[As we mentioned earlier, the next issue of Nieman Reports is almost ready to be unveiled. On Monday, we gave you a sneak peak at one of its articles, by St. Louis Beacon editor Margaret Wolf Freivogel.

We’ve got one more story to share before the rest of the issue goes online at Nieman Reports’ web site. This one comes from one of the brightest stars in the news-startup firmament: Joel Kramer, former editor and publisher of the Star Tribune in Minneapolis, and now founder of MinnPost. Here, Joel reflects on what he’s learned in MinnPost’s first year-plus. —Ed.]

A lot of pixels are being spilled these days reflecting on the future of newspapers, news, journalists, and journalism. I spent my career in newspapers, first as a journalist and later as a publisher, and I left when the business was financially near its peak. With the for-profit model now shriveling, I’ve spent the past 16 months trying to build one example of what might be coming next—a not-for-profit enterprise providing high-quality regional journalism on the web.

Here are some reflections from that battlefield.

MinnPost is a certain kind of nonprofit journalism enterprise — one that aims to eventually break even on operating revenues, such as advertising, sponsorship, membership and perhaps other sources such as syndication.

This is different from a pure philanthropic endeavor, like ProPublica, which (at least in its current plan) depends for its success on the continuing generosity of foundations or very large individual donors.

MinnPost has had early support from major donors and foundations, and we believe that serious journalism is a community asset, not just a consumer good, which is why we’re nonprofit. But we are focused on breaking even by 2011, or at the latest 2012, without relying on foundation support to keep the lights on.

Why? Because (a) we think it’s possible to reach break-even; and (b) we think it’s desirable, since foundations already have so many causes to support, and it’s questionable whether they have the capacity to support journalism on the expansive scale that may be needed to replace what’s being lost, especially regionally, in the for-profit industry.

We can argue the merits and demerits of each approach and, in our age of digital experimentation, it seems wise to let every flower bloom. But it’s important to understand MinnPost’s approach, to make sense of my dispatch from the frontlines.

Traffic

We draw our MinnPost members — more on how people become one later — from among our readers, and because the inventory we have to sell to advertisers is our page views, traffic to our web site, MinnPost.com, is critical to our financial success.

Google Analytics tells us exactly how many times each item we publish gets read. This has a powerful effect. It makes us want to do more of what gets read, and less of what doesn’t, while remaining true to our mission.

What does this mean? A glance at MinnPost lets a visitor know that it’s for serious newsreaders. Our brochure proudly declares, “NO Britney. NO Paris. NO Lindsay.” MinnPost is not a place to visit for stories about entertainment celebrities, or sex, crime, and advice for the lovelorn — even though we know that such content would bulk up our page views.

Even for our serious audience, we’ve learned that $600 spent on one long story produces a lot less traffic than $600 spent generating six to 12 shorter items. We still do longer stories every day, including many that combine in-depth reporting and analysis with personal voice.

But a careful reader of our site over the past year will note that we have a great many more short, quick hits, published all day long. So while we are spending less on news today than a year ago, our traffic has more than doubled during that time. On a three-month rolling average, we now have more than 200,000 unique monthly visitors and more than 700,000 page views — and in mid-February we enjoyed our first 31-day period with more than one million page views.

We are confident we can keep this number growing and keep quality high. Even short-form work can involve outstanding reporting and analysis — for evidence, check out David Brauer’s Braublog any day. But it does mean that we do a lot fewer ambitious investigative reports than I would like us to publish.

In 1974, I copyedited a Newsday series called “The Heroin Trail,” which won a Pulitzer Prize for Public Service. I’ll bet Newsday spent more money on that project (adjusted to today’s dollars) than MinnPost’s entire news budget in its first year. Our most ambitious MinnPost investigation, financed by a Watchdog Journalism fund we created, was a series on the resegregation of Twin Cities-area public schools, and it cost less than $15,000, fully loaded. Another major project was a series on the intimidating reign of our former state attorney general. Its author, Eric Black, acknowledged that it made him antsy to give up daily posting for weeks while he worked on it.

News staffing

MinnPost is a professional journalism site. It has always been part of our mission to support professional journalism and pay for it. But how we do so has changed substantially since we launched.

At the outset, our editors were on staff, and all our writers were freelance, paid by the piece. Some critics wondered whether it was possible to publish a five-day-a-week news site with all freelance reporters and writers. Our editors wondered, too. The nightmare question was, “What if one morning all the writers say they’re not available today because they have other assignments, or they want to play golf?”

During 2008, we added one full-time writer, then a second, reducing the freelance budget accordingly. Later still, we put four of our best reporters on full weekly retainers and several more on part-time retainers—again reducing the budget for paying by the piece. In January, we added a full-time Washington correspondent, an unusual step when so many bureaus are shrinking or dissolving. The new system works much better. The critics were right.

Paying for news

Like almost all news on the web, MinnPost content is free to all, but we do ask our readers to become members, which entails making an annual donation. This is a variation on the model that public radio and public television use, but minus the intrusive pledge weeks.

The good news is that more than 1,250 people have signed on as members during the first 15 months, with donations ranging from $10 a year to $20,000. On our membership list, you can see that the two most popular categories are Cub Reporter ($50–$99) and Night Police Reporter ($100–$249).

Yet we know that many thousands of our regular readers are not donating. Even some who have told us how much they like what we do are not yet donating. To reach break-even, we probably will need 5,000 donors by 2012. And we need to achieve these results without expensive incentives, like mugs or CDs, and without paying a large membership-support staff. (Ideas are welcome.)

We regularly ask ourselves whether we could charge for premium content on our site. With such a strong expectation out there that the Internet will be free, we have not yet come up with a viable idea. (Again, your ideas are welcome.)

From the outset, I assumed that advertising could not by itself sustain high-quality regional journalism, for two main reasons: Serious public-affairs subjects and local orientation are both bad routes to maximizing traffic, and the staggering number of publishers online depresses ad rates, so that without high traffic it’s not possible to generate big revenues. Before MinnPost launched, I estimated that the eventual breakeven would be based on 70 percent from advertising, 30 percent from membership. With a year of experience, I now believe it will be more like 50-50. Membership is challenging, but advertising is more so.

Our strategy is based on providing advertisers a high-quality environment and excellent service and asking them to pay accordingly. For example, we don’t allow intrusive advertising that interferes with the visitor’s reading experience. We also help our advertisers create effective banners and landing pages.

In one respect, this is working. Our advertisers pay $15 or more per thousand impressions, or appearances, of their ad, and we have been able to hold this rate in these tough times — though we have increased volume discounts, and we now target local advertisers’ ads to local readers only, thereby increasing their value. Meanwhile, our local competitors often offer our customers half that rate, and national networks like Google Ads offer to sell ads onto our site for a tenth of what we charge or less.

But the number of advertisers willing to pay for that quality is still too small. This much I know: If the rate for locally sold advertising drops to $1, or even $5, only publishers with truly gigantic global traffic will survive on ad revenues.

Increasingly, the pitch we’re making to advertisers is to sponsor part of the site, rather than just buy banner ad flights. This is working well. In the past two months, we’ve sold two sponsorships: One for the Daily Glean, a midmorning roundup summarizing and linking to the best of what’s in the other local media, written with attitude, and one for Community Voices, our daily op-ed feature. These opportunities give sponsors more exposure than they would get with regular banner ads and a stronger connection to our core mission.

Foundations have provided critically important funding to MinnPost. The Knight Foundation has been especially generous, but they told us from the outset that they wanted us to find local foundation support, too. We now have two major Minnesota foundations, the Blandin Foundation and The Minneapolis Foundation, supporting us with sizeable grants as well, along with smaller grants from a few corporate foundations. But our challenge, confronted by all nonprofit enterprises, not just those in journalism, is that we need unrestricted operating funds to sustain us until we fully develop our operational revenues—and many foundations prefer to fund a specific new activity. Right now, without the help of these foundations, we could not survive, and we are working to add additional ones, both national and local.

Finding our place on the web

When we launched, and occasionally since, some observers have predicted our demise because we’re a bunch of old newspaper people who don’t “get the Internet.” In response I readily admit that our primary interest is sustaining high-quality journalism, not exploiting what the Internet makes possible. But that doesn’t mean that we have not been open to learning all we can about how best to use the medium to achieve our goal.

Some things that the web makes possible might not help us get there. For example, take a look at the unfettered comments that populate so many web sites. From day one, MinnPost has accepted — and encouraged — comments on all our articles, but we have insisted on civility and set two hurdles in place to ensure it.

Those who want to leave a comment must register, and their full real names are attached to their comments.

Comments are prescreened by volunteer moderators and rejected not only for foul or hateful language but also for things like name-calling.

We took plenty of heat from web-savvy readers for this decision. But as readers have watched the quality of comment on respected sites that don’t require real names, many are now grateful for our approach. Recently we published our 7,000th comment. Some sites with looser standards appear to be reconsidering their no-holds-barred policies.

On the other hand, the web makes possible the convergence of the written word and video, and in this realm we are playing and learning. We have discovered, for example, that high-quality documentary video raises the same challenge as investigative reporting: high cost for the traffic generated. But rougher, newsier video works great.

Interactivity and social media have been more difficult for us to figure out for our site and audience, so we’re not as far along as I’d like on crowdsourcing stories, for example. But we are now tapping into a great community for getting tips, spreading the word about our work, and other forms of community building such as Twitter. Our Twitter account was launched in June with a couple of dozen followers and, eight months later, we have more than 1,300.

Guiding those who follow

I receive calls almost every week from people in this country and around the world seeking my advice about starting a regional web site. My colleagues who have started sites in San Diego, Chicago, New Haven, and St. Louis get these calls, too, which is one of the reasons we’re exploring starting a consortium of nonprofit regional online news sites: to help others get started.

I answer their questions and ask a few of my own. My number one question: Do you have significant start-up funds? When I started MinnPost, we had commitments of one year’s operating budget, about $1.2 million. The business plan called for having two, but my startup donors and I agreed that the time was right in late 2007 to begin, so we did so even though we were undercapitalized. It was the right decision, but it means I spend a great deal of my time finding the funding to sustain us through the next few years instead of devoting all my energy to the things that will sustain us longer term.

Many of the callers tell me they have no start-up funds in hand yet. “Well,” I say, “I’d start by getting some.”

With each new announcement of a paper closing, or a news company contemplating bankruptcy, or a dozen more journalism jobs being eliminated, my belief intensifies that the nonprofit approach has the best chance of sustaining serious regional journalism. But I am reporting back from the frontline of this digital journalism revolution that making it happen is no picnic. The same forces working against the for-profit model make self-sustaining nonprofit models challenging, too.

A lot of people are rooting for us to succeed, even counting on us to succeed. We’re making progress, hanging in, and learning and adapting every day. No promises, only possibilities.

Joel Kramer, CEO and editor of MinnPost.com, was editor of the (Minneapolis) Star Tribune from 1983 to 1991 and publisher and president from 1992 to 1998.