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June 17, 2021, 11:02 a.m.
Business Models

Ken Doctor: Six months after launching a local news company (in an Alden market), here’s what I’ve learned

We don’t wake up each morning to compete with a print daily, but rather to run our own local news and community model. That’s the key.

It was our first epiphany. Just a few weeks after our pre-Thanksgiving launch, we summoned the audacity to announce a public forum. “Join us for ‘Covid 2021: The Experts Answer Your Questions’ event in English and Spanish.” We had only small thousands of readers, a largely unknown brand and no track record of credibility in the community.

Yet, Lookout Santa Cruz brought the county’s public health leaders and other experts together (via Zoom, of course), at a particularly dire and fearsome time. We got the word out through Lookout, through our nascent partner network, and on flyers distributed with Second Harvest Food Bank bags.

How many might sign on? Would anyone actually show up?

More than 500 people signed up for the free evening event, and more than half stayed the full 90 minutes, listening in either English and Spanish. More than 100 questions were submitted by attendees.

That’s when we first knew we were on to something. We’d seen the first coalescence of what’s becoming a profound, interconnected 3 C’s of Lookout’s strategy — content, community, and commerce.

We’re counting additional epiphanies as we gain market experience. We’ve identified “ad deserts” — proving so far that marketing partner branded content can produce ample early revenue. We’ve seen that the strong link between timely content and the convening of public forums can quickly build brand and awareness. We’ve seen that the web of civic betterment/local business community connection is bedrock to the revival of community-supported local news. We know that relatively high, but fair, value-based membership pricing can speed the business-rebuilding of local journalism.

Overall, we now believe that the digital local nexus of content, community, and commerce, powered by appropriately scaled smart tech and bright minds, forms the foundation of Lookout’s early success, and our planned expansion. What that nexus looks like evolves each week, but it all derives from our mission statement, an unusual one in the news business: “Lookout aims to make Santa Cruz County a better place for all who live here.”

Lookout’s been a wild ride since our pre-Thanksgiving, into-the-teeth-of-pandemic launch of what we believe will be only the first site as Lookout Local proves out our model over time. Seemingly an eon ago, Josh Benton and I talked about our pre-launch plans last August. While it’s still very early on, we’re now glad to share first learnings and some key metrics that tell us we’re on the right track.

The early signs all point to what we believed: If we built a modern product built for quick swipe mobile reading and filled with ever-deeper, lively content, the wider citizen, civic, and business communities would respond. Still a half year of even good metrics is only that; it’s too early to declare success.

We’re now looking for a new top editor, ready to build the next stage of Lookout Santa Cruz and then Lookout Local more widely with our great overall team of 14. We’ve just opened a new position for a community voices/opinion editor, aiming to bring in the widest set of spirited, solutions-oriented, text and video commentary. In addition, we’re recruiting for correspondent positions, storytellers who are enthused to work deeply in this community and with data.

Launching into Covid — and against Alden

Soon after we formally announced a late fall launch for Lookout Santa Cruz, Alden Global Capital — the operator of the Santa Cruz Sentinel — did something it’s rarely done: It added newsroom staff. Reports told us that its non-sports contingent of three was being doubled. Alden, here, was responding to competition, maybe “investing,” more likely moving full-time employees from less-competitive markets. I’d made a big deal about the Lookout model being a replacement for failing, or suicidal, dailies. We announced a newsroom of 10, intending to become, as quickly as we could, the primary news source for the 276,000 people in Santa Cruz County.

Are we competing with the Sentinel? That’s a curious question. On the ground, it seems like we’re two trains passing in broad daylight, one headed into a frontier future, the other Dopplering into history. Print vs. digital isn’t really a fair fight, as long as digital’s got the time and money to see it through.

Yes, we aim to replace the community glue function of financially leveraged dailies, but we’re building a new modern model.

There are the metaphors, and there are the numbers.

While still in our infancy, our weekday newsletter list of more than 10,000, with a good open rate, already exceeds the Sentinel’s daily print circulation by more than 3,000, with the gulf growing each week as we gain and they lose. Yes, the newsletters are free — a mid-funnel product patiently building a durable reader habit, acting as our biggest converter of readers to paying members — and the paper is “paid,” but the trendlines are stark.

Consider our pricing: $17 per month or $187 a year, what we like to call fair value pricing. With a limited free access system in place for fewer than four months, we’re approaching 1,000 members paying that price. Of those, 76% have opted for annual membership.

The tiny number we love the most: six. That’s the total of members who have quit us since November.

The Sentinel just made its Memorial Day offer: $2 for six months. Do the math — and dailies are back, literally, to the penny press days of the 1830s.

$17 a month compared to a penny a day? We’ll communicate the value of our product/service, then back it up, in both the journalism and the community betterment work.

It’s brick by digital brick.

We launched Lookout in Santa Cruz knowing Alden had decimated a paper that had once been a community leader, owned by a local family, then a quality chain (Ottaway), until it fell into the hands of financial engineers. What we didn’t know is that in our first year, we would be competing — using a polar-opposite model — with what is now becoming the second-largest newspaper company in the country.

Does that make us an anti-Alden? We now all know the Alden playbook, but the makeup of those who stand for polar opposite values — big city and little city independents, family-directed smaller chains and the nonprofit startup movement — is so diverse, and hard to see as of a piece.

As we look at the Alden strategy and Lookout’s, it’s like a funhouse mirror:

— Short-term profiteering vs. our built-to-last intention to invest in deep, long-term community connections and betterment.
— Getting by with as few journalists as possible, vs. us spending 70% of our budget on the newsroom, a long-term investment given our public be.
— A shrinking of the public face of the paper vs. us flooding the zone with our staff engaging every way we can with the public in forums, Lookout Listens sessions, Zoom intros, member events, and, soon, street fairs. Two key positions we’ve invested in early on: A director of community partnerships and a head of events.
— A social media strategy that has made us the most actively engaged social medium among local news providers, one that interacts with communities and their members wherever they are.
— A print-centric business vs. us being digital first and always, able to harness the full power and potential of a modern platform.

We don’t wake up each morning to compete with a print daily, but rather to run our own local news and community model. That’s the key.

Still, there is a kind of harmonic convergence in now “competing” with Alden, given my own role in exposing its outsized profits four years ago. When I first noticed the aggressiveness of Alden a decade ago, and wrote about it here, it had bought the small and woebegone Journal Register company and had already accumulated stakes in a half-dozen newspaper companies. Now, despite all the citizen protest, politician harrumphing, and journalist pleading, Alden’s gobbling of Tribune Publishing leaves no doubt that Alden and other financial buyers will consume more of the shriveling daily press, as long as the money is right, until there’s little left.

As early as January 2020, I’d focused attention on Alden’s impossible-to-refuse embrace of Tribune. As I’ve been consumed with building Lookout, I was left to watch the inevitable unfold — yet again, as short-term financially driven “newspaper companies” approach ownership of 50% of the country’s daily circulation.

We know how that story is ending.

The new story

A new story is being written.

Nieman Lab has chronicled many sprouts of local news revival, growing unevenly. As we return to in-person conferences, the big topic won’t change much: What can really make up for the end times of the daily print local press?

It is good news that low thousands of non-daily paper journalists are out there plowing new ground, but we need many thousands more journalists hired, trained, and deployed across America (and far wider in all the democracies, all of which suffer the same issues, to varying trajectories).

I’ve differed, philosophically and strategically, with some of my peers in the revival movement, in my writing at the Lab, in conferences and talks. Lookout is a mission-oriented, for-profit, public benefit company driven to prove that local news can still be a market good. We love philanthropy, and see it as great for seed and supplement. However, we believe that the combination of earned revenue from well-paying readers, community-centric businesses, and events will likely be the only way that thousands of journalists are able to be paid fair salaries, fully repopulating the news deserts. That makes us a bit contrarian these days.

Still, what unites us all — the American Journalism Project, LION, INN, Report for America, the National Trust for Local News (which just made its first investment, helping the Colorado Sun boldly snatch a group of weeklies from the grasp of Alden), and many more — is far more important than those differences. We must find robust ways forward, or we risk the further diminution and defiling of our democracy. The recent attention given to new local aggregation plays is at best a surface-level attempt to solve for a deeper, more acute problem — the need for much more well-reported, original local news. It’s a kind of faux local, when what America needs is simply well-reported, original local news.

A few early metrics

If our goal is earned revenue, how are we doing? With our big goal of earned revenue, we have paid rigorous attention to our metrics, building new processes to achieve them.

We love data. And after six months we now have enough of it to fully make use of a Lookout tech stack built for expansion through integrated partnerships with the Los Angeles Times, BlueLena, ActiveCampaign, Parse.ly, Pico, Second Street, and Subtext. These numbers are very early, but they’re moving in the right direction.

As I mentioned above, 76% of our members have opted for an annual subscription, and just six people canceled. Our net revenue per member is $164 per year, after our community giveback program costs. With that program, every new member picks one of five community nonprofits, and Lookout donates 10% of the membership fee to that group. The goal: community betterment is a universal Lookout membership benefit.

When it comes to advertising, we have 17 market partners, with an advertising renewal rate of 100%. Average revenue per advertiser is $2,000-plus per month. We ask for a three-month minimum contract, with the average range between three to six months and increasing.

Our net promoter score is 51 among members, and 22 among people who’ve registered for the site.

And half a year in, we’re more than 30% of the way there in matching our earned revenue to our monthly expenses. That’s ahead of where we’d hoped to be.

The three C’s

Let’s return briefly to Lookout’s 3 C’s: Content, Community, and Commerce.

For us, innovation is often about applying the best ideas of others, rebundling them in new ways. It’s more alchemic or recombinant than inventive.

In this exhilarating and exhausting adventure, we have borrowed from myriad models — from The New York Times and Financial Times to the Daily Memphian, Charlotte Agenda (now Axios Charlotte), Colorado Sun, Block Club Chicago, and the Long Beach Post, and from Morning Brew to Skift, Spirited Media, and Community Impact — we’ve tried to incorporate the best ideas that so many have built and generously shared, and put what we consider the best of them together in new ways.

Community. Take the great, outsized success of The New York Times and scale it way, way down to our relatively small market of 276,000 in Santa Cruz County. In reporting on The Times’ transformation over the last decade, I’ve emphasized that it’s the thinking — not just the level of resources applied — that’s made the difference. An intense reader-first focus. Product thinking. A tech-driven funnel that drives both revenue and quality. Branded content, smartly created and deployed. Making the major investment in journalists the core of the strategy.

All of that requires an appropriate level of resources, whether you are trying to serve a market of 331 million (plus the globe) or a county of 276,000.

We’ve added a new input to the Times’ formula: We’re putting money and labor into community engagement and community betterment. The Times represents the gold standard of a national and global news company, but it can’t serve, rally, and challenge the people of Santa Cruz County. We can, and we will. In one sense, that’s a special sauce, waiting to be applied across the country, I think.

Our stated mission — “Lookout aims to make Santa Cruz County a better place for all who live here” — drives us philosophically and strategically. How we do that is two-fold: the ever-better local news report and the deployment of a range of community betterment initiatives — solution-oriented (and other) events (in-person and Zoom), those community give-back programs associated with membership, the creation of more than 60 “civic group pages” and regular listening sessions with all segments of our communities. We’re now putting the finishing touches on a broad access program for the county’s students.

Such a mission doesn’t diminish us as a news company; it multiplies our ability to do more and better solutions-oriented journalism. Healthier communities nurture healthier journalism, and vice versa.

You have to like the spirit, and the naming, of startup The Oaklandside. We can — and should — be on the side of our communities. Properly done, that’s not boosterism, but quite the opposite, exposing what needs to be exposed and exhorting what needs to be exhorted to make local democracy and local civic life newly vibrant in this confusing and challenging national environment. That’s a key reason we embraced Lookout as our brand.

We are not anonymous in the community, operating out of a distant, faceless distribution center.

What we’re doing is real modern “newspapering.” We’re in the fray, as a part of the community. We’ve presented to most of the Rotary Clubs and Chambers of Commerce in the county. In a town without a real publisher, I’ve become one.

Our team will soon move into a real office — built for collaboration — downtown, with a sign. I hope that people will drive or walk by and say, “That’s our news company,” throwing any epithet they want our way. We’ve done Zooms with innumerable civic groups, local boards and schools. We take every opportunity to connect. And in email and now (!) in-person conversations, people tell us in many ways, “Lookout feels like Santa Cruz.”

Just one: “I love it. The newsletters are fantastic. The best way I can describe Lookout is that every time I read it I feel like my soul took a shower and then I get mad because I realize my soul wasn’t getting the shower it needed beforehand. We’ve needed this outlet for years. I can’t believe we limped along without it.”

Commerce. Commerce, we believed from the beginning, must be part of any comprehensive news, information, and entertainment site. Imagine a city landscape with only housing and no stores. I visited Prague and East Berlin soon after communism crumbled in Eastern Europe, and still recall the oddness of seeing main street upon main street without a store.

Shopping, buying, interacting with other humans is part of what we do in cities, and so we believe commerce must be part of a revived local news model.

Lookout had no intention of competing with Google and Facebook, or focusing on Amazon-beaten-down and Covid-hammered retail, so we aimed to test thoughtfully written, clearly labeled, branded content on a very local level, clearly delineating promoted content from editorial content.

In early pitches, we said, “Thanks for considering Lookout. We know we’re brand-new and that you have a lot of places you can spend your marketing dollars.” We often heard the reply, “Actually, we’re glad you are here. We really don’t have the right places or the right ways to reach our audiences.”

So, slowly, we’re surveying a kind of ad desert. Sure, there is plenty of competition for ad dollars — but a real hunger for meaningful ways, on the phone and on the desktop, to engage with would-be customers.

Today we count 17 marketing partners — among them, the leading financial, education and health players in the county. Not one that has signed up has failed to renew. These multi-month partners, with our help, both tout their wares and highlight their own community connections and social responsibility causes.

Businesses have bought (figuratively and literally) into our community-forward mission. They love the dynamic, multimedia storytelling, which has spurred robust reader engagement. Just as our deepening community involvement has deepened our coverage, so has our relationship-based selling — a get-to-know-you-and-strategize-with-you process to form business partnerships that should last — furthered our community engagement.

Content. If you had told us a year ago that six months in, Lookout’s business model might be more advanced than its editorial model, we would have been surprised. The challenge we’d set out, of course, is proving out that communities would financially support revived local news.

It seemed as if creating the news product, given my own and our staff’s experience, would be the easier work. Curiously, though, it’s been a challenge. Maybe that isn’t surprising considering that we were born into the sea of Covid and are just now aiming to find our land legs as terra becomes firmer. For the first time, as we enter summer, we can approach normal coverage of a community that’s active, engaged and physically connected.

We approach what I call our post-launch period having published almost 2,000 stories, and have now showcased the best of them. These have been mostly local, with some assists from our valued content partners, including the LA Times, CalMatters and Kaiser Health News. These are almost all stories that this community would not have seen otherwise.

Readers scan through our stories with our homepage, highly visual, rotating Instacards, and, of course, through every manner of side door, familiarized one-by-one by our varied outreaches, with uniquely voiced and diversifying newsletters, text alerts, budding Spanish-language content, forums and events, and more. As we do all of this, more readers begin to make Lookout their go-to destination. We set out to create a local news product that didn’t look like a newspaper, and we have succeeded with that foundation.

I think we excelled from day one with our Covid coverage. All 2020, as a reader, as a citizen, I decried how little we knew about the local hospitals, the local nursing homes, the local toll. “Knit masks for the nurses at Dominican Hospital,” we were exhorted in the spring, but we had no idea what it was like inside Dominican, our largest hospital.

We took the challenge and through the depth of winter and uncertain spring, we told the story well, and then dove headlong into the early confusion of all things vaccine as Covid fears turned to joyous tears at mass vaccination centers. We got correspondence that made us — all remote half of the time, of course — cry: “I never would have gotten the vaccine without your help,” read one of the many thankful notes.

Now, we’re embarking more fully on our original editorial mission. That’s to tell the full range of stories about this place and its people that I like to call “paradise with problems.” We get to stretch our full accountability muscles, having proven some early mettle in our coverage of school district sexual misconduct. We get to expand widely into culture, arts, and entertainment. We get to cover — in person — all of the communities in our increasingly diverse county.

For me, Lookout has been my sixth career in journalism, after alt-weeklies, city magazines, daily newspapers, corporate digital transformation and my Newsonomics analyst work. And it’s been the most consuming.

We have set ourselves a sometimes-daunting mission, but within the bounds of one market and a couple of million dollars in startup capital — assembled from mission-aligned backers, not financial players — we are doing our best to deploy it. Humbled by the pains of this startup, we remind ourselves that the Times, like Rome, wasn’t built in a day, or six months.

POSTED     June 17, 2021, 11:02 a.m.
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