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Metamorphosis for the Globe?

globe

Imagine one morning, you wake up from your troubled dreams and find yourself transformed in your bed into a horrible vermin… No, no, wait! Imagine you wake up and find yourself holding the keys to the Boston Globe. And Arthur Sulzberger is standing beside your bed, ready to hand you $20 million or so if you will please, please, just take it off his hands.

This scenario could well play out — well, not quite like that of course — since the value of the paper is essentially zero. The Times Company has put it up for sale, and the question is really whether the buyer will pay some token sum to the Times, or whether the Times will subsidize the buyers by spotting them some working capital.

The folks nibbling at this opportunity (some of whom have been mentioned in the Globe and elsewhere) have to be asking themselves whether this white elephant of a newspaper can be made profitable once again. A key part of that question is whether Boston can remain a two-newspaper town.

My prediction is that, ironic as it may seem, Pat Purcell’s Boston Herald will be left as the only daily paper in Boston, and that the Globe will evolve into something different. That doesn’t mean the Herald wins, because in the long run, daily print is just not a sustainable business model anywhere. Or almost anywhere, if we want to hedge that bet a little.

If Denver, Tucson, Albuquerque and Seattle, all with populations in the same ballpark as Boston’s, couldn’t sustain two newspapers, then neither can Boston.

In Boston, for years the Herald seemed to be the one on the ropes, but its ship was more or less righted, for the time being, after owner Pat Purcell sold his chain of suburban weeklies and used the money to pay down the Herald’s debts. Purcell bought the Herald from Rupert Murdoch’s News Corp. in 1994 so that News could buy a Boston television station, and Purcell maintained a close relationship with Murdoch over the years. In fact, while still continuing to run the Herald, Purcell currently oversees the Ottaway newspaper subsidiary of Dow-Jones, acquired in 2007 by News Corp. along with the Wall Street Journal. For a time, News had tried to sell off Ottaway, which was not a good fit for its holdings. Ottaway will become known as Dow Jones Local Media Group as of July 1.

Presumably, therefore, the Times won’t entertain a market-rationalizing offer from Purcell, given his connections and direct allegiance to News Corp., which is seen by the Times as challenging its turf as Paper of Record. Most of the other newspaper chains that otherwise might be kicking the tires are bankrupt, in default, in the red, or pretty close to one or more of those predicaments. The likeliest buyers are local individuals who have made a nice fortune in other ways, and don’t mind putting some of it at risk for the glory of being a publisher.

So what, having fully awakened from that bad dream, do you do, as buyer of the Globe, on Day One? Here are my suggestions:

  1. Declare unequivocally that the Globe’s future is digital, and that Boston.com is now its focus and top priority.
  2. Launch or subsidize a network of hyperlocal sites all over eastern Massachusetts — not the kind of robotic aggregators that Gatehouse sued the Globe about, but real sites with local personalities.
  3. Launch another network of local niche verticals that can be accessed directly as well as through any of these hyperlocals and Boston.com — orient them to weather, traffic, jobs, cars, real estate, food, diet, technology, entertainment, travel, art, gardening, green living, education, you name it.
  4. In each of these, plan to create a tiered, variable pricing model — make most of the content free, but charge for the stuff that a small but highly-engaged group will pay for: fancy charts for the weather junkies, access to experts, diet club membership, online lectures, etc. This won’t bring in megabucks, but cash flow is cash flow.
  5. Monetize these verticals further with transactional revenue: sell theater tickets, facilitate restaurant reservations, earn commissions on affiliate sales and lead generation.
  6. Turn the Globe (oh, yes, we own a newspaper, too!) into a once-weekly guide to all of those niches and to all other media. Add features, opinion and news analysis. Think of it as the Sunday paper without breaking news, and distribute it on Friday so it’s positioned as a guide to the weekend that has several days of shelf life and gets bought in advance of the other Sunday papers. To be clear: yes, publish only that weekend edition and kill the rest of your print editions. With some ingenuity, you can preserve the majority of the remaining print advertising in the weekly edition.
  7. Publish a slew of niche publications in print, re-purposing content that’s already online, which can cross-promote Boston.com and all of your sites.
  8. Continue your partnership in publishing the Boston Metro commuter paper, which is essentially another niche publication.
  9. Build a digital-savvy team of salespeople and designers, adept at cross-selling all of these platforms, who can help Boston’s advertisers build their businesses by focusing on connecting with their customers online.
  10. Sell that big building, sell the presses, and subcontract all printing and delivery so you can focus on your digitally-centered publishing business.

Postscript: Dan Kennedy at MediaNation points out that in March, he posted “Next steps for the shrinking Globe.” While some of my suggestions sound like they echo his, I had not previously seen that piece. Dan expanded more than I did on the “digital first” strategy, recommends charging a lot more for the print edition (which the Globe has done), blogging what can’t be covered, building on the Metro stake, and repackaging more content into niche publications.

Photo by ckirkman, used under Creative Commons License.

                                   
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  • http://www.niemanlab.org/ Joshua Benton

    Martin, I think these are really smart ideas, if a painful transition. Since you’ve thought about this: Roughly what percentage of the Globe’s current staff of journalists would you project to still have a (recognizably journalistic) job after a transition like this? Obviously it’s not 100%, but is it 60%? 40%? 20%?

  • http://newsafternewspapers.blogspot.com/ Martin Langeveld

    Josh: Without access to the books, its hard to say. Obviously this kind of change doesn’t come without major staff cuts, but it preserves some staff, as Hearst did in Seattle, as opposed to a complete shutdown such as at the Rocky Mountain News. If we assume the steps to date cut the Globe’s $85 million annual deficit in half, there’s still $40 million or more to go just to achieve breakeven. You can’t cut your way to that level and retain a viable business, and in today’s atmosphere you can’t grow advertising to close that gap. The only way forward is to fundamentally change the business model. With a complex network of online enterprises as I suggest, plus a weekly package and niche publications, you’d certainly need more than the two dozen or so journalists retained at the Seattle P-I for a one-dimensional Web site. If I had to hazard a guess, I’d say you’d keep 200 in news and site management, but that might be high.

  • http://toughloveforxerox.blogspot MichaelJ

    I can’t see why what you suggest wouldn’t work. But the overhead – meaning full time paid journalists might – or might not – have to be lower.

    I heard the new CEO of GM. He said “We can break even in a market of 9,000,000 cars.”

    I don’t know how that works in the newspaper business, but I think you have to back into the staff size from pessimistic, reasonable and optimistic projections of earnings.

    If the earnings grow, the staff grows. It’s ugly, but it does keep all the incentives aligned.

  • http://newsafternewspapers.blogspot.com/ Martin Langeveld

    Michael J: Yes, this is known as the Parking Lot solution. As opposed to the constant whittling of staff that’s been ongoing at most papers, you fire everybody and send them into the parking lot, and then just let back in the people you absolutely need in order to executive your new business plan. It’s difficult, and it’s more easily said than done, but it puts the business in the necessary startup mode instead of the failure mode it has been in.

  • JoeN

    How do you square your call to cease publishing with your post in April, declaring:
    “All generally accepted truths notwithstanding, more than 96 percent of newspaper reading is still done in the print editions, and the online share of the newspaper audience attention is only a bit more than 3 percent.”

  • http://newsafternewspapers.blogspot.com/ Martin Langeveld

    Joe, my point in that post was not that print is still viable (my unfortunate headline choice notwithstanding), but that newspapers have done a poor job attracting their share of the online news audience. So they have a non-viable print business model and insufficient orientation to their digital future. But there’s no question in my mind that the future of news is online and that print will be, at best, a niche product.

  • http://www.twitter.com/seamuscondron Seamus Condron

    I would love to see a community-funded project become part of the Globe’s new strategy. Use one of the hyperlocal sites as the pilot. In addition to an online area where readers can see pitches and fund stories, there should be a physical space in where community managers and writers can meet with the public and pitch them. A spin-off of Spot.us and the “newsroom cafe” concept.

  • David Klein

    This is a fine idea but doesn’t need the Boston Globe to do it. In face, a start-up company with VC funding could arguably set these niche networks up faster and better and without any legacy/cultural issues. Nothing in this plan leverages any strength the Globe has. It’s a new business entirely, and not a newspaper. I actually think any pure digital play for newspapers is a non-starter, because a bunch of college kids with money can always do it better and faster — it’s for their generation. And they don’t have to start by unwinding gigantic debt loads, union contracts and angry customers and employees. Also, even when newspapers CAN execute this kind of transition (MUCH harder than implied here), the cost of entry for others is so low against any of your niches that you just can’t make much money. This is a fine business model for someone, but I don’t see why you need the Globe to do it — nor would it still be anything resembling the Boston Globe even if they did execute it adequately. Lastly, these niche business make niche revenues: You’d be lucky to be able to afford 100 people all told. It’s just a very sad state of affairs for us print people right now, but it is what it is.

  • http://newsafternewspapers.blogspot.com/ Martin Langeveld

    David, I agree it’s a big challenge and that the inertia of a legacy organization, and the required cultural changes, are enormous. On the other hand, the buyer here can get a going concern and a valuable brand for nothing. The buyer would assume no debt, might get a cash bonus, and could get cash for the real estate. Nobody is doing this as a city-scaled startup. Starting out with the existing Boston.com and networking in all the niche verticals and print niches would make the whole worth much more than a bunch of competing from-scratch niche startups.

  • A faithful reader

    Where does actual reporting fit into your plan?
    Unless I read carelessly, and forgive me if I did, I not even a passing mention of in-depth coverage of sports, politics, art, or business in the region.

  • A faithful reader

    Excuse me, I meant to write “I did not see even a passing mention of in-depth coverage of sports, politics, art, or business in the region.” I’m embarrassed by the mistake, but glad I could provide an example of why copy editors are needed even in the digital world.

  • David

    Digital is the future, but are you sure it’s Boston.com? It’s not part of the NE Newspaper Group of The Times Co. I haven’t seen the offering memorandum, but all a buyer might wind up with is the electronic rights to the Boston Globe content itself — not all the other parts of Boston.com.

  • http://newsafternewspapers.blogspot.com/ Martin Langeveld

    Dear Faithful:
    I’d like to see all of that, online first at Boston.com. If reporting of all stripes is not implicit in “the Globe’s future is digital”, consider that amended to “digital reporting and digital editing”.

    David: I haven’t seen the offering memorandum either, but if the Times is not selling Boston.com as part of the package, I doubt if anyone in their right mind would be interested.

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  • http://toughloveforxerox.blogspot MichaelJ

    Martin,
    Re: the parking lot model. What if the present staff were given a choice. It will mean sacrifices, no doubt. But as the President says we all have to share the pain.

    It might be something like: you can take a salary cut in return for x amount preferred shares. The greater the cut you take, the more shares you get.

    The preferreds have a set dividend, say 6%. But the deal going in is that the dividend gets paid only when there are profits. If the operation is successful, the price of the preferreds rise in the secondary market. That’s the potential upside.

    The silly market could decide to value the notes at 5 or 10 x.

    The key thing is that all the accounting is on the web. Everybody’s salaries and all the expenses are posted on the web.

    Or..

    Maybe a transition program, placing journalists in K -12 education, or government agencies.

    Meanwhile, health care is guaranteed during the transition.

    Of course I would be remiss if I did not disagree with the Print piece not being important. But I won’t clog this thread by getting up on my little soapbox.

  • http://toughloveforxerox.blogspot MichaelJ

    Sorry for two in row, but I wanted to add, that you do severance pay in the form of preferred shares. It’s not great, but it’s a hell of lot better than the email on Friday at 4:00/

  • Dave W.

    Please, we must speak respectfully of the dead. It was the Rocky Mountain News. Quite dead. The Post survives. You somehow blended both newspapers into one name.
    — Thanks Dave, I fixed that! – ML

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  • Greg Andrew

    The problem is that under your scenario, I suspect that the Globe will lose a lot more money over the next few years than under the way things will be once the current round of negotiations is finished. Sure, the print edition is a dead end in the long run, but in the short run I suspect it makes a lot more in revenue than it costs to print and distribute the paper.

    I think the appropriate news for most papers right now is to go a 5 day a week printing schedule, publishing on Tuesday, Wednesday, Thursday, and Friday, plus one edition on the weekend

  • http://www.boston.com/yourtown/ Anonymous coward

    On your second point: look at the local sites that are already found at http://www.boston.com/yourtown/. They are not the dumb aggregation that the Gatehouse lawsuit made it seem they were; and there are now 10 of them.

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  • http://newsafternewspapers.blogspot.com/ Martin Langeveld

    Anonymous: Sorry, but they look like aggregation sites to me. The Wellesley one, for example, at the moment has aggregated content from several Wellesley blogs, the town of Wellesley, the Globe, the Herald. I didn’t say dumb, I said robotic. Whether there’s someone curating it, or a machine, they really have no personality.

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