Newspapers Need to Change

November 16, 2008

We have watched with amazement at the rapid disintegration of newspaper stocks, and the unbelievably late realization that they were in the middle of a pronounced crisis. We listened with shock as CEOs of like Mary Junck of LEE held quarterly conference calls that ignored the significance of the internet. Now, they are paying the price. Just last week, newspaper execs convened for a newspaper crisis summit. Well, we have a message: it is almost too late.

Our clients are newspapers that realized this problem a long time ago, and appointed execs who understand new technology, are not wedded to newspaper traditions, and are able to make change, now. Our technologies are driving new revenues for them, as other papers linger and suffer.

Wikimetro has communicated with execs at more than 50 newspaper groups and companies, and has an amazing email record of their replies. In the coming weeks, we’ll post on this blog the dialogue that we’ve had with these people, so if you want to understand what is happening at these papers, or if you are one of these papers and are clueless about why your company is tanking, you will have a clear answer.

High School Sports

October 3, 2008

We are working with a newspaper group in the mid-west to provide SMS updates for high school sports games in the area where their newspapers are distrbuted. It is going well, and makes sense for everyone. It works like this. the 40+ high schools in the Plano, Texas area have active sports teams, including football, which attract big crowds.

Nearby businesses, like restaurants, want those fans to visit them after the game, or at other times during the week, however they longer place ads with the newspaper, since it has become less well-read in recent years, and is distributed to a larger area than the vicinity of the high school, so ad prices are too high for the local businesses.

The newspaper, which has only a few sports writers, finds students or parents to send SMS updates during the game, usually when one team scores, and rarely more than 12 for a full game, and the newspaper gives them a pizza coupon for doing this. Attached to each SMS is an advertisement from local businesses, such as “Come to Joe’s Pizza for a Buy 1 Get 1 Free after the game.”

The newspaper gets pure profit on this, since it isnt paying its writers to attend the games, and doesnt have to print or distribute a newspaper for this. Pure sales, plus whatever it can make by also putting the RSS feed on its own website and selling ads for that.

Carl Icahn’s recent tussle with Yahoo ended with him taking some board seats, and remarking that “historians will marvel at why the press won’t write more about the egregious abuses and mismanagement of corporate boards in America.” The irony here is that the same newspapers who aren’t writing enough about bad management at other companies, are writing nearly nothing about their own poorly run companies, since newspaper stocks have tanked more than any other industry in the last year.

There has been a lot of discussion about the next paper company to crash, now that the 400 newspaper Journal Register is selling for $0.015 (that’s one point five cents!). Based on our interaction with them, we think it could be Gatehouse, since their top Internet guy, Howard Owens, apparently spends his work time updating his personal blog about his view on life, rather than answering inquiries from vendors. Our first contact with Howard was in late April when Gatehouse was selling for about $5.50. Now, three months later, the stock is at $0.44 (forty four cents). Here’s our message to Gatehouse: we want your business, but give Howard the pink slip before your stockholders lose their retirement savings.

We are expanding our network of partner newspapers, and it is profitable for us. But, the continuing surprise is that while newspapers continue to cut their workforces by 10-15% nearly every day, our telephone calls with the internet people at these papers shows they are either completely unaware about what is happening, or so rigidly fixed in their world of how a newspaper is run that they can’t make the leap into online business, unless you can show them it has a 200 year history.

Sometimes it takes a totally weird turn. Here is an example. One of the all time investment screw-ups was the Washington Post’s huge investment creating a hyperlocal site for Loudon County called Loudon Extra. The decision seems to have been made by a few people there, including the president of Washington Post online Caroline Little and Jim Brady, the paper’s executive editor. They made a decision all the ways they were raised to make it: hire the best graphic designers and programmers, pay for the best servers, get the most information. The problem is that Jim and Caroline live in a world of traditional media that renders their experience about how to run an online company useless. As a result, the Washington Post has the most beautiful site that nobody has ever and will ever, ever use.

So, I emailed Jim and told him that. I expected some introspection. His first reply to me reads:

“What do you have to offer us to solve that problem?”

We think Wikimetro does offer newspapers like the Post their only remedy: a hyper-local website with classifieds, organized around a wiki. Time will tell who is right.

We use google docs a lot, and a big reason for that is that it just keeps improving. I used it from the beginning, especially the spreadsheet, and it was barely functional then. But, the day to day improvements are making it better than Excel in many ways.

That’s whats happening with wikimetro, too. It took a long time to build out the core of this, but when that was finished a few months ago, we are able to make steady improvements that change how it functions. It is a never ending process, but the change day to day, and week to week, is enormous, and our user stats reflect that. You can see on the site little changes every day. We keep an ongoing spreadsheet with a list of our current work to be done as a link called system status, in case you want to follow it more closely.

Newspaper stocks all continued to tank yesterday, with companies like Lee and McClatchy reaching prices that are either all-time lows, or lows that havent been see in decades. That is no surprise to us, and relates directly to what we are doing. Newspapers have once nitch left, and that is the local business, and they dont know what to do with it. If you want national or international news, it is better and free on the internet. The only area left for newspapers is local news, they need to transition to the internet, and they have no idea how to do it. That’s why their stocks are dropping so low.

That’s also the niche we are trying to fill. We believe that newspapers can’t solve the problem, for a few reasons. First, they are trying to create the same thing online that they have in print, with more features. But, nobody wants to see a newspapers online, especially a local one, and besides newspapers are horrible at doing anything more than writing stories and printing them. They are not technology companies, and can’t figure out how to hire and train programmers to create sites that people will like. They just do essentially what all newspapers do, which is to write, layout and print, and that doesnt work online.

Second, newspapers need to produce products that are regional, and that doesnt work online. For the same reason that Craigslist cant be segmented and divided into separate regional sites, and wikipedia cant be cut up into sites with different subject matter focus, local newspaper websites cant work. One site needs to aggregate what is useful, and we hope that will be us.

Finally, regionalization makes it really difficult to monetize national sales. Back in the day national advertisers would work with local newspapers, but no more. They work through resellers to reach local markets, and even that is disappearing, since they can just put up ads on Google.

Here’s the big challenge: so much of the USA is filled with small and medium sized towns that there isn’t a good way to organize them, and that makes it difficult to create a hyper local website. But, the corresponding problem in reverse, and one that newspapers are now grappling with, is that regional and localized websites dont work either. In other words, no matter how complete a site is for a city or region,  it wont work unless it becomes scalable for the whole country.

It is a message that the country’s newspapers haven’t quite realized, and they keep throwing money into creating more, and more useless, local websites, that are really nothing more than their newspaper put online with a few more buttons, and the addition of a directory of local restaurants.

We have the same problem, and we’ve tried to resolve it in two steps. The first step was to create a table of places in the USA on the right hand side of each of the screens with US cities. But, we realized early on that the number of cities was too big to include all of them, so we limited it to cities with populations over 20,000. There are about 2,300 of these in the USA. Craigslist and Yelp and other sites have just a small fraction of the toal cities.

Then, we started to get some business in even smaller towns, and we had a problem. If we just continued to add new cities to the table for each state, it would continue to grow and become unusable. But, we couldn’t just choose an arbitrary number to use a cut-off for what to include and leave out. So, if you look at the updated table, and in particular if you go to the state of Minnesota, you can see what we do. We’ve separated everything into two categories. First, cities with the 20,000+ population. Second, using another color, these cities plus smaller cities as they are added on by users or by us. We couldn’t just dump a full list of cities on the site, since the number is huge. We have to rely on user generated content going forward to do this for us. I think the plan is correct, and now we’ll see if over time this works out the way we have planned.