The last decade hasn’t been kind to local newspapers. According to one study, 1,800 newspapers have shut down since 2004, and many of those that survived are facing tighter margins, layoffs, and corporate consolidation.
There are myriad reasons for this retrenchment. Part of the blame is on hedge funds that buy up local media companies and then squeeze them dry. Others point to major platforms like Facebook, Google, and Craigslist, all of which have siphoned away a large portion of the local advertising newspapers traditionally relied on.
Despite these headwinds, we’ve seen a few digital-first upstarts thrive in the local news market. One such company is Village Media, which started out as a single news site in an Ontario city and has since grown to 11 sites spread out across Canada.
I recently interviewed Jeff Elgie, Village Media’s CEO, about the company’s history and how it’s succeeded where so many legacy newspapers have struggled or failed.
To listen to the interview, subscribe to The Business of Content on your favorite podcast player, or you can play the YouTube video below. If you scroll down you’ll also find a transcript of the interview.
This transcript has been edited for clarity.
Simon Owens: Hey Jeff, thanks for joining us.
Jeff Elgie: You’re welcome. Thanks for having me.
You run something called Village Media. What does it do?
Village Media is a network of local, community based media sites. We’re primarily headquartered in Ontario, Canada, but we now have partner sites located all across the country.
It’s a company that has a headquarters and then owns all these individual local sites in these different locations.
Yeah, so we own 11 of our own community sites, and then we have another 13 sites that we work with a number of other media partners on.
It began as a single site over a decade ago? How did it get its start?
Its early beginnings were actually as a coupon site in Sault Ste. Marie Ontario, a small community of about 75,000 people. It’s a long story, but basically the coupon site didn’t work. Some of the learnings by the early founders were that they needed content to get people to keep coming back to the site. Through this long process over a couple years it evolved into something called SooToday, and that was the original media site in our entire network.
They decided they were going to go around to these local businesses and get them to offer coupons on the website to local residents, and people were going to go to their site and download these coupons?
Exactly. And as you can imagine, just sustaining it in terms of cost and promotion, and then the effectiveness of it — in those days people didn’t generally go online and print out coupons and then bring them into local retailers. It, as a standalone concept, didn’t work out.
So how did it eventually transform into a newsroom?
In the early days, when they looked at the cost of the model of the coupon world, it was attracting an audience on a regular basis. They were advertising in the paper, on billboards, on the radio. And so they thought, well, if we get a well-known and local columnist and get them contributing a regular piece, maybe that would get people to come back. And that was true. That started to happen.
As the business evolved and the business changed, the turning point was the addition of a dedicated, full-time, local reporter. That’s when things started to turn around.
So it started with a local columnist. They weren’t even doing original reporting. They were just writing some columns. The business owners saw some initial traction, and so they converted that role into one that did more robust reporting?
You got it.
What was the makeup of that initial site? It was just the one reporter and then the business people?
It was that, but there were other functions of the site. In those days, I wasn’t involved in the core business, but I was running an agency, and that agency had some staff that, prior to coming on board with the agency, had done some community development work with building a portal and a flash-based mapping system. They had actually hand traced every street in Sault Ste. Marie and they were selling business listings on it. This was long before the days of Google Maps.
We brought all those things together along with a classifieds engine, and then also started publishing obituaries. There was this mix of not just original reporting, but really all the things that a daily newspaper, in healthy times, would have provided. That was all brought together into this site called SooToday.
But it wasn’t really that profitable, right? At least at first?
No. It took many years to build an audience. I would certainly say the bleeding slowed down, as compared to the coupon site. They brought sales people in and started generating some revenue. That enabled us to sustain and slowly grow that business. But no, it was never really a profitable business on its own.
You were working at this agency. What made you decide to become a majority stakeholder? Was this before it had expanded into other sites?
There was an early day expansion a couple years into the SooToday conversion, with a sister site in North Bay, but fast forward eight years and it was still a single-person operation. The SooToday site had built up a tremendously sized audience.
What happened was I was running the agency in parallel. The agency took a minority share interest in the original SooToday company because we did a lot of the early development work, and in lieu of cash we took an in kind investment. Six and a half years ago I sold the agency and had intended to go into digital consulting.
At the time I had just finished managing 30 staff in a mid-sized agency in a couple different locations, and I was committed to just taking it easy, working a few days a week, working on some specialized clients with some specialized skills. But as I got deeper into the SooToday business model, and some of the ad operations and analytics and operations, it was really exciting to me. Probably about six months in I made an approach to the current shareholders and said I had an interest in running the company and taking over a majority interest, and I made them an offer at fair value to do that, and took over at the time.
That was step one. We went to the sister site in North Bay, which had some of its own shareholders. We bought them out and brought the two together. We then bought out a local competitor in Sault Ste. Marie that was primarily video focused. We bought them and then took a step back and said, ‘what is this thing called?’ A few months in, our creative director came up with the name Village Media, and we loved it, and away we went.
How long ago was that?
That was about five and a half years ago.
You eventually decided to start expanding to some other towns and cities. Was the initial idea that you could scale this to more and more sites?
That was my whole interest. I know I probably don’t like to rest too much, I knew if I took over the SooToday site, we’d probably try to grow it. In those days, I thought the goal would be to grow it into the largest media network in Northern Ontario, which is pretty much just five main communities ranging from 40,000 people to 120,000 people.
That was the idea, to take this, build some technology that would let us scale more efficiently and more effectively, and dominate northern Ontario. And fast forward today and it’s gone a lot further than that, but that’s what fueled the early interest.
So walk me through this expansion. How do you decide when to launch a new site?
In the early days, because we weren’t quite ready to do it yet, but we wanted reach so we could start selling the audience, we actually partnered with some traditional media outlets, two newspapers companies in Ontario. We went to them and said, ‘listen, this is what we’re going to do. We’re going to build some technology to run this business efficiently. We’ll help you with guidance and transformation to digital and selling.’
So we onboarded those partners right away, mostly because we didn’t have — we weren’t ready and didn’t have the technology built, we didn’t understand the business fully, and we didn’t have a ton of capital to work with and keep launching new sites from the get-go.
So we partnered with those two. We came across a site in Timmins, Ontario, which was one of those five northern communities — it was a hobbyist site run by one person, something they wanted to get out of. It had the same name, Timmins Today. We acquired that but didn’t do much with it.
It wasn’t until about three years after we started that we had completed building the platform, the community engine as we call it today, and we then said, ‘we have a better handle on the business, we have full control of the technology, the SooToday site has become successful and profitable, we’ve turned the North Bay site around, we’ve got these partnerships. Let’s get going.’ And away we went.
These days, now that you’re a little bit more capitalized and have a steady revenue base, what’s your decision making process for launching new sites?
For us, there are certain community criteria that we look at. One of them is size. We’ve purposely stayed away from major markets. There are a couple reasons for that. Part of it is competition, but another part is just the nature of the community and how it feels about itself. We kind of say that one criteria is that it’s not a commuter community. This concept of I live here and work here, and even better I was born here. You get this sense of strong community identity, almost this isolation from other major media markets. Then you kind of get to know the audience is looking for certain things, certain types of news coverage, certain types of community information, in some instances classified ads or real estate listings.
So that’s definitely a major set of criteria for us. After that, we look at contiguous markets. So if we can open up in a market that’s nearby another, it often helps with nearly every aspect of the business, whether it’s travel, sharing of content across regional clusters, to selling clients across regions, and then we look at competition. In a lot of cases, it’s less relevant than you might think. It’s certainly not the first criteria we look at in a market. A lot of people would think that we’d only go into a market that’s a news desert, as you’d called it today, when in fact all of our markets have news competition. Every one of them has a daily newspaper, if not a daily and a weekly, and then radio and TV and whatnot.
It’s certainly a consideration. In some markets it’s led to an acceleration of launch. But it’s not necessarily the number one criteria.
What’s the minimum population of an area? I was interviewing someone else who runs a local news network and he said that an area would need at least a population of 10,000 residents before it could sustain an actual news organization.
That’s our smallest now. We operate in Elliot Lake, which is about 10,000 people. It would be our leanest operation in the sense that it doesn’t have a full-time sales person in an office, for example. I think some of the new programs we’re rolling out might let us push a little bit lower than that, but today that’s kind of the lower limit.
Most of our markets are 30,000 up to about 150,000 on our owned and operated site.
What’s the minimum staffing for an individual site?
Outside of that 10,000 person market, we try to look to have a community editor who would also have a reporting function, a full-time reporter, and a full-time salesperson.
You would ideally launch in a smaller market with three full-time people, and then add as you go along and compliment with freelancers.
What’s the community editor aspect of the job?
They set the tone for editorial. We give them a lot of autonomy in terms of how they operate. They’re guided by a managing editor here in the main office. We also have a support desk team here that does a lot of things like posting obituaries, moderating comments, moderating user accounts.
The community editor is really responsible for setting the tone of coverage and the depth. They would oversee the reporters, and they’d also oversee freelancers.
So they’re an editor for the site. I assumed community editor meant they were managing comments or social media or user generated content.
No, it’s like a city editor.
You mentioned this custom platform. There’s this ongoing debate in media about whether you should be using open source or already existing content management systems, or should we build our own. What did it take to build and maintain that platform, and why did you choose to go the custom route?
I think a lot of that goes toward my background. The agency that I founded and ran for many years started as a web development agency. It kind of morphed into a more of a marketing agency. But our specialty was always digital. In particular, some custom web application development.
So along the way we used Wordpress and off the shelf content management systems when customers demanded it, but I always felt that when you wanted to achieve exactly the specification you wanted with the most flexibility, then we were builders. We loved to build from scratch. And because we’ve been building websites for over 10 years, we knew that an off the shelf solution would never afford the feature set and the efficiency that something we could build would do.
It was always a given. It was never a question for me. I knew when we started that we would, in time, start out to do this. Looking back, I would 100 percent make that decision again, but I would do that because of the background I had. We were able to do it quite efficiently, where that might otherwise take years of development. Though to be fair, we’re still developing, still adding new features to the platform. There’s no question we would do it again.
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How has that shaped your strategy? I interviewed another company I talked to, they were able to build custom ad products, ways for people community members to submit press releases, classifieds. What have you been able to build that you wouldn’t get from third party platforms?
That’s just it. We built way more than a CMS. We built a classified engine, an auction engine, a user account profile management system. Our own comments and comment moderation platform. We’ve got mapping, custom analytics built in, voluntary pay modules built in. It goes on an on.
What’s happened is that we’ve built not only this platform that’s integrated, meaning we’re not bolting on this Frankenstein of a whole bunch of tech, but our licensing costs are effectively zero because we built it all, but the user experience and the integration of user data is 100 percent ours. So we’re not shipping data all over the place. We’re able to take advance of someone having one account on our platform and now you’re able to do all of these things, and by the way we can really effectively manage it with a smaller team, because it’s tuned for that.
It would take so long to build something to that particular specification. This is what the whole platform is built for. It’s not built to run other types of sites. It’s built to be a multi-site publishing engine.
You mentioned comment moderation. What are you doing in terms of trying to get communities more engaged? Do your sites have comments sections?
We talk about it all the time. We used to use Facebook comments, but as we grew we realized it was difficult to moderate, there wasn’t a central moderation capability. Plus we knew we wanted to do more with it. So we built our own commenting system and integrated it into the backend admin modules of the environment. So now the user accounts were connected to their comments.
But then we bolted in Google’s Perspective API for toxicity monitoring. We used some Microsoft engines as well to pre-moderate blacklisted words. We said, ‘before we start to build up our community discussion, we need to put good infrastructure in place.’ Now that’s in place, we’re slowly picking away at how we can ask questions, how do we start getting the community engaged with better dialogue. Can we make this a 100 percent safe environment? I would say it’s still not 100 percent safe, you still suffer from the issues that everyone does who runs comments. But the more safe we can get for users and the more they come to participate, then we could do things like asking questions at the end of an article like ‘how did you feel about this article?’ We’re trying to build a more healthy debate with the community.
At the same time we’ve launched features like in-story polls. So if you’re not comfortable commenting, you don’t want to link your account or your name to it, you can take a poll. We also launched a mood meter so if you have a particular type of reaction to the story, you can express that by clicking on a mood icon, almost like an emoji at the bottom of the story. We try to always look at ways we can engage with the audience back and forth.
Do those comments ever make it into articles or spur new story ideas?
Honestly, I would say today, not a lot. These are things we’re working on more and more. I don’t think you’ll see us give up on comments. You’ll see us continue to escalate our efforts. How do we have better discussions two ways with our audience, and how do we get them more engaged?
We’re actually piloting a program with Google in Canada called Bulletin. It’s getting the user engaged and contributing content. We’re always looking into how to do that. I don’t think I would say we’ve got it perfected by any means at this point in time.
Tell me about the benefits of a network in terms of pooling resources and cross pollination. What are you doing at the headquarters to provide resources to the individual sites? Are you providing editorial and marketing guidance?
In the head office, we have finance and operations. We have a creative team here that does all the ad design work. We don’t outsource any of that. We have creative direction for Village Media as well as the community brands. If you need a tent or coffee mug designed, that happens here. All the technology is 100 percent centralized. The tech itself is what we call ‘opinionated,’ meaning that it functions in a pre-described way based on how we think is most effective to operate the business. So for example, a local team doesn’t have to worry about publishing to social. The platform handles that. They don’t have to worry about hand curating a daily email. The platform does that for them.
We also have content administrators that do things like moderate accounts, moderate comments, fix typos, upload obituaries. All of those kinds of things. And then in terms of marketing the sites, we’ve centralized most of that function, though most of it tends to fall at the community integration level. But things like running social campaigns or search campaigns, particularly when we’re launching in a new market, are all centralized here at head office.
So when you look at the makeup of the local market, it really is, truly, first and foremost a local reporting team, followed with a sales team. It doesn’t require all the other complexities of running a local media operation.
What are the local building blocks for reporting? I got my start in local newspapers. The two I worked for highly prioritized covering the local schools. That was the most important thing. Next was probably local government, and then local businesses after that. The first newspaper I worked for really prioritized local school sports, they even had a reporter solely dedicated to that. The second newspaper I worked at barely covered local school sports at all. In terms of the mix of where you invest your reporting resources, where do you focus your efforts?
Things have changed a little bit, but in most ways they’re still the same. Local city council, for example, is a given in any of the sites you go to. Coverage of schools or hospitals or things like that would probably fall after that. The general day to day goings on of the community: police news, weather, transportation, or closers — that would form a significant chunk of content in all of the communities we cover. Event coverage, non profits, charities, new business openings. And there’s a lot of human interest, featured based. Here’s a community member who won an award.
You’ll see some courts coverage that seems more in-depth depending on the size of our market.
That was something that was never prioritized at the newspapers I worked at. We’d do a little bit of courts coverage if there was something big, but we didn’t have someone down there covering whatever was coming across the court docket. But whenever I got sent down there, there were always fascinating things happening. So I always thought when I was down there that there were probably a lot of stories we were missing just by not sitting down there daily watching every single local court case happening.
I think that’s fair. I know we also don’t have someone full-time at the courts at any of our sites. But I think there are always interesting things going on, and as we evolve and the business grows and the model continues to grow, then you’ll see us cover more and more things.
The one area that we’ve always struggled with is sports. That often was an anchor in daily community newspapers, and we’ve struggled to get traction in that area. What you learn is that in-the-moment game coverage in today’s world — there are so many sources of that information now. Social media being a big one. Every parent, who 20 years ago couldn’t wait to see their kids in the local newspapers, now they’re posting it to Facebook or Instagram or Twitter in the moment when it’s happening. We’ve learned on the sports side that it tends to be more features based. We’re doing a profile of an athlete vs a particular outcome of a game itself.
That’s interesting, because most of it didn’t exist when I was in newspapers. Certainly not when I was in high school. I didn’t think about how that changes the dynamic that they’re posting Instagram photos while the game is happening.
Exactly. And I think you have a lot of other media coverage, especially if it’s a live event. Or you might have another newspaper covering it. There are a whole bunch of dynamics going on and we’re just trying to find our position within that.
You mentioned the benefits of two sites being in adjacent cities. What kind of network benefits are you seeing there, where you’re able to cross pollinate content and advertising?
Outside all the efficiency of the central operation I talked about, if you look at these regional clusters, you see a huge benefit in the cross pollination of content in editorial. We’re very locally focused. As much as we carry national content, it’s very limited from an audience standpoint with us. However, if you get communities that are 20 or 30 minutes apart, there are often things that a local reporter is covering on the edge of one market that’s relevant to two or more. There’s a huge benefit of scale there.
And the same goes with advertising. You have a client who wants to reach people 20 minutes down the road just as much as the ones right inside our community. There’s no question that there’s some efficiency in those regional clusters.
Talk to me about revenue. Are these sites profitable?
They’re not all profitable. But the mature ones are. SooToday being the oldest and other ones that come along the way. We’ve learned that it can take probably two years plus to get a site to profitability. Some happen a little faster because of market conditions. There’s one or two where it might not happen longer than that, just based on the way the audience is responding. But certainly, we’ve been able to accelerate growth through the profitability of some of the sites themselves. I’m a big believer that this model can work. I guess we all are. We’re all pretty passionate about it. It’s not easy, but I guess as you see the audience and the industry transforming, you see there’s more and more hope every day.
Without question, these sites can be profitable. It just takes time. If you look back at old models, you didn’t walk into a market with a newspaper or a radio transmitter for zero costs. So instead of building printing presses and building transmission towers, our investment is building audience. Once the audience is there, there are tremendous ways to monetize it that can make a real business out of this.
I’m assuming a lot of your revenue comes from advertising. Are you doing ad sales at just the local level, or do you also have ad sales people at the headquarters trying to get larger accounts?
It’s pretty much all local level. Any kind of national sales, we do have one rep that works with national clients, but I’ll be honest, it’s somewhat limited. Most of the national sales comes through open auction ad exchanges. That whole mix is under 20 percent of our total revenue. The bulk of it really is the local sales teams selling local and regional clients directly.
Do the ad sales people in one site have incentive to sell ads for another site in a nearby location?
Absolutely. Just like editorial, there’s tremendous benefit to that. We have financial institutions or school boards or regional associations that, when they come to a sales rep, that rep can sell to multiple sites at the same time. Which is great for us, but it’s also great for the client. It makes it very efficient to buy in that sense.
As you spread out across the country, are you seeing more benefit to the programmatic auction at all, because you’re scaling your audience and covering a larger demographic of people?
Yeah, I think so. We already see that to some extent. We’re extremely dominant in northern Ontario and then some other regions. You’re starting to see some interest from some auto companies where we can reach a very particular audience in a very big way. The more we grow, the more we expect that to continue to happen.
My goal would be to have zero national sales. It would be to fill these things with local clients. Much like the healthy days of newspapers, the local advertisers form part of that envelope of content. Local businesses like to see themselves next to local content, but local readers like to see local businesses beside what they’re reading. So you see that really working. Our focus will be to say, ‘how do we sell 100 percent of our inventory out locally and never mind open auction and national advertisers. Let’s drive tremendous benefit for these local advertisers and make it work.
At the same time there are a ton of businesses that are local businesses but part of national chains that have storefronts in multiple locations. That’s where scale can help.
Tell me about your local legacy newspaper competitors. How are you beating them? How are you out-competing them?
I think there are a couple things. In almost all of our markets we’re larger than the legacy newspapers from a digital audience standpoint. It’s pretty much almost universally the case. I think part of it is we’re pure-play digital. That’s all we think about all day long. That’s the way our editorial team thinks and functions. We promote ourselves like a digital pure play. We build our audience in specific ways. There’s a whole set of guidelines about how we operate that’s kind of different.
The other side of it is that by nature of being a pure digital play and a distinct brand, in the eyes of our audience we are different as well. I think this concept of positioning and audience perception is really critical. They look at us to be the go-to source for Sault Ste. Marie. I’m going to bookmark you, make you my homepage. I’m going to come back to you two to three times per day. I’m going to come back to you for comprehensive community coverage that hasn’t been scaled back, because you have not only local news, but you have obituaries and classified and transportation and weather. The fact that we’ve positioned ourselves in the minds of the audience that way really helps.
I think you could argue on the other side that if tomorrow we decided to publish a newspaper, I don’t think we’d be good at it. We’re not in the business of it. This is our life. We live and breathe this every day.
A lot of local newspapers are failing now. A lot of blame is pointed toward Google and Facebook sucking up a lot of local advertising. I wonder if the reason a lot of these digital media companies are beating their legacy competitors is because they’re just much leaner operations. These legacy publications are trying to adapt to a digital world, but they’re heavily staffed with high overhead. They’re trying to do it with these legacy systems in place, and the benefits for a company like yours is that you’re able to grow organically in this digital media environment. Do you think that partially explains your success?
I think that’s part of it too. We’re leaner, we’re more efficient. That’s part one. Part two is that we behave differently. And then part three is we’re received differently by the audience. I think it’s a mix of all of those things that make it work.
What kind of distribution platforms are you most reliant on for driving traffic?
It all depends on the maturity of the market. A mature market for us would actually drive the bulk of its traffic through direct visits. We’re bookmarked or on their homepage. Or organic search, which is mostly searches for the brand name itself.
After that, you’re going to have more broad organic search terms, and then of course Facebook. Facebook is always a significant source of traffic, although less than it was three years ago.
If you look at a new market, we tend to use Facebook as a real core part of our launch strategy. We’ll drive a higher percentage of traffic in the early days. What I love this past year is we’re using all these channels to drive people to email subscription. We have some markets where total pageviews from email subscribers are beating out organic search, and they’re beating out Facebook. We’re always trying to make sure from a distribution standpoint we’re diversified, with a focus of driving people back to our environment. You’ll never see us on Instant articles. You’re not going to see us AMP our pages. It’s all about how do we use these platforms to drive people back into our world, and then hopefully make them follow us on social, subscribe by email, and then bookmark us and make us their homepage.
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