Cannabis Wire, a burgeoning trade publication for the increasingly legal cannabis industry, may also represent a glimpse into something else: a new path forward for the perennially battered media industry.
Alyson Martin and Nushin Rashidian came to the idea of Cannabis Wire slowly. Trained as reporters, they were drawn to cannabis for the thicket of complex issues it highlights: banking, environmental protection, health, and federal versus states’ rights, to name a few.
Back in 2010, there were 15 states that had legalized medical cannabis, and 19 were debating medical allowances; one, California, was even considering outright legalization. With the cannabis industry on the brink of change, Martin and Rashidian sensed an opportunity. After graduating from Columbia’s Graduate School of Journalism that year, the pair hopped in Martin’s red Volkswagen Beetle and toured the country, stopping in each of the continental states that had approved a medical cannabis law.
In 2012, armed with months of reporting, the two launched a prototype of what would eventually become Cannabis Wire. “It was a just a simple, really retro website,” said Rashidian. The idea was to create a platform for their rigorous reporting while they waited for a book deal, meanwhile helping both citizens and the cannabis industry keep abreast of cannabis-related issues.
This is the point in Cannabis Wire’s development where the story lines diverge between a tech company and a new media venture. If Cannabis Wire were a tech company, after launching their prototype Martin and Rashidian would in all likelihood have begun pitching their idea to solely to venture capitalists—highlighting their user base, audience engagement, and business plan, while making the case for explosive future growth. But Cannabis Wire is a journalism site, not a tech tool, which makes attracting private capital more difficult and the path to fundraising less clear.*
As the internet has boomed and audiences have fragmented, media companies have been forced to reinvent their business model, finding replacements for their formerly steady stream of advertising. While the industry is full of bold experiments, without a proven revenue model it is difficult to attract investors. Some have opted for scale, to make advertising work, while others, like Cannabis Wire, have opted (or will soon) for a subscription model, in order to pay reporters to create high-quality content. Where software startups can virally replicate (creating one copy of a software program costs much the same as creating one million copies of that program), media companies are anchored by the cost of content creation.
While they have continued to talk to private investors, Martin and Rashidian meanwhile have benefited from grants, fellowships, and public resources. Their first major funding came from the Brown Institute for Media Innovation, a joint initiative between Columbia and Stanford that funds interdisciplinary media projects, for a cannabis-based news game. To launch their internet venture, the pair would need encouragement and resources to move their focus from reporting stories to building a business. That’s where New York City comes in.
At the end of Dumbo’s cobblestone streets, where John Street dead ends into the East River, sits the Made in New York Media Center. The Media Center has all the trappings of a typical co-working space: chartreuse floors and jewel-toned furniture; rows of tables lined up like an auditorium during finals week, covered in cables and computers and people typing away at keyboards while sporting over-the-ear headphones. But while the space resembles other incubators its approach is unique, representing a concerted municipal effort to foster an innovation economy in New York. The Media Center complements twelve other city-seeded incubators scattered throughout the five boroughs, focusing on everything from food to transportation and mobility.
The Center is tailored to the unique needs of creative industry entrepreneurs, as its director, Sabrina Dridje explains. “A lot of them come here and they’ve never run a business before, they don’t know where to start. What’s a business plan? What’s a P&L? What’s a W-2?” These are all questions that Sabrina and the Media Center staff hope to help newcomers answer. The Media Center also runs seminars and mentorship opportunities tailored to their members’ unique needs.
“Developing our brand, hiring a lawyer, figuring out if we should be a c-corp versus an LLC—we had to figure all of that out ourselves,” said Rashidian. While Cannabis Wire developed a board of advisors** to help address these questions, they also received support from the Media Center, which gave them formal workspace at the Dumbo incubator. It also connected them with other city resources, like the Brooklyn Tech Triangle Internship program, which furnished the fledgling venture with city-paid interns to begin building the bones of the website.
“Providing paid internships democratizes opportunity for young people,” said Rachel Haot, the former Chief Digital Officer for New York City who served under Mayor Bloomberg. Haot was a strong proponent of city funded internship programs during her tenure. While municipal funding helps small businesses, it also makes internships with these businesses available to less affluent students, who may not be able to take unpaid or underpaid internships. Haot sees early internships as a crucial stepping stone to long-term employment within the technology sector.
Cannabis Wire worked with six interns over the spring and summer of 2015 to build out the site. Rashidian jumped into her most significant management role to date when they brought in the first rotation of interns. “It was a steep learning curve,” she said, “but you get the hang of it pretty quickly.” Cannabis Wire eventually hired a standout intern, Magda Sewastianik, their first paid staffer for the project.
Asked what they would have done without the city resources, Rashidian paused. “It’s scary to imagine,” she said. She estimated that replacing the office space the Media Center provided would have cost hundreds to thousands of dollars per month, and that without the internship program they would have had to wait to build the site, delaying their launch.
In an Aug. 10 article, Bloomberg News declared that venture capital funding is drying up for media startups across the country (over the last two years, nearly half of all nationwide private investment in media has been directed to New York-based companies, according to CB Insights). But an analysis by The Brooklyn Ink shows that investment actually seems to be bifurcating—creating two distinct classes of media companies, one that has convinced investors of their hyper-growth potential and another, a perhaps more niche-focused bunch that is pursuing a slower growth trajectory.
While new media juggernauts like Vice and Buzzfeed have raised more than $50 million dollars in a single funding round, below these behemoths are a stable of smaller companies, looking to raise $500,000 to $5 million dollars, fledgling startups like Cannabis Wire. These companies have innovative business models, creative content, and determined founders, but perhaps less lofty aspirations than the larger entrants.
Focusing on this second class of media startups, those lumped together and labeled “Others” in the chart below, it appears that investment in smaller media ventures has significantly increased since 2012, and has generally held steady, with some quarter to quarter variation, for the last two years.
Julie Samuels, Executive Director of Tech:NYC, a technology industry advocacy group, would argue that this bifurcation is not a bad thing. “I think there’s a lot of focus on hyper-growth, high growth, and I’m not sure that that’s the right way to think about these things,” she said. Samuels favors a holistic view: “I think that you can have incredibly robust startup ecosystems based on companies that aren’t all high-growth.” These smaller ventures are exactly the kinds of efforts that New York City has supported with municipal resources, jumpstarting spaces like the Media Center that can help smaller companies get off the ground.
Having taken the initial plunge into developing their own unique venture, Martin and Rashidian are now thinking through its expansion, talking to investors and building out a paywall for membership. “With a subscriber model, outside investment isn’t essential, but it definitely helps,” said Rashidian.
Asked to describe how she had seen the media landscape evolve since the Media Center’s founding in 2012, Executive Director Dridje replied, “People are taking more risks in starting something. A lot of people joining us have had twenty year careers working in big media companies, with a side idea of something they wanted to build, but have chosen that now is the time.”
* This story includes changes from the original to make clear that Cannabis Wire has sought private investment and that its revenue plan includes, or soon will include, a subscription model.
**Full disclosure: One of Cannabis Wire‘s advisors on journalism questions is Michael Hoyt, an adjunct professor at Columbia’s Graduate School of Journalism and an editor at The Brooklyn Ink.