Revenue streams available to liberal entrepreneurs

Revenue streams cover the income side of a business.  One of the first questions any entrepreneur will face in creating a viable business is, "what is your revenue stream?", in other words, "how will you make money?"  A closely related question is "what is your value proposition?", translated, "what product or service will you offer to direct that revenue stream towards your business?"  The more unique your value proposition, the more you can corner the niche market you've carved out for yourself.  (Or, you can just try selling pizza as "Ray's Famous Original Pizza" and see where that gets you.)

Below, I'll describe a few kinds of revenue streams, and the value proposition which can be offered to exploit each.  I'll also discuss the advantages and disadvantages for each revenue stream.

Online activity among progressive activists - ad impressions/clicks, donations, and product purchases

This is the revenue stream that's most easy to tap into and is most widely recognizable.  Revenue from advertising, merchandising sales, and book-selling referrals is the main source of income for most progressive blogs, and the trappings (ads, Amazon and Powell's links, CafePress lists, etc.) are apparent everywhere in the progressive blogosphere.  Fundraising appeals are also common, with Paypal buttons and ActBlue links appearing to be the most mechanisms for donations.

It's easy for a liberal entrepreneur to offer a value proposition to progressive activists, since the entrepreneur is a creature of the movement.  The main value proposition for the activist is a feeling of having advanced the progressive movement in some way, in addition to any kind of peripheral benefit derived from the book, t-shirt, or other item purchased.  Each blogger adds his or her own particular spin to this benefit; for example, you're not just making any old donation, you're making a donation to the Crooks and Liars community, with all of the history and impact that comes with that blog.  Or, you're purchasing the chance to view an ad-free DailyKos.  And so on.

For the most part, this is the revenue stream of choice for bloggers, and perhaps the most significant users of the revenue stream are bloggers.  Some grassroots activists groups also attempt to sell merchandise, books, and display ads on their website, but this activity probably pales in comparison to the volume transacted on the blogosphere.

The problem with this revenue stream is well-known: it's extremely difficult to derive enough revenue to support even a single employee.  The blog must generate an absurd amount of traffic in order to generate any decent-sized ad revenue, or it must generate a very large number of merchandise and book purchases to generate referral revenue.  Or, it must have a fairly large and loving audience to get a lot of donation income.  Building an audience that large and that loyal is very, very hard work, and it's not clear that there's even enough traffic to go around to support more than a few dozen blogs in this way.  Consequently, most bloggers consider this revenue stream to be a helpful bonus, but nothing to rely on.

There are a few well-known exceptions to this rule.  One of them is donations to campaigns; progressive activists have repeatedly demonstrated their capability to raise large sums of money online for campaigns, even in very short periods of time.  Another is highly specific, targeted asks from well-known bloggers, such as Josh Marshall appeal to support a trip to New Hampshire in January 2004, Matt Stoller's journey to CT in 2006, etc.  There are similar success stories in progressive support for charity, whether for Hurricane Katrina victims or for fellow activists who happen to be in bad luck.

Other exceptions to this rule include store websites, i.e. sites whose primary goals are to sell products to progressives (as opposed to sites which sell products as an ancillary revenue enhancer, unrelated to their primary mission).  I believe an online store for progressives can be a viable business model, to the degree that the store owners understand who their audience is, how to reach that audience, and how to convince that audience to purchase something.  These problems are classic retail business problems, of course.  The main issue is, are there enough potential customers, and do those customers have the money to buy what you're selling?  Defining the term rather loosely, the number of online progressive activists probably numbers 3 to 5 million, and the best estimates are that this group ranks in the upper middle class.  So there is certainly money to be made selling to this market on store websites.  A progressive book club would be a good example of such a site.

Furthermore, I would like to believe that it's possible for bloggers to take advantage of this revenue stream and make it a reliable source of solid revenue.  One possible solution to this problem is to use NPR-style fundraising drives, as Crooks and Liars and Kevin Drum does (although Political Animal is not just a run of the mill blog, since it's enmeshed in a whole magazine).  Another solution might be to sell very well-focused ads to a smaller audience.  A blogger who occupies and dominates some kind of economically valuable niche might be able to pull this off.  Hopefully, during my New Blog Friday series, ideas along these lines will float to the top.

There may, indeed, be some innovative ways to make this revenue stream more fertile, and I might devote a post to this at some point in the distant future.  However, it's important to think carefully about viability before relying on this revenue stream.

Gigs and consultancies with progressive organizations and campaigns

Progressive organizations and campaigns have a variety of needs, and the motivating idea within this revenue stream is to meet those needs while turning a personal profit.  There are a few well-known successful examples of providing such services, and a few which are still emerging.

• Campaign blogging.  While campaign blogging probably began as a career in 2003-4 with the Dean campaign, it became considerably more popular in 2005-6, primarily with Senate campaigns.  It appears that these jobs pay salaries that average around $4,000 / month.  That's not a bad salary for blogging, but the gigs usually do not last a full twelve months, either.  Since these gigs tend to go to very well-known bloggers, becoming a campaign blogger is only a bit more viable then making money off of ads, merchandising and bookselling referrals.

• Web consulting.  The demise of the Dean campaign in 2004 liberated several campaign techies to go on to new things; and that they did, starting web consulting companies like EchoDitto and Blue State Digital.  (Fair disclosure, I personally know some of the people involved in these companies.)  Other companies, like Mandate Media have been around for longer, while some, like Chapter Three (whose founders I also know personally) have only recently started up.  This is a fast-growing category of consultancies, since it's becoming increasingly clear that organizations can get solid results (in terms of money, media attention, and votes) out of their websites, and there's plenty of technical talent in the progressive movement.

• Outreach consulting.  This category of consulting has only recently gained attention, and it did so in a backhanded way.  The day after Christmas last year, the New York Times ran a lengthy profile of Mara Vanderslice and Common Good Strategies, detailing how her firm advised Democratic candidates to reach out to religious conservatives.  Talk 2 Action and Street Prophets jumped on the story, and a full-court religious left blogosphere brouhaha was on.  The overall response to Vanderslice's methods appear to include some of the following: her purported victories in 2006 were not impressive, coming as they did in a strong Democratic year in states where the GOP candidate was extremely unpopular; reaching out to religious conservatives as a general rule is a fool's task for Democrats, who should reach out to moderates and religious liberals instead; and the talking points which she encourages Democrats to use are antithetical to core Democratic values.  In particular, Talk 2 Action takes exception to Vanderslice's advice that Democrats should avoid talking about the separation of church and state, using other code words instead.  As a general rule, I agree with nearly all of these arguments.

  What I think got lost in this tussle was the fact that Vanderslice, at least, was doing her part to move forward an outreach strategy which she believed would work.  If progressives believe that Democratic candidates should more aggressively reach out to youth, minorities, religious liberals, or for that matter clockmakers, then they should follow Vanderslice's lead and start a consulting agency to advise Democratic candidates to reach out to these groups, and to devise tactics to do so effectively.  Not only would they get to see the real-world impact of reaching out to those groups, but they could earn a decent living doing so.

  The problem with this kind of consulting, unfortunately, is that campaign consulting is very much a crony game.  Crashing the Gate devoted an entire chapter to this point, and Amy Sullivan also wrote an in-depth story for the Washington Monthly about the crony culture of Democratic consulting.  Breaking through this wall of cronyism is indeed a challenge, but there are at least a couple of ways to get started.  One approach is to start working at the state and local level, where the cronyism isn't so sharp; another is to work through web consulting firms, which already have a foothold inside big campaigns.  Another approach is to work through institutions which are already trusted by many candidates, such as labor unions.  These approaches aren't yet proven, but they are worth investigating.

  One approach that is proven is to use experience in a large campaign as a jumping-off point for a consulting career.  Vanderslice is a perfect case in point - she was Kerry's Director of Religious Outreach.  (Vanderslice also proves the point that you don't even have to do a good job in order to launch a successful consulting career; Kerry managed to fight Bush to a draw among Catholics, despite having a deep well of Catholic convictions to draw on when addressing audiences; Democrats did 5 points better, without a deeply religious Catholic at the top of the ticket, in 2006.  Sheesh.)  Those aspiring to outreach consultancies would do well to attempt to land a position at a prominent campaign in the upcoming season.

• New media consultancies.  I suppose you could categorize this kind of work as outreach consulting, but for a variety of reasons it's very different.  For one, demographic outreach is as old as the Federalist Party, so it's not hard to find people who have some skills in targeted outreach.  On the other hand, new media is, ahem, new, which means that the number of people who can be called "experts" in new media are few and far between.  They are also almost entirely contained within the progressive blogosphere, since social networking participants are largely progressive, and the progressive blogosphere is quickly becoming a key ground of innovation in social networking.  New media outreach has unique benefits that other types of outreach do not; for example, a smart SMS consultant can help a candidate efficiently mobilize a large number of low-income voters and target GOTV messages to them in a high-impact, low-cost manner.  I wrote about this idea in a bit more detail last week, in a post titled Social Networking Consultants.  The key thing to notice here is that new media consulting is different from web consulting because there's not a lot of competition, and it's impervious to the cronyism which dominates outreach consulting because there just aren't any cronies who know anything about new media to begin with.  The trick is convincing a candidate that it's a worthwhile investment.  However, George Allen's macaca moment and Obama's 25 million dollar moment are both well-known examples which should help a new media consultant make the case that a campaign should invest in this growing field.
  

The value proposition in this revenue stream is some variation on "I'll help you get more votes, or more campaign contributions".

The trouble with this revenue stream is two-fold.  One, at least as far as campaign work goes, it's extremely seasonal.  Two, it precludes a lot of experimentation (campaigns don't usually like that), and it's nearly impossible to work on deep structural problems as a consultant.  At best, a campaign consultant can hope to expand the Democratic outreach strategy, to include more aggressive outreach to (for example) religious liberals, young minorities, or other groups.  This kind of achievement could certainly lead to downstream structural change that would benefit our movement (such as more focus on expanding religious liberalism as a religious movement), but it's an indirect route to be sure.

On the other hand, there is certainly money to be made in this field, and a smart entrepreneur can do quite well while fixing some of the structural problems which face our movement.

Progressive businesses

Without delving too deeply into the definition of a progressive business, I'll suggest that a progressive business is any of the following kinds of businesses:

• Businesses which make a point of investing in social or environmental justice causes;

• Businesses which sell products and services to progressives, including organic food, fair-trade chocolate, etc.;

• Local businesses which band together to fend off the encroachment of big chains, usually under the umbrella of BALLE or a similar group;

• Women or minority-owned businesses;

• Union-organized businesses, particularly businesses which welcome and encourage unionization;

• Businesses which cultivate a "hip" image, including JetBlue, Whole Foods, Starbucks, Apple, ZipCar, and some car brands (in particular the Prius, Yaris, the Fit, Volvo, etc.)
  

This list covers a broad swath of businesses, and the term "progressive business" should not be taken to mean that these businesses are part and parcel of our movement.  Some businesses, especially JetBlue and Starbucks, are certainly not part of the progressive movement.  Union-busting businesses are not part of the progressive movement.

The point of this list is to include those businesses which have something to gain from genuine interaction with the progressive movement.  The fact that they have something to gain from our movement means that there is an opportunity to do business with them in a way which solves one or more of our structural problems.

For example, last week I wrote a post discussing the possibility of creating a pro-labor employment law firm, which would advise companies on the best way to work together with a union for mutual benefit.  Such a law firm could make good money for itself, improve the bottom lines of its corporate clients, and fight the union-busting which is so toxic to our ideological landscape.

Employment law work is a bona fide need of any large corporation; there are simply too many ways in which a corporation can run afoul of such law, even with the best of intentions.  Unfortunately, employment law has largely developed as an anti-union field.  (And here I'll admit I don't know much about employment law per se.)  However, corporations which work together with unions have a lot to gain from such cooperative agreements, including increased loyalty, better productivity, lower turnover, fewer industrial accidents and injuries, and good PR.  A smart employment law firm will be able to sell its clients on the ability to derive solid profits and good PR side-benefits from good faith efforts to support unionization.  Such a firm could easily earn healthy revenues for itself.

The progressive business revenue stream is extremely lucrative.  The problem with the revenue stream is developing value propositions which are unique and which solve some of the structural problems facing the progressive movement.  That's where the creative process comes in.  I will try to develop and post more ideas along these lines in the near future.

"Unaligned" or apolitical individuals whose lives can be improved with practical applications of liberal values

This revenue stream is generally called "consumer spending", and we are all, in some way or another, familiar with it.  My belief is that there are many ways in which liberal entrepreneurs can turn practical application of liberal values into a product or service which will improve the lives of consumers.

A generic approach to developing such a business starts with thinking of some consumer problem.  The next step is to find an answer to that problem which is based in liberal values.  The final step is to find a way to make that solution accessible, and to price it in a way which makes it both profitable for the business, and cheap for the consumer.  Bonus points if the problem you identify happens to occur at a time which is crucial for ideological conversion.

This is a bit of an abstract concept, so I'll illustrate with an example.  Yesterday, I wrote a post about progressive wedding planning.  Wedding planning is a serious problem for many people, and you don't have to be an expert to know that it's a stressful and difficult process.  It's also a problem laden with values implications.  Take the "simple" question of where the wedding will occur.  For a couple which comes from different cultural or religious traditions, this question is not simple at all, and requires many skills (negotiation, the ability to compromise, a sense of perspective, etc).

Cue the wedding planner, whose services include straightforward event and project management, as well as a healthy dose of family and couples counseling.  The wedding planner can play a subtle but powerful role in the development of a couple's decision-making processes, and therefore in the kind of value system which dominates that couple's new household.

The wedding planner also plays a direct and powerful role in choose what kind of catering services, invitations, attire, and other products the couple will use in putting together the wedding.  Therefore, the wedding planner can help (or hinder, or play no role at all) in the use of environmentally and socially responsible products and services.

Moreover, the wedding planner gets paid well for all of these services; some earn as much as 10% of the cost of the wedding, or $50 to $150 per hour.  For a typical planned wedding (with a budget of $15,000), that can mean real money.

Finally, as I point out in my blog post, the wedding planner happens to be on the scene at a key turning point in the ideological development of a new family.  Consequently, creating a progressive wedding planning agency is not just a good way to make good money, it's also a way to distribute liberal values among individuals who might not be very political at all.  A fleet of progressive wedding planners could help reverse the rising tide of anti-feminist domesticity in new families.

As with progressive businesses, this revenue stream is extremely lucrative.  The problem in this case is also a matter of developing value propositions while solving a structural problem for the progressive movement.  The bonus, however, is that there is a real opportunity for ideological conversion, since the key to this kind of business is the distribution of liberal values into the lives of more or less apolitical people.

I should add, incidentally, that I don't think consumer spending can lead to meaningful ideological conversion by itself.  All of the evidence I've seen is that only a concerted, long-term engagement with a cultural institution like a labor union, church, or educational organization can have that kind of impact.  On the other hand, consumer spending can be a powerful counterpoint to the conservatizing effect of mass media, particularly political media.  After all, consumer spending involves real-life experience, which will usually be more powerful (to most people) than any kind of mass-media political message.  So this is an opportunity for weak ideological persuasion.

Other sources

There are plenty of other funding sources if you want them.  I've excluded them above because they don't tend to lead to sustainable profitability (i.e. profitability driven by a mutually beneficial service-for-pay agreement).  However, some of them are worth investigating in some cases.

• Big donors providing funding.  This model is the one which drives the Democracy Alliance, which I'm not terribly enthusiastic about.  On the other hand, it's the model which created United Professionals, so it might work out pretty well in some cases.  It's a good way to get seed money, especially if you're well-connected, but probably not a great way to get continuing support.

• Grantmaking from foundations.  Similar to big donor angel funding, this model is at least somewhat better because foundations have easily identifiable procedures for applying for grants.  The trouble is that foundations are generally not-for-profit, meaning they can't fund most expressly political work.  They also tend to avoid providing operational support, and they have been known to abandon a cause because it's suddenly out of fashion.  Again, these sources of money could be a great way to get seed money, but should not be considered a reliable source of ongoing support.

• Progressive investors.  The idea that investors should pour money into progressive movement institutions and expect to see a measurable return, in much the same way that investors pour money into small businesses, is extremely new.  The leader in this field is clearly the New Progressive Coalition (see this summary of the NPC which I wrote a couple months ago).  They appear to be doing excellent, excellent work, and I think as a whole they are much more reliable movement-oriented players than big donors and grantmakers.  Groups like the NPC can probably serve as a good source of start-up, and even second- and third-round funding.  However, it's probably unwise to expect investors to provide continued, indefinite support.  If you are looking to start an organization which needs a bit of start-up capital, or you're an investor with a bit of money burning a whole in your pocket, you should certainly check out this group.

• One-off 1099's.  These are usually small, flat fees paid to someone for some discrete service; for example, the honorarium paid to a speaker for an appearance, on top of travel expenses.  I suppose it's possible to turn this kind of revenue stream into a reliable source of income - right-wing speakers do it all the time, after all.  Realistically, though, this kind of revenue stream will probably only be possible once the progressive movement develops strong institutions (like speaker bureaus) which can create and manage the demand for speakers and other 1099 recipients.  However, 1099's might be a nice way to supplement blog income, and a blogger who can establish herself as a leading authority on some very specialized field might be able to earn good 1099 income.

What's Next?

I've now gone into considerable detail about the kinds of problems which face the progressive movement, and the kinds of revenue streams which are available to liberal entrepreneurs.  The challenge is really to find a value proposition which will simultaneously solve a progressive problem and earn revenue from one or more of these revenue streams.  Fortunately, this challenge is limited only by the creative genius of liberal entrepreneurs.

In my next post, I'll describe some ways in which the progressive movement, in particular the blogosphere, can support liberal entrepreneurs and can keep the creative juices flowing.  My goal is to develop a class of liberal entrepreneurs, who can earn a good living owing to their own talents and skills, and to their enthusiasm for strengthening the progressive movement.  This is a tall order, but I'm convinced that it's possible.  If we can achieve it, I believe we will really start to leapfrog over the conservative movement.

As I wrote last week, I hope you'll provide feedback and criticism. I'd be most particularly tickled if you were to steal some of these ideas and use them in your own work.

Finally, a brief disclaimer: I am myself an entrepreneur, and I hope to eventually assist other entrepreneurs in developing their own ventures.  So this series is self-interested.