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Luke Stangel and Jonathan Stray exchange comments (Jonathan first)

Here are the exchanges. First Jonathan Stray posted, and then Luke Stangel replies.

Stray's scenario: Probably need to poach from existing newsroom and build something totally new

I've been working through the question of what will become of the local newspaper industry, trying to understand what the end game is. I'm going to sketch out a scenario here. It's kind of a dismal exercise, but I think it's worth thinking through carefully.

Along the lines of Stijn's great Fungible post, it seems to me that a huge fraction of what was in the local newspaper package has been replaced. National and international news is completely commodity now, and it looks like it will be owned by the small number of global wire services plus a few bug national brands like NYT, CNN, etc. Movie listings, restaurant views: gone to good mobile apps. For arts and culture coverage, bloggers are probably good enough. Classifieds long gone to craigslist etc. Sports taken over by ESPN etc.

So what's left? Mostly civic-oriented stuff that has always been subsidized. City government business. Crime. Pretty much all of the money-making stuff has been siphoned away already by faster-moving digital players.

I see basically three "endgame" digital business strategies for local news orgs:

    1. Newspapers could attempt to compete directly in the digital local market. But this would mean going up against players like Yelp who can amortize costs across a much broader region and have a much lower cost base. So we have to ask: what is the possible competitive advantage of having local staff with boots on the ground, versus a technology company with entirely remote operations? Niceties like "we know the community" are not strategic answers. I'm looking for real, hard, "what would make consumers choose us over Yelp?" answers. Because at this point, Yelp is the incumbent and a newspaper would have to dislodge them.
    2. Newspapers could also try to generate profits from unrelated digital businesses, to subsidize their local newsgathering. This is what the NYTCo has done with About.com and setting Boston.com up as the registrar of .boston domains. Essentially this turns the paper into a VC. But, they have no experience here, and most start ups fail anyway.
    3. Or, newspapers could try to produce a news-related digital startup that would be an attractive purchase by a technology company. Since the advertising business is going to the companies formerly known as the "technology industry," rather than trying to transform ill-suited local news organizations into tech players, let's ask how we can put newsrooms inside of tech companies. Put another way: a local paper could try to compete against Google's "Places" initiative, or they could set up an operation -- which would be much smaller than an existing newsroom -- that produced only the sort of news not already served well by other players, and do it as cheap and lean as possible. Then they would try to get enough traction (but likely not revenue) so that Google (or whoever) would want to buy the operation and integrate it into their existing local digital play, as a nice improvement to their product.

Anyway this goes, I don't know if it's helpful to focus on ways to transform existing organizations. In particular the combination of repeated layoffs and union seniority rules make staff development incredibly hard, because the people you are forced to fire are exactly the people you hired most recently -- the ones who bring digital talent from outside the organization. I don't know if this is a solvable problem.

So let's assume instead that you're building a brand new company by selectively poaching from your existing newsroom. The new newsroom is going to be a lot smaller and cover things very differently. There are answers out there on how to do this, just not answers that newspapers are yet willing to entertain. For example Homicide Watch DC covers every murder in DC from crime to conviction with just two people (I got into how in my recent NiemanLab piece.) It's going to have to be a lot more focussed on connecting people to each other too, rather than paying for extensive content creation.

Basically what I'm saying is let's just assume that the traditional local newspaper organization is a loss and will not survive. But, there is still some money left in the operations of the business before print dies. What is the best way to spend it? I may or may not be right about the possibility of survival for the former news industry, but I think this point of view forces the right questions.

Luke Stangel's reply: The most precious commodity is attention

Excellent insights (above). As a journalist-turned-technologist, I absolutely agree. The most precious commodity of the 21st century will be attention.

Fifty years ago (even 15 years ago), it cost a lot to build an audience. Journalists were reasonably good at building an audience, because they had a monopoly on information. We gave the crowd vegetables (news) and cake (comics, crosswords, features, special sections, sports, columns, etc). The Internet changed that by making cake free. The Internet leveled the playing field, making the cost of audience acquisition nearly free. Journalists discovered they weren't actually that good at building attention . . . they were simply competing in a vacuum in the past.

Journalism will survive, because:

  • Truth tellers exist in every community. If every paid reporter disappeared in my neighborhood, the truth tellers living here would take it upon themselves to inform us and
  • There will always be a market for news and local ads.

I'm not as sure that journalism companies will survive.

The negativity

The crowd is intelligent. We'd rather watch kitten videos on YouTube than shelling in Syria, because nobody really wants to see shelling in Syria. We trust that if we have to really pay attention to something, our friends on Facebook/George Takei will tell us about it. Reddit is exponentially more interesting than the local paper. You're telling me the front-page article about water rates increasing $1.20 per month is really more interesting than an introspective elementary-school janitor answering every question he gets from the crowd? To survive would take a fundamental shift in thinking. Our industry is artificially propped up by an aging audience who would choose the Internet if they felt comfortable playing there with us. Fresh newspaper readers aren't being born anymore, and I'm increasingly seeing my parents' friends canceling their subscriptions.

OK, enough negativity. What does that seismic shift look like?

The positive view: Still deep opportunity in local advertising

I agree that one of the most feasible scenarios is that journalism will be subsidized by a civic-minded, profitable company, ala Patch. While AOL is nice, I always thought saving local journalism was more of a Google-sized problem. Alternately, maybe it survives by adopting the NPR/PBS model, as a public/private partnership with the community.

I came out of MediaNews, and when this question came up in the past, I argued that maybe we should focus on improving our true core product, advertising. While their grip on content crumbles around them, local newspapers still have a monopoly on local ads. I briefly worked for a downtown business association in a small town in Silicon Valley, where 60 percent of small business owners didn't own a computer in their store. They didn't buy Yelp ads, Facebook ads, Google ads or Groupons. They did however, buy hundreds of dollars worth of ads from Tom, the newspaper sales guy who worked downtown and walked around at his lunch break, stopping in to chat with each store owner by name. Tom had worked there for decades, and had built strong relationships with business owners across the town. That paper is doing fine.

The ads we're displaying online are stuck in the '90s. Go to the average local paper's website, and you get hit in the face with garish banner ads that you'd never click on. There's no targeting, no metrics, no immediate call to action. That's got to change.

Finally, I posit that journalists shouldn't run news organizations. The grizzled middle manager making digital decisions at the average regional paper could write you a mean lede, but really doesn't understand the Internet. I encountered an overwhelming amount of risk aversion at MediaNews, from people who kept clinging to life rafts like, "It's the economy; ads will come back," and "The kids today will value news once they get older." What they were really saying was, "I don't want to stick my neck out and try something that might fail."

Very few incumbents survive an evolutionary format change. The Victor Talking Machine Company became a huge company mass producing phonographs, but wasn't able to create the record, the tape, CDs or MP3s. We're simply experiencing the death of a format (print) and the rise of a better alternative. I swear, I'm not jaded.