BERKELEY, Calif. (CN) – In what could become a future model for funding local journalism, hyperlocal news website Berkeleyside announced Thursday that it has raised $1 million from 400 readers to bolster its news coverage.
According to Berkeleyside, it is the first news website in the country to raise that much money through a direct public offering.
The hyperlocal news website, launched in 2009 by three veteran journalists, has used the money to hire a new reporter, make its website more mobile-friendly and enhance its event and membership programs to bring in more revenue.
Berkeleyside cofounder and publisher Lance Knobel pinned the public offering’s success on four factors: a loyal following of readers, wealthy Berkeley residents who care about their community, the investment culture of nearby Silicon Valley, and the election of President Donald Trump, which has inspired some to invest in institutions often attacked by the president as phony and dishonest.
“I don’t think his assault on civil liberties and news is affecting us in Berkeley, but I think a lot of people rightly said, ‘The importance of news and journalism is really under threat, and there’s something I can do locally to stave that threat off,'” Knobel said of Trump’s impact.
The announcement comes amid heightened scrutiny of corporate ownership of news publications, as a Denver Post editor on Sunday called on its hedge fund owners to sell the paper to someone invested in supporting journalism rather than laying off reporters to maximize profits.
Berkeleyside’s public offering campaign started in the fall of 2016 with a goal of raising $800,000. After raising $500,000 last year, the news outlet renewed its public offering and managed to surpass its original fundraising goal.
Unlike an initial public offering, a direct public offering allows a company to raise capital directly from investors without a financial firm underwriting the deal. The Green Bay Packers used the same process to become the only community-owned team in the NFL.
Knobel said his organization has vowed to pay 3 percent dividends to investors, which will accumulate over time, but he doesn’t believe anyone invested in Berkeleyside for the payout.
“If what you’re looking for is financial return, there are things you can do that are better,” Knobel said, adding those who invest in Berkeleyside are more committed to supporting journalism than making profits.
Last year, Berkeleyside received a $60,000 grant from the Lenfest Institute, a Philadelphia-based non-profit journalism foundation, to help develop an open-source revenue model for local newsrooms across the country.
“We’re doing a detailed case study of what we’ve learned and also a guide,” Knobel said.
Berkeleyside maintains a small staff of eight people: six that produce content and two who help run the business.
Unlike some news websites that have limited access to content, Berkeleyside has chosen not to install a paywall.
“We have a deep belief that everyone in our community should be able to read Berkeleyside,” Knobel said.
The company gets 60 percent of its revenue through advertising and another 40 percent through memberships and events. Readers can choose to become members and pay $5 to $25 per month, according to Knobel.
Last year, the San Francisco Press Club honored Berkeleyside with first-place awards in digital media for overall excellence, breaking news, and coverage of the November 2016 election. Also in 2017, Berkeleyside reporter Emilie Raguso was named Journalist of the Year by the NorCal chapter of the Society of Professional Journalists. In 2016, Berkleyside won an Excellence in Journalism Award from SPJ NorCal for its coverage of homelessness in Berkeley.
In 2017, Berkeleyside averaged 1 million page views and more than 400,000 unique visitors each month, according to the publication.
Knobel said he hopes other local news outlets across the country can learn from Berkeleyside’s experience and replicate this model for funding local journalism, though he acknowledged it will be more challenging in rural and low-income areas.
“This is all about creating a sustainable model so that good journalism can be done for years and years to come here,” Knobel said. “That’s what we’re trying to do here.”