A number of high profile newspapers have recently shut down their printing presses and transitioned to online only. The Christian Science Monitor will now be online, with a weekly print magazine. The Rocky Mountain News shut down completely last moth, but there is a new initiative by ex-Rocky journalists to start an online-only offshoot. The Seattle P-I shut down their print version on Tuesday, and will be online-only going forward.
I’ve said before that the transition to online-only is extremely significant – it will give these newspaper organizations a chance to continue doing what they do best: high quality journalism. By changing the platform and distribution mechanism, they can take advantage of cost efficiencies and run a leaner, cheaper and more efficient operation. Most importantly, it gives them the chance to re-invent themselves and their business model. That is why I think these newspapers should now be run like startups.
Unfortunately, I’m not really seeing this lean mentality manifesting itself in the new online-only operations. For one, the new Rocky offshoot (INDenverTimes.com) will only launch if they can pre-register 50,000 paid users by April 23rd, each paying between 5-7 USD a month. Think about that for a second: they want guaranteed subscription revenues of $250-300K/month just to begin their ’startup.’ I counted approximately 30 staff listed on the site, so just the subscription revenue is enough to pay 120K/year per employee. On top of this, there will be advertisement revenue as well, which can be used to cover operational costs (servers, bandwidth, office space etc). So just in order to get going, they want to guarantee enough revenue to run their entire business. Color me dumbfounded. This is the exact opposite of a startup or entrepreneurial mentality. What happened to bootstrapping?
The Christian Science Monitor had around 95 staff for their print newspaper. Surely the online newspaper will be a small, lean and very agile operation? Think again. According to the Monitor’s editor John Yemma, “a modest reduction” in the Monitor’s 95-person editorial staff is likely, once the transition to the new product line-up is completed.”
The Seattle P-I will be run with a reduced staff of around 40 (down from 195). That’s exactly the menatility we need! Michelle Nicolosi, who ran the paper’s old Web site and will
But then I saw this tweet from the Nieman Journalism Blog that says “
Before anyone jumps all over these numbers, I realize they are very rough and simplify the cost structures of these organizations. But that is the point. The logistical and operational overhead should be neglible – there are no printing presses, deliver men, unions, paper costs etc. There are servers, computers, and bandwidth – which are essentially free (or very, very cheap). Software? Open-source. Office-space? Find the cheapest you can get. That leaves us with one cost, the people. Sure, the journalists are your most important asset, but why not think of this as a bootstrapped business? Startups don’t pay their staff an average salary of 125K.
The InDenverTimes website says that they are embarking on a ‘bold and creative’ effort, combining traditional distinguished reporting with 21st century electronic delivery. Well, I would say these online-only newspapers should take it one step further. Combine the 21st century delivery with a 2009 entrepreneurial mentality.
Be very lean but agile. Be cheap but resourceful. Take advantage of constraints by being creative. Focus relentlessly on giving people what they want. Only work on projects that create a tremendous amount of value for your readers. Hire lots of young, hungry journalists and pair them with a few experienced ones. Start small (even smaller than 30 or 40 staff), and work your way to break-even. Then grow, using cashflow or outside funding. If you can run your newspaper like a startup and create something that people want, I will gladly invest.
Edit: Mathew Ingram pointed out in a tweet that “even startups need financing, no? most journalists can barely afford pen and paper, let alone funding a startup.” That’s a fair point: not all journalists can take a startup salary and wait around until Ramen profitability. But not all startup founders can do it either. But startups find ways to get it done, whether its bootstrapping, finding angel money, freelancing on the side etc. By applying the same “relentless resourcefullness” to newspapers, I’m confident journalists can get it done as well.
Thank you, thank you, thank you. I just don’t understand why these news orgas aren’t using this opportunity to build a profitable business the way people have done it for centuries. Don’t start with a huge cost-base and work backwards. Start small and build value upwards. Oh yeah, one more thing that startups do well: release early, and release often.
[...] If the quality of the P-I’s online edition drops dramatically in the crucial first months, then readers (and eventually advertisers) just won’t come back. This post disagrees with my reading of this and says that the P-I is on the right track by running its operation with as few staff as possible and thinking more like a start-up. [...]
Spot on Shafqat! My only concern is that your proposal means getting rid of a significant portion of the workforce/culture/history of the news organization. That may be a good thing (getting rid of the old mentality), but it’s still tough.
Either way, we need more of this entrepreneurial, innovative thinking within news organizations. They wouldn’t have gotten into this mess in the first place.
For organizations like the Christian Science Monitor that do excellent reporting in very dangerous parts of the world, asking that 1 person to be their own security detail AND everything else begs the question … if everything is done quick and cheap, where does the true investigative and foreign affacirs journalism come from that will keep me coming back?
[...] to fill this void. Now, I’m certainly not in favor of treating every new media enterprise like a startup, which is really just code for “Pay us shitty wages with no benefits.” But I am in favor [...]
@Matthieu @PeterK – thanks for the comments.
@SAM – you’re absolutely right. their is always a cost/quality tradeoff, so it will be a delicate balancing act. my point was more about being cost-efficient and resourceful rather than cheap. i think covering local news (and even investigative local journalism) can definately be possible using a bootstrapped model. it’s tougher for foreign affairs journalism, but i think it’s more the principle of being lean that’s important than simply saying we must save X dollars. thanks for the feedback!
Ummm, I don’t think that the $120K/person you’re talking about goes nearly as far as you think it does. After you take out social security and taxes and benefits that are usually invisibly paid by employers, it’s probably much more likely that folks are looking at $80K/person, take home. I’ve worked at a number of startups, and that’s less than I was ever paid (barring that first job out of college, nearly 20 years ago). I’m sympathetic to the original thesis, but if you’re gonna play like you’re a hard-nosed numbers person, please get the numbers right.
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@K – thanks for the comment. I’m glad you agree with the original premise, and I assure you this post was not about hard numbers. I even said “Before anyone jumps all over these numbers, I realize they are very rough and simplify the cost structures of these organizations.”
Even a 80-90K MEDIAN take home salary is too high if you want to reinvent the business and try and make a profitable online only venture. That’s just my opinion. A lot of these companies are prepared to run the online operations at a loss (i.e. CSM gets funding from their foundation). My original thesis was about running the business at a level where you can get to break-even as quickly as possible. But your point as a fair one.
Eh, I think that most folks who sign on to a startup with a crappy salary[*] do it with the expectation of a big payoff in the end. Sometimes it works out, and sometimes it doesn’t. In the case of all of these newspapers, though, what’s the payoff? For the Rocky Mountain News folks, $5/month/subscriber is probably about as good as it’s ever going to get. It’s not like, “Gee, once they get that first taste, we bump it up to $50/month/subscriber, and cash out!” These folks seem to be in for the long haul, and I’m delighted that they are hard-nosed enough and smart enough to try to make sure that this venture will actually pay before diving in.
I’m with ya, these media companies will have to innovate or die, and I’d like to see some more wild and crazy innovation, but, at some point, you gotta pay for new ideas!
[*] Again, while it’s realistic for founders to get by on peanut butter and ramen for awhile, once you’re up to 30 employees, you should probably be paying competitive (or at least reasonable) salaries. If you can’t offer reasonably pay, well, then, maybe your idea isn’t really ready for the market.
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