained stubbornly constant” over the last five years, fluctuating between 525 and 575, Abernathy writes.

That’s despite a recent wave of philanthropic dollars and venture capital into the sector.

Virtually every news outlet is digital now, whether it started as a newspaper, TV station or a website, but in this context the term “digital outlet” refers to digital only news ventures.

Some are tremendously successful but overall, it doesn’t appear these startups have yet found a way to overcome the business challenges of traditional media.

Abernathy’s report cites a survey that found only one in five digital news outlets believe they achieved sustainability, and more than half have annual revenues below $100,000.

In an essay published by Northwestern and Poynter.org, Abernathy explores these issues through the experiences of several digital news outlets.

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It describes how the San Jose Spotlight in Silicon Valley had a budget of nearly $1 million last year, with backing from more than 50 donors and corporate sponsors.

Fifty miles away, the Benito Link in a more rural area considered closing after its initial $150,000 grant expired. The community came together with smaller grants and fundraisers, growing the budget to $300,000 last year, though its executive director told Abernathy it’s unlikely to receive major donor support.

If such digital outlets “are to fill the gap in existing news deserts,” Abernathy writes, “then funders and entrepreneurs must begin to address the disparity between the resources available to urban sites compared to those in smaller suburban and rural communities, as well as traditionally underserved urban neighborhoods.”

The report found 20 local and regional digital outlets in Washington state. Reflecting the national findings, they are mostly clustered in the Seattle metropolitan area, with 10 in King County, four in Snohomish County and two in Pierce County.

It found no such outlets in 32 of Washington’s 39 counties and just one in Eastern Washington, in Spokane.

The second update to the Local News report points to several successes “that offer a potential strategic road map that other for-profit local news outlets might follow in suburban and smaller communities,” writes Tim Franklin, Medill’s local news chair.

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One is the Richland Source in Ohio, which is profitable despite competing with two local dailies and a weekly paper. Its formula includes committed local ownership, a diversified revenue stream, award-winning journalism, a clearly defined editorial mission and lower operating costs.

Franklin notes that these examples come amid an industry that’s in decline with two newspapers closing per week on average.

“There’s no magic cure to the ailments of the local news industry,” he writes. “Aggressive cost cutting hasn’t solved the problem and is likely making it worse. Policymakers in Washington and in statehouses have so far failed to advance solutions. Philanthropic institutions have stepped up, but there aren’t enough charitable dollars to spare an entire industry.”

Australia update: A policy that pressed tech giants to negotiate fair compensation for their use of news content resulted in deals injecting “well over $140 million” into Australian journalism each year, according to a new report by Anya Schiffrin, director of the technology, media and communications program at Columbia University’s international and public affairs school. The U.S. Congress is considering a similar policy, as are policymakers in Canada, India and South Africa, she writes at Poynter.org: “Outlets throughout Australia are hiring new reporters … Journalism professors say their students are getting hired and that there are too many job vacancies to fill.”

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