A double dose of denial in Denver
The Independent was the second in a series of online news sites established by several Rocky veterans in the hopes of being able to continue doing the work they love in a place they would hate to leave.
Ironically, the Independent failed for exactly the same reason the Rocky did: A suicidally stubborn determination on the part of the organizers to be in the business they wanted to be in, instead of attending to the business they needed to attend to.
As Temple told the UC Berkeley Media Technology Summit at Google in his talk (text here), the Rocky hit the wall because it failed to understand its customers and how to do business in the new era of interactive media.
The Rocky thought its competition was the Denver Post, instead of the whole, dang World Wide Web, said Temple. It figured its future would be secure as long as it remained the best possible newspaper it knew how to be.
In his speech, Temple quoted an executive of E.W. Scripps, the Rocky’s owner, who said: “We were not used to the market telling us how things should be. We were used to telling people what we thought they needed and how they needed it.”
“That,” said Temple, “has to change.” Amen.
The same sort of self-indulgence led to the unraveling of the Independent. A quick recap:
When the Rocky shuttered in February, approximately three dozen staffers got together to launch a website they called In Denver Times. Their plan was to emulate as much as possible the work they did so well at the Rocky, while continuing to receive the same sort of pay and benefits they had enjoyed at the newspaper.
To achieve this, they immodestly planned to get 50,000 people to subscribe to their website for $60 a year. Despite the patent implausibility of the idea (as ably dissected here at the time by Steve Outing), the journalists actually persuaded some local businessmen to provide them with office space and a sum of seed funding to get started.
The journalists got busy doing the work they loved but they didn’t attend much to the strategic, operational and financial realities associated with a start-up business. They essentially assumed, as had their former employer, that the quality of their work would attract the patronage they needed to continue doing what they loved.
As money began to run out at In Denver Times, the journalists turned to the investors for more. Despite the fact that the subscription drive fell spectacularly short of its goal (the organizers claimed 3,000 sign-ups but we will never know for sure), the investors actually considered putting in more money, according to one of them, Kevin Preblud.
But the dollars never came, because the investors wanted the payroll trimmed to reduce the cash-burn rate until such time as the business began generating more subscriptions, a decent amount of advertising sales or some other sort of reliable revenue stream.
The journalists balked at making cuts, Preblud said at the time. The investors and the journalists went their separate ways and the journalists started a successor site, the Rocky Mountain Independent.
Sadly but unsurprisingly, the journalists announced last week that they were abandoning the effort after selling only 300 subscriptions to support them in the work they loved to do.
As the folks at the Independent discovered, start-ups are hard. Having participated in several and failed at some, I can tell you failure is far more instructive than success.
The point of this discussion is not to kick the founders of the Independent while they are down but rather to extract some lessons from their experience so individuals contemplating similar ventures can avoid making the same mistakes.
The lessons at the Independent are almost identical to those of the Rocky, so they apply as much to established media as they to do the newest start-up:
:: The product has to match the market. Until further notice, the presumptive price for online news content is free. Anyone interested in Denver news had to go no further than the free sites operated by the surviving Denver Post and the several local broadcast media. The subscription model was a non-starter and everyone involved should have known it. It was wishful thinking to expect the second subscription drive would succeed after the first one failed.
:: The content has to match the medium. The journalists for the most part luxuriated in writing the kinds of articles on their websites that they luxuriated in writing for the newspaper. Neither of the sites leveraged the power of the web to weave social networks, enable users to personalize content or do any of the other things that consumers commonly expect from a modern interactive experience.
:: The first business of a business is business. Like so many entrepreneurs, the journalists started their websites so they could do the work they wanted to do. But a business, especially a start-up, requires far more than passion for the work. It requires close attention to the nuts and bolts of raising money, making sales and controlling expenses. Above all else, it requires the discipline of living within your means until the business grows healthy enough to fund your aspirations.
The start-up news sites failed for fundamentally the same reasons the Rocky did. People felt the universe would reward them for doing what they wanted to do, instead of doing what they needed to do to earn the patronage of readers and advertisers.
Sorry, folks, it doesn’t work that way.