The Business
“Most entrepreneurial ideas will sound crazy, stupid and uneconomic, and then they’ll turn out to be right.”
The Equation:
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The business model for N2 is the same one used by media companies around the globe that create entertainment content for streaming platforms. It works like this: a platform contracts with a company (N2) to produce content. The contract provides a large percentage of the developmental budget upfront to start production. Over the course of production, progress payments are made to ensure production is completed and done on time. At the end of the production, final payments are made and the content is delivered or licensed, to the streaming platform for distribution.
As the company’s primary revenue stream, this provides the necessary resources to establish news bureaus across all states while also freeing the company to focus on the most important aspect of its business: reporting the news.
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As the company’s primary revenue stream, progress payments provide the necessary resources to establish news bureaus across all states while also freeing the company to focus on the most important aspect of its business: reporting the news.
Our model also has the advantage of secondary and tertiary revenue streams that utilize proven new media business models: advertising and licensing. Through distribution agreements, N2 can license shorter versions of its stories for traditional linear and both print and digital distribution.
As the only news organization covering local and regional stories for streaming audiences, existing news organizations can license versions of N2 stories for their audiences. Not only does this provide additional revenue for N2, but it also drives up subscriptions and viewing hours for the platforms and reduces churn. If the COVID-19 pandemic has proven anything, it is that people will not give up their streaming subscriptions, suggesting the platforms are less likely to suffer during economic downturns.
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Daily newscasts consisting of stories directly relevant to the public interest with a laser focus on credibility, accuracy, responsibility and unmatched quality.
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From a financial standpoint, we see this as the only sustainable model that will support local news in a way that rebuilds local reporting capacity. It’s a win-win-win for the platform, for news consumers, and for the company.
Sustainable Revenue Model
Primary revenue is an industry-standard content production contract
Secondary and Tertiary revenue from licensing and ad sales, podcasts, and feature documentary production
The combination of contract revenue plus licensing and ad revenues equals a sustainable revenue stream supporting a stable and growing news organization
No Need for Traditional Capital
We do not anticipate a need for traditional startup capital or multiple follow-up rounds to launch or sustain the company. Most news organizations require significant up-front investment to pay salaries, open offices, etc. While we will have those expenses, in our case those dollars come from development and production contracts, not upfront capital raises.
This is a significant competitive advantage because:
Maintains equity amongst founders, staff, and initial investors
Maintains focus on what’s important: refining the model and reporting the news
Increases value of the company as the model is proven
Provides greater flexibility as opportunities arise and markets change
Eliminates the need to focus on metrics that do not matter to our success
3 Revenue Streams
Free to focus on what we do best: Avoiding the costs and responsibilities of finding subscribers who are already there, paying for network infrastructure that already exists, and supporting business units we don’t need means N2 can dedicate the majority of its resources to what it does best: providing the best original content from the best journalists in every state in the country, every day.
Staffing Up
Layoffs resulting from downsizing or closing newsrooms and media organizations have created a broad marketplace of available talented journalists. We will actively recruit producers, editors, and technicians through outreach and partnerships with professional associations, talent referral services, gig staffing agencies, social media, and word of mouth.
To provide coverage in more rural areas, we will contract with independent journalists to both alert us to new stories and cover them.
N2 will also partner with other newsrooms, increasing coverage, and audience size while also promoting the availability of news on our VOD platform.
“We want to create an environment where our teams know they’re fundamentally changing the news industry for the better and restoring the media’s true purpose, which is informing the people and preserving democracy.”
Roll Out
The rollout plan is designed to refine the newscast, test reporting, and staffing models, establish partnerships and explore funding strategy. VOD priorities will influence the actual deployment process and timeline.
Full launch depends on resources and the ability to staff up. We envision a pilot launch in four states to full operations in all 50 states in four phases covering approximately four years.
The number of news teams is based on the number of primary population centers in a state. This map shows the number of teams at full launch and projected production funding levels.