Jim Brady nails the errors and the potential in local news

My take on the hopeful future for local news, even if we’ve made a ton of mistakes in the digital era: https://t.co/u74RhzyDlL

— Jim Brady (@jimbrady) June 20, 2016

I am late reading Jim Brady‘s Columbia Journalism Review piece on local media. But it’s outstanding and worth catching up on. If you care about local news and also missed it initially, take the time to read it now. It’s long but well worth the time.

Just a few highlights:

Jim absolutely nails the brutal user experience at most local newspaper sites:

Slow load times? Check. Pop-up ads? Yes sir! Auto-play video? Of course! Forty-page slide shows? Why not? User experience? Sorry, not familiar with that term.

A good friend, who has been doing some excellent work, works for a Gannett newsroom. I see a link to some of his work on social media and click on the link. And Gannett tries to push me away with horrible load times (I give up on my iPad before it even loads) and with a question (or a few) I need to answer before I read the story. More often than not, I leave in frustration. And I’m earnestly and patiently trying to read the work of a good friend. How many readers who aren’t trying to read friends’ work give up even sooner?

Jim, founder of the Philadelphia local news site Billy Penn, also explains why he’s optimistic (I am, too) for local news startups:

I think now is the perfect time to start a local digital news operation. There are few greater gifts in journalism than a blank sheet of paper. Billy Penn started with nothing. We had no history, but no baggage. We had no brand recognition, but no brand fatigue. We didn’t cover everything, but we didn’t have to cover everything. Every disadvantage is an opportunity to create an advantage.

I get sick and tired of people dismissing local news as a place of failure for digital startups because of the failure of Patch, the abandonment of TBD‘s strategy (see disclaimer below) and other local ventures that didn’t last. I sent Ken Doctor an email last month, taking him for task for erroneously describing local news as “a sector that’s all but been left for dead.”

Actually, local news is a sector with dozens, if not hundreds, of success stories. They’re mostly small success stories that escape the notice of most big-picture analysts, and the sector needs thousands of success stories, but Jim’s optimism is justified, and he lists some of the successes:

That’s why it’s so encouraging to see so many entrepreneurs out there trying their hands at local. On the for-profit side, there’s Billy Penn and The Incline, its soon-to-be sister site in Pittsburgh, plus Berkeleyside, Charlotte Agenda, Mission Local, ARLnow, Baristanet, the Watershed Post, the upcoming Denverite, and many others. On the nonprofit side, there are early pioneers like Texas Tribune, Voice of San Diego, and MinnPost, plus new sites popping up seemingly every week. Spanning both models are members of the Local Independent Online News Publishers group (LION), including sites such as The Batavian, Richland Source, The Lens, and many more. Journalism consultant Michele McLellan tracks the growth of local sites at Michele’s List.

But there’s room for so much more—unlike in national, the local digital field remains relatively wide open.

If you care about local news, read through Jim’s piece. He captures the excitement and potential of local news.

Disclaimer that won’t be necessary for longtime readers of this blog: Jim and I are friends and he hired me twice, to work at TBD and Digital First Media. And I’d gladly take a third round with him.

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What’s in a brand? A tronc (Tronc) by any other name …

Perhaps I’m the last person who should make fun of Tribune’s renaming its company tronc. But that won’t stop me.

I named Project Unbolt. I proudly worked for TBD. I let my CEO change my title from editor to information content conductor (thankfully, Editor & Publisher went old-school in recognizing me as Editor of the Year). I get why you might choose a ridiculous name (or a great name that others might like; reaction to TBD’s name was mixed).

I’ll say this: It’s too early to say whether this name change is a master stroke, a stupid move or both. I’ll explain that more later.

But the reaction to the move was swift, derisive and hilarious:

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Orange County Register deal underscores how much of newspapers’ value is in real estate

My old company has essentially proven a point I have made at least twice in this blog: that many newspapers’ value now is mostly the value of the real estate they own.

A Ken Doctor report today does the math: Less than a month after buying the Orange County Register and Riverside Press Press-Enterprise for $51.2 million, Digital First Media, where I worked from 2011 to 2014, sold 14.3 acres of land surrounding the Register’s Santa Ana office for $34 million, two-thirds of the sale price. The developer who bought the land had purchased the Register’s building two years ago.

In posts about the Boston Globe purchase in 2013 and the Omaha World-Herald sale in 2011, I previously speculated that real estate value probably accounted for most, if not all, of the purchase prices.

I am too busy, and don’t know enough about finance and real estate, to undertake an analysis of recent newspaper sales and what the core value is after you subtract the value of real estate. But I agree with Doctor that this value is “astoundingly low.” And it’s nowhere near the first time that’s happened.

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Advice for Gannett on running a single news operation

I have some advice for Larry Kramer and Gannett on running a nationwide network of newsrooms as a single operation.

Ken Doctor speculated yesterday that Kramer, publisher of USA Today, might lead Gannett’s editorial operation as a single unit.

As Gannett separates its newspaper properties from its broadcast and digital properties, Doctor tried to parse what Bob Dickey, CEO of the print operation, which will keep the Gannett name, meant when he said he would be “uniting our different news businesses into a single, nationwide news powerhouse.”

Doctor observed:

If Gannett’s journalists were to be centrally directed, they would comprise 2,700 journalists, the largest single journalistic workforce globally.

Gannett gives a lot of corporate direction to newsrooms. Currently the Newsroom of the Future is the Gannett wave, but earlier thrusts have emphasized Information Centers (2006, after the Newspaper Next report), First Five Paragraphs (2000 or so, when I was a Gannett reporter) and News 2000 (that was the priority when I interviewed for a Gannett job in 1992). And I probably forgot a few. Remind me, if you recall one I missed. Update: I forgot ContentOne (2009).

The company also is consolidating print production in regional Design Studios, a trend throughout the industry.

But, as Doctor noted, Gannett editors don’t work for a national corporate editor:

Those editors now report solely, within a traditional newspaper structure, to their paper’s publishers. Gannett senior vice president for news Kate Marymont (“My job is to elevate the journalism across Gannett’s local media sites,” says her LinkedIn job description.) leads editorial planning and strategy. Like her peers in similar positions at newspaper companies, she may act as an editorial advocate, but doesn’t have line authority.

I worked for nearly three years at a company where the newsroom editors did report directly to a corporate editor. Early in the formation of Digital First Media, I was on a conference call with all the publishers when CEO John Paton told them their editors would report to Editor-in-Chief Jim Brady. Publishers would still be in charge of the local budgets and the local operation, but for all journalism matters, Jim was in charge.

I was one of a handful of editors who reported directly to Jim, and I visited 84 newsrooms, including all DFM dailies, so I suppose I’m as qualified as anyone but Jim to share some lessons from our brief experience trying to run a single journalistic workforce.

I will neither boast of our successes here nor criticize our mistakes (mine or others’), though I will make passing references below to my DFM experiences. The lessons below are my own observations and advice to Kramer and Gannett (if Doctor’s speculation is correct), based on successes and mistakes at DFM and many experiences that were a mix of both. And I suspect some other companies might seek to better unify their news efforts.

Here’s my advice for Kramer and others who may lead national news operations:

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Continuing efforts to sell Digital First Media: observations from a distance

Anything I have to say about Digital First Media today is speculation or observation but I will speculate and observe.

(I’ll explain in some detail at the end of this post what I used to know about DFM operations and strategy, and what I don’t know now.)

A tough sell

My first observation: Selling this scattered company and its diverse properties has probably been much more difficult than anyone thought last year when executives decided to pursue a sale. My first knowledge of plans to sell the company was that they would likely sell it in pieces. I think the difficulty of that job led to an effort to sell it in one piece, as Ken Doctor reported last year. That led to a pending $400 million purchase by Apollo Global Management. Ken’s speculation – more informed than mine, but probably not coming from DFM sources – is that the deal fell through over price.

I think DFM CEO John Paton, Chief Operating Officer Steve Rossi (who will become CEO take over the company’s reins in July) and whoever is making decisions for Alden Global Capital, the hedge fund that owns DFM, have decided that some individual parts of the company will attract higher value separately. I think they’ve decided the higher values of some individual pieces will be worth the trouble of operating and eventually selling or shutting down the properties that would be more difficult to sell, or possibly operating a reduced company after selling the most attractive parts.

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Thoughts on the DFM sale and newspaper values

If reports are correct, my former company, Digital First Media, is going to sell to Apollo Global Management for about $400 million.

I’m not going to pretend I can analyze what that means for DFM, my many former colleagues there or for the news business. I hope for the sake of my many friends remaining in the company’s newsrooms across the country that the Apollo’s management will find a path to prosperity that doesn’t involve endlessly cutting staff. I hope the company will genuinely pursue the kind of digital creativity that the future demands and will have the staying power to let good ideas flourish.

Since seeing initial reports about the pending deal, I’ve wondered about the meaning of the $400 million sale price, reached in a long “auction” process that sought the best deal(s) to sell the company as a whole or in pieces.

The reported price tag is a breathtaking fall from what newspapers used to be worth, even in the past few years. I hope this means Apollo’s strategy isn’t to keep cutting staff to maintain profits. DFM doesn’t have much left to cut, and values have dropped as newspapers have been cutting. The best way to maximize this $400 million investment will be to build value by developing new revenue streams.

Comparisons of sales prices of media companies can be misleading. One sale might include more real estate, while another might include more debt or pension obligations. Successful subsidiaries can add value to a company. In a sale such as the DFM deal, which is essentially between two private equity companies, full terms may never be disclosed. You might not be comparing apples and oranges, but apples and lawn mowers.

I was not involved in the sale at all, other than losing my job last year as the company was preparing for the sale. But I understood DFM enough to know this was an extraordinarily complicated deal, with an array of factors that make it unique:

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I’d be optimistic about a news organization (finally) trying a ‘full-stack’ business approach

Jay Rosen

I commend to your attention Jay Rosen’s blog post suggesting that news companies take the “full stack” approach to a media niche and Ken Doctor’s post examining newspapers’ chances of finally starting to grow revenue just enough to keep pace with inflation.

The posts don’t seem related. Jay looks primarily at digital startups, using legacy media mostly for contrast. He starts out talking about a “complete, end-to-end product or service that bypasses existing companies,” citing a post by Chris Dixon about the software industry.

But mostly Jay focuses on a single point of the full stack, suggesting that news organizations need “a full stack intellectually speaking.” I’d love to see Jay expand on that full intellectual stack, but he zeroes in further, on the very identity of news organizations: “That means defining the beat the way no one else defines it, and coming up with a mission that differs from the industry standard.”

It’s a thoughtful post and I recommend reading it. I’m going to take it in a different direction.

Ken Doctor

But first, a quick overview of Ken’s piece, which I also recommend. No one is taking a more detailed look at upheaval in the news business, particularly the newspaper business, than Ken is. This piece asks when (and whether) the newspaper industry can level out after being in a revenue free fall since 2007. Ken’s idea of leveling out is not just to stop losing revenue, but to keep pace with inflation, which Ken projects at 1 percent for 2015 (after a 2.5 percent loss for 2013; 2014 numbers aren’t out yet).

Ken speculates about the chances for growth in 2014 and 2015 in three areas: reader revenue, digital advertising and the “third stream,” an eclectic grouping of revenue sources such as commercial printing, events and marketing services (spoiler alert: He’s not optimistic).

So here’s where I stretch to relate (I hope) Jay’s full-stack thinking to Ken’s analysis of the newspaper industry’s chances to grow.

Let’s start with the point that newspapers were never a full-stack operation. We were at the mercy of newsprint companies, which many times in my career threw budgets into havoc with huge price increases. (I was always puzzled why we never developed a futures market in newsprint, letting companies lock in low prices and/or hedge against price increases.)

On the other end, we didn’t control delivery, turning that over to boys and girls (for the first part of my career) and adults (more later in my career) who were independent contractors. I remember feeling guilty when we would go to court to fight (successfully) against worker comp claims filed by teen-agers injured delivering our papers. When I was at the Kansas City Star and Times, we actually went to the Supreme Court in a battle with our carriers over who controlled our routes, then (after we lost) paid them millions of dollars to buy the routes back. And then we hired the carriers back as independent contractors. We wanted to own the routes, but we still didn’t want to deliver the papers.

I never was thinking about the full-stack metephor until reading Jay’s post, but much of my career, especially the past decade, I have been calling for newspapers to pursue a full-stack approach. In the 1980s (it might have been 1990), I unsuccessfully urged colleagues at the Kansas City Star and Times to follow the lead of cable TV companies and sell modems to customers of the StarText program we were testing, which offered stories to subscribers the night before they would appear in the newspaper. In those days before the World Wide Web, most computer owners (including me) didn’t have modems, and I thought we would have a much bigger audience by offering to sell and install modems for customers, rolling the cost into the subscription price, rather than just selling our service to those with modems. I don’t know whether my approach would have made StarText successful (it wasn’t), but it was my start of thinking about a bigger stack than newspaper executives were thinking of.

From 2005 to 2008, working on the American Press Institute’s Newspaper Next project, which might not have been the full stack, but it called newspapers to think bigger about how they did business. N2 drew a lot of interest and several companies tried different recommendations of N2, but no one implemented the full stack of N2 recommendations.

In 2009, I published my Blueprint for the Complete Community Connection, which was as full a stack of business ideas for a newspaper (or other community news organization) as I’ve seen from anyone. Again, the idea generated interest, but no one tried to implement it.

If that stack wasn’t quite full, I added to it later in 2009 with my suggestion for mobile-first strategy, in 2010 with my call  commissioned obituaries and other life stories and in 2011 with a long list of revenue ideas for newspaper companies.

In two recent jobs, I argued unsuccessfully that we needed stronger technology development operations, both to develop better tools for executing on a full-stack approach and because I was convinced that technology solutions for media companies following our paths would be another revenue important revenue source.

I’m not saying my ideas would have saved newspapers or would have been the path to prosperity for digital startups. I’m sure some of them would have failed.

What I am saying is that Ken’s discussion of potential revenue streams for newspapers is nowhere near the full stack that Jay is advocating or that news companies need to consider.

I may have been unduly pessimistic about the potential for revenue from subscriptions or paywalls. But I was exactly right in 2013 when I said new revenue streams hold more promise for newspapers than paywalls. Ken, who used to be a paywall optimist, now warns: “Don’t expect much growth in circulation revenue for full-year 2014” (he and the Newspaper Association of America both lump digital subscription revenue with print subscriptions). The private numbers I have seen on paywall revenue agree with his outlook.

Ken is more optimistic (but still kind of gloomy) about that “third stream,” which I was blogging about in 2013: “Growth in marketing services should be real, and ramping up, but it’s unlikely to throw off the big dollars needed for the up turnaround. The other new revenue sources are good, but won’t grow a lot.”

Doctor (and NAA, whose numbers he’s using) have a narrow view of that third stream. A full-stack company should pursue such revenue streams as transactions, events, commissioned content, technology solutions and far more. Ken’s right that the current third-stream efforts of newspaper companies won’t grow a lot. But you need a full stack of revenue sources beyond advertising and subscriptions. The sideline efforts we’ve seen so far aren’t nearly enough, but a full stack has great potential.

Ken is right in being pessimistic about newspaper companies’ chances of growing digital advertising revenue: “The industry may be lucky just to stay even in digital ads in 2014.”

Newspaper companies have done a lousy job of selling digital ads, as Ken notes: Only $3.42 billion in 2013, most of it bundled with print ads. Newspapers’ digital ads grew only 1.5 percent in 2013 and Ken doesn’t expect them to do much better (or even as good) in 2014 or 2015.

But digital advertising represents a huge opportunity for a full-stack media company: projected at $52.8 billion this year and growing at 13 percent annually, Doctor says. A full-stack company can pursue digital advertising more aggressively and more successfully than the abject failure of newspaper companies.

It may be too late for newspapers. I don’t anticipate anyone investing what it would take to pursue a full-stack strategy. But I think a full-stack strategy, correctly identifying your niche and mission, as Jay suggests, can be the path to success for digital startups or for legacy media willing to adapt to survive.

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Links about journalism, education, hashtags and paywalls

A quick roundup of pieces I don’t have time to break down in detail:

Journalism and education

Ken Doctor

In The newsonomics of  News U, Ken Doctor suggests that news organizations can expand their community news and information role and play a formal role in education in the community:

As the tablet makes mincemeat of the historic differences among newspapers, magazines, TV, and radio, we see another bright line ready to dim: that seeming line between what a news organization and what a college each do.

I’m not going to try to summarize Ken’s piece, but I encourage you to read it. I will respond to one of Ken’s suggestions for the news business:

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How the digital-first approach can succeed at making money

I have blogged this week about various aspects of digital-first journalism. For any of that to succeed, digital-first must succeed as a business approach.

It will. It is. I’m not going to explain that in detail in this post, though. I’m going to shift to curation (an important process and skill in digital-first journalism), because lots of people have already explained the business aspects of the digital-first approach well.

John Paton, CEO of Digital First Media (and Journal Register Co. and MediaNews Group) explained the company’s business approach better than I would (which is good, since he’s the CEO) in his June address to the International Newsroom Summit in Zurich: How the Crowd Saved Our Company. His recent post on news media as medium and messenger elaborates, including the slide below. His September post announcing the formation of Digital First discussed some of the results of the approach so far (and we’re just getting started).

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Janet Coats is right: New York Times paywall is “rearview-mirror” biz model

Janet Coats articulated better than I did the problem with the New York Times paywall: It reveals, she says, a “vision very much preoccupied with the rearview mirror.”

Janet, former editor of the Tampa Tribune and the Sarasota Herald-Tribune (owned by the New York Times Regional Newspaper Group), notes how quickly last week’s paywall announcement followed Times Editor Bill Keller’s column about aggregation (which required a second attempt).

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Seattle P-I joins newspaper graveyard

Update: Ken Doctor’s blog Content Bridges notes one of the most intriguing aspects of the SeattlePI.com plan: Aggregating regional advertising opportunities for business.

Rest in peace, Seattle Post-Intelligencer.

When I was in Des Moines in 1982 and in Kansas City in 1990, I saw the deaths of two newspapers, the Des Moines Tribune and the Kansas City Times. So when I was unemployed in 1992, I applied all over the country, except in cities that had two newspapers.

I love the mountains, so Denver and Seattle were two cities I would have enjoyed working in. But I didn’t apply at either, because I didn’t want to be around when one of the newspapers died. Both cities had joint-operating agreements that kept the second newspaper alive a lot longer than I anticipated back in 1992.

In both Des Moines and Kansas City, the two newspapers were operated by the same company, so JOA’s were not an issue. The companies could see the duplication involved in dual staffs and the efficiencies offered by killing the afternoon paper and merging the staffs.

Even anti-trust exemptions were not enough to keep the Seattle Post-Intelligencer and the Rocky Mountain News going in today’s economy. The Rocky died Feb. 27. I have the final edition displayed in my office, courtesy of Judi Whetstine, who was in Denver that day.

The P-I followed suit today, announcing that Tuesday’s paper would be the last print edition, Editor and Publisher Roger Oglesby announced. Seattlepi.com will continue as a news web site with a much smaller staff.  

Add the deaths of the Capital-Times in Madison, Wis., last year and the cutback at both Detroit newspapers to three days per week, and two-newspaper cities are becoming increasingly scarce. Even twin papers in twin cities, such as Minneapolis-St. Paul and Dallas-Fort Worth, are viewed as precarious.

Cedar Rapids is a one-newspaper city. The Gazette is far healthier than most newspapers. But the deaths of long-established newspapers in Denver and Seattle underscore the importance of innovation and developing new business models. We have to change dramatically and swiftly.

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