This is the third in a series of guest blog posts on the future of news by former staff of the Rocky Mountain News, marking the six-month anniversary since the 150-year-old paper published its final edition. Join us this Thursday at 5 p.m. ET/ 3 p.m. MT to chat live with these writers.

---

One of the questions we at the Rocky Mountain Independent hear a lot is, “Did you guys think about operating as a nonprofit?” After all, similar online news ventures in Minneapolis and San Diego seem to be doing well with that model. Why not Denver?

The answer is, yes, we did consider going nonprofit but decided it wouldn’t be sustainable for us in the long term. Instead of relying on the economy’s ups and downs, we would be relying on the kindness of donors and foundations, which in turn rely on the economy’s ups and downs.

We wanted to be as independent as possible, and that’s why we developed a three-pronged revenue model: advertising, memberships and consulting work. We keep our expenses low so that whatever revenues come in go right back into content development. The RMI’s 12 owners agreed to work for free through the end of September, and we pay for supplemental content from freelancers. We don’t use a traditional office, and we use our own equipment. We also run a network of specialized partner sites and receive a small share of their advertising revenue.

The model is a good one in theory but not necessarily in practice. Advertising and membership revenue correlate with Web site traffic, which correlates with content. If you don’t have the right content, you won’t bring people to your site, and you won’t make much money. But if you don’t have enough money, you can’t fund the robust content that Web readers are looking for.

And that is the catch-22 that has ensnared the RMI. To break out of it, we hope to develop the consulting prong of our revenue model and bring in much-needed capital by offering Web design, search engine optimization and editing/writing services to other businesses. But, as journalists, this is tough for us to wrap our heads around. Traditional newspapers erect a “wall” between the editorial and advertising/business departments to prevent conflicts of interest. As we build up our consulting business, we will have to reshape this wall, perhaps by spinning off a segment that’s separate from the core news magazine.

For years, journalists have ignored the business side of media to their peril. We at the RMI were forced to face this when the Rocky Mountain News closed. We still don’t know if our model will be sustainable long term, but we hope that other budding journalism businesses, online or otherwise, will learn from our experiment and eventually find the right formula.

---

Cindy House is co-founder and editor of the Rocky Mountain Independent.