Law 3 – Local: Remap and Reload

The 100-product-a-year model is a much-needed growth model. We can see how it fits nicely with all-access subscriptions, and together we have two interconnected Lego blocks of a new sustainable news model. We have two essential parts of a crossover model (“The Newsonomics of Crossover”) that I detailed here a few weeks ago. The big, hairy challenges of accelerating print ad loss and onerous legacy costs remain, but at least we’ve got a couple of building blocks we didn’t have two years ago.

Why do it? Why trade in the sleepiness of California’s capital city (Sacramento is McClatchy’s headquarters) for the bright lights of Broadway, a long walk from AP’s NYC offices?

Number one on list may be McClatchy fatigue. Pruitt and his CFO, now-successor Pat Talamantes, have rowed the third-largest U.S. newspaper company oh-so-gingerly around the bankruptcy shoals that have grabbed more than dozen of their peers. They’ve had to make devastating cuts in staff and other expenses along with other companies, but get some points for greater efforts to keep newsroom size and spirit going in the face of that bleak reality. It’s important to note that McClatchy has found no special sauce in transforming itself for the digital age, performing on par, sometimes better, sometimes worse, than its peers. Pruitt is getting this job not on the basis on being a proven transformative player, but on being a known, highly respected news exec who understands the challenges of the times.

What percent of print ad loss is made up by digital ad gain? This is the crossover metric driving much of John Paton’s Digital First Media/Journal Register Company strategy. With print advertising down now more than 50 percent in 10 years in the U.S., and even diving more quickly now in some parts of Europe, replacement ad revenue is at the top of the crossover list. In 2011, Journal Register made up about 95 percent of its print ad revenue loss. It intends to hit the crossover mark — making more in digital revenues than it is losing in print revenues — this year.

“Everyone wants us to fast-forward to the end of the movie,” Webster notes. He has a sensible point. Given how each Patch rumor — two sites consolidated here, freelance budgets cut back there — is treated as forensic evidence, Webster is in relatively hardy form. He admits that Patch, with its fast expansion, took too much of a one-size-fits-all approach to site deployment, and was too “cookie cutter.” Some of the changes in budgeting — for instance, devoting some site budgets more to marketing awareness and less to paying stringers — derive from overall understandings of the market; others attempt to learn that needs in West Des Moines are different than in West Orange.

All we can say with certainty: we’re witnessing the death and life of California news. Who will own the biggest news media? Who will manage the biggest news media? How much of a life in print will be left for newspapers as they go digital? And, of course, how many journalists will be paid to get the news to the state’s 37 million residents and to the rest of the country? Already, well over 1,000 daily newspaper journalists have lost their jobs over the past five-plus years. How many new combinations — among news entities formerly known as newspapers, broadcast, and digital news startups — will emerge and grow to scale? Those combinations are already beginning to tax legacy imaginations, and as of this week, we’ve got a new intriguing model to add to the mix.