Why I’m optimistic about local news

Publishers can fill a big void in coverage, but they need the right people

Jul 1, 2021

You’re reading the My News Biz newsletter, which I send every Thursday. My goal is to help digital media entrepreneurs find viable business models.

A media entrepreneur asked me recently if I was optimistic about the future of local news organizations. Actually, I am. Let me run through some of the reasons and end with some caveats.

First of all, there is a shortage of quality news and information in local media, and that creates a business opportunity. This is true all over Europe and the Americas. Newspaper publishers have responded to the last decade of declining ad revenue by cutting staff and coverage to protect their profit margins. They reduced product quality, and most haven’t invested or innovated.

Readers have noticed the decline in quality. This has opened up a space for media entrepreneurs to develop high-quality news with a low-cost business model based on digital production and distribution. Without the burdensome capital costs of printing presses, office buildings, trucks, warehouses, and distribution networks, digital entrepreneurs can compete with traditional brands.

Narrow the focus

Many digital media entrepreneurs are finding a fertile market for quality journalism by creating content for niche communities defined by geography or topic. Even small newsrooms can compete with large traditional media by developing a reputation for trustworthiness and relevance. (See Anne Schulz’s article, Local news unbundled: where audience value still lies, from the Reuters Digital News Report 2021.)

The Axios media group has bought up some local media organizations in the US and is planning to launch its news model in at least 50 cities. The model is based in part on creating a daily newsletter with content relevant to local political, social, and economic issues.

The newsletter creates intimacy and loyalty, and that relationship can be developed to generate revenue from local advertising, events, e-commerce, and other sources. The key is loyal relationships (frequent vistors, interactivity, social engagement) rather than scale (large numbers of page views or unique users). They write about what people care about. It is the opposite of sensationalistic. (See data on how local journalism creates loyal users and a tendency to pay for news.)

In Spain, two of the most popular media organizations are digital startups, elDiario.es and El Confidencial. El Confidencial is not strictly local, but it does have a narrow focus on economics and financial issues as well as on investigative journalism–holding the powerful accountable. elDiario.es also focuses on investigative journalism, and it has added more than a dozen local journalism editions to its website.

Both publications have grown their newsrooms gradually, in line with revenue. elDiario.es now generates more than half its revenue from freemium subscriptions: most content is free, but some is available only to subscribers.

LaSillaVacia of Colombia also focuses on holding the powerful to account. Although it has a staff of only about two dozen, it is regularly named among the most popular media organizations in the country. It also has nine regional editions. Its business model includes multiple revenue sources–sponsorships, foundations, donations, and clubs. It has also innovated with its data bases that map the relationships among the powerful and which firms are winning public contracts.

To sum up, as my colleagues at the University of Navarra and I have shown, one viable and sustainable business model for producing quality news in digital media is to focus on a geographic (local) or thematic niche (business and finance), and keep costs low.

The key is to create content that helps people feel like they can participate in the civic life of their communities. That often means less writing about the proclamations of the political class, and more coverage of public health, public education, labor markets, local business, public safety, and local culture, among many other potentially relevant topics.

A well-balanced team

The media organizations that are prospering amidst the triple crises of declining ad revenue, the pandemia, and the related economic downturn are those that have well balanced teams.

The biggest mistake of many journalism startups is that they have too many journalists on the team. This is like having a soccer (football) team of all midfielders. You need to have some strikers to score and some defenders to protect the goal.

In this analogy, the “strikers” are the marketers and salespeople who bring in the revenue that will cover the salaries and other costs. If they are good at their job, they will grow that revenue so more team members and better equipment can be added. Too many digital media startups have no one dedicated full time to generating revenue. This is a formula for stagnation and a slow death.

The “defenders” are the technology staff who make sure the platforms are user friendly and interactive, and safe from cyberattacks by the enemies of free expression. They also help the organization innovate with new multimedia products. Too many startups rely purely on text and photos–in essence, a newspaper online.

When I have written about these roles in the past, designers and the data analysts have complained, What about us? Beautiful, functional design without doubt helps build loyal communities. Data analysts can interpret how users interact with the site to discover opportunities for improving coverage and generating more ad and subscriber revenue. It takes a team.

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