Nieman Foundation at Harvard
HOME
          
LATEST STORY
Congress fights to keep AM radio in cars
ABOUT                    SUBSCRIBE
Sept. 11, 2024, 2:10 p.m.

With an expansion on the way, Ken Doctor’s Lookout thinks it has some answers to the local news crisis

After finding success — and a Pulitzer Prize — in Santa Cruz, Lookout aims to replicate its model in Oregon. “All of these playbooks are at least partially written. You sometimes hear people say, ‘Nobody’s figured it out yet.’ But this is all about execution.”

It’s been a big year for Lookout, the local news company founded by longtime Nieman Lab columnist and news industry analyst Ken Doctor. In May, its first newsroom, Lookout Santa Cruz on the California coast, won an obscure little bauble called the Pulitzer Prize in Breaking News Reporting. (“For its detailed and nimble community-focused coverage, over a holiday weekend, of catastrophic flooding and mudslides that displaced thousands of residents and destroyed more than 1,000 homes and businesses.”) And last week, Lookout announced it was ready to launch a second newsroom, Lookout Eugene-Springfield, on the banks of the Willamette River in Oregon. Editorial excellence and financial growth — not the most common combination in 2024 local news!

Unless you live in Santa Cruz (or root for the Banana Slugs from a distance), you likely haven’t paid too much attention to what Ken and his colleagues have built — a digital-only news organization whose editorial resources outgun the local newspaper. The Lookout model isn’t to supplement to the hometown daily, to be a second read for the most engaged — it’s to supplant it as the biggest news source in town. And by some measures, Lookout Santa Cruz has done just that. (It has 10 full-time newsroom staffers; the Santa Cruz Sentinel, owned by the vulturous hedge fund Alden Global Capital, lists 7.)

Yes, there are a few other digital news companies that can claim to be the news leader in their communities. But what’s exciting about Lookout is its ambition to repeat its Santa Cruz success in other markets. There are so many American cities whose once-respectable daily newspapers have been hollowed out by plundering chains. If Lookout succeeds, it’ll have created a model that can help fill those voids at scale.

For Eugene-Springfield, Lookout is hiring a 20-person staff, 15 in the newsroom. (Are you, Nieman Lab reader, the perfect candidate to be executive editor or publisher? Ken wants to hear from you.) That’s the sort of journalistic heft you don’t see often for a digital news site in a smallish (pop. 380,000) metro area. And the company has committed to launching at least three more Lookout cities by the end of 2026.

Four years ago, I spoke with Ken shortly before the Santa Cruz launch, and this expansion seemed like a good occasion to check back in. We talked about the lessons he’s learned, the new revenue streams he’s aiming for, and who he sees as Lookout’s peers around the country. Our conversation, lightly edited, is below; I started by asking Ken about his long-ago connection to Oregon, where he edited and published the alt-weekly Willamette Valley Observer in the 1970s.

Ken Doctor: I lived there 10 years — the ’70s and into the early ’80s. My wife’s an Oregonian. Our three kids were born in Eugene. Then I lived in Portland for two years.

Eugene and Springfield, that’s an interesting story in itself. Eugene’s a university town, with the University of Oregon, and Springfield was a mill town. I don’t know how much you’ve read Ken Kesey over the years, but Kesey [who grew up in Springfield] captured the place, beyond the counterculture stuff. He captured old Oregon, which was all about resources, mainly timber, carried on the rivers, and then fisheries on the coast.

Joshua Benton: How long ago did you start thinking about Eugene as a place to expand to? Was it already in your mind when we talked four years ago? You knew you wanted to prove out the model in Santa Cruz and then expand it elsewhere.

Doctor: Not Eugene specifically, no, but it fits our model. We want a good-sized city that has a significant-sized group of college-educated, affluent people and has a daily newspaper that has been decimated a chain’s budget cuts. And so the college towns around the country are obvious candidates.

The Eugene paper [The Register-Guard] was a good family-owned paper until it was sold to GateHouse [now Gannett] in 2018. Peter Laufer, a professor at the journalism school at Oregon, wrote me and said he’d like to come visit. This is spring of last year, 2023. He said The Register-Guard is a shadow of itself — it’s terrible. People feel awful about it. There’s not a good source of trusted community news. And he was thinking of trying to buy it cheap from Gannett, maybe for $1, and turning into a sort of teaching hospital, where journalism students at the university would run it. They have a big School of Journalism and Communication with hundreds of journalism students.

I told him I don’t think it’s a great model. It’s great to involve students via internships and residencies as much as you can, but readers need a professionally reported, professionally edited publication, just like they always have. So we ended up talking for two hours. That got it going. He arranged a meeting with some people at the j-school, and since then, I’ve been up there 10 or 11 times. I’ve probably spoken to 400 or 500 people — over dining room tables, living rooms, small group gatherings, bigger group gatherings, winery happy hours, that kind of stuff — to push it all forward in, basically, a year of work.

Benton: I saw in your announcement that the main funders are “more than 20 individuals or couples and four family foundations.” It’s got sort of a barn-raising vibe — the leaders of the community coming together to make it happen.

Doctor: Yeah. It’s a truism that way too much time is spent having to raise money. I don’t really mind it. I never knew before I raised money for Santa Cruz if I could be good at it, but I have no compunction asking people for money to create local news. But it is tremendously time consuming, when the time should be going into actually creating the products and delivering the news. But the plus side of that is that it’s really affirming. It’s a lot easier to do with Santa Cruz to point to. We can say: Look at this, this is what we’re doing there, and we want to do it here. We’ll do even more, because we’ll have a bigger staff, and obviously it’s all going to be local. And they think: Whoa, this is pretty good. We really need this.

I feel a real sense of responsibility. We’re taking people’s money and plowing it all into making it work. A few people say: Well, what if it doesn’t work as well here? It will work, given enough time and money. But what’s the alternative? We are going to hire locally, run it locally, and put the stake in the ground that we plan to add three more of these by the end of 2026. It’s totally doable and necessary.

Benton: One thing that I remember from our conversation a few years ago was that you felt there was a pretty settled set of best practices from other local news startups, and you mostly just wanted to pull all into a single operation.

Doctor: Yeah — playbooks. We’ve got models. We have a journalistic model which is rigorously nonpartisan. Interestingly, it’s increasingly breaking-news oriented, as well as connect-the-dots stuff we’ve done from day one — we’ve now become more of a primary news source and people expect us to be on top of everything. It’s the full breadth of local news — of course politics, education, health, environment, but also a good emphasis on food and really strong arts and entertainment. That breadth is really important.

And then you have community engagement models, event models, the advertising model, and, of course, the reader revenue model. All of these playbooks are at least partially written. You sometimes hear people say, “Nobody’s figured it out yet.” But this is all about execution. The two main sources of revenue are advertising and reader revenue — you may as well call it circulation. That was true a long time ago and it’s still true.

We do have other revenue streams — from platforms, especially with the California settlement going through now, and Google Showcase. We have a Lookout in the Classroom program we’ve gotten philanthropic support for. We’re about to launch an individual donation program through the Local Media Association. And then Oregon has digital public notices, which we’re interested in. We’re going to try to break a code on obits somehow, to get a significant revenue stream from obits. So there are a lot of other possibilities out there, but the basic blocking-and-tackling is still advertising and reader revenue.

Benton: Let’s set aside Oregon for now and go back to Santa Cruz. Where are you guys right now financially, in staffing?

Doctor: So we have we have 15 people full time — 10 in the newsroom and five in what we call community and commerce. Every story gets two reads from experienced editors, which I think is under-appreciated — the editing authority that needs to go into the rebirth of local journalism. So we have a managing editor and a copy production editor, both with 20-plus years experience, and then an opinion editor, full time, a visual journalist, and six correspondents. So that’s 10 there.

In terms of reach, we figure we’re now reaching 50% to 60% of all adults in Santa Cruz County in any given month. We got about 340,000 pageviews a month and about 170,000, 180,000 unique visitors. Those are still going up some month to month.

The revenue split varies. Advertising took off first, which we knew would happen. We had five good advertisers — we call them marketing partners — at the beginning. We’ve now had literally hundreds of advertisers and that is a good, steady business. Reader revenue, by the nature of it, is an annuity business. We had a number of technology problems there as we went from Pico, which was a disaster, to Piano, which is overly complex, to Newspack’s reader activation system, which essentially manages our paywall and which has been great, absolutely great. I think two or three years from now, membership will solidly eclipse advertising, because it’s an annuity, and it continues to grow as long as you keep your churn low.

In terms of where we stand, we have had quarters where we are at 75 to 80% earned revenue from just advertising and reader revenue. If we add in other recurring revenue, so money that we know is coming, it has hit 100% or break even. It’s not consistently there yet, but it is getting closer and closer each quarter. I’m very satisfied with where we are — we’re essentially on track of where we need to be, and we continue to get some supplemental philanthropy.

It’s about continuing to invest. Fifteen full-time people, you know, in an area as small as Santa Cruz County, that’s a lot. It’s got to be one of the largest newsrooms per capita in the country. We could be quote-unquote “profitable” if we had fewer people in the newsroom. But the right thing to do, as long as we can gain the funding, is to invest — which, of course, turns that flywheel of more stories, which means more pageviews, which means more advertising revenue, which means more membership revenue.

Benton: You said earlier that there are lessons from Santa Cruz that you won’t have to relearn in Oregon that you you’ve already learned. Tell me a few of those.

Doctor: So I would break them down this way. Technology was a major one. We were at first on the content management platform provided by the L.A. Times, which was good. But it was a one-off, so it wasn’t connected to the network of innovation that’s happening around Newspack. Moving to Newspack about nine months ago, that was the first step that was helpful in connecting us up to the wider ecosystem of news innovation.

And then the big thing I think really held us back was Pico, was the paywall. I think about all that I wrote about paywalls over the years and the necessity of having flexible paywalls — in terms of time, in article provision, all that kind of stuff. Well, that’s fine if you have a huge development staff at the Post or the Times or the Journal. But if you’re a startup, you don’t have those resources. We worked with Pico at the beginning, and that did not work out for us or other small publishers. They were just not ready to serve the needs of publishers. But it took us a good year to figure that out, because everything was brand new. [Pico renamed itself Hype last year and pivoted away from publishers toward online creators.]

We end up moving to Piano, and we ended up doing two years with Piano. Piano is widely used — it’s the primary paywall system in the industry. It is robust and it can work very well, but it’s also highly complex for a small news organization that doesn’t have development resources. When we talked with Newspack, they were more mission-oriented, which makes a huge difference. They would ask: What are the features you need? What are you trying to do? We moved our system to Newspack on March 15 and it has worked wonderfully. It’s removed friction. It’s very user friendly, for us as a staff and for the people who are trying to become members. So the technology lessons are significant — we have a very clear tech stack we like that we can take to Eugene and any other community.

A second area of lessons, I would say, is people. We had significant turnover that first year. We launched in November 2020, so we were hiring during covid, hiring by Zoom. We were not as rigorous as we should have been in terms of the fit, whether that’s skills or culture. We’re really trying to build a modern 2020s culture of how a news company operates, which is very engaged and fairly flat. We have a hierarchy in the newsroom to make news decisions, but it’s otherwise a fairly flat organization of mission-oriented, collegial people who actually work in an office. So we are much more rigorous in the interviewing process to try to make sure that’s right fit.

And I think the third area of lessons would be product. It’s a set of products. We do seven newsletters throughout, throughout the week. We do email alerts. We do text alerts. Events have become more and more important to us — tracking which members come to which events in our CRM, knowing that that’s going to be helpful in retention and pricing over time. We’re going to launch an app — the target date right now is mid-October.

And we’re beta testing right now a project called Neighborhood Briefs, which, like a lot of this, is kind of a blast from the past, like the weekly neighborhood sections that metro newspapers used to print. Those basically got washed away in the 1990s and 2000s. Now there’s no staff for them, they’re too expensive, there’s not targeted advertising. But people still want local neighborhood news. So this Neighborhood Briefs email product will cover 10 areas of Santa Cruz County — roughly 20,000 or 25,000 people in each. Give them local news, local weather, local crime and safety, school meetings, events, local news — whatever’s tagged appropriately for that area. We asked for beta testers and we’re getting 70% open rates on these things consistently. And they’re good! You have an idea, it’s low cost, you try it, and then you see if it works.

Benton: What impact has Lookout had on the newspaper in Santa Cruz, the Sentinel? [The local daily is owned by the hedge fund Alden Global Capital.] Have they shrunk further? Have they tried to compete more?

Doctor: When we launched, they moved two or three people down from other Alden papers around California, but then it shrunk again. I think they have five people now. They tend to be spirited young journalists who Alden can pay less, though there’s one veteran reporter who has stuck with them and a veteran photographer who is great. They’ve receded.

In terms of impact, I think they adhere to the tried-and-true model. They’ll report from city council meetings, county meetings, some other city councils in the area. They’ll report a lot on courts and justice and crime. They have not really expanded what they’ve done in terms of impactful journalism, investigative journalism, of the kind we’ve taken on. We’ve done a lot of stories that hold local governments accountable. I’m proud of what we’ve done, and we want to add to that over the next several years.

Benton: You teamed up with five other ambitious local news companies to start the Alliance for Sustainable Local News. [The others are The Baltimore Banner, Block Club Chicago, The Colorado Sun, The Daily Memphian, and the Long Beach Post.] These are all publishers that either are or aspire to be the largest newsrooms in their community, not a second read to the local newspaper. Is that Lookout’s peer group, as you see it?

Doctor: ASLN is an informal way to share ideas, to share benchmarks and metrics. But we’re different in that we want to expand. The other five share our same mission, our journalism values, but they are really focused on where they are. And for us, expansion has always been a big part of the plan — to prove out the model in Santa Cruz and then take it elsewhere.

Benton: So who would you think of as your closest peers in the local news business?

Doctor: It’s funny — I don’t think of anybody is exactly doing what we’re doing. I talked to P.J. Browning in Charleston a couple weeks ago, and in some way, there’s more kinship there, though they’re obviously a legacy company with print. [The Post and Courier in Charleston, South Carolina, has expanded from its newspaper base by launching a series of digital-only news operations in other cities across the state.] They’re doing it differently, focused on one state, but they’re basically saying we can be the digital disruptor in these other cities.

There are some similarities with Berkeleyside, which started The Oaklandside and then Richmondside.

Benton: It’s sort of a boom time for the stronger remaining legacy local news companies to expand into other markets. Here in Boston, you have the Globe making a big push into Rhode Island and then New Hampshire. In Louisiana, the Georges [owners of The Advocate in Baton Rouge] now do print in New Orleans and Lafayette and digital-only in Shreveport.

Doctor: And what the Star Tribune just announced in Minnesota. You’ve got these companies that are mostly for-profit but also mission-oriented. They’ve all had their struggles in the digital transition, but they’ve stayed the course and worked it through. And there’s this point where they think: Oh, if we can do it in our hometown, there is a relatively marginal cost to expanding, and if we manage this correctly, we can take this to other communities that have seen their daily newspapers hollowed out. There is a common thread there.

I think philosophically, we’re very similar — but we’re rigorously digital to make the economics work. Our technology costs are 10% or less of everything we do. 75% of our costs are salaries, and a majority of that goes to journalists. I remember when I wrote for the Lab [back in 2013] that the average daily was only spending about 12.5 percent of its total expenses on the newsroom, much less than it spent on paper and ink. Our model flips that. So we’re a digital disruptor.

We’re not going in and competing with anybody who is mission-oriented. But there are plenty of communities, like Eugene, that have these tired, fatigued dailies that have been bled dry — and with our model, on a relatively small amount of capital, you can go there and succeed, because it’s not really expensive to do.

Photo of downtown Eugene at night by spec.B used under a Creative Commons license.

Joshua Benton is the senior writer and former director of Nieman Lab. You can reach him via email (joshua_benton@harvard.edu) or Twitter DM (@jbenton).
POSTED     Sept. 11, 2024, 2:10 p.m.
 
Join the 60,000 who get the freshest future-of-journalism news in our daily email.
Congress fights to keep AM radio in cars
The AM Radio for Every Vehicle Act is being deliberated in both houses of Congress.
Going back to the well: CNN.com, the most popular news site in the U.S., is putting up a paywall
It has a much better chance of success than CNN+ ever did. But it still has to convince people its work is distinctive enough to break out the credit card.
The New York Times redesigns its app to highlight a universe beyond just news
It’s the first major redesign since the app launched in 2008.