Tuesday, October 06, 2009

A double dose of denial in Denver

At almost the very moment former publisher John Temple candidly told the Berkeley media-technology conference last week the reasons why the Rocky Mountain News succumbed, the Rocky Mountain Independent was drawing its final breath.

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.


Anonymous Michel Marizco said...

That's fine but how *does* it work?
That's the question nobody knows the answer to.

8:59 AM  
Anonymous Anonymous said...

Exactly. For years, newspapers have dictated what readers would read. But the freedom given readers by the Internet has led to a rebellion where they are going elsewhere to get what they want and need. It's hubris. Reporters and editors believe they know better than their readers and that they will suffer through yards of thumbsuckers. John Temple was responsible for one of these, involving a 32-part series and a 50-year-old traffic accident that was obviously written only in the hope of prizes. This approach only antagonizes readers and invites them to turn elsewhere for the news that they want.

9:03 AM  
Anonymous neil senturia said...

very very well spoken !!

9:24 AM  
Anonymous Geoff Dougherty said...

Ditto on not wanting to bash the well-intentioned folks at the Independent.

That said, it seems like they failed to do even the most basic reporting on their business assumptions.

Anyone who's currently operating a local online-only site could have told them that they would never get 50,000 subscribers in their first five years, let alone prior to launch.

Chi-Town Daily News, Voice of San Diego and MinnPost have all been at this for years, and none has anything approaching 50k paying site visitors.

10:22 AM  
Blogger Dave said...

Michel - I don't think those of us who have success in the hyperlocal arena believe we have all the answers but we have some. The folks in Denver should have looked at sites like the Ann Arbor Chronicle, NewWest.Net, The Batavian, PasadenaNow, SunValleyOnline, Baristanet, West Seattle Blog and a growing array of sites which I believe have all attained some sustainable business model and are serving their communities quite ably. Those sites didn't have the luxury of a bunch of free content from the print side and all kinds of other things that made their online business anything but a pureplay.

The answers are out there. One needs to look in the right spots. Alan highlights these from time to time. the NewsInnovation.com and OJR.org sites do as well. No one is retiring off these ventures just yet but they are quietly growing the next generation of local media.

10:47 AM  
Blogger tgd said...

How does it work? Great question, Michel. You'll likely hate the answer:

No one knows with certainty.

Oh, and anyone who says they do is lying - to themselves, possibly.

Which is why the future of news will be invented by entrepreneurs, not legacy media. In this environment, there is no magic bullet, just a hail of bullets. Most of which will miss.

To paraphrase an old professor of mine: Learning from your mistakes is good. Learning from someone else's is better.

On to the next idea(s).

11:48 AM  
Anonymous Roger Black said...

The Rocky wasn't losing that many readers, but it was losing ads. And they weren't going to the Internet.

The death of the Rocky has more to do with the end of the cost-per-thousand business model than the Internet.

The problem with the Denver Times/Indpendent was that it didn't come up with a new business model, and as you say, the staff persisted in doing what they learned following the old one.

11:57 AM  
Anonymous Anonymous said...

brilliant and candid, a real tour de force.
yep - I want to get paid for what I love to do. I am slowly coming to grips with the fact that this is a dead issue. musicians, artists, actors, etc. have all been there, done that on this point.
I am coming around. it is over.
now what? we can't all go into PR or teaching. (or surg. tech.-ing)

12:12 PM  
Blogger David fa niente said...

Papers stopped reporting news long ago. Reports became journalists, news became opinion items aimed squarely at individual social groups with agendas. So please don’t miss the 900 pound gorilla sitting on the news desk…

12:22 PM  
Blogger WebRat said...

Excellent post! As far as "How does it work". We are all trying to figure that out. But in a nutshell the news and information you publish for *free* (not really) is a conduit for services and other creative revenue generating ideas. This can be as simple as selling reprints of photos within stories and photo galleries (100K or more at some newspapers), video advertising, or something as complex as a do-it-yourself ad system that generates ads for online and print. Gone are the tradition models of paid subscriptions, ROP ads and classifieds. Yes, still viable, but not for long.

12:33 PM  
Anonymous Anonymous said...

One of the first things someone should do when they launch a venture like this is to insist that anyone giving them advice not write indecipherable sentences like this: "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."

1:35 PM  
Anonymous Anonymous said...

Your analysis is missing a vital piece of information: You don't say how much these journalists raised from their investors. Obviously, the main lesson here is that they didn't raise enough.

2:21 PM  
Blogger Howard Owens said...

First, Alan, great post.

Thanks to Dave for the shout out on The Batavian, as well as my able colleagues in the independent online community news publishing business.

I think we're finding our way. For The Batavian, time will tell if the model we have in place is sustainable, but I grow more hopeful every day.

Michel asks "what does work?" And I think if you look at the independent online publishers you can glimpse several different possibilities.

Read my post on howardowens.com that looks at the history of newspaper start ups. None of today's big newspapers started in chain ownership, nor did their original business and content models fit into today's idea of the modern newspaper. But people of passion started small and built big businesses. I believe that's what it's going to find what it takes to succeed with local news online. I have no faith for the answer to come from the newspaper chains.

3:00 PM  
Blogger Mike Donatello said...

A great post, Alan, and dead on. It's a shame that you can substitute another 1400 titles for those in Denver and realistically anticipate the same outcome. Not really a question of "if," but "when."

I sympathize with those now out of work. I am lucky to work in a job and for a brand that I love. But I realize that I may not always be so fortunate. The only rational path is to adapt, improve and reinvent -- both yourself and your business.

Find a market need and fill it. I wish more of this industry would focus on doing the same.

3:38 PM  
Blogger jessdrkn said...

I am very intrigued at the success and failure of online community news start-ups. I was watching (and rooting for) the Rocky Mountain Independent. After hearing about RMI's demise recently, I started to panic, but that gave way to less panic as I thought about so many community sites out there that are hanging on.

Many of them are operating on grants, or on a sole proprietor's own savings, or limited advertising.

While no one yet knows what will stick, regarding a successful news model, it's refreshing to see people trying in the first place.

Jessica Durkin
Founder, online news start-up directory: http://inothernews.us

4:49 PM  
Anonymous Anonymous said...

How does it work? I'd imagine like most businesses: start with LOW overhead and build it up as the funds dictate. Keep it profitable from the start. In practice I think a multidimensional few editors with knowledge of programming and building web sites would make a good start. Then they need to get creative with their freedom and ability to launch new features. I like the idea of offering internships to a partnership with a local college.

6:09 PM  
Anonymous Anonymous said...

The missing element in Rocky Mountain Independent and other egalitarian startups could be crowd sourcing. They aren't recruiting and training their communities to gather and report news, which can exponentially expand a news organization's effective watch area. The notion that a failure to focus on business caused their collapse seems flawed -- it summarizes what they didn't do but doesn't tell us what they could have done. Social networks per se won't result in news production, but networking tools can be used to develop news reporting skills among the public. Several community radio stations have proven the model workable -- with volunteers gathering news filtered through professional editors.

8:22 PM  
Anonymous TR in W. Seattle said...

Again, as Mr. Chase noted, you CAN get paid to do what you love.

Frankly, I love what I do now a lot more than I loved what I was doing in old media - where I'd "risen" from 17-year-old typesetter to 20something, 30something, 40something newsroom manager, and while I had some value in oddball areas like politics producing, style-guide-keeping, mentoring of young reporters/producers who needed to learn how to write ... I wasn't covering the news directly. As half of the two-person team running West Seattle Blog, I am now.

And we are in the black, and we're not even living on Costco staples any more. AND we don't have side jobs, savings on which we're drawing, angel investors, grants, ANYTHING - 100 percent bootstrap. The business model question is important but so is taking a look at exactly what the community responds to. I wish more people would ask us about that. There are a fair number of us successful in this area out here - but we do NOT produce our content all the same way.

And a lot of "what works" flies in the face of the "conventional wisdom" du jour. For example, video - Only a small percentage will click on it. They may all be watching entertainment video online but they don't want that much news video from a site like ours. Text and photos (AND LINKS!) still rule.

And while display ads are supposedly "dead," they're sure not for us.

YMMV, as it goes - just get out there and DO something, don't agonize too much about what you are GOING to do - and don't declare yourself the definitive whatever whatever until and unless you ARE! - Tracy @ West Seattle Blog

8:55 PM  
Blogger Mike Lange said...

I've been though a failed startup in a small market, but I was wise enough to pull the plug after I lose a few thousand dollars.

My site was free and popular, but it took a lot of persuasion to convince advertisers that their message would be as viable online as in print. You can keep a newspaper lying around for weeks. Computers are usually shut off for some period of time each day.

Also, I had a hell of time convincing news sources that we were the real deal. So even getting state agencies to send us press releases in a timely fashion took weeks.

There are some profitable, local on-line news services, for sure. Unfortunately, some of us don't have the patience or deep pockets to sustain them.

3:57 AM  
Anonymous Anonymous said...

xxx how *does* it work? xxx
1. Start with the online clicker which is telling editors which stories are being read, and which are not.
2.Give them more of the first. Less of the second.

1:51 PM  
Anonymous Alex S said...

60 Minutes' Don Hewitt famously said he never once in his life looked at Neilsen Ratings -- all his job was, he said, was to focus on the story and the rest apparently took care of itself. What a luxury! Times have indeed changed. The central issue now is the difficulty of concentrating so heavily on both medium and message -- does journalism suffer when reporters must play both roles? There's a reason so few good journalists also know how to write code or do SEO -- it takes a helluva long time to master just one skill. How are there enough hours in a day -- or years in one life -- to learn it all?

2:28 PM  
Anonymous Anonymous said...

These articles by Mutter offer zero insights. All he does is predict failure and talk about what does not work, as if everyone doesn't already know what does not work. And this very site, if he depended on it to eat, he'd starve. Nobody would pay for these posts. They regurgitate the obvious, offer no solutions, and it's obvious the writer doesn't have a clue as to what would succeed because he's already failed in the news business himself. If you just predict failure all the time, you'll be right most of the time. But it's pretty clear that Mutter is no visionary, he's just another guy who doesn't have a clue. His writing is a waste of time.

7:07 PM  
Anonymous Anonymous said...

Hehe -- I can see from the above post that some of the Denver folks are chiming in.

5:51 AM  
Blogger Dave said...

Let me add a couple other thoughts to what I said earlier (i.e., there are plenty of successes out there -- Tracy from West Seattle being one so it's great to see her jump in).

When it comes to getting a kickstart on revenue, there are great resources out there like Mel Taylor and Greg Swanson that can give a boost in revenue. [Warning: self-plug ahead] That's also the basis of why GrowthSpur has started -- to teach hyperlocal sites how they can make the $100-200k/yr that we've seen a bunch of small operations make.

Tracy made a good point about video. In hyperlocal, it ain't all it's cracked up to be. We experimented with it heavily after having some initial big successes. We used it for covering council meetings, for example. Other than capturing occasional outburts best captured on video, people preferred our quicker-to-read articles. We actually lost audience during this experiment.

There's at least one exception to the story on video - big breaking news. We had a major wildfire. While I had no videography skills, I'm fit and can run up and down mountains and shot the first and only shots of the fire kicking up. We also shot videos of the briefings by the Incident commander. These videos were heavily watched and built a lot of buzz as well as triggering UGC videos brought to our office (our videos and UGC videographers were later licensed or hired by CNN & CBS). Later, we've had a few other big breaking news items where we've had video and it was well viewed. Hyperlocals proximity and those that tap UGC contributors have a unique advantage vs. the old line media players.

6:38 AM  
Blogger Howard Owens said...

On video: I do as much video as I have time for and interest in. Which ain't all that much. Four videos a month at least, maybe 8 in a month the most I've ever done.

If the video is worth watching at all, I'll get 300 views on it, which I'm OK with.

Breaking news video is definitely the most viewed. Views on breaking news video, serious accident or fire (if I get flames) are 600 to thousands.

I'll do talking head video once in a while if I can do it with P&S and no edit and just post. This might get 200 views, but more if great topic and interesting speaker.

Definitely, Dave is right that people really just want text, a quick read.

Comments on posts are huge for us. There's a direct correlation between traffic and comments. And people tell me all the time they read the comments first and come back to the story itself if needed for clarification.

I'd say each audience member has their own primary motivation for visiting the site --

1) What's happening in my community right now (frequent visitors)?
2) What are people saying (addicted community members)?
3) The quickest easiest way to get the news of my community at the end of the day (regular users)?

That makes up a good 70 percent of our audience.

Video is a nice have, but it's not an audience driver.

I spend an inordinate about of time on football video each weekend, but I have sponsors and for the football addicts, they love it.

9:36 AM  
Anonymous Taylor Trask said...

Its pretty apparent from watching their "farewell video" that most of these reporters are snobby Gen-Xers who want to still work in a posh building, make 45k+ a year and not really do much for it. Simply having "good reporting" doesn't mean much to the media consumer anymore. They would have gotten more mileage out of a Denver-Digg.com.

6:28 PM  
Blogger California Girl said...

the examination and explanation of why it didn't work is akin to what's going on in the radio industry now. radio has failed to adapt to the changing market and the owners, most of whom are huge corporate entities are used to SSDD and dictating to the listeners who are abandoning the airwaves in drove.

i remember attending a seminar, probably 20 yrs ago, about "paradigm shifts". Up to that point, I had no idea what a paradigm was. I do now and I'd say all major old school media are in one.

7:26 AM  
Anonymous Anonymous said...

Many of these comments reflect the sad, but true situation that ALL print media has been in for some time; however, let's not lose sight of a few things: there is blame to go around.

One - the generation that brought about this fall from grace, the Baby Boomers, have had most, if not all of the executive/management positions at newspapers and failed miserably in adapting to the technology - the Internet - emerging in the 1980s, 1990s, and the early 2000s.

Two - Each "recession" period since the late 1980s, 1990s, and 2000s led to the lay-offs of Generation X journalists who had been pushing for their respective newspapers to make use of the Internet.

They were not listened to, and, were let go in successive waves as more Boomers retained their positions while younger staffers were left to fend for themselves. The Boomers lost the vision of these younger journalists, who were the vanguard of the emerging Internet technologies. The Boomers cast a deaf ear, and disapproving eye, laid them off, and continued to give themselves pay hikes.

Three - Executives & managers at news organizations remained committed to the same old tired model over the past 20 years and did very little to see what was down the road - all the while preaching "innovation" when what they were really saying is "leave it just like it is while we make some money preaching IT innovation."

A lack of vision, while lining pockets with immediate profits have totally killed newspapers. There simply was little investment back into organizations for their dinosaur models to remain feasible.

Four - The Boomer editors and execs relied heavily on the past "prize-seeking" models while maintaining a inside-political-father-knows-best culture based on the past. Again, more hubris, and even more lack of vision.

What works today? Letting go. That's what works. And it is happening everywhere.

We are entering new, unfamiliar territory where the future of news will depend on a new generation that for the last 20 years has seen little thanks and no rewards while navigating through an outdated model run and managed by Baby Boomers that was based on keeping things always the same - all the time. This refusal to "change" and to "adapt" has killed newspapers and threatens the entire country as we speak.

Now - nothing will ever be the same. Readers matter. So do Journalists. But the running of this country into the ground, and hence, its great newspapers into a black hole of debt and destruction by the Baby Boomer generation has been a total success. Well done.

We can now put a gold standard on generational abysmal failure as that seems to be the next obvious candidate for a Pulitzer Prize.

Thanks for the memories.

1:00 AM  

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