We all know that people in Sweden sit beside lakes all day in chunky sweaters, staring into the middle distance and humming Abba’s “Dancing Queen.” Then they go home to wooden houses and spend the evening sending their money to the government.
This, however, is true only in the sense that all Brits carry rolled-up umbrellas, all Italian men are in bed with your wife and all Aussies are convicts.
Well, that last one has more than a grain of truth to it. And so does this one: Journalists know nothing about the business they’re in. Indeed, they take perverse pride in their own innumeracy, believing I suppose that willful ignorance will shield them from the temptation of skewing a story to return a favor. I know this. In my years as a journalist I never once talked to a reader or, god forbid, an advertiser. It wasn’t a policy, more like an expectation. Like my colleagues I lived in a priestly bubble, hermetically sealed from the real world, even safe from any scrutiny of how receptive the audience was to the stuff I was feeding them. What the audience thought about that really didn’t seem to matter. Aah, those were the days.
So, when I jumped the great divide from the newsroom to the management suite, I floundered. I had much to learn, not just about marketing and sales and finance and operations and business development, but also about leadership and management – in other words, I had much to learn about the business of media. I quickly developed a new respect for the practitioners of those disciplines. I found more creative thinking amongst them than I had ever found in the newsrooms in which I had worked, where hierarchy and self-importance squashed innovative thinking. I resolved to learn everything I could from them.
Don’t get me wrong. Good journalism matters despite the bubble, and today, fortunately, it’s in high demand again. The news media business is booming. People are proving their interest in news by opening their wallets and subscribing to digital news products in record numbers – which by the way belies the self-serving bullshit you hear about news “deserts.” Markets without newspapers are not news deserts, they’re newspaper deserts, that’s all. The fact is that even as newspapers die the consumption of news and information of all kinds is up, everywhere, thanks to the enormous variety of digital media options, both horizontal and vertical, available at a swipe, a click or a social beckon. Rather than deserts, we’re all, each of us, inundated by a flood of news and information.
The issue is selection, not access.
And since the issue is selection, any news product has to offer explicit differentiated value to a particular audience if it is to become successful. Publishers must provide a tangible reason for their audience to make the decision to engage with their product every day. To make that decision, their audience must be persuaded to explicitly reject for a time not just the product’s direct competitors, not just its indirect competitors, but also every single appeal for their attention from across the internet universe.
Instead of shopping, instead of searching, instead of socializing, instead of checking out a competitive offering, instead of wasting time, they are instead going to spend a few precious moments with you.
It’s a tall order.
It’s an especially tall order for those of you trying to build local news products.
Lots of start-ups are emerging in the local news sector – here’s a recent look at that from my colleague Chris Krewson of LION, the Local Independent Online News organization:
As Krewson points out, most of the new local news products are led by journalists. They are well-intentioned, committed, hard-working professionals, but they don’t have a clue how to make a buck. All their lives they’ve lived in the bubble. Most fall back on high-minded appeals to deep-pocketed local luminaries. It’s so ironic. A key component of the journalism creed used to be reflexive agreement with Balzac’s famous adage that “behind every fortune lies a crime.” For now though, it’s all good…
Because they don’t know how to think in marketing terms, they don’t understand who their competition is. Many of them think their principal competitor is the digital product of the local newspaper in town. Don’t be silly. Newspapers had franchises only an idiot could screw up and for the last 25 years they have been busy testing that hypothesis. No, like I said, their competition is everything and everybody just once click away. Time is finite, engagement is the battlefield they play in, their product must therefore enable them to compete for share of attention against…everybody.
And because they don’t know anything about sales – a discipline they have typically under-estimated or even looked down upon – they don’t understand their product must enable them to compete in the local advertising marketplace, too. Imagine for a moment the poor embattled owner of the car dealership when you, a recovering journalist, appear on his doorstep eager to get him to buy a sponsorship. For the last 25 years people from AOL Digital Cities, Real Cities, CIMCities, CitySearch, Patch, Yelp, Yahoo!Local, Google, salespeople from the websites of the local TV stations, radio stations and newspaper and god-knows-who-else have been knocking on his door desperate to get him to do just that. His knowledge of the digital marketplace is antediluvian – he still thinks the newspaper website is where the action is. So, what’s your story? What’s your USP? Who’s your audience? Does it match his customer profile? His draw area? Or are you simply going to appeal to his civic mindedness? Really? Good luck with that.
And because they know little about running an actual business, they quickly run into trouble with the basics of day-to-day operations, budgeting, planning and management, just as Amanda Zamora did when she co-founded The 19th. She had this to say in a recent LION podcast: “We came up with a three-year plan and [in hindsight] I think it was laughably simplistic…[I wish] we would have recognized how much the operational side of things needed some tending.”
But behind these issues of marketing and sales and day-to-day operations looms a bigger issue; As I have said here often, the dimension of local in news is a weak differentiator. Subscribers to newspapers were never all that interested in local news, at least as newspapers defined it. Anyone who’s ever looked at a newspaper readership study knows that. Within the broad, rich bundle of exclusive information delivered by the newspaper through its monopoly distribution channel, local news was simply not perceived to be that important. It was just another slice of the pie, a thin slice at that, carried by the national, international and vertical news, information and commentary that surrounded it.
Digital insurgents and national news companies empowered by the frictionless reach of the internet stripped away piece after piece of the newspaper bundle. Our AutoTrader decimated newspaper automotive advertising, for example. The New York Times, a paper that had been faltering for years in the national print marketplace, suddenly found itself well positioned to dominate that franchise in the digital world – hey, sometimes you get lucky. (But note that subscriber growth has slowed dramatically this year). In the end, the only piece of the bundle left was local news – and that thin slice could never be the basis of a business with the kind of revenues and margins and growth that attract meaningful investment and some kind of liquidity event that, in the end, makes all the hard work of producing it worthwhile.
The only way to increase the chance of exiting with a little bit of scratch in your back pocket is to develop a successful local news playbook in one market that you can roll out to other markets that, in turn, you can then roll up and package for sale or for a public offering.
Nobody’s found that formula yet – though I think Axios Local and 6AM City may be on to something. More on them in a moment.
Everybody from traditional local media companies to AOL to Yahoo has had to learn this lesson the hard way.
There is no replacement for newspapers. They have been supplanted, together with the monopoly margins. To try to replicate that bundle in today’s digital marketplace is to demonstrate that you don’t understand how that marketplace works at all. The only thing left is a small-scale news business. It’s a noble business, a worthy endeavor, but it’s a tough way to make a living. It’s rather like looking for a barrel of oil in a thimble of water. The local news business will eat you alive and spit you out.
I know this. I’ve been there…
But, knowing what I know now, I do think you can do one or two things at the outset to increase your chances of finding a way to make a buck – and to perhaps accelerate your path to profitability. You can either do what everybody else has done before you and work yourself to the bone for year after year with only incremental improvements in your audience and revenue numbers – or you can ask yourself this:
What’s the problem I am trying to solve?
Put another way, what business am I in?
Please don’t answer by saying “I’m in the business of providing access to local news.” We just talked about that. It’s not a problem that brings sufficient pain. It’s not a big enough deal. Besides, providing access to local news is not a business. It’s an expense.
News was not the business newspapers were in. Actually, they were in the local advertising business. News was “just” the device they employed to build an audience – which was then packaged and sold to local advertisers.
So, what business are you in? What problem are you solving?
If you say something like “I’m in the business of saving busy young professionals time and money,” then you may be on to something. It’s not a new idea of course, in fact it was the operating slogan of CIMCities, the network of local websites I ran in the 90s. And today it is the stated market intent of Axios Charlotte:
Axios Charlotte serves busy young professionals looking to get informed and make local decisions, fast. These are the tastemakers of our city.
Go check it out. And when you do, notice how they’re populating a database of job openings direct from local companies and a database of events direct from organizing sponsors. And check out their “things to do” guide. This is local “news” with a specific purpose. This is local news that saves people time. And time, after all, is money.
Less talk. More action.
But even if you get the positioning right in your chosen market, it’s going to be a long, slow climb. That’s fine by me. Some start-ups are like rocket ships. They go up fast, dangerously fast, and the job is to keep the thing pointed upwards and not blow it up. I was closely involved with Google in its very early days and I know what it’s like to make a small mistake in that environment, for the impact of even tiny mistakes is dangerously magnified. Rocket ships make people like me, people who have actually run companies big and small, uncomfortable. I like slow and steady.
In local news, I’m looking for a tractor. I want to know the horsepower, traction, weight, gearing, transmission, payload, how many acres an hour. All that. In other words, I want to know where the beef is…
Since beef is on the menu, I’m going to do you a favor. See that promise I make in my own subtitle up there at the top of the page, where it says “no tips and tricks?” I’m going to break it. I’m so tired of seeing journalists unnecessarily impede their path to building a profitable local new business that I’m prepared to violate my own positioning promise. For you. Just this once. I want you to have long term ownership of the next legacy. I want you to figure out the local news challenge. So, here’s five hard-won insights that will help. Ready?
- Your audience is not everybody who happens to live in your town. It is a selected subset of them. Nor is the optimal profile of your target audience the reader of the local newspaper. The demographics of print newspapers increasingly look a lot like the demographics of smokers – older, less educated, and less wealthy. You don’t want them. They’re not worth much. You want a younger audience that will grow with you. But you had better know how to relate to them…
- Design your product to fit your target market. Less is more. Become known as the best source for two or three things. This is how you build a brand. Repeat after me: “I am not a newspaper.” I am not going to report on / talk about the flood, the traffic, the weather and local politics. Nobody cares what I happen to think of them. Instead, I am going to provide direct information about them, quick, direct information that will help my audience save time and money. In the local news market today, providing information in an attempt to enlighten is foolish – providing information that is helpful will be rewarded. In this way I will build authority and credibility that I can leverage into other areas. Maybe one day these qualities will constitute the essence of my local brand. Don’t just take my word for it. Ryan Heafy, co-founder of South Carolina-headquartered 6AM City, told Press Gazette last month “what we avoid almost entirely are politics and crime…If Joe Biden came to town, we would not be saying: ‘Go attend Joe Biden’s rally.’ We might say: ‘This is how it’s going to impact traffic.’” His product strategy is working. 6AMCity started out with one newsletter, GVL Today, covering Greenville, South Carolina. Five years later, the company has embedded itself in eight markets and has 450,000 newsletter subscribers. The company is currently hiring to expand into 24 cities by Thanksgiving. Seems to me 6AM City has built a successful local news playbook – and it looks a lot like the one Axios Local is following, too…
- Scale expenses to potential return. There’s a lot of work going on right now to build the infrastructure of the “creator economy,” things like healthcare, retirement plans, efforts to organize and collaborate, budgeting and operations, and so on, the basic building blocks of any business. Make sure you’re plugged into that work. Understand going in that overhead is your enemy. Most of the business plans I see for local news start-ups are wildly optimistic, because journalists think everybody should share their sense of civic responsibility. They don’t. Less Kentucky windage please, and a little more realism. For a start, you have too many journalists in your plan. I know that without looking at it. There is no direct relationship between the number of journalists and the quality of a news product. None. A product specialist with a marketing background, a social promotion specialist and an experienced sales person are as important as any journalist on your team. Maybe more important. Ken Doctor’s LookOut newsroom out in Santa Cruz has 11 people in it, as they chase their self-professed goal of replacing the Alden-owned, hollowed-out, local newspaper. 11! Stop it. It’s not your competitor, nor is its demise your opportunity. I want you to succeed, not drown in red ink
- Someone once introduced me at some conference or another as a man who could sell a double-bed to the pope. I kinda like that. I do like the art and science of selling. Let me share something fundamental about it. Do you know the three most important rules of selling? Stand back. Here they are:
First, hold the rate.
Second, hold the rate
Third, hold the rate
Our friend the recovering journalist wants desperately to make a sale. Our friend the local car dealer knows it. Our friend the local car dealer is intrigued, but he’s oh so cheap. So, in his response to the pitch, he instinctively lowballs. Our friend the recovering journalist accepts the lowball number. He has just doomed his new product. The dealer knows now he can be bought. And once you compromise the integrity of your product, your belief in it and your offer, it is impossible to climb back up again. It is always better to walk than to cave. Tough to do, especially at the start, but true. No, not true. Critical.
- Having defined the precise audience you intend to serve, you must then identify where you are most likely to find them and how best to reach them, so you can expose them to your product. Be open-minded. Hint: the combination of zip code + specific interest is very helpful here. You have the data and you know how to apply it, right? You know how important this is because you read this post before on BlastofWinter: How well do you know your market?
With all this in mind, you will understand that I was astonished to read of a new initiative by Substack, called Substack Local, a $1 million initiative to help independent writers start sustainable local news enterprises.
To my astonishment, there is not one mention of product, marketing and revenue in this announcement. Not one. Once again, journalists living in a vacuum. I am, my friends, an ancient voice, hollering in the wilderness.
Age is insidious. It silently creeps up on you. Each day I am incredulous at how old people have become. Take Sandy Bullock for example. I’m deeply in love with that woman. I even keep a picture of her on my bedside table, along with one of my wife of course. Yesterday morning she was a kid with a tramp-stamp and a bottle of tequila in one hand, a smoke in the other. Now she’s knocking on the door of 60. I make this point because our own experience makes us stubborn old people about the future. It’s a lot easier for us to intuit what the future will be like by extrapolating on what we’ve actually experienced. Yes, things will be different, we all know that, but they’ll be different in predictable ways. We expect that anything that deviates too far from our past experience, or historical averages, will revert to the mean.
If you’re in a local news start-up, don’t try to make an online newspaper. You’re trying to find a new model, a new way of making the business of local news viable. And as you set out on that journey of discovery, don’t make it harder than it needs to be. Surround yourself with people who have the skillsets you lack. After all, you’re not running an academic feel-good exercise in civics.
You’re running a business.
And now, the Update:
The usual summary of what I found interesting in the media business since the last time we were together. Might seem a little rando, but each seemed important in its own way. Most have already appeared on BlastofWinter’s FB page – you may want to follow that.
- Knewz, the News Corp. news aggregator, bit the dust. Not surprising, given the name. Drudge without Drudge didn’t work. Yet another Murdoch digital fail
- Former President Trump’s blog (remember him?) was shut down after just 29 days. “In a time of silence and lies, a beacon of freedom arises” they said when it launched. Now he’s the one who’s silent. Enjoy it while it lasts.
- Nextdoor, the neighborhood social network, is going public via a SPAC sponsored by Khosla Ventures. My pal Khosla has been fascinated by the local news puzzle since NCN in the ‘90s. There’s a guy who never quits.
- Apple News+ had about 11 million paid subscribers in 2020, could get to 19 million by 2023, says Cowan analyst Kris Sankar. He’s also predicting $2.2 billion in revenue by then. It’s newspaper-friendly, too!
- Facebook launched its newsletter platform, Bulletin, a set of publishing and subscription tools to help independent writers – who keep all their subscription revenues. They move quickly there, don’t they?
- Things are getting interesting in video streaming and there may be a lesson there for the news business. Netflix lost 430,000 subscribers in North America in the second quarter. Disney+ has essentially flatlined in the U.S. this year. Looks to me that American consumers, overwhelmed by the proliferation of subscription services, are saying “enough already!” Good luck then with that new newsletter. It had better be good, you know, differentiated…
- A new bill has hit the U.S. Congress designed to help newspapers. Quite how its sponsors justify a taxpayer-funded reward for market failure is beyond me. Oh wait, it’s the House of Representatives…
- Two dozen English-language news publications have collected 100,000 or more digital-only subscriptions. I get that the NY Times, WaPo and the Wall Street Journal are on the list, but the first person who can explain why the Minneapolis Star-Tribune is in there gets a brand-new BoW T-Shirt.
- One of my favorite newsletters is Packy McCormick’s “Not Boring.” One of his recent posts was called “The Cooperation Economy.” I had to read it three times, sometimes these things are so pretentious as to be impenetrable. But his point is that the internet is enabling loose configurations of individuals to work together on a project by project basis. If I was launching a little local news business, I would certainly apply this idea
- A quick update on the business that newspapers should have invented. Due to its direct exposure to brick-and-mortar retail businesses, Yelp took a big hit in 2020. But that year didn’t go to waste: the company immediately hunkered down and made cuts to its cost base. Now shares of Yelp are up ~30% on the year, beating the S&P 500 by roughly ten points and beating most tech peers by even more
- Twitter’s on a roll. It has launched the first iteration of its new subscription offering, Twitter Blue, in Australia and Canada. It costs users in Canada $2.88 monthly and users in Australia $3.44. The initial set of new features includes Bookmark Folders to let users manage and organize content so it’s easy to find later and Undo Tweet, which lets users review and revise tweets before they go live. Users can set a customizable timer of up to 30 seconds to click “undo” before a message actually posts, so they can correct mistakes. No more shooting from the hip for me.
- Can you read too much? I read an awful lot, especially of developments in digital media. Trouble is, I keep getting the feeling that there’s nothing new under the sun, just a new, fancy, fashionable language for describing ancient things. I mention this because a little-noticed piece of research came out recently about newspaper cartoons and how they are selected for publication. These days they call this “moderation,” though newspaper editors have been doing this very thing for decades. They just called it “editing”
- Talking about moderation, Facebook will no longer take down posts claiming that Covid-19 was man-made or manufactured, a move that acknowledges the renewed debate about the virus’ origins. Local media has some responsibility for the spread of COVID misinformation – according to that bastion of editorial righteousness, the Old Grey Lady
- All this talk of moderation made me think about the great editors I have met over the years, including this guy. John and I had our disagreements, but I never questioned the value of what he did. That was obvious, even to me…
- It just ain’t right. The current average base pay for a local reporter, according to Glassdoor, is $49,061 annually, compared to $65,437 for national reporters
That’s depressing, so in the tradition of late-night TV news and the “funny” they always run at the end of the broadcast, here’s a link to “Video Killed the Radio Star,” by The Muggles. This was the very first video that ran on MTV, which launched 40 years ago this month. From Abba to The Muggles, hey, this is a blog about media in all its forms, okay? https://www.youtube.com/watch?v=W8r-tXRLazs
That’s it for this edition of BlastofWinter. Thanks as always for your emails and enjoy your summer. It sure is flying by…