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April 14, 2022, 2:10 p.m.
Business Models

Ken Doctor: 18 months after launching a local news company (in an Alden market), here’s what I’ve learned

“The term ‘news desert’ has been a shorthand, but the real problem here and elsewhere is that this region lacked the number of journalists it needed to thoroughly inform the public.”

We called it the 3 a.m. Club.

We converged in Denver in mid-October last year, between Covid scares. We planned to talk about the stuff that actually makes local journalism revival possible in our cities and across the country: reader revenue, our tech stacks, the difficulty of hiring and the satisfactions and the pains of building new news companies, brick by brick. We had each brought people from our own teams, who shared their victories and stumbles, in the larger group of a dozen or so.

We also decided to have a small meeting of the news organizations’ founders, which Larry Ryckman, CEO of The Colorado Sun, called our “3 a.m. session.” 3 a.m., as in: What keeps us up in the middle of the night. In that session, held under a sunlit fall Denver afternoon outside the Sun’s offices, we shared the truths that we had kept to ourselves: Insomnia, endless lists of to-dos, worries about getting our fledgling enterprises right. It was a little unexpected therapy session. Us news industry veterans, with long and diverse resumes, hadn’t known we were signing up for a high-wire act as we moved to rebuild local journalism in our communities. Sharing the angst, as well as the epiphanies, still sticks with each of us six months later.

Now, as we move back into the non-Zoom world of human interaction, our little group is planning more business and editorial work together, with the addition of at least one new key member. As The Baltimore Banner readies its launch, it joins up with the Daily Memphian, Colorado Sun, Long Beach Post, Block Club Chicago, and Lookout Santa Cruz to push ourselves and our models forward. We’ll be more outspoken about what is and isn’t working as we participate in industry gatherings. It’s not a formal group, just a working one, and we’ll go on to include other organizations dedicated to our twin missions: 1) becoming impactful replacements for dying chain dailies and 2) focusing on earned revenue to make it work.

Over the last couple of weeks, I’ve headed full-speed back into the industry conversation. Lenfest Institute and Aspen Institute brought together five dozen news industry players, doers, funders, academics, and association leaders for a local news summit outside San Diego A few days later in Austin, the International Symposium of Journalism (ISOJ) resumed its first in-person confab since 2019.

I’m still digesting both events. How much were these simply a resumption of the pre-Covid talk about local news reinvention? And how much has changed?

The breadth of new news organizations, overwhelmingly local ones, is astounding. Many are led by women and people of color. Their zeal to give their communities a fighting chance to better themselves is largely undaunted by funding woes or the difficulty of building anything new meant to last.

That old pre-Covid conference talk — “Where are we going to find $2 [or $3 or $4] billion to ‘rebuild’ or ‘save’ local journalism?” “Which ‘experiments’ in local will actually produce a new model?” — is still with us. But those of us doing it on the ground focus on much smaller numbers.

What’s the right monthly member price point — $9, $13, or $17 a month — to maximize reader revenue? Should we spend $500 or $2,000 on Facebook to generate new registrants? Is $65 a good entry price point for a new job board bundle? It’s the little numbers, not the billions, that make or break our ability to feed local democracies the news and information they need.

For hundreds of us now, this is all about execution. For an increasing number of us, it doesn’t feel like “experimentation” at all.

With one common mission — to pay more talented journalists to produce incisive, community-bettering journalism — we no longer need to debate what’s going to pay for it. The two main funding drivers are the ones that have driven journalism for centuries. First, advertising: Display, sponsorship, branded content, promoted content, new “classifieds,” or whatever. Second, circulation: Subscription, membership or underwriting. We can now add philanthropy to the mix too. (You could add “events” as well, but those are really member or ad support.)

The only debate is how the three form enough revenue for us to sustain and grow. I’m encouraged that some old debates seem to be ebbing. In the old days, too often, interviewers’ or panel moderators’ questions turned to philanthropy vs. earned revenue, or nonprofit vs. for-profit models. Now, in my public talks with new industry leaders like Sarabeth Berman, CEO of the American Journalism Project, we see far more alignment than divergence. The question before all of us is: What combination of those lines of funding gets us into the black? Onne size does not fit all. How and how much we earn in subscriptions and via advertising will vary by community.

So, how’s it going at Lookout?

We set out to create a model — not the model — for rapidly rebuilding strong, trustworthy, trusted news organizations, especially in sub-metro areas like Santa Cruz.

Our team of 13 serves a county of 276,000. Ten are in the newsroom, three are driving the business. We call that business side “Community and Commerce,” reflecting the fundamental relationship-building we’ve now done for 18 months.

We put a lot into our product, as we worked through it with our design firm, Charming Robot, and platform provider, the Los Angeles Times. Readers like the look: serious, but friendly and fun. Most important, of course, is the journalism. At our launch, an incumbent local publisher said, “We don’t need you, there’s enough journalism in Santa Cruz.” But we’ve demonstrated that’s not true. In our short life, we’ve published about 2,000 originally reported pieces — emphasis on original, not aggregated. I estimate that at least three-quarters of them covered people, controversies, or news that no one else had covered.

Do one fast-flagging Alden daily, an alt-weekly, and a small digital startup constitute a “news desert”? That term has been a shorthand, but the real problem here and elsewhere is that this region lacked the number of journalists it needed to thoroughly inform the public. The nomenclature isn’t important. The community impact is.

We’ve done big accountability stories and series on topics like school sexual assault and the difficulty of rebuilding for the 900 families who lost homes in 2020’s fires. We’re increasingly incorporating accountability work into our daily stories, pushing public officials who are unused to being questioned to respond.

Two weeks ago, I noticed something a little remarkable when I pulled up the Lookout homepage. Each of our top stories featured women, a diverse group of women doing noteworthy things in our community. Longtime women’s rights advocates Cynthia Mathews and Gail Michaelis-Ow. Esteemed cookbook author Andrea Nguyen. Local playwright Kate Hawley, who debuted her latest play at the Jewel Theatre. A succinct Q&A with Jewel artistic director Julie James (a new format readers have told us they like, in addition to the popular “Ask Lookout“). A story on Dientes CEO Laura Marcus and Santa Cruz Community Health CEO Leslie Conner, who launched a $28-million Live Oak medical and dental facility. A quick look at native Santa Cruzan Heather Rogers’ perspective on becoming the county’s first public defender. And our own Lily Belli giving a taste of the weekend with Eaters Digest. We didn’t plan to feature stories focusing only on women that week, but we want to recognize and make prominent the worthy and diverse people who make Santa Cruz County so endlessly interesting.

Our metrics are on track, despite the huge obstacle of Covid. We’re way ahead on some — branded content has proven to be a home run — and meeting expectations we set for others, including membership, student engagement, and overall audience-building via newsletters and text messages. We increasingly balance access and audience building with the ARPU (average revenue per user) that our high-priced ($17 per month) membership drives. With the help of our friends, we learn constantly and apply; the folks at Axios Charlotte (née Charlotte Agenda) have been instrumental in the success of a month-old revenue source, our job board. We have made our share of mistakes, and try to make them small ones. The goal: Keep moving.

Our revenue mix right now is about 60% advertising and 40% membership. Our promoted content — borrowed, as much of the Lookout model is, from The New York Times, in this case its “paid posts” — has now attracted almost 50 marketing partners. They love the branded storytelling, and the stories are often highly read as well. It’s community content — all local — with businesses and nonprofits largely pointing out what they are doing for the wider community. No one mistakes it for editorial content (we’ve made sure of that), and it’s produced, of course, outside the newsroom. It’s a huge win, and an essential part of the model for Lookout and for other outlets, like Canada’s Village Media. I am still amazed when I hear people advocate that only some combo of reader revenue and philanthropy will save the day. At ISOJ, Village’s Jeff Elgie joined me in exhorting the crowd to rebuild that traditional part of local news’ business model. I hope 2022 will be the year that changes.

We’re aiming for profitability next year, even as we begin planning where the next Lookout Local sites may be located. We won’t get ahead of ourselves, but we’re mindful of the increasing need for companies like Lookout. We have built out a company meant to get smarter and more efficient as we grow.

That’s the sunny part. But a few clouds still chase us.

This is as much a technology business as it is a journalism business. We made the (correct) decision to outsource our tech to the best-in-class providers we could find. Most of that has gone swimmingly, though the list of what needs at least a temporary workaround each month is never-ending. We understand that we are still early on in connecting the parts of the business model.

Then, there’s hiring.

My peers in the industry all point to hiring — finding talented journalists and business people — as their biggest challenge. More than a decade of decline of the journalism industry has hollowed out much of the talent base. Many of us have found that hiring younger people — the next generation of news — and training them is the most sensible strategy, both in the newsroom and on the business side.

We had lots of turnover in our first six months. Covid, social isolation, the strains and stresses of digital startup life, The Big Quit, and top-of-the-charts affordability issues proved almost overwhelming. But we got through it, and the community saw the service we offered in our public health reporting. We bonded with our audiences early, even as early company-building stumbled. Through it all, we kept our eye on our mission: Lookout aims to make Santa Cruz County a better place for all who live here.

We learned a lot from that experience and from the almost 12 months that have followed. Among our top lessons:

— It’s a physical, retail business. Last week, as essentially Lookout’s publisher, I met and greeted many locals at a Chamber of Commerce gala. In Santa Cruz — and in most every city across the country — the business and civic communities overlap much more than anyone would think from a distance. As a long-time editor who conceived the Lookout editorial and business model, I know we’re secure in our “without fear or favor” standing, even as I freely mix with those in power. That’s what the best local publishers always did. Being in the fray also allows us to push for more access to the people making decisions. We’ve found that in an environment like Santa Cruz, too often, a handful of public information officers decide what the public knows. We’re changing that, week by week. We believe in old-fashioned in-office collaboration. Our team enjoys a spacious workplace in downtown Santa Cruz. Our conference room has been used by community groups, and at the end of the month, we’re hosting an in-person open house for our members.

— It’s the locals who stay with it the most. This is tough work. People who have lived in the community have an additional reason to see through the hardest parts. Though we initially hired from across the country, our whole staff of 13 is now made up of Californians, nine of whom have strong Santa Cruz ties.

— You can’t make all the people happy all the time. We know that from the entire history of newspapering, and learn it anew in what I am test-driving as The Newspub Era. We make choices: More or less investment in accountability work, more or less investment in the culture and guides. It’s an imperfect art at best — and there are always critics, local and sometimes national.

You can’t build a local news business without doing lots of things for people. As Richard Gingras, Google’s vice-president of news, has emphasized at ISOJ and elsewhere: Focusing only on accountability journalism won’t serve enough of communities’ 2020s news needs — or provide a model for paying for them. Recently, we introduced the Santa Cruz Puzzle Center. Readers have taken to it immediately, and our arts, entertainment, and food coverage brings many readers to our civic reporting. We’re not trying to recreate the once-successful daily; we’re creating a new digital-native product to provide for what readers want today.

— The community wants agenda-setting. Later this month, we’re launching Community Voices, a center for opinion and commentary. Santa Cruz is paradise with lots of problems, and one key role of local media in the 2020s is bringing a key eye to the real issues and the best solutions.

— All-in commitment is a great tonic. I recently talked to an old friend about a project we were working on together. He could hardly engage, so troubled was he by the news from Ukraine. What’s going on in the broader world is bleak, more than enough to depress and deflate us. I’ve put all that in the back of my head because I have little time or room to address national or global issues on which I can have little impact. I’ve been working on Lookout now for more than three years, and it’s the hardest, most consuming thing I’ve done in a 47-year career. But as I, and my peers, focus fiercely on rebuilding our little parts of the planet, we focus on what we can change.

Altogether, it’s been a wild and still foundation-building experience, one I wouldn’t trade for anything, even as I see so many of my old colleagues enjoying some retirement. Journalism remains a noble and humbling way of life. And in our business, it’s always 3 a.m. somewhere.

Ken Doctor is a long-time media analyst, speaker, and consultant, who contributed more than a million words to Nieman Lab before launching his own local news startup, uh, newspub, model, in November, 2020. Lookout Santa Cruz, the first newspub of Lookout Local, supports a staff of 13.

POSTED     April 14, 2022, 2:10 p.m.
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