When sales representatives for the Philadelphia Inquirer, the Philadelphia Daily News, and Philly.com call on clients, they know the advertising collateral on their iPads — rate cards, samples, and advertising guidelines — is up to date. That’s because a mobile document management system developed by a start-up called SETVI handles the back-end syncronisation of all materials compiled by the media company’s marketing team and sales managers.

One reason SETVI’s system works so well for the Philadelphia news media company’s needs is that it was built in-house, as part of an incubator that has hosted more than 20 early-stage technology companies focused on the digital media space.

Doing so provides these start-up companies with physical workspace and an established media platform as a test bed. In return, the incubator and its tenants have provided the Philadelphia media company with new ideas, technology, and opportunities to develop new revenue streams. 

“We’re watching how they are, on a shoestring budget, building impressive technologies, mobile apps, and the like,” says Eric Ulken, executive director for digital strategy for Philadelphia Media Network (PMN), the parent company of The Philadelphia Inquirer, the Philadelphia Daily News, Philadelphia SportsWeek, and Philly.com.

“Certainly there’s a need in legacy organisations for new thinking and for connections with a community of creative and innovative people who are trying to solve real problems for customers.”

The Project Liberty Digital Incubator is a partnership between PMN and Ben Franklin Technology Partners of Southeastern Pennsylvania, the region’s largest technology sector seed-stage capital provider. The John S. and James L. Knight Foundation also provided a grant to support the project. 

Founded in 2012, the incubator was created, in part, to “help the [news]paper improve its business model and monetise elements of the business,” says Omar Mencin, director of investment partnerships for Ben Franklin Technology Partners.

To date, 22 early-stage companies have participated. Other U.S. media organisations, including The New York Times Co., have since developed similar models to support, invest, and learn from start-up companies. But Project Liberty is unique, its organisers say, because of its more regional focus. 

PMN provides a dedicated staff person, office space in its downtown headquarters, and other resources to the incubator. The incubator manager also focuses on connecting start-ups with managers of the media company’s product and technology teams.

Doing so allows them to “strategise and share notes on the trends we are seeing and they are seeing in the marketplace,” Ulken says. PMN staff also serve as sounding boards for pitches and help connect incubator companies to other potential business partners. 

Equally significant is the opportunity for these early stage companies to introduce and test products on Philly.com.

“A very important benefit for any start-up company is to have a major partner or pilot customer,” Mencin says. “Philly.com has a large, if not the largest, reach in the region of any media organisation, and the feedback they can get of how their technology is used and learning how to integrate with a large organisation is the largest benefit.” 

Philly.com and its parent company have benefitted from new products developed by incubator tenants:

  • Along with SETVI’s mobile sales technology, an online funeral planning resource called “I’m Sorry to Hear” provides content, such as tip sheets, to Philly.com’s obituary section.

  • An online vocabulary service called ProfessorWord partnered with Philly.com on a summer reading challenge focused on helping high school students learn vocabulary for the SAT and ACT college entrance exams. ProfessorWord also created a section on the site for teachers and students that ties in with PMN’s Newspapers in Education projects.

  • And PMN offers employees discounted access to a mobile health app called Fitly developed by another incubator partner as part of its wellness offerings, according to Mencin. 

The potential to create new revenue streams through investment also exists.

Both PMN and Ben Franklin Technology Partners have the option to invest in the incubator’s companies. While Ben Franklin has made investments in about 10 of the incubator companies to date, PMN has yet to do so, in large part due to external factors, according to Ulken. However, Ulken anticipates that will change. He believes there are benefits to investing in early-stage companies. 

“There are a lot of digital competencies we know we need to gain and improve,” he says. “There would be an opportunity with the right company to help pull some of that know-how and way of thinking into the organisation relatively cheaply.” 

Ulken argues that any investment would have to be aligned closely to the core business: “We as an industry sometimes have a little bit of a focus problem, and it’s important for us at this time to shore up our core competencies and make sure we do what we need to do really well.” 

Even without direct investment, media organisations like PMN still benefit from collaboration with startups: “We have a lot to learn from this group, and I hope we have some things to teach as well. There’s still a lot of untapped potential there.”

This is one of 14 case studies featured in INMA’s strategic report “Revenue Diversification Beyond Traditional Print and Digital,” released in December 2015.