Friday and Saturday, I got to catch up with two friends in the industry, Greg Piechota of INMA and Damon Kiesow, the Knight Chair in Journalism Innovation at the University of Missouri. Greg and I talked about a lot of things including the cost of developing an app for a news organisation and where apps sit in the conversion funnel for publishers. I came away thinking that the presumption of app development being pricey might be due to the high cost of in-house development. And I would have said that before I joined Pugpig because I’ve always been more on the buy side of the buy versus build discussion. We also talked about the business models that support local journalism. I’m more sceptical of advertising-supporting models than Greg is. I’m definitely a reader revenue convert. I say convert because I thought that digital advertising would provide more revenue than it has. And it still can, but the real revenue is in direct sales and not programmatic or network ad sales. However, the real issue might not be down to advertising-supported models versus reader-revenue supported models but rather those newspaper groups that are solely focused on local and those like Gannett and Reach that try to balance the demands of local and national publishing.
Damon and I talked about a lot of things including what Press Forward means for US local news, but one of the topics that really interested me was a research idea that he had. When thinking about the future of local journalism, there is a question about what services can be shared and what services are best locally controlled and executed. Large newspaper groups like Gannett (Gatehouse before it) and Reach have centralised a lot of services to try to reduce costs in the face of declining revenues. It’s a very typical business strategy, but if it was the answer, both groups would be performing better than they are. Although Damon appreciates that it runs counter to conventional wisdom, it is worth thinking about what services make economic and operational sense to centralise. Centralised and regionalised reporting has been a mixed bag to be sure, but I also would argue that centralised direct sales has failed to deliver. The local relationships that both reporters and ad sales staff have are core to the business. Back-end services can definitely be centralised, although when I was at Gannett in 2014-2015 the HR function was so centralised that HR partners had to cover multiple states. It really is a good question, and we both thought that the first step was convincing people that it was a reasonable question to ask. To be honest, it is the kind of industry research that needs to happen, and I wouldn’t mind doing it (if I wasn’t already busy with my day job).
Speaking of Reach, as someone who consulted with Reach on Engagement for a couple of years (2016-early 2018), I still have a soft spot for them because their teams were so dedicated and innovative. They have needed a strategic pivot because their current strategy simply isn’t working, and I welcome the fact that they are trying to diversify their revenue from advertising and platform-driven volume. Here is a bit of straight talk that I hope my friends don’t mind. The first challenge with these paid-for products will be to convince customers that they are worth paying for. Some of their brands have lost a lot of equity in their communities.
Very apropos of the discussion about internal services, the New York Times has an interesting piece from a member of their print hub team. The Print Hub at the New York Times takes copy that was written for digital platforms and edits it for print. It shows how digital-first these processes have become, and it also pulls back the curtain to let readers understand how the sausage is made.
This story shows that the local journalism crisis is a North American story, not just a US story, and in many ways, the headlines out of Canada about job cuts and the wholesale shuttering of titles has been starker than in the US over the last year. This headline was incredibly shocking, and it’s unclear what happens next.
As someone who has worked in local print, TV and radio media in the US, I find this fascinating. The crisis in local media in North America is undeniable. Press Forward is just one effort to respond to this crisis. Another comes out of US public radio. Public radio provides invaluable services to local communities across the US. My first full-time journalism job was in western Kansas, and I used to listen to High Plains Public Radio reading service for the blind. It was a service intended for the blind or visually impaired, but for me, it was a great way for a poor journalist to listen to what was, in effect, an audiobook service. But the news service was spread out over thousands of square miles, and they often relied on local newspapers for material. It will take creativity and a lot of different experiments to address the crisis. I think small digital outlets will be the foundation, but I also see public radio playing a role as well.
Revenue pressures are not just on local journalism groups but also on digital creators such as the writers on Substack. Like bigger outlets looking to increase ARPU through bundling, Substack creators are looking to diversify their revenue by adding podcasts.
And in today’s review of AI headlines, we have news out of the UK of AI 'editorial ‘co-pilots’’ but also a bit of news about efforts to monetise archives. Again, this is about creating resilience at publishers by leveraging technology not just to squeeze costs from the business but also to add revenue. This is promising.
And my friends over The Mix look at the challenges that generative AI pose to publishers. This article looks at the challenge that AI chatbots could pose. As we often say at Pugpig, now is the time to lean into creating direct relationships with audiences. Instead of worrying about what Google, Microsoft and others do, this is the time to act.
