How local news outlets can compete with the Facebook/Google duopoly
It’s become obvious over the last few months that the national news media, particularly the part of it that exists online, isn’t exactly a paragon of good health. Thousands of journalists have faced layoffs, millennial-focused publishers have gone up in fire sales, and the venture capitalists that once funded those publishers have tightened their purse strings.
But while most of the attention lately has been placed on the ongoing struggles of national outlets, local media isn’t faring all that well either. A recent Association Press report claimed that 1,400 cities and towns have lost their local newspaper over the last 15 years. The local newspapers that still do exist have faced several rounds of layoffs, and many are now operating with what are essentially skeleton crews.
And lest you assume this is a problem that merely afflicts legacy newspapers, there are plenty of examples of tech-forward, innovative media companies failing to gain traction. The most famous, of course, was AOL’s Patch, which under Tim Armstrong’s leadership burned through tens of millions of dollars before he was finally forced to sell it off to an investment holding company. And sure, Patch is now considered profitable, but it isn’t producing the kind of robust journalism that we’ve come to expect from our local newspapers. “Patch … usually assigns a single journalist to cover multiple towns,” wrote Recode’s Peter Kafka. “Those reporters then generate five to 10 stories a day, which means those stories are almost always generated quickly.”
Spirited Media, which many industry watchers considered a bright spot in the local news landscape, is also facing headwinds. As recently as 2017, its executives were referring to the company as “the BuzzFeed of local news,” but earlier this month it announced that it was selling its Denver news site and also looking to offload its Pittsburgh and Philadelphia sites as well. The company was in the midst of pivoting to a membership model, but its failure to generate VC interest in a Series B round meant that it would be forced to move forward with increasingly scarce resources, a scenario that its executives didn’t have the stomachs to endure.
What ails local news outlets? In many ways, it’s the same market forces that afflict their national counterparts. But there are challenges unique to local news.
For one, large swaths of the industry have been vacuumed up by hedge funds and private equity firms that don’t even bother pretending that they’ve acquired these newspapers out of some idealistic desire to sustain local journalism. Alex Shephard, writing for The New Republic, described the parasitic effect these firms have on their newly-acquired victims:
Because newspaper earnings have fallen, they are cheap for private equity firms to buy. These firms can then juice profit margins by cutting staff. Meanwhile, the debt prevents newspapers from reinvesting profits into rebuilding their newsrooms. Instead, staff cuts continue as papers try to meet impossible profit goals. And because staff cuts prevent papers from covering important local issues — or, sometimes, even just the basics, like city council meetings and sporting events — circulation drops further, making them irrelevant and unattractive to other buyers.
And unlike national media outlets, which are able to adapt to the ever-evolving technological trends that govern the internet, local newspapers just don’t have the financial resources to hire the tech expertise required to make constant updates to their websites and apps. Peruse through the websites of local newspapers and you’ll find content management systems that haven’t changed in a decade or longer. I recently revisited the website for a local newspaper I stopped writing for in 2008, and it looked just as I had left it. And even back then it wasn’t exactly sporting cutting edge design.
Of course the Facebook/Google advertising duopoly has played its role in draining demand for local newspapers’ chief revenue source. It’s now increasingly easy for local business owners to target social media and search ads by both zip code and user interest, and all without having to deal with a newspaper ad sales person. What’s worse, local outlets simply don’t have the web traffic scale to make programmatic advertising a viable option, nor the aforementioned tech expertise to implement the necessary ad tech.
But the great thing about the local news industry is that it isn’t homogenous. There are thousands of news outlets spread out over many cities and towns, each with a different population and dominant industry. While lots of media companies continue to suffer, there are plenty that are thriving. Looking at this latter group, it’s possible to identify some trends and best practices that could be adopted industry-wide.
For instance, some local publishers are seeing success from launching niche verticals. Last year, I interviewed Christopher Wink, the co-founder of a company called Technically Media. After graduating from college at the height of recession, Wink and a few of his classmates struggled to find journalism jobs, and so during their abundant free time they launched a blog that covered Philadelphia’s burgeoning tech scene. It was an industry that was largely ignored by both local newspapers and national tech blogs, and so their site quickly carved out a vibrant following. Flash forward a decade, and this bootstrapped company runs tech verticals in DC, Philly, Delaware, Baltimore, and Brooklyn.
The Athletic, a venture-backed company launched in 2016, operates on a simple premise: people are obsessed enough with their local sports franchises that they’re willing to pay for a publication that focuses on them exclusively. The company has aggressively expanded into dozens of cities, sniping away the best newspaper sports writers and placing their content behind paywalls. Though The Athletic is still in growth mode, we’ve seen evidence that readers in some of its target markets are showing a willingness to subscribe. Slate estimated that its Chicago vertical alone brings in $1.2 million in revenue, and Digiday reportedthat several legacy newspapers are beginning to replicate its model by launching standalone sports verticals with their own subscription prices.
Another trend I’ve noticed? Publishers eschewing display advertising for alternate revenue models. I’ve already mentioned The Athletic’s subscription approach. Technically Media’s Christopher Wink told me that he hates advertising-based business models and that his company has seen most of its success by hosting events and charging tech companies to post to its online job boards.
TAPinto, a New Jersey-based media company, has invented its own ad offerings that can’t be easily replicated by Facebook or Google. A lawyer named Mike Shapiro launched the company as a single vertical for a cluster of New Jersey towns. After that initial site started generating revenue, he began to expand it into other nearby towns, eventually transferring to a franchise system in which anyone could buy in to the company and launch their own local news site.
In an interview last year, I asked Shapiro why his sites have succeeded in towns where legacy newspapers have failed. He pointed to a number of ad offerings that afford local businesses special privileges on the site. For instance, advertisers that meet a specific price threshold are given their own blogs on the site, which not only produce additional content for the vertical, but also serve as a content marketing platform for the sponsors. Advertisers are also allowed to upload their press releases to the site and are featured in its auto-generated newsletter. TAPinto has launched over 80 franchise verticals and expanded beyond New Jersey into Pennsylvania, Florida, and South Carolina.
And while local news sites have been historically held back by their lack of tech resources, we’re seeing a number of new SaaS tech companies enter the market that are meant to serve up best-of-class publishing platforms to publishers large and small. Earlier this year I wrote about The Washington Post’s Arc platform, a content management system that not only offers up the best publishing tools on the market, but also gives participating publishers access to its ad tech and subscription software. Widespread adoption, as I predicted in my piece, would give the news industry a more level playing field as it tries to claw back some of Facebook and Google’s share of digital advertising.
But let’s face it: a lot of that advertising isn’t coming back. The publishers that succeed are the ones able to carve out hard-to-reach audiences and offer them and local businesses a product that can’t be easily replicated on Facebook or Google. The headwinds against local news are strong, but as publishers like Technically Media and TAPinto have shown, they’re not insurmountable.
By Simon Owens