We live in weird times, where journalists are routinely maligned and abused. They now sit lower in the pecking order than the newt and the bat. It’s a long way to fall, for they used to sit high on a pedestal, from where they bestowed their special insight on the unwashed far below. To be fair, their pretention was not entirely of their own making – the culture and management structure of traditional media kept them removed from, isolated from, the business that supported them and the markets they served. They worked hermetically sealed off from the real world, supposedly to protect themselves from succumbing to the temptation of bending “the truth” for financial reward. As a pernicious result of their detachment, few newspaper journalists grasped just how far their papers had fallen until it was too late. Worse yet, they had no clue about why that had happened and what to do about it.
Living in a bubble
Sometimes the effect of their isolation from the real world had disastrous – and hilarious – consequences. In my new book, “Cannibal in the Room,” out soon if we can finally get our editing act together, I describe one such event, a true story from the Chicago Tribune in the 1980s:
The managing editor rules. Although he presides over more than a thousand people, he has never read a book on leadership and does not see the need for training in management He has zero interest in what the advertising department is up to, and as for marketing, well, marketing is merely promotion and that takes place only after he’s decided what should go in the paper. Nobody dares challenge him, not his boss the publisher, nor his boss, the president of the company. Not anybody. It’s a surefire recipe for management malfunction.
Sure enough, one day he persuades the publisher to let him re-design the Sunday paper. The newsroom toadies say the new layout is breathtaking. Beautiful. Breaks new ground in newspaper design. A couple of days before launch it occurs to the editor that the advertising director might like to see it. He invites him up to the room where the design team has been working in secret for weeks. A mock-up of their final design is laid out, page by gorgeous page, on a long table. After opening the padlock on the door, the editor pushes the door open with a theatrical flourish. “You’re gonna love this,” he says as he ushers in the ad director, who is suited up for work in a crisp white shirt and yellow tie. “Yeah, it does look great,” the ad man replies. He walks slowly around the table, picking up the pages and eyeballing them. “But wait a minute. Where’s that lifestyle page sponsored by Marshall Field’s department store? Tell me you haven’t canned it? Have you canned it? You have? Christ almighty! Do you realize they pay us twelve million a year for that?
From Chicago, to Australia
Not knowing or not caring about how the business worked was a luxury afforded by monopoly. Take the protective monopoly away though, and you quickly find yourself in trouble, for you’ve never had to compete before. Because you’re human, your first impulse is to cast around for someone else to blame. The precipitate decline in audience and revenue must be somebody else’s fault.
Look no further than Australia and its proposed new media bargaining code. It would force Google to pay news organizations for showing their stories in its search results. This is what happens when you walk around upside down all day, I guess. (I should know). Here is what the Washington Post had to say about these developments downunder:
The rise of Google and Facebook has massively disrupted the news business all over the world. The steady advertising revenue newspapers relied on for decades has almost entirely gone online, and news organizations have struggled for years to adjust to the new reality, with many going out of business or severely downsizing.
If you don’t understand how your own business works, and you’re not quite as intellectually honest as you would have others believe, it’s easy to create a myth like this. Soon, everybody’s at it. Everybody says Google and Facebook destroyed the news business. But there’s a couple of problems with the argument. First, Google and Facebook came along years after the business had already been decimated by internet competitors. Once the Internet arrived in 1995, it didn’t take long for digital insurgents to steal away the classifieds and other critical pieces of the content bundle. That had nothing to do with Google and Facebook. In fact, it pre-dated them by almost a decade. It was all too easy for those competitors, too. I should know – Cox founded AutoTrader.com We waited and waited for newspapers, including our own, to mobilize against us to protect the automotive advertising category. To our amazement, they never did.
Second, both Google and Facebook became hugely profitable by helping users navigate through and make sense of a world of infinite content – which is why the value flow is precisely the opposite of what the WaPo contends; Google and Facebook direct huge amounts of traffic to newspaper websites. They get little in return. Google itself claims that in 2018 alone, it sent more than 2 billion visits to Australian news sites from Australian users.
As leverage in its ongoing negotiation with the Australian government, Facebook put Aussie newspapers on the barbie. It turned off the ability for Australian users to share newspaper content on its platform. As you can see in this Axios/Chartbeat graphic, this is what happened:
It’s important to understand that this traffic from Google and Facebook is provided at no cost, and publishers are left free to sell ads against that traffic and free to convert those visitors into subscribers. The fact that they have not been able to do either is hardly the fault of Google, and Facebook.
Just to be clear, I’m not against regulation.
I’m all for regulation built upon new thinking that leads to better management of the digital marketplace, just not this particular hamfisted attempt, which is, unsurprisingly, promoted hard by Murdoch and his dying papers down there. We need new regulation, particularly in social media of course, but it will be more difficult to figure out than regulators yet grasp. Facebook has two billion users posting 100 billion times a day. The global SMS system distributes 20-25 billion messages a day. What are these companies? They’re not publishers, they don’t generate their own content. They’re not platforms, because they offer more than technology, their value is derived from the ongoing aggregation of users. They’re definitely not telephone companies – yet that’s what the relevant current legislation in the United States is based on.
See this previous BlastofWinter post to find out more about current regulations: Rubbernecking
The answer, I think, will be found somewhere in the notion of amplification. If you have a personal Facebook page with a hundred friends and family following you, no problem. If you have a Twitter page with 10,000 followers, it probably needs to be managed more closely…
Still living in a bubble
Meanwhile, even in the contemporary media world of vertical content choice and social display, the belief that journalism must operate like a priesthood in order to remain true to, well, the truth has not gone away. Nilay Patel, the editor-in-chief of The Verge, said this recently on his Decoder podcast:
I have almost nothing to do with the revenue of The Verge. I’m a very traditional journalist in that mold. Like, I know who our sales team is and sometimes they parade me out in front of executives to seem fancy. But I don’t know what our rates are. I’m very insulated from sales. It’s your inbox, it’s your deals, you’re setting the rates.
Quite what knowing what your advertising rate is has to do with journalistic integrity, with explanation and fact-checking, is beyond me. The key here, I think, is that a media business based on mass advertising had to present a veneer of neutrality in order to appeal to the broadest possible audience. It had to promote the idea that its journalists were motivated only by a desire to find and share the “objective” truth. But this is a mere pretense – neither you, nor I nor the Washington Post holds exclusivity on the truth. It’s also not how the business began. Before industry consolidation led to one-newspaper towns where reaching the biggest audience possible became the aim – which led in turn to the development of the big, multi-dimensional local newspaper that became the familiar staple of daily life – press barons used their properties to push their particular worldview. There were ethnic papers, labor papers, papers for the masses, papers for the upper classes too, and sporting papers and gossip rags, and broadsheets and tabloids for all kinds and for all markets. Journalists were paid not according to how well they masqueraded as purveyors of the objective truth, but according to how well they catered to the audience of their particular newspaper. The idea of “objective” news publications funded by advertising and designed to cater to everyone in a local marketplace is really only true for a 50-year period of media history.
Back to the future
But now we’re heading back to the future. Back to a world where subscribers pay for the news they want, not advertisers.
In yet another display of the famous American pendulum swing to the extremes, every man and his brother, every woman and her sister, is jumping into the e-newsletter subscription game. Companies who once you would have thought had no earthly business getting into the media business are using newsletters to do just that. Andreessen Horowitz (A16z) for example. Recently, this Silicon Valley VC company created a publishing unit and launched five (5!) newsletters – a general one but also one covering fintech, another for bio, and enterprise, and crypto, all areas of investment focus for the company. Margit Wenmachers, an A16z operating partner, described it on the company blog as “a direct channel to express our thinking:”
We are building a new and separate media property about the future that makes sense of technology, innovation, and where things are going — and now, we’re expanding and opening up our platform to do this on a much bigger scale. We want to be the go-to place for understanding and building the future, for anyone who is building, making, or curious about tech.
Naturally, some members of the media establishment are up in arms about a venture capital company entering “their” business, as in this article from Fortune magazine: Andreessen Horowitz is developing its own media outlets. That might not be good news.. | Fortune But it’s just another manifestation of the “creator economy” and the “democratizing” of channels that were once rigidly hierarchical. (I just read that last sentence and despair of ever becoming the writer I want to be. But you get what I was trying to say, I’m sure!) There are now hundreds if not thousands of digital newsletters covering every media category, from sports to business, from the arts to technology, and from science to parenting too:
STAT news the health, medicine and science outlet owned by John Henry and Lina Pizzuti Henry who purchased the Boston Globe in 2013, has a morning newsletter they say brought in over $10 million last year
Spider Studios, one of the largest digital media publishers for parents, reported 2020 revenues of $35 million. Each of its brands, Scary Mommy, The Dad and Fatherly has a morning newsletter.
Even so-called platforms are getting into the act. Twitter has just acquired Revue, a newsletter platform for writers and publishers. Facebook is working on its own newsletter product, to be released in the summer.
The local news industry is no different. The news industry’s widespread misconception that advertising is dead was already fueling a transition to subscription revenues. (It’s not dying of course, a CAGR of 21% is expected in digital advertising through 2026. It’s just that unqualified, raw clicks could never pay for a newsroom). Subscriber-paid newsletters feels like a natural evolution in that context. Even though “local” is a weak differentiator that attracts only occasional usage, email acts a daily reminder to a user to check in with the product. And, the theory goes, because of the low operating cost and the absence of legacy overhead, this new channel offers a way to make the delivery of local news economically feasible at last. When you unpack the big newspaper bundle of content, and focus on just local news, the overhead load naturally shrinks. You end up with a business that is small in scale for sure, but feasible.
So, starry-eyed, a lot of journalists have left the outlets they work for and launched independent newsletters where they live. Most of them use Substack as their publishing platform, others assemble their own stack, like WordPress for writing, a provider like MailChimp as the email engine, Pico for managing subscriber lists and Stripe for processing payments.
In 2019, a journalist up in Victoria, British Columbia, was among the first to sense the opportunity. Andrew Wilkinson “wanted something to skim that gives me a rough sense of what’s happening.” He ran Facebook ads to collect email addresses and launched the product, calling it “Capital Daily.” Last September he shared an update in a Twitter thread – he had acquired over 40,000 free daily email subscribers or 10% of the population of the province.
It’s easy to see how this might work on a paid subscription basis through multiple cities. There are 349 cities in the United States with a population over 100,000. If 10% of each city’s population subscribes to a newsletter, and the annual recurring revenue generated from each subscription is just $24 (or $2 a month if you don’t mind the accounting sleight of hand), it’s easy to see why the scale economics of a network of newsletters looks financially attractive. It looks even better when you include local advertising sponsorships.
This explains why Patch, the hyperlocal digital news company with more than 1,200 sites has built a new software platform that lets news reporters publish their own newsletters on their own URLs and sell local sponsorships.
And as I first mentioned here, in Starting up the “smart brevity” news company Axios is rolling out a stable of local newsletters. Charlotte, Des Moines, Minneapolis (the Twin Cities) and Tampa are already up and running. Axios Charlotte already has 24 advertisers. Axios Charlotte
Having closed a funding round at the end of 2020, 6AM City has launched newsletters in nine southern cities, including Greenville, South Carolina and Chattanooga, Tennessee.
Newsletters. Newsletters. Let’s all “pivot” to newsletters.
Newspaper companies of course cannot make such a pivot. They’re still not that diminished and they’re still intent on eking out the last dime from the old bundle. But anybody else can. And they are.
You already get where I’m going with this, right?
When does subscription fatigue set in?
In a world where consumers are deluged with opportunities to subscribe to free and paid newsletters offering the latest on every subject under the sun, at what point does subscription fatigue set in? How many newsletters re you willing to pay for? Even if many are free, what is the limit on how many you can read? How many can you spend time with? How many can you use?
Once the happy jolt of pleasure at discovering a newsletter that strikes a chord with you subsides, will you still open it every day? Every other day? Maybe you’ll start saving it for later “when I have time.” You know you’ll never go back and read it if you do that. Eventually, will you get into the habit of deleting it reflexively when it pops up in your inbox? At the end of the cycle, will you take the time to unsubscribe? Will you churn away?
Building a successful publishing business, even a little local newsletter, takes a whole lot more than basic expertise in traditional journalism. If you’re starry-eyed, let me bring you back to earth by asking just a few basic questions. Do you understand the unremitting demands of a publishing cycle based on you and you alone? I already see a shakeout due to burnout. More importantly, have you ever pitched an ad? Have you ever even talked to a local advertiser? Do you know how to define an audience? Do you understand – precisely – the information needs of that audience?
So once again we arrive at a place that will be familiar to the people who wander in here from time to time to see what I have to say. (Thank you, by the way!) If you’re going to enter the local newsletter business, what does your product have that adds real value to my day? How differentiated are you from the competition? Is that differentiation durable? Can you deliver it consistently, every single day, with a voice and attitude and leaning that attracts and holds a sufficient number of people for you to build a growing business? Can you build your newsletter in such a way that a community forms around it? If you can, you have just lowered the risk of your customers switching to a competitor. But do you know how to pull that off? Do you even think in those terms?
If you don’t, you’ll do a lot of work but arrive at a subscriber ceiling beyond which you can’t seem to grow. Eventually you’ll grow tired and frustrated – and pull the plug.
And you know the harsh reality of it all? Nobody will notice you’ve gone.
Look, I’ve banged on about differentiation a lot, I know. Here, for example. OK Boomer. But given the explosion of content options made possible by digital distribution, it’s the fundamental key to carving out a franchise in media today. The success of Axios has the herd believing that any newsletter news product needs to be a short, concise summary of generic news, a quick briefing fired out each morning to a mass audience. Why should that define the channel? Besides, why would you replicate what everybody else is doing?
The easiest way to differentiate is to target a segment defined by age. It’s a rudimentary way to go about it, but it’s better than trying to be all things to everybody, like it’s the 50s all over again and the principles of mass media still govern the news business. Just don’t under-estimate how tricky it is to get the content mix and more important; the voice, right. My parents used to listen to the music I played as though they were being tortured. I try to avoid looking like that when my daughter plays me something today. If you’re a 50-year-old white male, don’t imagine you can program a news product for a local millennial audience. That would be silly. And you would lose your shirt. You can hire somebody to do it, though. And that somebody would be a product manager.
The role of the product manager
I first began arguing for this position in media about a year ago, in Breaking the Stranglehold, where I said:
…The stranglehold of the Fourth Estate is breaking down because of the openness and pervasive reach of the internet and because the newsrooms of the Fourth Estate, by never learning the art and science of building digital news products for new audiences, left a vacuum for others to fill. Their product leadership proved deficient in the fundamentals of contemporary marketing, including market segmentation, database analysis, brand affinity and subscriber acquisition and retention.
The product manager is a marketing maven. The idea of having a product person, not an editor, lead a newsroom is catching on. People are beginning to understand the need for an executive who can operate at the nexus of content generation, audience, revenue and platform technology. As Becca Aaronson, interim president of the brand new News Product Alliance put it recently:
It’s really about trying to think holistically about the needs of the audience, the mission and business interests of the organization, and technically how you’re going to get things done, and bringing that together in a holistic way to create a comprehensive strategy for your organization
Some, including Becca, believe anyone in a newsroom can do this. They can’t of course, they know nothing of marketing. And some miss the point completely, reducing the role to one of technology specialist. But most “get it,” because it makes good business sense to understand the relationship between audience and revenue. And that after all is what media is. A business.
The role of product manager fits my theory that the media outlets that emerge from the pandemic will be lightweight, focused on specific narrow audiences and bring exclusive insight to the task of serving those audiences. Rather than a strict journalism background, producers will be experts in the subject; a qualified environmentalist will guide a product on climate, a psychologist will direct a product on gender/sexuality. The product manager will take this input and recast it editorially, perhaps in explanatory formats, data-driven pieces, long-form podcasts, or video segments.
The best example I can think of to illustrate this is the YouTube channel MKBHD. A teenager started it in 2009, simply by making videos of his new HP laptop. He’s grown the channel to be one of the largest tech resources in the world, with 13.5 million subscribers, a podcast and a growing team of producers. Here’s a link to a recent interview with him: The business of being a Youtube influencer with MKBHD – The Verge
So, don’t put a journalist in charge of your newsletter. It should be run by a product manager. If you’re a journalist and you’re trying to build your own newsletter, the key issue you face is how quickly you can get up to speed on the basics of marketing and sales. If you don’t want to do that, you had better find someone who can. At the other end of the spectrum from a little local newsletter, the Gannet USA Today network recently hired someone to fill that kind of role up in their corporate office.
Gannett gets it, after all this time
Mayur Gupta, a former executive with Spotify and Freshly, was hired by Gannett late last year as Chief Marketing and Strategy Officer. He holds this crucial role at a key time for Gannett, which merged with GateHouse in November 2019 to form the nation’s largest newspaper chain.
Here’s what Gupta said in a recent interview with Mark Jacob at Northwestern’s Local News Initiative program:
Our digital subscriber acquisition pod in local markets has product managers, engineers, data scientists, designers, content writers and editors and marketers. They have a common OKR – objective and key results – that they are all held accountable for. …
Today’s customer has so many choices. The value proposition can no longer be static. It’s the Amazon mindset that you’re constantly thinking about giving incremental value to not only the user at risk – on the contrary, to your most loyal customer.
We’ve come a long way from the top-down, insular, editor-dominated newsroom of the Chicago Tribune in the 1980s. But, if you really want to think about putting the user first, take a look at NextDoor…
The hyperlocal social media company
Some estimates put NextDoor’s current user base in the U.S. at about 34 million. For comparison, the total daily circulation of all U.S. print newspapers is now at about 25 million. The social app has boomed during the pandemic, as neighbors seek advice on where to find toilet paper and masks, and local authorities use it to convey shutdowns and test sites. It’s no longer a junior Facebook – it has become the place where people go for local news and gossip and events.
There’s no such thing as “followers” on NextDoor, so there’s no incentive to post engagement bait. And each user is identified by their real first name, last initial, and neighborhood of residence – you need a verified mailing address at signup – which helps the intimate, authentic feel.
What makes the NextDoor business model special is what makes Facebook and Twitter special; they are able to get great content for free, in exchange for helping their user contributors find an audience.
The rise of NextDoor is further evidence that the phrase “news deserts” is a misnomer. They’re “newspaper deserts” not news deserts. In the stead of newspapers a new local news ecosystem is fast taking shape. From newsletters to Nextdoor, from Facebook groups to local Reddit subs, people are sharing and commenting on news important to them. The Trump-Slump is coming for national news properties. But down where it matters, in local markets, the growth of new forms of local news continues.
Yet there are still some people who cannot let the old world go. Not just down in Australia but across the pond, in France.
Back to the past
French MPs voted last year to grant a tax credit to anyone taking out a new subscription to a current affairs newspaper or magazine.
The credit amounts to a one-off deduction of up to €50 to any household subscribing for the first time, for at least 12 months. The measure, says Agnes Pannier-Runacher, state secretary for economic affairs, reflects “an undertaking by the president to support the press, which is suffering enormously…”
Who would have thought that the Australians and the French would have so much in common?
Politically-connected vested interests can mount any rearguard action they like to slow the audience and revenue decline of their traditional media properties – but the media world is evolving so fast they can’t keep up. Without fundamental transformation, they are doomed. Key to that transformation is understanding that in the digital age, what comes first is the user, the subscriber, the audience, and not the journalist and not the editor. The old world of print journalism has been turned on its head.
See you all next month.
Special thanks to Henry K. “Buzz” Wurzer, former vice president of advertising at the Chicago Tribune and business development manager at Hearst Newspapers.
As always, feel free to email your thoughts and reactions to me at email@example.com