Requiem For A Newspaper, Part II: The Road To Online

I explained in Part I why the P-I as a print newspaper is dead. But let me rehash some points I and others have already made.

  1. The P-I as we knew it is dead, because newspapers are dead. The ink-stained wretches may clutch onto false hope that someone will save it, but it’s over.
  2. Journalism is alive and well, though. And I’ve already seen one too many people talk as if losing the paper means losing the only journalistic voice in town. Between radio, TV, and blogs, there’s still plenty of journalism in this town. It’s just going to be… different.
  3. Hearst shuttering the P-I only delays the Times’ funeral. Before Friday, the Times wasn’t going to see out the summer. Now, they got, at most, two more years of life. But the Blethens are cash-starved and running out of things to sell. Going non-profit won’t save them from their business model. And they’ve been very, very backwards online, castigating bloggers where the P-I embraced them.
  4. This is more about the onerous JOA than Hearst losing money. Apparently, Hearst and the P-I have been pushing hard for a greater online presence, but the Times had to say yes to the initiatives, and they consistently said no. Killing the JOA, even if it means killing the P-I in the process, puts Hearst in control of their own destiny in the Seattle market, rather than still in the hands of the Blethen family.
  5. No one has ever done a true, daily, online-only newspaper wholly independent of any other media source or revenue stream. No, really. And before you start saying Crosscut, look at it. It produces one, maybe two articles a day. Add that all together and you get the output of a weekly newspaper, like the Seattle Weekly David Brewster used to run. Every online newspaper up to now has depended on revenue from elsewhere to keep itself, mainly from ads sold in the dead tree version. Yes, that means there’s never been a successful online-only newspaper, but it also says that there really is no business model for an online-only paper. The P-I going wholly online will be a first, and comparing it to other web models pre-supposes a great deal.

It seems like going online-only, in the long term, is a smart business decision. Five years from now, being first-to-market with an online newspaper will give you huge structural advantages over all your competitors. Even if there is no model yet for a wholly online paper, five years from now there probably will be. And right now, the old newspaper model is broken. So, if Hearst or someone else with money is willing to gut it out, they will be positioned to dominate the market when the stars do align.

With that in mind, this is what I’d suggest the P-I’s owners should think about the day the end comes.

  1. Be strategic about whom you’re keeping. Ideally, you want to cut all but 20 people. Hang on to a couple of sales people and IT folk, natch, but what you really want are the most passionate journalists and editors left on that staff, the ones who are willing to be a little idealistic and eat some ramen for a few years. And you want writers who not only know and understand Seattle, they know and understand the online space. The folks who are anti-online or in the least disdainful of online you need to show the door.
  2. Treat this like a Web 2.0 tech startup, not like a newspaper. I’d start by breaking the lease on the office space and telling MOHAI to come get their globe. Hand your reporters laptops and bus passes and coffee cards. If you need to have a meeting, rent a coworking space like Office Nomads. Stay lean. Scarcity should drive, not paralyze. Use free web tools to organize. Pay cash. Avoid adding staff until you can afford it.
  3. This will infuriate the Guild. So offer them two choices. They can either choose to continue representing everyone who is left — with massive concessions to the new economic reality and the startup mentality, or they agree that they won’t attempt to (re)organize until the chasm has been bridged — and when they do, you will not stand in their way. Neither one is really palatable to the Guild, and the history of unions in online companies can be written on a cocktail napkin, but in five years the Guild may not have anyone left to organize.
  4. Investigate, uncover, watchdog. Seth Godin today really nailed why we value newspapers as a community:

    [after going through a litany of things he won’t miss about newspapers] What’s left is local news, investigative journalism and intelligent coverage of national news. Perhaps 2% of the cost of a typical paper. I worry about the quality of a democracy when the the state government or the local government can do what it wants without intelligent coverage. I worry about the abuse of power when the only thing a corrupt official needs to worry about is the TV news. I worry about the quality of legislation when there isn’t a passionate, unbiased reporter there to explain it to us.

    Punchline: if we really care about the investigation and the analysis, we’ll pay for it one way or another. Maybe it’s a public good, a non profit function. Maybe a philanthropist puts up money for prizes. Maybe the Woodward and Bernstein of 2017 make so much money from breaking a story that it leads to a whole new generation of journalists.

    The reality is that this sort of journalism is relatively cheap (compared to everything else the newspaper had to do in order to bring it to us.) Newspapers took two cents of journalism and wrapped in ninety-eight cents of overhead and distraction. The magic of the web, the reason you should care about this even if you don’t care about the news, is that when the marginal cost of something is free and when the time to deliver it is zero, the economics become magical. It’s like 6 divided by zero. Infinity.

    Readers can get their local and national and neighborhood news, TV listings, comics, sports scores, and Target circular from the Internet for free. Duplicating those things on your site costs you time and effort you could better spend on the things that make a newspaper a public good, like uncovering graft and corruption, or explaining the pros and cons of a ballot measure, or making sure the poor and needy aren’t getting ripped off or abused by the rich and powerful. We know papers do this, and they do it well. Focus on that. If you can afford hanging on to your AP wire contract, then hang onto it, but don’t let it be the core focus of your enterprise, not when you can read the AP wire through Google News.

  5. The bloggers and the journalists should be friends. West Seattle Blog and Capitol Hill Seattle, right now, are handling spot news in their neighborhoods far better than all other local media. Don’t do their job. Make their jobs easier. Use your expertise to do what they aren’t trained to do or what they don’t have the time or ability to do. Do NOT kill the P-I reader blogs; instead, use them to fill in your coverage gaps. Promote good posts and good writers. Aggregate the community stories. A good rapport with the local blog scene will also mean they’ll go to you with stories — and not to the Times.
  6. Your goal: A social news media network. If you do it right, the P-I will be the nexus of a news network that covers general and niche stories, one that has professional journalists working alongside kids with camera phones to serve the public good, one that promotes the good writers but also is not cliqueish and open to any and all readers. (This last bit is important; lurkers will make up a majority of your readers, so make them feel at home and not at some party where they don’t know the inside jokes.) Everyone one of us is a news gatherer; find a way to turn that skill into something collectively powerful. (And oh, if you have a social network, then you have an advertising network, too.)
  7. If you are going to charge for content, charge for content people will pay for. No one is going to pay for your opinion. Opinion, after all, is a fungible resource on the web. They’ll pay for fantasy football insider data, though.
  8. Finally, do NOT pay big salaries for “top talent.” They will only drag your bottom line down. Instead look for talent with experience in startups or in non-profits, people who won’t ask for six figures and won’t twiddle their thumbs looking important but will throw themselves into the position. I am still amazed how many companies overpay for big name tech people, even though the excess of the dotcom bust was only eight years ago.

One last thing: A few people have said that an online-only newspaper won’t work because it’s too generalist and not a targeted niche. They keep forgetting that cities are themselves niches. If they weren’t, then the concept of local news itself is thrown into question. People have been looking to local news media for information and advice since the advent of the printing press. The question shouldn’t be about whether an online news site has the readership volume to sustain itself. The volume is there. The question should be whether such a site will generate enough income to employ journalists to do the public good.

Tomorrow: I address the gleeful conservatives.

7 Comments so far

  1. josh on January 14th, 2009 @ 11:15 pm

    plus, the P-I already has "post" in its title, which already sounds pretty bloggy/newmedia.

  2. Beth (sea_beth2) on January 15th, 2009 @ 9:28 am

    Great post Dylan!

    And Josh- hilarious :D I’d never thought of that… but it really works well as an online newspaper name. :D

  3. Ryan (ryanhealy) on January 15th, 2009 @ 10:52 am

    Great post, Dylan.

    I think the key to the success of an online-only newspaper is contained in number 6 of your second numbered list. Simply moving a pared down offering of current content online clearly wouldn’t work. An online-only P-I has a unique opportunity, in some ways, to be (for lack of a better term) Editor in Chief of a thriving local blog/news community while also providing its own content. As someone who reads a printed version of a newspaper very rarely and who is overwhelmed by the amount of unread posts in my Google Reader account, I’d welcome a P-I that would spend the time to aggregate the best of the local blog community’s offerings while also providing its own content put forth by professional journalists.

    Dare I say it, but I would even pay real money for a service like that.

    Because really, going online only without a significant change to their content aggregation and delivery model won’t make them "first to market" in anything — online-only news has been around for over a decade.

    As shocking and sad as the P-I’s current situation is, I think there’s reason to be optimistic about their future.

  4. westseattleblog on January 15th, 2009 @ 5:15 pm

    Sorry again that we can’t represent at tonight’s event – two major meetings to cover.

    But I do want to squeak up with what I usually issue as reminders in these discussions. I would love to see an end to the perpetuation of the divide between "bloggers" and "journalists."

    Many people who write and publish blog-format websites ARE JOURNALISTS. Case in point, us. The majority of what we do comes from original reporting. Many are not, but it’s easy to delineate who is publishing what kind of site, by simply discussing "writers" rather than "bloggers." Are you a diarist? A political analyst? A government watchdog? An advocate? What kind of writer are you? "Blogger" just doesn’t say anything any more. Imagine "newspaperer."

    One element of what used to be unique to the blog format is no longer unique – online "newspaper stories" have comments (although the newspaper journalists do not necessarily participate in the discussion, so far, the way blog-format writers have been doing) – although some (like the Times) are terribly late to the party.

    I most wholeheartedly support your point of "newspaper-type" journalists doing longer form, more investigative, contextual stories. At present, till we add staff, we don’t have the bandwidth to do that, but we certainly have the background, the training, and the expertise, just not the time. That’s how the two types of news organization can be complementary – we tell you what’s happening now, they tell you the deep background of why it happened and what has to happen to prevent it from happening again. Etc.

    Anyway, hats off to Dylan for saying "let’s have a grass-roots form of the ‘future of news’ discussion" – instead of just saying (GUILTY HERE) "somebody" should have that chat. Hope we’ll be able to join in the next round.

  5. bmwood99 on January 24th, 2009 @ 6:28 pm

    I do not live in Seattle but I followed a link to your posts. There are many truths to your two recent comments regarding newspapers.

    Unfortunately, you grossly underestimate the cost of editors and reporters at newspapers to report on “local news, investigative journalism and intelligent coverage of national news.”

    Even though the vast majority of newspaper reporters are not getting rich (or even making very much money compared to their educational backgrounds), the newsroom cost is significantly more than 2%. Local news is the most expensive news to produce at most newspapers. It has a limited audience and a short shelf-life.

    Payroll at newspapers is the second most expensive overhead cost and news typically represents one-third or more of the payroll (and that doesn’t count support personnel in other departments (HR, prepress, tech support, etc.).

    Your comment number 2 is actually scary. Where do you think radio and TV receive most of their news coverage ideas? From newspapers, of course. I’ve even heard radio announcers read a newspaper on the air and pass it off as their news. Radio and TV news gathering staffs are tiny compared to local newspapers.

    Comment number five is not completely accurate, as I am aware of two or more online only newspapers that are not tied to a print product. I can recall one is in San Diego and another in Minneapolis.

    San Diego’s online only news site is a non-profit and set up like a PBS station with donors and sponsors. Minneapolis’ site was started by former staffers at the Minneapolis Star-Tribune. To my knowledge they do not make a profit and they not as complete as a metro daily newspapers but they are essentially doing what you have suggested.

    The San Diego PBS styled site looks promising (sorry, I can’t recall its name at the moment)There are a group of online Examiners around the country in major cities but some (but not all) are tied to a printed newspaper.

    The internet is not killing newspapers, they are doing it to themselves by giving their original content away for free. There is not enough online ad revenue to support free content except maybe to the very large operators.

    Online advertisers don’t really care where you see their online ads as long as you click on them. There are so many web sites that the price of advertising on them is too inexpensive to support a news only site.

    Newspapers must return to a paid online model to survive. People who want to read their exclusive content will pay for it because they won’t be able to find it anywhere else.

    Many will cease to exist but the ones that find the right combination of subscriptions and advertising will survive. (I think the Wall Street Journal is a good example.)

  6. Dylan (dylan) on January 24th, 2009 @ 11:30 pm

    Even though the vast majority of newspaper reporters are not getting rich (or even making very much money compared to their educational backgrounds), the newsroom cost is significantly more than 2%. Local news is the most expensive news to produce at most newspapers. It has a limited audience and a short shelf-life.

    OK, first off, you’re taking Seth Godin’s quote and saying I wrote it.

    But I think you misrepresent local news. Yes, it has a short shelf life and a limited audience (most of the time — there are exceptions, e.g. the Boston priest sex abuse scandals or the Enumclaw horse sex case). But the cost to produce it is falling rapidly; community bloggers are doing it already for less that a traditional news enterprise pays. Consider that when the plane landed in the Hudson you had people running to Flickr as much as they ran to their TVs and newspaper websites.

    The traditional model had papers being the first to report on events and blogs/TV/radio follow. But now we’re seeing it go the other way just as much. Blogs report on something, and days later it’s in the paper or on TV.

    Payroll at newspapers is the second most expensive overhead cost and news typically represents one-third or more of the payroll (and that doesn’t count support personnel in other departments (HR, prepress, tech support, etc.).

    See, there’s your trouble. If these are "newspapers," why is news only 1/3rd of the payroll?

    Hearst lost $14M last year on the P-I. $14M would be more than enough to get an online paper going with a small staff. And I’m suggesting a radical embrace of the software startup model that would be even cheaper to run. But right now the P-I’s overhead is way too high. If news is what’s important, then their staff should be devoted to news (and also have a robust sales staff to go with it).

    Your comment number 2 is actually scary. Where do you think radio and TV receive most of their news coverage ideas? From newspapers, of course. I’ve even heard radio announcers read a newspaper on the air and pass it off as their news. Radio and TV news gathering staffs are tiny compared to local newspapers.

    And yet Seattle radio and TV companies have been, for the most part, profitable, thanks to all that local advertising on TV news and news radio. The Times and the P-I haven’t turned a profit since the 2000 strike. And they may get news ideas from newspapers, but they get them from other places in the community as well. If newspapers go, the local news gap will be filled by… something. Probably a combination of expanded TV/radio news and online news sources. But again, the cost of local news production is plummeting.

    Comment number five is not completely accurate, as I am aware of two or more online only newspapers that are not tied to a print product.

    The two sites you’re talking about are Voice Of San Diego and MinnPost. But they’re both non-profits. The point I was making is that no one has managed to build an online-only newspaper with a revenue stream all its own. That is, no one has ever created an online-only newspaper-like news source that’s turned a profit.

    The internet is not killing newspapers, they are doing it to themselves by giving their original content away for free.

    OK, this meme is really starting to bug me, because it’s simply not true.

    If a newspaper charged for all its online content, it would still fail, because there’s too much substitution. And even if every single newspaper in America got together and colluded to charge people for every news article in America, there would still be free news sources on the Internet to undermine this.

    Consider the Tulsa World. For years they only granted online use to subscribers to the print edition; everyone else had to pay $45. Their subscriber base dropped at the same rate as everyone else during that time, and online people wouldn’t pay the $45 because the local TV stations were offering news online for free — as was the Oklahoma City newspaper. In 2006, they finally threw in the towel and dropped the subscription rules. It didn’t help them, really, since everyone still reads the TV station websites, but they aren’t losing any more money on the web than they were with that $45/year subscription base.

    Paywalls don’t work, because there will always be a free substitute. "Exclusive online content" doesn’t exist, because not only is it anathema to a web where information wants to be free, it’s also anathema to journalism itself. Stories can’t propagate behind paywalls. In a case like the WSJ, that ends being fine, because the readers of the WSJ are in business sectors where information is expensive, and they’re willing to pay for "exclusive online content." But what goes behind the paywall on a local level? Local news is covered by other media. Google taps into the AP wire. You can get comics and crosswords online. Craigslist has slashed the cost of classifieds. So, again, we end up back with Seth Godin’s list — "local news, investigative journalism and intelligent coverage of national news." And then, you’re hoping you have the best writers who can write the most compelling stories, because if you don’t, you’re toast.

    Perhaps a hybrid paywall like the WSJ could work. But your news product has to be as compelling to the average Seattleite as financial news is to your average Wall Street broker. Is it going to be unique enough to get people to drop $29.95/year on it, or are you going to be charging money for things that people can already get out of Google?

    Local news is a niche, just like financial news and its components. But you have to know that niche well enough to find the irresistible and be able to sell it well. The problem with papers is they do know the niches, but they’re bogged down with overhead.

    Online is inevitable. The problem is that no one has yet figured out the right secret sauce to put on the online model so it’s sustainable. But someone will figure it out, and sooner than you think. And when they do, the industry will transform rapidly.

  7. bmwood99 on January 25th, 2009 @ 6:20 pm

    Sorry about the mis-attribution. I actually saw and read the second post first before looking up your first post.

    It would be a little handier if the blogs on Metblogs were more clearly linked together like the blogs on blogspot. But I was unfamiliar with Metblogs before discovering your second post on this subject.

    I don’t think I’m misrepresenting local news as much as my definition of local news may be different than yours. Yes, there are big local stories that become regional or national stories and take on a life of their own.

    But there are so many more that are only in the news cycle for a day, week or month before being discarded. Most, at least in the suburbs outside Los Angeles where I live are not covered by the LA Times, bloggers, TV or radio. The local daily covers some of it for my city, but they are covering 26 or 27 cities and can’t do any of them justice.

    Much of this news is reported in the local weekly and is intensely local news. It probably would not be of interest to anyone living outside my city unless they knew someone living there. You might call it micro-local news, I’m not sure.

    Newsroom payroll is only 1/3 (and declining throughout the industry) of the total because it’s the bulk of the total payroll after subtracting all the other departments that support news, like your "robust sales staff", front office (A/R, A/P), HR, tech support, graphic artists to design those ads, prepress, pressroom and of course, delivery carriers.

    And yes, there are savings on the delivery and printing with the internet, and some of the other functions can be subcontracted out, but as a practical matter, you can’t do without most of the others and still be a business. You might be a voluntary organization or a non-profit, but you can’t run a news business without support personnel.

    I’m not personally familiar with the Seattle JOA, but I’d be surprised to see Hearst (or anyone else) drop $14 million a year in Seattle to try and invent an online only newspaper (with as you say "a small staff") when in your own words "no one has yet figured out the right secret sauce to put on the online model so it’s sustainable". The ROI is just not there.

    What I’m saying is that newspapers may disappear before the online model you describe is invented. I’m suggesting a holding action with a hybrid model of ads and paid online "wall" like the Wall Street Journal has. And you’re correct the wall will not work if there is not unique, compelling content behind that wall.

    I also believe it will be very difficult to invent your model because news web sites are competing with all other web sites for advertising, not just other news sites. This drives the ad prices down and makes it difficult to pay for original, compelling news content every day.

    I recently started reading the WSJ every day and for the most part find their content different and compelling most days. I use both the printed version and the online version in different ways and find the subscription combination refreshing (I have no connection to the WSJ other than being a paid subscriber.) And to be clear, I find almost nothing I would describe as local news in the WSJ (other than when the bank I use was seized by the feds).

    I’m not aware of any of the big dailies running a hybrid operation like the WSJ. I’m suggesting one of them seriously try it before all the newspapers disappear. What do they have to lose?

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