Bobbie Carlton of Mass Innovation NightsMeet Bobbie Carlton. She’s come up with an idea that every newspaper publisher in New England should have had but didn’t. Her success demonstrates how news publishers can reinvent themselves and survive – maybe even thrive – but only if they have completely rethink what they do.

Carlton isn’t a publisher. She’s a career public relations professional who set out a little more than a year ago to figure out a way to drum up new business in a dismal economy. She knew that there were still plenty of innovative companies in the area that were starved for visibility. Finding investors and customers in a crummy economy was a time-consuming, trial-and-error process. The few conferences that were available for such purposes were either expensive or subjected applicants to long and seemingly arbitrary approvals processes.

Carlton hit on the idea of a cheap, frictionless approach she called Mass Innovation Nights. The events would be free to everyone. Entrepreneurs could show their stuff and hope to catch a big break.

Carlton borrowed meeting space from a local museum.  She partnered with Dan Englander of High Rock Media to build a website and a Twitter account and started promoting Mass Innovation Nights entirely through online word of mouth.  There was no hype and no inflated expectations. If the event bombed, then attendees got what they paid for.

Only the event didn’t bomb. MassInno, as the affair is now known, is a raging success, with exhibitors now competing for limited space. The most recent meetup was tweeted more than 600 times and drew more than 400 attendees. Carlton is toying with the idea of syndicating the idea across the country.

Today, Carlton has so much business coming in from startups that were boosted by Mass Innovation Nights that she’s having to refer work elsewhere. That makes her a popular person in the depressed local PR economy. Partner High Rock is booming, too.

Why was one woman able to exploit a simple idea at almost no cost while media institutions with hundreds of employees stood by and watched? Because newspapers didn’t think it was their job. They believed they were in the advertising delivery business, not the business of growing the local economy. Newspapers that continue to think this way will shrivel and die over the next few years. But there is a path to salvation. It’s in doing what Bobbie Carlton is doing on a grand scale. But how many publishers are willing to make the sacrifices to seize that opportunity?

The Folly of Paywalls

Newspaper publishers are confronting their current business challenges in the wrong way. They’re trying to battle online competition by becoming more like their competitors, building massive online presences to serve global audiences when their advantage is inherently local. They’re also hyper-focused on a source of revenue – advertising – that will only become more competitive and less profitable in the future. They need to change the rules.

The eyes of the industry are currently trained on The New York Times, which is trying to re-bottle the evil genie it released 15 years ago when it elected to give away its content for free. The Times’ paywall experiment will be modestly successful because it is The New York Times. Publishers in Baltimore, Dallas, St. Louis and hundreds of other cities will be unable to exploit the idea, however, because they lack the Times’ brand and international reach. Paywalls are a waste of time.

Instead, publishers should concentrate on diversifying their revenue streams away from advertising and into local business services that promise stability, growth and a future. This is a market in which they have a natural advantage. Small business is the one great untapped revenue opportunity left in America, which is why giants like American Express and Bank of America are practically throwing money at the market. But these global companies lack the local connections and the feet on the street to truly become partners in small business success. Local newspapers have that advantage.

Most major metro dailies have long regarded local business advertising as the cherry on top of the sundae of display contracts from national advertisers and department stores.  Local businesses fueled the classified section, but counted for only a small part of the total revenue picture. Now national advertisers are marketing directly to customers, classified advertising has collapsed and local businesses are publishers’ only hope for a future.

The Local Opportunity

Look at the merchants in your local community. Most don’t know the first thing about marketing. Few are even very good at managing their businesses. Marketing is tough for little guys. They spend their dollars on a mishmash of coupons, flyers, Yellow Pages listings, classified ads and occasional radio and television.  Few of them track ROI or have any means to assess the performance of these investments. Online, they’re practically invisible. They know nothing about search marketing or customer relationship management (CRM). In short, the kinds of sophisticated analytics and tools that big companies use are out of reach to mom-and-pops. Lots of businesses want to market better, but they don’t have anyone to teach them how or give them a cost-effective platform to do so.

News organizations can be that platform. They can start by delivering a basic package of marketing and business services on a subscription basis and expand as local conditions dictate. They can potentially manage many of the overhead and backroom activities that sap small business owners’ time. Here are five ways news organizations can monetize this opportunity. There are plenty more where these come from:

Website Development – Few small businesses know anything about the Web.  Outside of restaurants and entertainment providers, most have websites that are little more than online brochures, if they have websites at all. Their sites aren’t optimized for search, don’t deliver calls to action and have no means to retain visitors as subscribers. Forget about analytics. If small business owners want to adopt new platforms like blogs or Twitter, they either pay outside consultants or figure out the tools through extensive trial and error.

This is a huge opportunity for news organizations. These companies have long-term relationships with business customers, local credibility and expertise in publishing. They can deliver advanced online features like e-commerce, e-mail marketing, search optimization and analytics at low cost by leveraging economies of scale. There is no reason why the local newspaper publisher can’t also be the dominant provider of online services to local businesses.

Affinity Programs – Every hotel, airline, national retailer and supermarket chain has a loyalty program these days.  The reason is simple: they work. Customers who carry affinity cards typically buy between 10% and 30% more product from the merchants who offer the programs than from those who don’t. Unfortunately, few small-business owners have the option of participating.  The administrative overhead is high and customers won’t carry cards for every merchant in their community. News organizations could set up these plans as cooperatives, allowing groups of noncompetitive businesses to participate at a modest cost.  Commercial grade analytics could be bought and scaled to provide reporting that demonstrates the return to business owners.  Revenue would come from the fees paid by the participants and potentially even subscribers to premium buyers clubs.

Events – Lots of small businesses would like to use event marketing to share their expertise and meet new prospects, but if you’ve ever tried to stage a promotional event, you know what an ordeal it is. The details and hidden costs can be overwhelming and few small businesses have the means to manage the leads that result.  Again, publishers can come to the rescue.  By building expertise at event management and applying it to different businesses within the community, publishers can provide targeted thematic events (for example, outdoor recreation or pet care) at a scale and cost that makes them affordable to local businesses. They can gather and manage leads that result and create marketing programs that optimize them for their customers. The news organization becomes a business partner and consultant, not just an outlet for advertising. There’s even the possibility of generating fees from event attendees in some cases.

Value-Added Advertising – Craigslist has won the war for the low end of the recruitment advertising market.  Publishers need to stop mourning the loss of this commodity business and move the bar higher. Christopher Ryan and Steve Outing published a manifesto for competing with Craigslist more than a year ago. Unfortunately, few publishers seemed to have noticed.  We won’t try to reinvent their wheel; ReinventingClassifieds.com has some great ideas publishers can apply to take advantage of their local reach and marginalize Craigslist.

For example, they can offer real estate agents or car dealers video walk-throughs of the products they sell. Or they can provide peer recommendations like Angie’s List (more than one million members at $35/year). They can tweet ads and push them to mobile phones. They can even provide transaction and fulfillment services that Craigslist can’t. In short, they can do all the things that Craigslist doesn’t do and build these features into a monthly subscription service that makes them all but invisible to the customer.

Transaction Fees – If you’ve ever used Ticketmaster, you’ve experienced the sticker shock of discovering that those $40 Nine Inch Nails tickets carry an eight dollar “convenience fee.” But you pay it because it’s easier than standing in line for two hours. Publishers can tap into that revenue stream.

The local garden show probably isn’t interested in ticket brokering. It may outsource the task to TicketMaster for the sake of convenience but it would really be interested in using a local organization that could combine fees with demographic marketing, behavioral targeting and amenities like e-commerce. Who better to deliver that experience than a service provider that knows the local community? Do you think restaurant or hair salon owners would like to have automated scheduling? The newspaper could provide that, too, with fees from the buyer, the seller or both.

Bottom Line

The five scenarios outlined above are just a sample of the opportunities available to local publishers once they stop thinking of themselves as advertising vessels and become partners in the success of local businesses. At their core, newspapers are marketing tools. Instead of simply providing advertising space, publishers can become marketing consultants, value-added resellers and service bureaus. They can offer the kind of expertise and analytics at a price that mom-and-pops can finally afford.

There are many more possibilities: Publishers could offer accounting, tax preparation, creative services, executive recruitment, business telephony, technical support, facilities management, order fulfillment and so on. Where they lack in-house expertise, they could partner with local providers under an approved-vendor program. Does this mean publishers might compete with their prospective advertisers? Sure, but how many of those companies are advertising now, anyway? Members of the approved-vendor program could potentially buy bigger schedules from the publishers who feed them business.

Back to the Future

Few publishers will choose to pursue the business model outlined here. It’s too hard. Departments such as circulation will need to be downsized or eliminated. Sales people must be retrained or released. Experts must be hired in new areas and partnership networks will have to be formed. New services will have to be created and priced, software licenses acquired and technology infrastructure put in place. These changes are painful, but reinvention isn’t pretty. It’s easier to sit and hope that paywalls will succeed in letting you do what you’ve always done.  Good luck with that.

If this transformation sounds radical or risky, consider that it’s already been done. More than 20 years ago, many computer companies faced the same kind of near-death experience that confronts newspaper publishers today. Their core hardware products, which generated 80% margins, were suddenly assaulted by cheap, standardized components. Many of these companies died or were acquired, but a few, like IBM and Hewlett-Packard, took the strong medicine that was necessary to transform themselves. Today, IBM derives more than half its revenue from services, a revenue stream that barely even existed 20 years ago. Its 2008 revenue was a record $103 billion. HP made the shift even earlier. Twenty years ago, it was less than one-fifth IBM’s size. In 2009, it was bigger than IBM.

Thanks for sticking with us through this long essay. Now tell us what you think. Are we off the wall or could business services be the prescription that nurses this dying industry back to health?

Comments

comments

This entry was posted on Wednesday, April 28th, 2010 at 12:43 pm and is filed under Advertising, BusinessModel, Classifieds, Local news, NewMedia, Newspapers, OnlineMedia, Paywalls, Solutions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

24 Comments

  1. April 28, 2010 @ 3:31 pm



    Interesting ideas! Thank you for sharing. The proposals raised many questions for me. Primarily, what is the synergy between the editorial side of a news organization and the business side in this scenario? What advantage would such a business-services company have coming to the table with a suite of editorial products? Is it selling an audience still? Or just services? Selling “conversations” (flow of interactive info that is ongoing instead of a static ad of limited duration) with a difficult-to-assemble audience? Both? Do these services require the audience assembled by an editorial staff? If this business is no longer selling an audience, why would it accept the cost of creating an audience? If the advantage of offering a large or high-quality audience is lost, won’t it be far easier for competitors to move into the same business-services space?

    Posted by Amedeo
  2. April 28, 2010 @ 3:41 pm



    This was huge post so I’m going to reply in pieces:

    You ask a question in one sentence “Why was one woman able to exploit a simple idea at almost no cost while media institutions with hundreds of employees stood by and watched? and reply to it in the next Because newspapers didn’t think it was their job. They believed they were in the advertising delivery business, not the business of growing the local economy.

    And I agree with your assessment that Newspapers that continue to think this way will shrivel and die over the next few years.

    This is a new business model that goes against the grain of what publishers think of as their responsibility. They are forced to act as activists, promoting things, being progressive, instead of merely being passive eyes of the community.

    This would signal a change, (and we all know that change is scary, right?) in the existing modus operendi in the publishing world.

    More later…

    Posted by msbpodcast
  3. April 28, 2010 @ 4:17 pm



    The continued pursuing of advertising dollars when all of the advertisers can run their own web sites is the height of folly.

    All the advertisers need nowadays is buzz, anybody who’ll refer them to their web sites. For that they don’t need traditional media.

    Yes traditional media still fulfills that role, but only part of that role. Social media (Twitter etc,) fills that role much better than traditional media ever could.

    As Twiter et al. get more widespread and Google get used more and more, I expect the role of traditional media to decline below a certain threshold where it is capable of supporting the disconnected, unwired media.

    Once that threshold is reached, I don’t care how indispensable a job traditional media thought they were doing, traditional media and their outmoded business models will cease to exist.

    Think what being used for interviews on the Oprah show did for Skype. Now think of how well Oprah could have done all those segments without Skype. (Basically not!)

    Wake up folks… Oprah is going away and has already kissed traditional media goodbye.

    New media just needs old media so close the light when its done.

    New ad models are just something that is better than the old models, and that good enough.

    More later…

    Posted by msbpodcast
  4. April 28, 2010 @ 4:25 pm



    Great list of ideas, Paul. I agree with you entirely that the focus on advertising and paywalls is not going to take newspaper organizations where they need to go. I also believe that adopting a more service-oriented model on the business side can only help the entire news organization engage more effectively with the community it needs to survive. I was very frustrated for years as a newspaper editor that we were not more interested in being better connected to our communities. With advertising dollars flowing, we didn’t have to be. Given this, I took some inspiration from a recent gathering of news site operators who believe engagement is a critical part of their business model. I wrote about it here: http://bit.ly/c70kS2. Thanks for a great post!

    Posted by Michele McLellan
  5. April 28, 2010 @ 5:21 pm



    Wow, Paul. Thank you so much. And, of course, I need to throw my arms around the community in Boston that has come together to make MassInno such a resource for local companies. It’s not really a one person show.

    Great ideas for publishers in this post and I want to point out some places where newspapers, or more specifically, journalists are trying out this role too. Scott Kirsner from the Boston Globe has also been diving into this too. Here’s my blog post on that http://www.carltonprmarketing.com/public-relations/the-new-power-of-the-press

    Meanwhile, I am still one of those people who likes the sound of the printed paper(s) hitting the front stoop. And as a marketing/PR person, I have a vested interest in newspaper survival. They have great content creators and an audience — they should be able to move beyond the limitations of their current business model.

    Posted by Bobbie Carlton
  6. April 28, 2010 @ 8:13 pm



    I urge everyone who reads this to go back five years — yes, FIVE YEARS — and take a look at the original reports posted at http://www.newspapernext.org. All these ideas are in there, and the Boston Globe and Wicked Local were both pilot sites for the research.

    Posted by Elaine
  7. April 28, 2010 @ 10:01 pm



    Paul:

    I think you cover the waterfront of business services that information valets can offer businesses as they transition out of the news(paper) business. As for the news, which will continue to be a useful driver of attention and trust to all these marketing services, I think there is a huge opportunity to invite citizens to reward great journalism and actionable, unique information services by paying for them. All that’s needed is the emergence of a common platform that moves subscription services beyond single-site silos (vs. WSJ and what the NYT is presumably planning) to allow home-base information valets to make money offering their customers access to information from anywhere — one account, one ID, one password, one bill . . . like Visa or the cell-phone network. See: http://www.infovalet.org and the links from there. The notion of emphasizing paying and walls was always stupid. Let’s talk about offering convenient, trustworthy packages of information so useful, and so easy to purchase, that folks are happy to do so — packages of as little as $5 a month for now, upsold over time.

    Posted by Bill Densmore
  8. April 29, 2010 @ 12:00 pm



    Your article highlights the resourcefulness of entrepreneurs like Bobbie Carlton who has the ability to change the paradigm when considering ways to move forward in the new economy. Kudos to both Ms. Carlton and to you.

    Posted by Lillian C Dalphin
  9. April 29, 2010 @ 12:20 pm



    Its later (than you think….)

    Lets examine the state of reporting on the internet.

    Seriously.

    Social media are fine for breaking news and fighting brush fires. For quick news reporting done with immediacy its hard to beat the speed of the internet. Twitter had images from the attack on Mumbai in seconds of the event. Traditional media didn’t even start with rumors until its was almost all over, the hotels were burning and the terrorists were dead.

    Blogs and other writing logs are repositories of knowledge and minutia of mind numbingly complex detail. Whether the subject is Japanese to English translation in manga and animé to representation methodologies for very large data sets, you can find it. The problem is that they are also repositories of a great deal of crap.

    Traditional media fails in speed and fails in depth of coverage but it can offer us something else: quality of writing.

    Since you can’t go faster than the speed of light, you might as well not waste your time competing in that arena.

    But the second arena, where complex issues need to be distilled into comprehensible, and therefore clearly written, quality written articles which are written for an audience which would appreciate the quality and clarity.

    These people would not mind content behind pay walls, that they have to pay a subscription for.

    That is the direction the publishing industry will find itself going.

    The rest of the general press, traditional media freed from the shackles of all those salaries, are going to be referrers going back to an original on the internet and leaving it at that.

    Traditional media are going to become aggregators of content produced by stringers, for low relevance, low quality content, or content produced by SMEs (subject matter experts) for high relevance, high quality content.

    Editors will be playing the same two roles that they always have been, but they will be doing it under different umbrellas.

    Posted by msbpodcast
  10. April 30, 2010 @ 2:33 pm



    msbpodcast wrote:

    “But the second arena, where complex issues need to be distilled into comprehensible, and therefore clearly written, quality written articles which are written for an audience which would appreciate the quality and clarity.”

    Isn’t this what bloggers already provide? I can read “clearly written articles” with “quality and clarity” all day long on the internet for free (like the one I just read above). Maybe I don’t understand what you’re saying, but it doesn’t seem all that different from what newspapers are already trying to do; and it’s not working very well.

    Posted by TGF
  11. April 30, 2010 @ 8:04 pm



    mspodcast,

    I don’t know. What you’re describing seems to be that in between fast and in-depth style of writing that makes people, (me at least) feel talked down to and in which the newspapers already engage.

    I don’t want or need anyone who is going to tell me what they think is important. I want someone who is going to lead with live video and tweets now from their ‘Droid or iPhone, and then follow up with an incredibly detailed account of the facts of the event when they get back to their desk. I want them to follow up with documents and interviews, (note: not merely quotes) from the people involved. I’m ok with the story being told in layers with them letting me know what they’ve found out, as they find it out. I’m perfectly comfortable with having the reporter make corrections as they go.

    In other words, what I don’t want is the news told to me in the way in which reporters are currently trained to tell me stories. I want to know every little thing. I want that minutia in my news. …And I want it in multiple formats; video, written word, tweets, photos, links to definitions of things I might not understand, etc. No well written 500 word article is as compelling as a reporter’s real time account of not only the story, but his or her experiences in getting the story.

    I can barely stand to sit through a traditional news story anymore. I make myself do it because I want the info, but I have to fight the urge the whole time to go to twitter to see exactly what happened without those layers of newsroom lawers between myself and the information. I have to fight the urge to facebook the people involved to see what they’re like. Traditional reporting, the type at which newspaper reporters excel is something I merely settled for in the years before the internet.

    Sorry about the ramble, my comment didn’t really fully engage your comments which addressed a much wider scope then the one little thing I picked on, and is probably all off topic anyway. ;)

    Posted by Curtis Bloes
  12. May 1, 2010 @ 8:07 am



    Amedeo:
    Editorial content is critical to the equation because that is what binds the newspaper to its community. However, I don’t see the need for synergy between the editorial and business side. Newspapers should still have an advertising business, but they need to diversify the revenue stream. Editorial would be the unique service that they offer the community, but they would just monetize it in different ways.

    Posted by Paul Gillin
  13. May 1, 2010 @ 8:18 am



    Msbpodcast
    TGF
    Curtis

    I think the bigger issue is what’s now being called “curation,” or the aggregation and distillation of relevant content according to the needs of a particular audience. This is where editorial models will have to evolve in the future because the old problem – lack of information – has been replaced by an entirely new one – overload of information.

    The problem with news organizations in general is that they have a deeply embedded not-invented-here mentality. They believe that if they don’t produce the content, they can’t control it and therefore it has no value. This is why traditional journalism is being marginalized by new media. People want the best content regardless of where it originates and they find that their friend networks on Facebook and Twitter are better impartial judges of content value than news editors.

    If news organizations are to succeed in this climate, they must discard the notion that ownership is important and adopt the attitude that all content should be judged based upon its value. Unfortunately, this is very difficult to do because it means sending people elsewhere if that’s where their needs can be satisfied. It would be like Best Buy telling customers that they should go to Radio Shack to get a better price. But wait a minute; that’s exactly what Best Buy has deputized its associates to do. And guess what? It’s the only consumer electronics retailer left standing. Hmmm…

    Posted by Paul Gillin
  14. May 2, 2010 @ 12:09 pm
  15. May 2, 2010 @ 1:54 pm



    Paul,

    You’ve come up with a terrific list of useful ideas for newspapers to try as part of their evolution. AOL’s patch.com (note: not a legacy news site) seems to be thinking along the same lines. As each Patch opens in a new community, the sales force recruits local businesses for free listings and offers help with developing websites. The company plans to focus on national companies for display ads, but it looks like Patch is laying the foundation for the kind of service relationships you’re talking about. I think it’s brilliant.

    Best,
    Barbara

    Posted by Barbara Selvin
  16. May 3, 2010 @ 12:53 am



    […] #How to Save Local Newspapers @ Newspaper Death Watch […]

  17. May 3, 2010 @ 8:03 am



    […] To come: Musings on Paul Gillin’s  How to Save Local Newspapers […]

  18. May 4, 2010 @ 7:03 pm



    News papers must die.

    Posted by KARMA - MRA -MGTOW
  19. May 4, 2010 @ 7:05 pm



    I suspect the news papers will die due to people like me, i will destroy them.

    People go google mens rights. MRA’S

    Posted by KARMA - MRA -MGTOW
  20. August 10, 2010 @ 6:03 am



    […] Speaking of magazines, Jeff Jarvis suggests eight ways magazines can survive if they’re willing to turn the traditional model on its head. Survival is job one for the U.S. magazine industry, which has seen circulation of the top brands plummet by more than 60% this decade. Jarvis’ number one suggestion: “Ignore print. Enable community…Magazines still have tremendous, if very perishable, value if you know how to unlock it because their people care about the same stuff. Enable communities to build and meet and create value around their interests, especially those that are specialized.” Magazines are still nexus points for communities of readers, but their value derives not from producing content as much as enabling community members to create and manage their own. Curation, anyone? Some of his recommendations – specifically that magazines diversify their revenue models – sound a lot like the ones we proposed back in April. […]

  21. November 8, 2010 @ 7:09 am



    […] them on a website, as I do with the “Media Sites” list in the right-hand sidebar on Newspaper Death Watch. That list is easily generated by Google Reader, and it changes whenever the feed list […]

  22. April 29, 2011 @ 7:06 am



    […] Hmmm, why didn’t we think of that? […]

  23. October 12, 2011 @ 10:30 am



    […] and giveaways to local businesses, entertainment venues and cultural institutions.” We were pushing this idea two years ago. Publishers need to expand their revenue base beyond advertising and subscription fees. Affinity […]

  24. January 5, 2012 @ 12:26 pm



    […] we’ve argued before, the hyperlocal model needs to work from both the content and revenue perspectives. Patch has […]