Local Journalism is Big Business

In 1811, a newspaper publisher named Hezekiah Niles decided to publish what would eventually become the country’s most important weekly news magazine, The Weekly Register.?

He did it out of desperation.?

His previous endeavor, The Baltimore Evening Post, had folded for a simple reason: too many people were reading the paper for free, and advertising dollars weren’t making up the difference.??

As Walter Isaacson tells it in his podcast Trailblazers (Full disclosure – I was a guest on this episode):?

“There was no question that Americans loved their newspapers, but most of these people were reading their newspapers for free in libraries, coffee shops, and reading rooms, or they were subscribers who hadn't paid their bills. Americans believed access to news was their birthright and a vital part of modern democratic life. Perhaps that's why they thought they should get the news without paying for it. And that put Niles and other publishers in a bind.”

So Niles decided to launch a new subscription-only venture, with no advertisements. The Weekly Register published for 25 years, covered the War of 1812, warned of the threat of the future Civil War, and “exerted a powerful influence on the early national discourse .”?

No doubt, there are plenty of newspaper publishers today that can empathize with Nile’s plight. The industry has been dominated by two basic narratives: the out-sized success of national all-stars like the New York Times, the Wall Street Journal and the Washington Post, and the decline of regional newspapers as a result of the collapse in industry advertising revenue.?

In 2008, for example, the U.S. newspaper industry collected $37 billion in advertising revenue. By 2020, that number fell to less than $9 billion . Last quarter alone Google made $75 billion in advertising revenue , much of that on the backs of journalists.?

But now a third narrative is starting to emerge: lots of regional papers aren’t just surviving, but thriving.?As it turns out, we all care about what’s going on in our towns and cities, and we’re happy to pay for smart content that focuses on the communities we live in. We’re just doing it with subscriptions instead of advertising.?

According to the New York Times , Gannett, the country’s largest newspaper chain with roughly 250 papers (Detroit Free Press, Arizona Republic, USA Today), reported in November that digital-only subscriptions rose 46 percent from the previous year. Lee Enterprises, the country’s fifth-largest chain (The Buffalo News, the St. Louis Post-Dispatch), recently reported 57 percent annual growth in digital subscribers. And Hearst (The Houston Chronicle, The San Francisco Chronicle) reported a 50 percent increase in digital subscribers at the end of last year.

Today, there are dozens of regional newspapers that are growing at the same rate as digital startups. The Los Angeles Times doubled its digital subscriptions over the past two years. So did the Boston Globe. The Dallas Morning News now employs over 175 journalists.??

“These businesses have gone through challenges,” said Jeffrey M. Johnson , the president?of Hearst, “but the strength of the consumer subscription business is reshaping the future.”

Mike Reed, Gannett’s chief executive, said, “There’s a big misperception out there that there’s a big hole in local journalism, and I think that narrative’s been created by people who aren’t sitting in local markets.”

Now, canny readers of this newsletter understand that you can always boost subscriber numbers with deep discounts. But my sense is that newspapers have gotten much more sophisticated about their acquisition strategies. They’re really focused on gaining and maintaining a solid and predictable financial platform.?

Just take a look at the Seattle Times, which has managed to almost triple its digital subscriber account over the past four years:

Crucially, that growth hasn’t come at a cost to their subscription rates. As Kati Erwert, the publisher’s senior vice president of product, marketing and public service, recently told the Press Gazette :

?“[We look at it from] a revenue standpoint, versus a ‘we are chasing this volume number.’ Because there are all kinds of terrible things that you can do to your long-term viability and sustainability that will drive that volume number.”

Like most regional papers, the Seattle Times has an introductory offer ($1 a week for four weeks) followed by a standard rate ($4.99 a week). This actually makes the Seattle Times more expensive than many national papers, but that pricing friction is put there on purpose. They’re offering a truly differentiated product that people are happy to pay for.?

“We’d much rather have a lot less subscribers and a loyal base that paid a lot,”?said Erwert.?

And the Seattle Times has a lot more room to grow. The Seattle metro area contains over 4 million people . That’s a lot of potential upside, especially when you consider that they could potentially go the New York Times route with special bundled products for local interests like sports and dining.??

It’s a lesson that I think a lot of regional papers are learning: Don’t try to compete against the New York Times on global news; instead, be the New York Times of your own community.?

Are there any lessons here for other industries? Of course. Don’t neglect your local constituents on your quest for world domination. Make sure to establish direct relationships with those constituents. Don’t discount yourself chasing volume. And most importantly, give them something they can’t find anywhere else.?

“The question in each individual case is whether the quality and exclusivity of the local news content and the digital product experience are worth paying for,” said Jim Friedlich, the chief executive of the Lenfest Institute for Journalism, which owns The Philadelphia Inquirer, told the New York Times .?

“When these conditions are met, local news consumers have opened their wallets graciously.”

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Disclosure: These opinions expressed are mine, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.?