Knight Foundation funds Philadelphia Media Network ‘digital media incubator:’ thoughts

Philadelphia Media Network CEO Greg Osberg announcing Project Liberty, which includes a tech startup incubation program. Photo by Liliputing.

The parent company of the two largest paid daily newspapers in Philadelphia is making good on its pledge to launch an incubation program. We at Technically Philly first reported on that pledge last fall.

We had heard of the likely partnerships with University City accelerator program DreamItVentures and the regional Ben Franklin Technology Partners, but what did surprise me a bit was the $250,000 in funding from the Knight Foundation to give it a go.

The initiative was a sliver of the Philadelphia Media Network’s overall Project Liberty, which focused mostly on news that the media company would offer subsidized sales of Android tablets with subscriptions to its newspaper content baked in. So, I’ve been surprised by the handful of questions I’ve had about the smaller incubation portion of the project. I’m writing here to answer them.

All of those questions came because of the 2009 pitch we at Technically Philly made for the Knight News Challenge called News Inkubator. It was aimed first and foremost toward offering backend services to independent news sites, but we were very interested in leveraging partnerships with other industries and tech startups. It helped that we had been covering the technology community.

Our proposal — which was too widespread, without a clear focus and lacked established, legacy partners — didn’t make the cut, but the response from a news community around the country not yet widely talking about business was encouraging. We have since broken off pieces of the News Inkubator concept and moved forward, but nothing as comprehensive as what we put out here.

So, to answer the questions, here are some basic thoughts on the incubation portion of this initiative (on the tablet side of things, I respect the company for trying something new and will leave it at that for now).

  • First, the details are still somewhat limited, so I’m making some assumptions for these initial thoughts. I assume this is a traditional accelerator structure in which PMN will take some equity stake in what I expect to be mostly (if not entirely) for profit startups. I assume BFTP will take a cut for receiving the grant and offer guidance and administrative oversight, before forking over the lion’s share of the money to PMN for hosting and administering the incubation program, in addition to paying DreamIt for consulting and perhaps some mentorship. Again, these are all assumptions. Take them as nothing more than that.
  • I truly and genuinely wish the Philadelphia Media Network success on the project. I have been deliberate in my belief that the success of news will be about realizing it needs a ‘catering business,’ a more profitable backend service that uses reporting as a loss leader. This sure seems like an example of that to me.
  • There are strong reasons this will succeed. This project has, I’d say, the right partners. The grant is technically going to nonprofit BFTP, with decades of investment experience, and, I imagine, there will be some consulting partnership with DreamIT, which has a couple years of tidy success in the tech startup acceleration world. They dabble in this space. So, all PMH has to offer is their floors and floors of now unused news HQ space and perhaps some new paint (and inevitably flat screen TVs and other swag to make it not seem like unused news HQ space).
  • There are strong reasons why this will fail. Another reason for success also brings me to reasons why I have real reservations: a pile of money from an outside force. I wonder if anyone involved in this incubation initiative (at least on the PMH side, if not altogether) is hungry. This has all the makings of a ‘set-it-and-forget-it’ project, which, to me, means it just might end up being forgotten, and I’m not yet convinced it has a champion that wants this to succeed for any reason other than to make money. What’s more, the real spirit of this is cobbled together with disparate partners and housed at a stodgy news organization that doesn’t have a lot of recent celebrated triumphs around innovation.
  • Are these startups going to be the leftovers from DreamIt applications? In just a few years, the DreamIt accelerator program has a nice little national profile. It’s easily the only truly serious such program in Philadelphia. After expanding to New York City, its season moved to the fall, just about when this PMN incubation program will be running. Far as I can tell with scant initial details, the startups PMN will be approaching are the same type of the companies that could land at DreamIt. Allowing for the slight possibility that Philadelphia doesn’t yet have the kind of outside brand recognition to exclusively command the attention of the most compelling startups, could this PMN accelerator be competing with other cities and one of its partners?
  • Is this the first case of the Knight Foundation explicitly funding profitability on a large-scale legacy media company? — Knight funding an incubation program for lower yield, public affairs news producers fits the mission of creating informed communities. Knight funding an incubation program for potentially higher yield media service providers housed at a for-profit legacy news operation is something different. (Keeping in mind the common perception that Knight got screwed after funding Everyblock and watching it get sold without seeing a dime of that return.) One could argue that the experiment of a backend project at a newspaper company is a worthy experiment, but this is decidedly a profit play that the market welcomes — which seems unlike what foundations are really meant to do.
  • Are there concerns about possible layoffs or buyouts at the newspapers come October? — Foundations are notoriously skittish about public persona, so I can’t help but wonder if the Knight PR department has caught wind of the longstanding rumors that, with new ownership and a union-backed employment freeze at the newspapers up in October, more reporters are going to be bled from the newsrooms. An infusion of outside capital for experiments with startups led by 20-something technologists somewhere inside the once full 400 N. Broad Street might be taken the wrong way by some. And, with a fall timeline, these startups will be just settling in, while journalists could be potentially clearing out their desks.
  • The News Inkubator Knight News Challenge pitch wasn’t the right fit in 2009 — We shouldn’t have gotten funding in 2009, and Knight clearly agreed. The idea, I still believe, is one that needs to be created, and we’re tinkering way down in the basement on pieces of it, but we’ll never scale to what would allow  it to happen. So, I’m hopeful that the PPIIN initiative from the William Penn Foundation could make good on the promise of many of these initiatives. Still, something lingers in my mind. The Knight funding offered to this project, by way of fiscal agent BFTP, is $250,000. The Knight funding we requested back in 2009? $250,000.