From the category archives:

Economics

Honesty in the age of the paywall

by Kevin on July 3, 2010

After months of discussion and speculation, The Times and The Sunday Times have disappeared behind a paywall or have asked their readers to pay for the journalism that they value, depending on which side of an almost religious divide you fall on. Like a lot of commentary, I find the punditry and posturing around paywalls uninformed, over-simplistic and, frequently, disingenuous.

It is often said that people paid for journalism in print so they should pay for journalism online. If ‘they’ value journalism, they should pay for it.

No. As many people have pointed out, the cover price of a newspaper really just paid for the high capital costs of printing and distributing a newspaper. To put it bluntly: People paid for the platform, not for the content.

As the OECD said in its recent survey of the newspaper industry in 30 countries:

On the cost side, costs unrelated to editorial work such as production, maintenance, administration, promotion and advertising, and distribution dominate newspaper costs. These large fixed costs make newspaper organisations more vulnerable to the downturns and less agile in reacting to the online news environment.

For every newspaper journalist who moans about how much money their publication spends on running their website, I would ask them if they know how much the outlay is for printing the newspaper. Business Insider calculated that for the cost of printing and distribution the New York Times was twice the cost of sending every single subscriber Amazon’s Kindle e-reader.

Google’s chief economist Hal Varian looked at the US industry and found that in terms of core costs, only 14% of costs as a percentage of revenue went to pay for editorial. Production costs were 52% of newspaper costs by revenue. (Varian has sourced all of his statistics from the US Statistical Abstract, the Newspaper Association of America, the Pew Foundation and academic sources.)

Newspaper revenue and the great digital divide

However, here lies the conundrum for newspapers, which commenters point out on Business Insider. For most newspapers, the printed newspaper brings in roughly 80% of their revenue. With the current revenue mix, shutting off the presses is simply not an option without dramatically cutting the editorial staff. One example of this is the Seattle-Post Intelligencer, which went online only in 2009. Hearst laid off 160 employees and retained 20 “news gatherers”. It’s not necessarily a recipe for success, with traffic declining by 20% after the shift.

Digital must and can make up more of the revenue mix at newspapers. In its report, the OECD found that “online advertising only accounted for around four per cent of total newspaper revenues in 2009, and fell strongly in 2009″. However, and this is key, the report said:

In general, the online revenues of newspapers are miniscule in comparison to total revenues and online revenues of other digital content industries.

Many will say that it’s not possible to make enough money online to replace the revenue that used to flow to print. We have traded dollars in print for pennies online, they say. This is not an iron-clad law of digital content. Yes, digital margins are lower, but many content companies make money online.

In a recent Folio profile of Justin Smith’s turnaround of The Atlantic. Smith pushed for a digital first strategy, which to many in the newspaper industry probably sounds like heresy in 2010. The simple rebuttal to that would be Smith’s record of success. The Atlantic had seen declining circulation and revenue since the 1960s. In 2010, they project a turn to profit, with digital representing 39% of their revenue mix.

Innovating on the commercial side

The problem with newspapers’ digital strategies has been that they have largely been content strategies without effective commercial strategies. For too long at too many publications, digital advertising has simply been a sweetener bundled in with the print ad sales. For too long, we have not done enough to know our audiences online, understand their needs and adjust our strategies accordingly.

Those who have succeeded online often have innovated in terms of commercial models as much as they have in content creation. Google’s main revenue engine is advertising, serving up ads to people based on what they are searching for. Without that commercial innovation, Google would not be the billion-dollar company it is today if it’s business model was based solely on undifferentiated ads supporting a search service.

Indeed, I agree with this post on ExchangeWire that the publications that will benefit the most in the future “will be able to leverage that audience to generate more revenue from targeted ads or data trading” and goes on to say:

But if they are to have a commercial future, pubs will need to be become absolutely obsessed about their data and how it can be best used to unlock new revenue.

We’ll have to re-think print and digital and the revenue streams that support journalism on those platforms. We’ll need to re-think advertising and have commercial strategies that reflect differences in audiences and in editorial approaches.

Oversimplifying an issue is something that media excels at, and now, its lack of sophistication in dealing with issues is hitting closer to home. This is not simply an issue of free versus paid, not simply an issue of jettisoning freeloaders and extracting value from those who value journalism enough to pay for it. Creating such false dichotomies makes a good column in which complex issues are transformed into black and white choices for easy consumption, but simple analyses often lead to simple and simply ineffectual solutions.

Newspapers must end their dependence on the revenue from print or face continuing decline leading for many to total collapse. The industry has been having this civil war over paid versus free. Surely, the argument should be profitable versus unsustainable? We didn’t need Murdoch to build his paywall to prove a point, we already have examples of newspapers and magazines realising that they are in the news business not just the paper business.

For those labouring in the digital side of the business, once you’re making the majority of the revenue, you’ll not just have a seat at the table, in many cases, you’ll be at the head of it. It’s achievable. It’s necessary. There is no time to waste. The future of journalism (as opposed to the future of newspapers) depends on it.

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NewsRewired: Marc Reeves, TheBusinessDesk.com

by Kevin on June 25, 2010

I had to dash out for a lunch meeting, but I was happy to make it back for Marc Reeves keynote. He is the editor of TheBusinessDesk.com West Midlands. I found myself applauding over my morning coffee when I read his recent speech to the CBI. His frankness and lack of sentimentality was refreshing. He started that speech with this statement:

Journalism has no God-given right to exist and journalists are owed a living by nobody.

Here is summary (not word perfect and and many places paraphrase) of his keynote at NewsRewired. It was nice to hear his lack of sentimentality in person:

Three main points, in a niche not enough to be a journalist, have to provide other stuff too. Need to provide more than just information. Niche audience needs a niche approach not a mass market approach. Why has this subject risen up the agenda?

The internet didn’t create this. We publishers forced them into buckets because it was more profitable for us. By lassoing 100 interests, we deluded ourselves into thinking they were a unified whole. It actually created some ineffectual and inefficient advertising models.

Not all niches created equal. Football readers deliver half of the audience. Most of the advertising wasn’t on those football pages. Many readers online bypassed the home page and went straight to football pages.

Now, the internet has revealed the niches in the mass. Financial model is there. Can’t talk about journalistic approaches to serving audiences without talking about how the businesses are organised and how they relate to their audiences, and I include advertises as an audiences.

Are you going to hope that by sitting back and writing about what they do in those niches? No. You have to produce other content that is relevant to their lives. In business terms, it’s always been about the relationship you have with your audiences. You turn acquaintances to transactions. Once you have attracted them, you need to think of other ways to interact with them. Events, get them to sell things to each other, get them to interact with each and sell services to them.

To people who say that I’m just a journalist and I don’t do events, he said: “Tough. That’s the way it is now.” By putting the noisy people called advertising in one room and the studious in another room was a big mistake. Just giving the audience journalism alone is not enough in the long term.

They now have 40,000 registered users across their regions. They hit their target of registered users in Birmingham in four and a half months. They have a daily email in the morning that drives 80% of their traffic.

We ignore the CPM race and refuse to become SEO tarts

At the centre of their business is the intelligence that they have about their users. He tries to personally review every new sign-up. He calls up some and thanks them for registering.

As a small business, we avoid waste. I reject things that don’t deliver audience, revenue or attention.

He says that this might be a way to support journalism in the future.

Q: Do newspapers not get the ‘net?

A: Yes, I’m afraid so. That is not because there aren’t brilliant individuals and editors who do get it. Structurally, I don’t think they can turn themselves around to make money on the internet.

I asked him to follow up with that. It is said you loose a pound in print for a penny online. That’s often true, but he said that the high fixed costs of newspapers – print plant, pensions, staff costs – make it almost impossible to ‘turn that super-tanker around’ and sustain their business with a digital revenue.

He uses Google Analytics to monitor his traffic and track the performance of their morning email.

Q: What is there that helps you re-engineer the cost base?

A: I’m not dragging behind a 100 ton press behind me or having to manufacture the most perishable product daily. Taking that cost out of the business makes all the difference. When we launched in February, it was me and my deputy in a serviced office with two laptops. In terms of when we scale up, we’ll keep on that trajectory.

One thing that stands out is their focus on keeping costs low and developing multiple revenue streams. They hold physical events. They do mail shots for promotion.

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Journalism’s future: ‘Silver bullets are the talisman of the desperate’

by Kevin on June 17, 2010

I will admit that it’s a bit cheeky quoting myself, but as I was watching the flow of posts and conversation on journalism blogs today, and specifically in response to Adam Tinworth’s excellent post Complexity is the New Reality, I wound up Tweeting “Silver bullets are the talisman of the desperate”. Adam was commenting on a good rant by Paul Bradshaw titled Let’s stop this ‘Curation is King’ crap right now.

…if curation is king in online journalism I guess I missed the coronation. Curation is a usurper, here to distract us from the bloody mess we’re in with the message ‘Business as usual’.

The future of journalism and publishing will not be curation, aggregation, the iPad OR mobile. It will be a strategic mix of these things and more depending on the market and the audience. As Adam says:

There is no easy answer, otherwise we’d have found it after over a decade. Complexity is the new reality. Clichés are just a crutch.

Clichés are much worse than that. Seemingly easy answers too often win internal debates, especially as Paul points out, some of these messages convey that ‘business as usual’ is an acceptable course of action.

Earlier this week, I wrote a post about multi-facted digital strategies that are generating growth for both the print and the digital for forward-thinking publications like the Christian Science Monitor and The Atlantic. The first comment on that post was “one word – iPAD!” The commenter isn’t alone: Mathias Döpfner, the head of German power publisher Axel Springer had this recommendation for his colleagues in the corner office:

Sit down once a day and pray to thank Steve Jobs that he is saving the publishing industry.

That’s the problem. Senior leaders in the industry aren’t looking for strategies, they are looking for a saviour. They want some supernatural – or in lieu of that, legislative – power to turn back the clock, put the genie back in the bottle, tax the internet and go back to the good old days when money just fell from the sky into their coffers. News flash: It’s too late. The good old days aren’t coming back. Anyone who tells you that you can continue doing what you’ve always done and that the solution is easy is lying. They care more about their current position than they do the future of journalism.

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Comparing non-profit news org models in the US

by Kevin on April 27, 2010

Alan Mutter is one of those rare creatures who has both editorial and business sense and writes lucidly, analytically and rationally about the business of news. Alan says this about himself:

Alan D. Mutter is perhaps the only CEO in Silicon Valley who knows how to set type one letter at a time, just like his hero, Benjamin Franklin.

He has a great post comparing the different funding and business models of non-profit news organisastions in the US. Several have started in the last few years to address the decline in traditional reporting capacity due to the turmoil in the US newspaper industry. Some are boot-strapped, scrappy operations that operate very leanly. Others, such as ProPublica and the Texas Tribune have very substantial foundation support.

The MinnPost in Minnesota is definitely in the lean and scrappy camp. Alan thinks that the MinnPost might just have a successful model for non-profits looking to operate without major foundational funding. That kind of funding can come with strings attached. How is the MinnPost succeeding:

First, by keeping costs low. Second, by raising money almost continuously through such diversified initiatives as advertising, NPR-style user contributions and even an annual gala featuring organic-vodka martinis.

From my point of view, the MinnPost as opposed to the Texas Tribune and  ProPublica are different editorial propositions, different funding models aside. The Texas Tribune is much more like a Politico for Texas.  Both the Texas Tribune and ProPublica are intended to support the high-end Porsche of public interest journalism: Investigations. Investigations are expensive,  time-intensive projects often with very little commercial return, and ProPublica currently gets “$10m a year from a single benefactor”. Investigations are the height of public service. They garner awards and attention but often are difficult to get a return on investment alone from a strictly business point of view. ProPublica is definitely doing good work and has just won its first Pulitzer.

The MinnPost is much more of a traditional news site, covering a range of issues including politics, sports and arts, just to name a few.

Alan points out a major difference between the big foundation-funded non-profit news operations and the MinnPost: Pay.

Although Kramer and his wife, Laurie (of the MinnPost), have worked tirelessly on the project since they launched it in 2007, neither ever has drawn a dime of pay. Their commitment, which includes personal donations in excess of $120,000, contrasts to the hefty six-figure salaries paid at Pro Publica, where editor Paul Steiger makes $570,000 per year; the Bay Citizen, where CEO Lisa Frazier earns $400,000 annually, and Texas Trib, where editor Evan Smith gets $315,000 a year.

Alan points out the the another foundation supported site, Bay Citizen just leased “stylish offices in downtown San Francisco” even before it publishes a single story.

Pay for journalists

Putting aside for a moment the different models at these non-profits, I have to admit that I’m really of two minds here about the pay at these large foundation funded non-profits.

I’ve never made a lot of money being a journalist. My first full-time reporting job was at a small newspaper in western Kansas, and I made $2000 less than a first year teacher in the town I lived. Fortunately, the cost of living was pretty low. Although I have written for newspapers and done radio and TV reporting and commentary, my main income has been as a digital journalist and editor. The pay has been low compared to my colleagues focused on the traditional media. I’ve managed to make a living wage, but there have been times when it took efforts to make ends meet even though I was employed full time. The idea of making six figures is just a completely foreign concept to me, as I’m sure it is for most journalists. (There is a myth that journalists make a lot of money. That’s only for TV anchors and well paid columnists. Most of the rest of us, especially those in local journalism, are paid poorly.)

When I started out as a journalist in the mid-1990s, I complained on a mailing list that I wouldn’t be able to pay my health care bills if I was injured. (I am a American, although I’ve worked for British journalism organisations for more than a decade.) I was told by senior editors and journalists on the list that ‘you didn’t get into journalism to make money’. No, I didn’t, but I also didn’t take a vow of poverty.

There is only so much foundation funding to go around, and I have applied for foundation funding in the past (largely through the Knight News Challenge). I have to say that it makes me feel more than a bit uncomfortable about some of the pay levels at these non-profits.

Whether in the non-profit or for profit world, I feel like one of the few journalists to care about costs. My view has always been that a every pound or dollar I save on travel costs, tech or accommodation is another pound or dollar we can spend on journalism. I care deeply about journalism and public engagement, and I have always sought ways to do that as inexpensively as possible while having the greatest impact.

I take on board that to get the best investigative journalists you have to pay a premium, and I’m pleased that the editors at these well funded non-profits have the resources to pay themselves well and pay for talented journalists. However, I do wonder if the foundation funding cannot be sustained at these levels whether these heavy cost structures at these non-profits can be supported in any other way.

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US paper sets limit for free local articles

by Kevin on April 26, 2010

In a hint at the thinking behind the New York Times’ paid content strategy, a local paper it owns will allow subscribers to read all news content, but non-subscribers will be asked to pay after viewing a “predetermined number of staff-generated local news articles“. The Times owned Worcester Telegram & Gazette writes:

After users pass that limit, they will be asked to pay a monthly charge or buy a day pass. The price and threshold have not been determined.

The article states that most content on the site will remain free with the pay meter being set only for content produced by the Telegram & Gazette news staff.

This is yet another refinement in the paid content strategies being proposed, and it moves further away from the kind of binary, universal paywall versus free argument. The binary argument makes good copy, a nice bit of media biz argy bargy, but it hasn’t done much to help the failing fortunes of the newspaper business. Besides, most sensible people in the business know that a more sophisticated, hybrid model has a greater chance of success.

I’m not familiar with the Worcester Telegram & Gazette. The big questions for me are around how much original content they produce on a given day and the competition they face from local radio and television. The bulk of their website will remain free even for non-subscribers. Will the staff content be enough of a draw to get people to pay? We shall see, but it will be great to get some data from an increasing number of experiments so that the paid content discussion moves past some of the faith-based decision making stage.

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iPad app pricing: You’re not fooling consumers

by Kevin on April 6, 2010

As I mentioned in one of my comments on my previous post about iPad app pricing, the gap between the value assigned by publishers and the value perceived by consumers was one of the big issues in terms of paid content.

Now, we’ve evidence of this. Mediaweek is reporting that “Mags Get Pushback on Per Issue Price on iPad“. They quote this comment on Time magazine’s app.

As one customer of Time magazine’s app ($4.99 single issue) wrote, “Not to put too fine a point on it, but they’re … passing the savings on distribution and raw materials to themselves. I can get 56 issues of the paper version for $20. How am I supposed to feel about this?”

Some consumers also misunderstood the pricing, thinking that the per issues pricing was actually a subscription. They also quoted an unhappy, although not antagonistic, comment from a Popular Science customer, who wanted to be ‘help’ and buy the iPad edition but couldn’t bring himself to pay the $4.99 per issue price. Sara Öhrvall, director of research & development at Bonnier Corp., publisher of Pop Sci, put a brave face on it saying that they were working to prove the worth of the per issue price. She said:

We have to do a lot of work to recreate the magazine for the iPad.

However, that’s the problem. Rather than recreating the magazine for the iPad, why not think about the iPad how it changes what you can offer. This has been the problem when it comes to digital content. Most content creators think of recreating a legacy experience instead of creating a new experience. We have digital audiences now. They are natively digital. They don’t want a magazine experience on an iPad. They want a premium digital experience delivered on their device.

That they might pay for, although it’s doubtful that they will pay more than you’re charging them for a print experience. You’ve got a long way to go to prove that to consumers.

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iPad app pricing: A last act of insanity by delusional content companies

by Kevin on April 2, 2010

Looking at the iPad app rollout, you can easily separate the digital wheat from the chaff in the content industries, and you can see those who are developing digital businesses and those who are trying to protect print margins and who see the iPad as a vertical, closed model to control and monetise content.

There are those who believe that they sell content and that they should be compensated for it. Just as with the music industry, they couch this in terms of repaying content creators, when it really is more about wistfulness for the days of double-digit profit margins.

Those who view their primary business as selling content believe that not only can they charge for it but that they can actually charge the same or more for it, just because it is on the iPad. Time, for example, is charging $4.99 a week for their iPad ‘magazine’.

Scott Karp, CEO of Publish2 and editor of Publishing2.0, put it as clearly as it needs to be put on Twitter:

Paying $4.99 for magazine on newsstand includes cost of printing/distribution. Now you pay for iPad instead, so magazine should cost less.

What do you get for $4.99 a week?

Unique interactivity including landscape and portrait mode, scroll navigation and customizable font size

Oh, I’ve never seen that in a mobile web browser, I say with incalculable levels of sarcasm. That’s like morons in the 90s having Java animation that you actually couldn’t do anything with and calling that interactivity. You think that’s insane and delusional, just wait, it gets even better! No content sharing on the app, which I’m assuming means you can’t bookmark or Tweet your favourite stories, and you’ll have to buy and download the app every single week. There is also no indication that they will charge for their now free iPhone app or their website.

Note to Time digital strategists: Sorry caching your site so I can take it with me when I’m on the move isn’t a feature worth your premium pricing. I do that now, and have done it for years, with an open-source app called Plucker and an aging Palm T3. I’m truly sorry. Do you actually use the internet or digital devices or do you just indulge your bosses’ angry fantasies about the good old days?

Let’s look to Rupert Murdoch’s proud paid content pioneer, the Wall Street Journal. What is the Wall Street Journal selling? The past. Alan Murray, deputy managing editor and executive editor, online for the Wall Street Journal, says on MarketWatch:

We have come up with a version of the Wall Street Journal on the iPad that I think is closest you get to a newspaper reading experience on a digital device.

To be fair to Murray, he goes on to say that anyone giving their content away for free on the web won’t be able to convert those readers on the web to paid readers on the iPad. Murray says:

You have these apps, but you also have a web browser. So I don’t see how any newspaper that is giving its content away for free on the web is going to be saved by the iPad because the iPad makes it easier to access that free content.

Unless the Wall Street Journal’s app not only delivers me a ‘newspaper reading experience’ (which I frankly am not missing anyway) but also picks my stocks for me so that I can retire next year, I’m not going to pay $17.99 a month for it when I can subscribe to their website for $1.99 a week. I didn’t work on a journalist’s salary and still manage to be in a financially secure position by giving money away to grumpy old media moguls like Murdoch.

Paul Kedrosky, venture capitalist and private equity investor who writes the blog Infectious Greed, said on Twitter:

Paying $17.29/mo for WSJ iPad app should disqualify you for something important, like being allowed to use money.

As I’ve said before, Murdoch for all of his brash brilliance has no understanding of the economics of digital businesses. I give him props for still having the power to shift the discussion, and I think that his paywall strategy at the Times might help it stem its £250,000 a day losses. However, his paywall strategy is a defensive move, not a long term strategy. Unless he starts building credible digitally-focused businesses as soon as the paywall brings in some cash to stabilise the business, it will be a brief pause on the path to collapse.

Now, let’s look at other strategies for the iPad. Let’s look at the FT. Robert Andrews, UK editor of paidContent, says that the FT secured sponsorship that allows it to offer its iPad app for free for two months, after which time they will shift to subscription model with the promise of additional features. Much cleverer.

Suw and I talk often that one thing really lacking when it comes to digital content is commercial experimentation. The FT securing sponsorship for a free app for two months is a good step at not only experimenting with content but also with payment models. The Economist earlier this year released a report on social networking, allowing users to download it for free and giving sponsor prominent credit for the offer. This is clever. Premium sponsorship opportunities for special content or services.

Look at the development thinking behind National Public Radio’s iPad app. They did market research and found that up to 5% of their audience were planning on buying an iPad. They knew what the opportunity was. They also used iPad development to improve the experience for visitors coming from search or social networking services, explains Kinsey Wilson, senior vice president and general manager of NPR Digital Media.

Compare the strategies and thinking. On the one hand we have a set of pricing models that deliver marginal value for premium prices and show very little that differentiate themselves from the web experience, although they expect to charge more. These pricing models are based on a sense of entitlement to set pricing as it was in the days of print. I won’t even call them strategies because they lack any kind of realistic strategic thinking.

On the other hand we have a set of strategic pricing structures. NPR takes a realistic look at the commercial potential, does market research and develops its app not just for a single device but also as a chance to make improvements to their overall service. The FT experiments not just with content but also with the commercial strategy.

In terms of who is positioning themselves for the future by delivering value to their audiences and experimenting with business models, it’s clear. If any company thinks that the iPad will allow them to rebuild the monopoly rent pricing structure of the 20th Century, then you’ve really fallen prey to the Steve Jobs’ reality distortion field, and you’ve blown yet another chance to build a credible digital business. However, I’ve got a game you might want to check out, Final Fantasy.

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Paid-vs-Free

by Suw on March 31, 2010

Just a quicky: Stephanie Booth has a great post on paid vs free content, taking the kind of sensible and level-headed approach that I am failing to see from most media companies. Key for me was this bit:

This is a tough message to pass on to a client: “The money you’re paying me to write is actually marketing money. The content I provide will add value to your website for years to come, and help build your reputation and credibility. How much is that worth?” It’s not just words on a screen, disposable stuffing like so much of what is unfortunately filling our newspapers today. Scanned today, gone tomorrow. Great writing, online, has no expiry date.

Dead right.

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Poynter asks: Are journalists giving up on newspapers?

by Kevin on December 11, 2009

The Poynter Institute in the US hosted an online discussion asking if journalists are giving up on newspapers after high-profile departures there including Jennifer 8. Lee, who accepted a buy out at the New York Times, and Anthony Moor, who left newspapers to become a local editor for Yahoo. Moor told the US newspaper trade magazine Editor & Publisher – which just announced it is ceasing publication after 125 years:

Part of this is recognition that newspapers have limited resources, they are saddled with legitimate legacy businesses that they have to focus on first. I am a digital guy and the digital world is evolving rapidly. I don’t want to have to wait for the traditional news industry to catch up.

This frustration has been there for a while with digital journalists, but many chose to stay with newspapers or sites tied to other legacy media because of resources, industry reputation and better job security. However, with the newspaper industry in turmoil, now the benefits of staying are less obvious.

Jim Brady, who was the executive editor of WashingtonPost.com but is now heading up a local project in Washington DC for Allbritton Communications, said on Twitter:

A few years ago, the risk of leaping from a newspaper to a digital startup was huge. Now, the risk of staying at a newspaper is also huge.

Aside from risk, Jim echoed Moor’s comments in an interview with paidContent:

Being on the digital side is where my heart is. Secondly, I think doing something that was not associated with a legacy product was important.

In speaking with other long-time digital journalists, I hear this comment frequently. Many are yearning to see what is possible in terms of digital journalism without having to think of a legacy product – radio, TV or print. There is also the sense from some digital journalists that when print and digital newsrooms merged that it was the digital journalists and editors who lost out. In a special report on the integration of print and online newsrooms for Editor & Publisher, Joe Strupp writes:

Yet the convergence is happening. And as newsrooms combine online and print operations into single entities, power struggles are brewing among many in charge. More and more as these unifications occur, it’s the online side that’s losing authority.

It’s naive to think that these power struggles won’t happen, but they are a distraction that the industry can ill afford during this recession. In the Editor & Publisher report, Kinsey Wilson, former executive editor of USA Today and editor of its Web site from 2000-2005, said that during the convergence at USA Today and the New York Times:

We both had a period of a year or two when our capacity to innovate on the Web stopped, or was even set back a bit

Digital models are emerging that are successful. Most are focused and lean such as paidContent (although it has cut back during the recession, I’d consider its acquisition by The Guardian, my employer, as a mark of success) and expanding US political site Talking Points Memo. There are opportunities in the US for journalists who want to focus on the internet as their platform.

Back to the Poynter discussion, Kelly McBride of Poynter said during the live discussion:

I talk to a lot of journalists around the country. I don’t think they are giving up journalism at all. I do think some of them have been let down by newspapers. But a lot are holding out. They are committed to staying in newspapers as long as they can, because they are doing good work.

It’s well worth reading through the discussion. I am sure that many journalists have some of the same questions.

What was the verdict? Poynter discussion - Are journalists giving up on newspapers?

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Landrush for local: NowPublic, Everyblock and now Outside.in

by Kevin on December 9, 2009

A common joke amongst journalists is that all we need is two examples to proclaim it a trend, but we’ve got much more than that when it comes to rush to build local media empires in the US. In June, AOL bought two local services, Patch, which provides news to small towns and communities, and also Going, which provides a local events listing platform. MSNBC.com bought Adrian Holovaty’s hyperlocal aggregator Everyblock in August. In September, local news network Examiner.com owned by billionaire Philip Anschutz‘s Clarity Media Group bought citizen journalism site NowPublic. Now, we have another major move in hyperlocal with CNN and others investing $7m in aggregator Outside.in. CNN will not only invest in the site, but it will also feature feeds from Outside.in.

Outside.in founder Steven Berlin Johnson called the investment and content deal:

a vote of confidence in the platform we’ve built at outside.in, but perhaps more important it’s an endorsement of hyperlocal and the ecosystem model of news that many of us have been championing for years now.

Fred Wilson, a venture capitalist and the principal of Union Square Ventures, is an investor in Outside.in, and he makes the passionate case for people covering their own communities.

My unwavering belief is that we will cover ourselves when it comes to local news. We are at the PTA meetings, the little league games, and the rallies to save our local institutions, so who better to cover them than us? This is what hyperlocal blogging is all about and it is slowly but surely it is gaining steam.

CNN’s partnership with Outside.in can be seen as a simple response to a competitor, but with all of the deals in this space, I guarantee that 2010 will see additional deals and development. Add to this location based services and mobile, and you’ve got somethig very interesting happening.

The promise of ‘pro-am’

As Fred says, people will cover their own communities, and we have seen some interesting hyperlocal projects including the pro-am projects of MyMissourian in Columbia Missouri and BlufftonToday in South Carolina or hyperlocal projects here in London like William Perrin’s Talk About Local. I personally like pro-am models where professional journalists cover the official life of the community – council meetings, crime, sports, schools and other local issues – while the site provides a platform for the community to cover itself and the full range of lived experience there. As Clyde Bentley, who set up MyMissourian, found out, readers didn’t want to write about politics as much as they wanted to write about religion, pets and the weather. Here are the lessons he learned from MyMissourian:

  • Use citizen journalism to supplement not replace.
  • UGC isn’t free.
  • Online attracts the eager, but print serves the masses.
  • Give people what they want, when they want it and how they want it.
  • Get rid of preconceptions of what journalism is.
  • Every day people are better ‘journalists’ than you think.

Lessons learned from failure and success

Despite all of this energy and experience, hyperlocal has still seen more high profile failures than successes such as Backfence and the Loudoun Extra project by the Washington Post. Even in those failures, there are lessons to be learned. Mark Potts who was behind Backfence said that one frequent mistake of hyperlocal projects is that they aren’t local enough.

He believes the key is to focus on a community of around 50,000 people. Covering a bigger area makes it harder to keep people interested. “You care less the farther it gets from home.”

The difficulty for Loudoun Extra was integration with WashingtonPost.com and a lack of community outreach, according to Rob Curley who headed up the project.

That doesn’t mean that we don’t have success stories, but again, the secret to success seems to be a laser light focus on niche topics and keeping the hyper in hyperlocal. Crain’s New York just profiled Manhattan Media, which has seen revenue grow fivefold since 2005 and even more surprising is that ad revenue has continued to grow in the midst of the Great Recession. It’s a multi-platform, multi-revenue stream model with newspapers and websites, and their events business now contributes 20% of their revenue.

The lessons I take away is that newspapers trying to be all things to all people with no sense of place or focus are suffering mightily during the recession. Focus is key both in terms of topic and geography, and seeing as this is about engaging not only a virtual but very real world community, I’ll add my basic advice about blogging and social media: Be passionate and be real.

Whether we see a strong recovery in 2010 or not, local will be one growth area, and journalists looking for new opportunities should watch this space for ‘help wanted’ signs.

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