Side Businesses, Communities and Missions
Poynter’s Bill Mitchell has a must-read on side-bet businesses that could help news organizations through their current woes.
For those who think this is something new, Mitchell passes along Michael Schudson’s observation that American newspapers got their start as advertisements for printers who made their money printing other things — as well as by offering postal services and serving as general stores. And he notes that today, the Washington Post gets the majority of its revenue from Kaplan, its education business.
Of course, few news organization are likely bets for launching test-prep behemoth, but smaller papers have done well with smaller ventures: The Pocono Record’s editor tells Mitchell that the paper does a nice side business selling reprints of photos taken at sporting events and festivals by the paper’s photographers. (Because the photo galleries are posted online, they also give the Record a nice traffic bump.) An Alaska TV station runs airplane flights and fishing trips. And lots of specialty news organizations offer special reports or host meetings.
Mitchell offers three considerations for news organizations considering such side-bet ventures. At the top of his list: “consistency with the organization’s values.”
Agreed — to which I’d add a wrinkle. To me, the core values of every news organization should include serving as a key member of a community and as a collection point/repository for information about that community. (Though not necessarily the sole such repository or the core of that community.) I think news organizations have accelerated their decline by losing sight of this mission, through cutbacks that have damaged their institutional memory and fetishizing empty traffic numbers that accompanied oft-meaningless “reach.” Some side-bet businesses of the sort discussed by Mitchell would simultaneously bring in more money and reinvigorate news organizations’ role in their communities.
The Pocono Record’s photo galleries bring in money, but I’d argue they’re also a community resource, a digital expansion of “refrigerator journalism” as discussed by Roy Peter Clark in the comments on this post. And I’d say the same thing about other side-bet businesses that connect readers with local businesses, particularly if they’re constructed to make the news organization a valuable middleman.
My folks have a summer house in Maine, and one of their local papers there is the Lincoln County News. Like the Record, the News posts photo galleries from local events and sells reprints. It also has Web forms for submitting events, birth announcements and news of engagements and weddings. For those who think small local papers are just shovelware, there are a lot of great, community-friendly features here. What else could the News do? A next step might be to tie together wedding announcements with local caterers, wedding planners, and the like, link birth announcements with florists, and so on. Tie the food/dining section in with reader reviews and location-based services. Instead of just linking to restaurants’ Web sites, offer to build or improve restaurant Web sites — or any potential advertiser, for that matter. Then the paper gets a cut of referrals. (You’d have to be careful, of course: Restaurant reviews, for example, couldn’t be dictated by business relationships. But bright lines have always had to be drawn, and small towns have always been webs of personal and business connections.)
For a local news organization that built itself out in this way, the business of news might seem secondary on the balance sheet: The organization would be a Web consultancy, photo service, community bulletin board and partner with many local businesses that also had some journalists on staff, raising the question of which business is the side bet. But from one point of view — a critical one for paying the bills — news has always been secondary, the stuff around the ads meant to connect businesses with local customers. All of these connections would support the news organization’s mission of participating in and supporting a community — just as those long-ago print shops provided valuable services to local businesses and individuals, sold useful items, served as a gathering place and even printed some news.
Digging Into the Abernathy/Foster Report
The latest attempt to summarize the challenges facing newspapers and recommend a course of action is out, with the alarm bells being sounded this time by veteran media executive Penelope Muse Abernathy and former McKinsey director Richard Foster.
The study (linked from Bill Mitchell’s overview as a PDF) struck me as a fairly familiar overview, though the writer/editor in me appreciated that it’s admirably succinct, and written with a welcome bite. (And I laughed out loud at the examination of Hindu and Judeo-Christian demises.) Certainly Abernathy and Foster find the right targets and hit them hard.
For instance, they nail the industry’s major disadvantages in the digital era:
- the high cost of printing and distribution
- the loss of geographically protected market dominance
- the loss of high-margin advertising to online competitors
And their proposed plan of action seems sound as well:
- shed legacy costs as quickly as possible
- recreate community online in an effort to regain pricing leverage
- build new online ad revenue streams
For me the best section of the plan is the one concerned with community, particularly how it’s defined and how it should be approached. A theme of the report is that news organizations keep using new digital tools in an effort to repurpose old models, when they ought to be reinventing things from the ground up. For instance, Abernathy and Foster note that pre-digital newspapers aggregated content and defined community largely based on geographical and political boundaries, but the new aggregators — search engines and commerce sites — do so around special interests. That simple, essential shift may be obvious to Web-business types, but I think it’s a blind spot for newspaper veterans.
Their advice: Rebuild newspapers around specialized audiences and communities (including hyperlocal), instead of continuing to try and reach a single mass audience or community. Start with niche audiences that papers are already serving. Become their aggregators, and customize stories for them — for example, instead of writing one big story about the health-care debate, write different versions tailored for those different specialty audiences. Such reinvented papers, they say, might be able to charge advertisers a premium to reach those communities, and charge customers for unique information.
An interesting point I hadn’t encountered before is that Abernathy and Foster say there’s a precedent for this — magazines responded to the threat posed by television by migrating to serve specialized niches or interest groups and charging advertisers a premium to reach them. Newspapers, on the other hand, have largely reached for eyeballs, putting themselves in competition with better aggregators such as Google.
There are some rather searing quotes in the report. Here’s one: “Unless news organizations simultaneously invest in re-imagining and re-inventing the online edition, there is no transformation of the traditional newspaper and the industry dies with its aging loyal readers, who pay an ever-increasing price to receive the ‘last’ printed copy of the newspaper.”
Ouch. And the report is nicely short on Pollyanna-ism, as this warning makes plain: “[a]n enterprising executive may accomplish all three goals … and not achieve the operating margins typical of news companies in the last quarter of the 20th century, since those profit levels were largely the result of being de facto geographic monopolies.”
Abernathy and Foster are sympathetic to companies that know they need to change, but find those changes difficult to implement. As an example of how to escape that trap, they cite Intel, and its change from making DRAMs to microprocessors. That difficult transition was finally made, they write, when Gordon Moore and Andy Grove asked themselves a brutally simple question: “If we got kicked out and the board brought in a new CEO, what do you think he would do?”
It’s a good question. Here’s hoping it gets newspaper executives nodding, and causes them to take action.
More Evidence That Local Is the Place to Transform
The latest Pew Research survey of how Americans view the press is out, and offers more evidence that local coverage is the best focus for newspapers trying to transform themselves for the digital age.
When asked where they get most of their national and international news, 71% of survey respondents said television, little changed from recent years. 42% said the Internet, compared with 24% in September 2007. And 33% said newspapers.
When respondents were asked where they get most local news, television still won with 64% of the vote. But 41% said newspapers, compared with just 17% who said the Internet. And among respondents aged 18-29, the numbers were 67% for TV, 39% for newspapers and 21% for the Internet.
There’s the opportunity — if newspapers will take it.
Discussions of how newspapers lost their competitive advantages often focus on the barriers to entry that have fallen. The Web allows anyone who wants to be a publisher to be one — you no longer have to buy presses and lots and lots of former trees. But for years the limits of geography also protected newspapers from competition: Unless you were willing to pay extra for an unsatisfying national edition of some out-of-town paper, your local paper was your default source for most news, from international and national to movie reviews. (This also made the wires invaluable to many papers.)
Now that’s gone: You can read dozens of different papers’ takes on international and national stories and spend the duration of a movie reading its various reviews. With the geographical boundaries down, we have a glut of news in some categories. Within them, competition for readers is national — and increasingly global. Faced with this, digital-first papers should be asking themselves a) if their efforts are good enough to compete nationally; and b) if the expense of a wire service is justified when they could just link to other papers’ efforts.
None of this is a revelation — it underpins Jeff Jarvis’s mantra of “do what you do best and link to the rest,” for instance. But the Pew numbers remind us that it isn’t the rule across all categories of news just yet. When it comes to local news, newspapers still enjoy the protections of geography. And those protections will remain in place — at least when it comes to competing with other newspapers.
But other newspapers aren’t the only source of competition. Neighborhood blogs are springing up everywhere. A bevy of companies are experimenting in an effort to mine the promise of “hyperlocal.”
And the Web itself is changing.
Today’s Web is great for searching globally, but lousy at filtering locally. If I want a flat tire fixed in Brooklyn Heights, it does me no good whatsoever to discover I can get it done really cheaply in Cleveland or that some guy in San Jose is great at it. But this weakness is temporary: Geotagging and location-aware services are driving constant innovations in the local Web, and companies new and old are competing to reap the benefits.
Newspapers’ best chance at transformation is local. As Pew has shown, local is where they still retain readers who otherwise have turned to other sources of news. Local is where the advertising market remains largely untapped. Local is where real-world communities are still searching for a virtual expression. And local is where newspapers still have advantages in institutional knowledge, newsgathering skills and a historically valued place in civic life.
But time is of the essence. Because these advantages won’t last.
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You can read my first column for Indiana University’s National Sports Journalism Center here. I’ll be writing weekly about sportswriting and new media, something that’s dear to my heart as former co-writer of WSJ.com’s Daily Fix column and co-author of Faith and Fear in Flushing. I’ll be writing alongside Dave Kindred and Eric Deggans, which is immensely flattering and daunting in equal measures.
Web veteran Jason Fry explores the challenges faced by newspapers in the digital world.
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