Covering thought leadership in journalism
Editorial members of the Austin American-Statesman’s protest the company’s leadership and cost-cutting measures imposed since its 2019 merger with GateHouse Media, June 5, 2023
Press Forward launch. Alden still buying. Texas Tribune’s reckoning. Invasions of Kansas newsrooms. Beyond news fatigue, active news avoidance. “Prompt engineers,” perhaps replacing journalists.
With just a few months to go until 2024, we enter a potentially perilous presidential election year on edge, uncertain, and hopeful, just like many of our local news readers across the country. The old cautionary tales of 1984 and 2001 reside in our rearview mirrors as we try to get our heads around the real impacts to come of artificial intelligence in societies already bathing in misinformation and disinformation. And then, there’s the stubborn, persistent, sometimes inconvenient fact that despite all the efforts of more than a decade, we’re still losing more local news creation than we are gaining.
Many of us have been waiting, watching, and debating the promise of Press Forward all year long. The year dawned with the publication of a controversial roadmap, which I critiqued — “Dear Sunnylands, Widen the Road: and Mark an Achievable Destination for Local News” — here at Nieman Reports. And, then through its larger private twists and turns, Press Forward now presents us with the biggest point of optimism in an otherwise too-bleak landscape. To be sure, Press Forward will be no panacea. Here, Jim Friedlich well lays out its genesis and its goals, with a hopeful headline: “The Press Forward Multiplier Effect.” The $500 million-for-local-news campaign does rivet attention. And that provides us all with the opportunity to assess where we are as 2024 approaches and Press Forward moves into high gear.
One way or the other, 2024 will be a decisive moment in the fractured and frustrating effort to replace (in one form or several) the old local news print world that only stumbles along on its last legs. After 21 years working as an editor and executive of what was then proudly the second largest newspaper company in the country, Knight Ridder, and then about a decade spent bringing my Newsonomics lens to the downward spiraling business of news globally, I’ve now spent almost half a decade focused on my own model of local news revival, Lookout Local, and our first site, Lookout Santa Cruz.
So I bring that dual lens — veteran news watcher and in-the-trenches local news entrepreneur — to this view of what may lie ahead. As Lookout itself plans expansion next year, and beyond, I’ve tried to make sense and bring order to an environment that seems to feed on disorder. Each of these nine truths, my own, could spawn a lengthy debate among us. I’d look forward to that. We know we’ve got to get this right.
The list isn’t definitive, but it’s a start in helping me differentiate between bedrock and quicksand. So here are my own hard and hard-won truths about reviving local news.
1. The numbers are eye-catching, but we don’t yet have a narrative to understand or explain them. Take the $500 million announced by Press Forward leader John Palfrey on Sept. 7. Half a billion is a big number by any measure. And we know that both Palfrey’s MacArthur Foundation and the Knight Foundation have doubled their commitments to local news, at about $150 million each. We also know that while the grant land rush begins in 2024, the money will likely be granted over five years, not in a single year. That may be smart, but also, puts the funding in a little more perspective.
You had to love the headline on the Nieman Lab piece on the initiative: “Is half a billion dollars a big-enough Band-Aid to cure what ails local news?” Bandages, tourniquet, hemorrhaging, what are the metaphors we grasp for?
To be sure, the money is both difference-making and likely insufficient for local news revival.
How much is needed?
A smart industry colleague recently engaged in back-of-the-envelope estimation of how much might be needed to really run a revived, impactful local news industry in the U.S. The scribble: $15 billion. A year. Or as Dick Tofel suggested in his recent Press Forward piece, maybe one billion a year in philanthropy. In any event, it’s a big and difficult-to-grok number, but it gives you an idea of the difference between starter money and operating money. And that’s the key to funding as all involved in and around will agree: This round of money better make some bets on “winners,” whose models prove out as replicable examples — and lead to “sustainable” news operations.
One other eye-stopping number: $632 million. That’s the amount of money that the Knight Foundation has spent on journalism since 2005. How does Knight assess its impact? Eighteen years is a long time, and so much has changed in journalism and society in those almost two decades. Knight has collected its impact assessments here, with an aim to measure audience and revenue growth especially. This may be useful as funders now look for intel. It’s almost impossible to ascertain a cost/benefit ratio, I believe. We may be left with this sentiment, expressed by an industry friend in the wake of the Press Forward announcement: “All we know is that things would be worse than if it wasn’t spent.”
2. This is a time of committed execution, not searching for “the answer.” Here we come to a key question for this next stage of funding: What is your theory of this particular news marketplace? We still hear, as we long have, that “no one has it figured out,” and that we need lots more “experiments.” And, thankfully, we also increasingly hear at this juncture, “let’s not do another ‘let a thousand flowers bloom’ again.”
The truth is out there, and unsurprisingly, the main supports of newer local news will be what they have been for several hundred years: reader revenue, or what long-departed Knight Ridder CEO Alvah Chapman described, with a second hard “c,” as circulation and advertising. Neither business model is a mystery. Both demand a good, unique product that serves reading and business needs. After that, it’s all execution. These revenue models, from The New York Times down to local markets, are working. They just need continued (and in some cases, better) execution and time. And, that is where this new targeting philanthropy can best fit in — providing capital, which buys time.
Let’s get realistic about sustainability. How long does it take to construct a built-to-last local news brand and organization? It takes more time than we’d like, and it takes more money than we’d prefer. It took dailies decades to win primacy and trust — and precious few years to lose so much of it.
Talk to the most successful larger local digital news start-ups, as I often do, and you’ll have a tough time finding any of them break-even to profitable on earned revenue. These aren’t put-capital-in-and-expect-profitability three-year small business plans; there is no hockey stick growth in serving smaller (non-national, non-global) audiences. That’s particularly true to the extent that we aim our local news missions high: to replace those flagging dailies with widely read, community-centric primary news. Meeting that mission requires more money — and thus more time.
What we do find and what represents a rational path forward: majority earned revenue businesses whose recurring philanthropy funding declines over time. The formula is more like 80/20, at this point, 80 percent representing that advertising and reader revenue contribution and 20 percent drawn from a range of philanthropic support, local and national, individual and foundation. The two important factors: majority and growing earned revenue and declining, and best recurring, philanthropy. That formula stands in contrast to too much of what we see in the landscape today; operations heavily dependent on philanthropy for the bulk of their operational expense.
3. Alden is still the major remaining buyer of dailies. You can’t believe how many times journalists ask me, as an analyst, why Alden Global Capital, operator of Media News Group, would buy more papers — often asked in the time period between announcement of the sale of their own paper and their own layoff. There isn’t any mystery here. Alden makes lots of profit, yes, even at your hometown paper, now down to a handful of newsies operating out of some benighted corner of an anonymous industrial office park.
How does it wring profits from smaller numbers of paying readers? It’s simple: Call it the Bamboozle the Boomer gambit. See, below, the bill of one long-time subscriber to the Denver Post. He recently got a simple renewal note, reproduced here:
That’s right. Only $1,616 (and 95 cents) to get 52 weeks of home delivery.
The usual stealthier strategy of Alden: send postcards with six-point type crying poor and informing its aging customer base that the paper will cost seven cents or so more a day. All those cents and postcards add up, so that many long-time subscribers are paying $600, $700, $800, and more for their denuded print. So this notice stands out in its baldness. Note the new subscriber price, below the invoice, of $41.60 a month or $500 a year — a relative bargain.
Just in the last three months, Alden bought the San Diego Union-Tribune when L.A. Times owner Patrick Soon-Shiong decided to divest, and then a group of family-owned papers in Scranton, Wilkes-Barre, Hazleton, and Pottstown, PA.
In my continuing talks with those in the know, it’s clear that Alden is in many ways the last remaining buyer for medium and larger dailies, while smaller chains have been consolidating smaller papers. Alden now controls 68 dailies and more than 300 weeklies in the country, second to Gannett, which controls somewhere around a quarter to a fifth of newspaper circulation.
As many focus, rightly, on the building of the new, let’s not lose focus on those papers that still remain and the hugely important, daily newspaper industry. For us, two questions:
4. It’s time to abandon the tired dichotomies that have wasted our time. Briefly, let’s take five:
5. There’s a new triangle model to ponder. Steve Waldman’s persistence amazes me. As a serial doer of good in the news industry, he sees windows where too many see walls. His Rebuild Local News organization, made up of a hard-to-assemble group of semi-friendlies, has kept a good focus on directing money to local news organizations through state legislation setting favorable tax treatment around local news. Tax credits for local news organizations hiring and retaining journalists. Tax credits for local businesses buying local news site advertising. And my own new favorite: directing much of the substantial spend of government advertising/public notices to local news organizations. A group of us independent California local news organizations is now forming to lobby our legislators on these policy prescriptions for the 2024 session. It would be great to see more local news companies do that, state by state, in the year ahead.
I have no doubt that the slate of would-be funding help — which seeks mightily to avoid having governments pick winners and losers — will move forward. The question is how far, how fast.
But to the extent, it does, it helps to fill in the news business model, shown here on this triangle. At the top, earned revenue, mostly reader revenue and advertising, provides that solid foundation, a majority of needed revenue, as I’ve detailed. On the left, recurring philanthropy, that declining-over-time support that provides capital and the ability to build big enough to meet mission and business model needs. On the right, tax-advantaged support, pulled from that suite of initiatives Rebuild Local News socializes. What percentage of revenue might it contribute? At best, it reduces some of the pressure on the two revenue sources. It’s too early to know, but it makes a great complement to the Press Forward push.
6. How good is the new digital-only local news sprouting across the country? So much time is spent talking about “the business model” and “sustainability” and new tools for journalism. That’s all important, but it misses a basic question: How good is the new local journalism being done out there? Forever, the quality of the journalism, just at the local level, has varied widely, and this new digital-only, start-up stuff is no different. Some excellent, some poor, and lots in between. Publishing local news in and of itself is no panacea. It has to be fair, consistent, non-partisan in my playbook, and trustworthy to broad swaths of a community, if it is going to succeed in replacing the function of the once (largely) trusted daily newspapers.
Then, there’s the cousin of that question: How much local journalism is needed, and what kind? Check out the INN and Lion publisher lists, and you’ll find the most dedicated group of journalists in the country — and a wide spectrum of journalistic goals. Many of us focus on accountability, and in a sense, that’s a no-brainer. It’s the admission price to the club. If accountability is the sole focus, though, that means a smaller audience, and in my view, less of a chance to both maximize impact and to fund the work. That’s why we’ve built Lookout to offer a full range of community content, from government and education, to food, arts and entertainment, and this fall, targeted new niche audiences with coverage of wine, aging, high school sports, and a greater business news commitment. That means a bigger news staff and the business under it.
And then, the other cousin: Who is going to do this work?
In fact, while we direct so much of our attention to money in our rebuilding, we pay too little attention to the other beleaguered fundamental: talent. As I talked to peers who run news organizations, most will tell me that they spend too much time raising money, but that their biggest unsolvable headache is finding top talent for their news and business leadership jobs. We have each and all found some amazing young people ready to take on challenges, and we are building a pipeline of talent for the future. But we need more experienced, mission-centric journalists, and we need more quickly.
And, yes, while originating local reporting is the main metric, let’s talk about editors and editing. Good editors are a gating factor in reviving the local press and enforcing the standards we need to rebuild trust over time. They are in perilously short supply.
Raising the money to pay the people we need to lead the next generation of news is fundamental, but so is recruiting and training them.
7. We must continue to sharpen the pencil on shared services and infrastructure. Fundamentally, news organizations need to focus on two things: 1) creating great news products and 2) earning the money to support them. But, like any other business, the “everything else” publishing requires is voluminous and time-consuming: financials, insurance, HR and benefits, government paperwork, getting the office cleaned, and the vicissitudes of the “tech stack” — the fundamental make-or-break enablement for any digital operation.
Press Forward’s funders have rightly identified these headaches as a target for improvement, under the rubric of “shared services” and infrastructure. Now, the hard part. One fundamental divide, I think, centers on this question: Which needs are unique to news operations, and which are not? For the most part, running a news organization is like operating any other business, and the world of outsourced functions, including PEO-based HR, payroll and benefits, and fractional accounting, is well established. These need not be reinvented, but maybe clarified and group-priced for publishers. The infrastructure that is fairly unique to publishing demands the focus, and the good news here is that work has begun thanks to the Knight Foundation’s additional investment in the Newspack content publishing system, which was announced last week. Now, it is in related fields, especially specific to news operation runs like the audience growth and management and reader revenue, that big dividends could lie ahead.
8. It’s time to update the weather report. I first recall hearing newspaper company CEOs explain bad financial results on their quarterly earnings calls by citing “headwinds” in the economy at least 15 years ago. How long can these guys sell this permanent weather report, I wondered. The apparent answer: forever. And Gannett’s Mike Reed isn’t the only one. It’s time for an industry in retreat, in part because of its propensity to put profit over mission, to acknowledge, after a decline that began in 2008, that it’s not headwinds, but the reality of modern life itself — and the choices they’ve made — that have landed them in their positions. Then, there are mighty winds of their own making, like the gusts Gannett created by taking on the $1.8 billion dollar debt to finance the Gatehouse/Gannett merger. That debt service resulted in massive newsroom cuts across the company.
9. What would JB do? Let’s ask one last question for now: What if we asked, of those building new local news organizations not how little they need to stand up their enterprises, but how much funding would allow them to hire the best, experienced, diverse, mission-directed appropriate talent for both the newsroom and business operations. Enough talent and money to ramp the organizations as fast as possible in mission, audience, and revenue growth? To build new organizations that will last for decades?
The JB here is Jeff Bezos and the MO is, of course, Amazon. It took Amazon 10 years to reach profitability, as he famously invested in growth over break-even/profit.
Let’s face it. We are operating with a scarcity mindset: We have too little with too much to be done. That seems our reality.
Turn the glass over for a moment. Yes, the community news vacuum threatens democracy itself — but I’m convinced it also represents an unprecedented market opportunity — given enough time. If the financially driven chains have left a vacuum, does it make sense to fill that vacuum slowly or quickly — before those with political and partisan passions fill the gap?
If you believe that readers and businesses needing customers need local news, then figuring out how to provide it doesn’t just serve a mission need, it powers new business. That may seem contrarian, within our current scarcity mindset, but consider a longer time horizon. If we execute correctly, we could see healthy organizations and businesses robustly serving communities, sustainably and growing for a long time to come.
Ken Doctor currently serves as a national business of news analyst and CEO/founder of Lookout Local/Lookout Santa Cruz. His 48-year career in journalism encompasses alternative weeklies, monthly magazines, newsroom and newspaper management, and digital innovation, including 21 years with Knight Ridder Newspapers in both digital and print executive capacities.
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