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June 11, 2014, 10 a.m.
Business Models

Q&A: Penelope Muse Abernathy on how community newspapers can face the digital transition

In her new book, Abernathy examines the divide between metro papers and rural or ethnic papers as they deal with digital competition, ownership changes, and the search for new revenue.

pennyabernathyWhen we talk about disruption in the journalism business, the conversation often centers on the big players. It’s easy to focus on a place like The New York Times because its plans for carving out a future in journalism often make headlines. But what about The Wilkes Journal-Patriot in North Carolina, or The Rutland Herald in Vermont?

In Saving Community Journalism, Penelope Muse Abernathy set out to look at the challenges small dailies and weeklies around the U.S. face as they try to transform their business. Abernathy, the Knight Chair in Journalism and Digital Media Economics at the University of North Carolina, told me she wanted to expand the definition of community news to look at outlets who focus on ethnic groups as well as rural areas. “As long as you define a community newspaper as being…something that’s defined by circulation, that’s, to me, a very 20th century definition,” she said.

For community papers, the prescription for change mirrors the larger metros: Cut legacy costs while finding new revenue streams and adapting to new technologies. But in her research, Abernathy found the obstacles to change for community papers can differ from their larger counterparts.

I recently spoke with Abernathy about the new threats facing community news organizations, the importance of audience research for smaller readership, and how these papers can capitalize on the unique relationship and loyalty they have with their community. Here’s a lightly edited transcript of our conversation.

Justin Ellis: One of the big things you tackle in the book is that competition now is different for a lot of these community newspapers. In some cases, that competition might come from a TV station that’s 50 miles away — or you’re dealing with competition from Google or somebody that comes up with a community calendar.
Penelope Muse Abernathy: Look at the public service journalism that these very fine community newspapers do — and not all community newspapers are fine, but most of the ones I dealt with deserve to survive. If you look at it, they don’t get their advertising revenue from running exposés about how the town water is polluted, right? They have to depend on the advertising that comes in from a whole range of things. So what they really were in the past was the town square. And the real danger becomes that somebody can say, in Whiteville for instance, oh, everybody is really into sports. So why don’t I go in and set up a prep sport site and get all the ad revenue that should have been going to Whiteville, and I’ll do it as a digital site?

And I’ll be a lot more relevant. I’ll be running tons of pictures. I’ll be having all the stats. And I’ll get all their advertising. And so that sucks off another portion. So, you know, one of the things I’ve been really trying to stress, regardless of who you are as a community news organization, is that you’ve got to have the revenue to support you. And, unfortunately, in a lot of these small towns, that’s got to come from the advertiser. Especially if you’re an economically challenged community.

Journalists also have a hard time understanding that readers read the newspaper to get information about the community. And information to them includes advertisements. So if you don’t have the advertising, you’re providing less of a service to your readers, too.

Ellis: Right. But as you point out in the book, there’s a need to go beyond relying on advertisers. But one of the interesting things that I thought that you mentioned in the research was that for some of these community papers, the advertising dominance was based on a small percentage of advertisers or businesses — that 50 to 80 percent of the ad revenue was coming from a small collection of people. Is that unique to some of these community newspapers?
Abernathy: If you looked at most publications — when I worked at the Harvard Business Review, you typically have anywhere from 60 to 80 percent of your advertising coming from [a few] people. The truly scary thing about what has happened with a lot of these small towns is the small businesses dry up or look elsewhere for things. They’re more and more dependent on the coupons that are inserted in. There’s zero flexibility there.

And also, let’s face it too: Coupons are probably going the same way as the printed newspaper in a few years. So what they really have to start doing is thinking about where the advertiser and how the advertiser needs to see people.

And so it’s really getting them to stop thinking about something that is two-dimensional — that is black and white because it’s printed on a paper — and start thinking about the newspaper for both the reader who is reading it on multiple platforms, and the advertiser who needs to reach people on all those multiple mediums.

And what’s really neat about it is you can get them to think about that. Most of these communities are so far away — like Whiteville — from a major TV market, and the TV market does not know how to do print in the same way they know how to do video. If they can develop this kind of expertise, there’s going to be much more value to both their readers and their advertisers.

Ellis: But as you point out, one of the biggest things that these companies have to do is rebuild that readership. It seems to me in each of these cases you look at, these different papers can identify what’s unique to them to bring back that audience because that ties into the advertising.
Abernathy: You know, when I worked for the Harvard Business Review, I knew exactly how to create a picture of who my typical reader was. When I worked at The Wall Street Journal, I knew that too. So you had tons of reader research. You had tons of interactions with your customers in which you could do that. And there’s a part in the book when I talk about it. You know, all that we have done for either the advertiser or even for the reader is they’ve been treated like a number.

savingcommunityjournalismAnd that’s another reason to get away from circulation. So you go into the advertiser and say, we cover 75 percent of the market or 75 percent of the homes. You don’t give any picture of who that is. And when we did some very simple reader research, for instance, we found there was a very different profile for the person who only read the print edition. They were much older. If you dropped the people that read both, you drop down 15 years. And if you looked at the people who read only the, they were another 15 years younger.

You can then go in too, with some simple reader research like we did in Whiteville, and you can craft six different communities pretty easily within the community that you serve. So part of it is just getting journalists to start thinking about writing stories in different ways that are going to appeal to various communities, understanding that the standard will be that you learn to write or that somebody that expects you to write on a town council meeting is not necessarily going to be the one that gets it for more than anybody that’s interested in the town council. And that, you know, if you’re bringing people into the sports page, how do you then get them to understand some important issues that are happening in education or any other place that resonate through your community?

I used to get all these readership surveys when I worked in Dallas or wherever, in Wichita or Charlotte. And they would come in and say “people only care about local news.” Well, what does that help you to understand? You know, what’s local to me — or what I care about — is not the same as what my husband cares about.

Ellis: That, to me, seems like one of the biggest lessons in the book. No matter which newspaper you’re looking at, it seems like there’s an important lesson in going back to understanding the community or the audience that you’re serving. Having done this research and looking at these different places, how feasible do you think it is for them to do this type of research on an ongoing basis?
Abernathy: How did we think about market research, you know, even 10 years ago? You went out, and you hired a Belden, and by the time you got the stuff back, it was out of date.

I had to really lobby hard to get online surveys at both The New York Times and The Wall Street Journal because the marketing department had been trained a certain way, that a mail-in survey was better than anything else.

And when I started talking with people in the ’90s who were talking about being able to use online surveys, you know, it was just — it was like it went against everything they had learned, right? This could not be reliable. Where in fact, you know, when we did it at The Wall Street Journal, I think in the early — it must have been 2003, I think — the marketing department was stunned. Not only did they get a higher response rate off an online survey, they got a lot more comments on it.

And it’s just because it’s an interactive medium. It’s not like you’re sitting there with a — you’ve opened up an envelope and they’re going to give you a dollar to fill in something. And then you have to remember to go back to the mailbox and mail it back in.

And so, you know, one of the things is getting them to understand it doesn’t have to be complicated. It can be as simple as 10 questions that you post every six months.

I think everybody who does it is just actually very pleasantly shocked at how easy it is to do it — how much you can learn from just a little bit of what comes back in. How loyal your current readers are, and — then if you want to peel it back, like we did at the New York Times — you can start figuring out when were these people that became loyal first introduced to the paper, the same way we found out at the Wall Street Journal.

If you really want to get into it, if you’re a real geek and want to start peeling it back, you can. But in most small communities, you don’t. You just need to know who is actually reading you, why they’re reading you, and what they care about that you’re writing.

Ellis: On those same lines, you guys did find that there was some fairly high loyalty from readers at a number of the papers. And I’m wondering how you think that contrasts with metro papers or other papers that are outside of the definition of community newspapers. How do these smaller newspapers capitalize on that?
Abernathy: Back in, I think it was — I can’t remember now — I think it was in 2010,  it might have been 2011 — I was asked to present at the FCC. And one of the things you have to think about on the metros is they have a ton more competition.

So they’re competing with the TV stations there. They’ve got lots of city magazines in there. And the other thing is they’ve never been a clearly defined market in the same way, or a community, in the same way that a community newspaper is.

Bruce [Kyse] was actually in doing a piece on the website where he takes a look and even divides the metros into two more categories. He thinks that the top 25 have a much harder time reestablishing themselves than the bottom 75. I’m not sure I agree — but there are lines crossed at some point where your community is not as cohesive and as well defined. Either geographically or ethnically or whatever it is. And I think that’s the problem that the metros have.

But by the same token, you look at a place like Rutland, or you look at a Whiteville, and I think the reason for the loyalty is very different. Rutland people love Rutland because Rutland is so Vermont. It is my favorite paper in the country. They are geeky. They are backwoods. They are everything in blue blazes. If you have not looked at their weather minute, look, listen to their weather minutes, which goes on for about five minutes, and you will think you are back in eighth-grade science class. It tells you everything that is going on 24 hours a day.

And I look, and it’s so funny because I was having a conversation with someone from The New York Times who is in charge of Times Minute or whatever they call it. And he was saying they were having such a hard time figuring out what the brand of The New York Times was on the video minute. And they are. The Wall Street Journal has been doing it for a lot longer, and they’re a lot further along. You look at the Rutland paper, and that, Tomorrow’s Headlines is so Rutland through all of that. And so, for Rutland, I think it’s just that they’re scrappy. They persevere. They cover everything. I mean, one of my favorite stories I read on fiddlehead ferns was in the Rutland paper about 15 years ago. So for them, it’s just that they understand. They’re of Vermont, and Vermont is Vermont, and that’s where their loyalty comes from.

If you look down in Whiteville, I think the loyalty comes from the fact that people know that family, what that family has done. They know how long that family, off and on, how that family teeters back and forth on financial brinks. And they just feel that, you know, they cover Whiteville. They cover Columbus County. And they took an incredibly courageous stand with the Ku Klux Klan, which they paid for financially. But I think, long-term, citizens in a community appreciate that where the Chamber of Commerce may not. It’s one of those things that says we’re in it for you.

Ellis: You talk about how the strategy for these papers is sort of juggling several things at once — cutting down on their legacy costs while finding new revenue streams and trying to win back audiences. And from looking at all the papers that you’ve looked at for the book, I’m wondering what advantages you think some of these community papers have in doing those things that other, larger papers might not have.
Abernathy: If you look at the large metros, invariably what they’re facing is a huge distribution over a large area or even regional area.

What we’ve had is a real shift in ownership, away from what you thought of as your traditional newspaper owners and chains like Knight Ridder and McClatchy and Gannett, over to the private equity and the investment firms owning papers. And where have they gone? They either go into a select city where they think they’re going to turn things around, and then come out a little later and realize it’s not quite that easy — or they go into these markets like Whiteville and make an offer that nobody can refuse. And then what do they do? They basically shed legacy costs, but they don’t reinvest it in building the community.

And so if you look at North Carolina now, there are huge pockets that are really underserved. And so if a Whiteville goes, there’s nothing that’s going to be covering Columbus County because it isn’t reached, except on the periphery, by that TV station 50 miles away. And basically the only time they’re going to be covering it is when there’s an accident or a prison break.

So there’s nobody really talking about what has to happen in those communities going forward. So first off, they have a huge advantage in that they can think — if they can get themselves to think this way — they can think creatively about shedding legacy costs. So one of the things that Rutland has done, I think, very, very quickly and also in a very strategic way is just put everything on the plate. They said it’s not that we’re just going to focus on printing costs. We’re going to look at everything. Where are we adding real value? And where we add real value is in our reporting and our editing.

So, I mean, I think that they have an ability too to look at it on an individual level and make those cuts and then reinvest. So that is one advantage, I think, that the independent — especially independent — community newspapers have.

Ellis: You talked several times throughout the book about the tension between the chains buying up smaller newspapers or community newspapers versus private equity versus family ownership. Do you think there are any misconceptions that any of these companies or these groups that try to buy community newspapers have that are different than, say, a metro paper?
Abernathy: I think that what they think is that, because they are in remote areas without a lot of competition that there’s still a future in print. And that’s not that unusual if you think about. Remember the last ASNE meeting? Ken Brusic, from Orange County, got up and said how they were doubling down on print. And everybody was so thrilled about that, right? They hired 300 people. Well then, you know, by November, they had laid off a lot of those people.

What I’m pretty convinced of, having watched it and been stunned by it, is how quickly the habits of people that live in very rural areas, how quickly their habits are tracking with Pew. I’m pretty convinced there is not a long-term future for a print-only product.

But if you’re not that familiar with it, and if you’re an investor and not looking at it that way, you may think that that’s a good bet. I worry more about the private equity purchases and the investment purchases, in part because they don’t carry with them the same kind of at least stated commitment that the large newspaper chains have had, which is that the journalism is driving it. That they’re there to serve the community. Now there are tons of books that show that chains have not necessarily always lived into that. But I would think you could also argue there are some chains that have tried very hard, that improved the papers they bought. Very specifically, the latter half of the 20th century. They made investments. What I worry about most with when you get investment firms talking about the return on investments is they’re not really talking about what it is that the community needs and wants long-term.

Ellis: What was the most fascinating or surprising part of doing the research for this?
Abernathy: I had spent the last 20 years or so dealing with national or international brands like The New York Times and The Wall Street Journal and the Harvard Business Review — which I believed in fervently for what the good that they did and what they added to the universe of information. It was coming back and realizing how important it is to have strong, local information that puts context on everything that you’re doing.

That newspapers, when they’re at their best, they interpret life for you. And they connect you. And it’s just, it’s coming out of that with a real strong passion too for making sure that the good newspapers that want to change, that don’t want to die, can actually have the tools to do it.

POSTED     June 11, 2014, 10 a.m.
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