The New Local

The Piano experience isn’t about a little-heard-from place east of Vienna. It’s about scarcity. Bella says that Piano will launch in another neighboring country next month. He notes that there are 10 to 15 European countries with small populations and a smaller number of media outlets, an early sweet spot for the company. Small countries with less than two dozen media outlets, though, aren’t the story here.

The biggest takeaway for larger countries with larger publishers is the thought about scarcity. Round up a critical mass of newsy content and you may find a few percent of digital users willing to pay. Put aside nations of 50 or 300 million. Think about regions, combining newspaper, TV, and magazine companies. Think about certain kinds of topical content, which could be corralled into consumer packages (Epicurious + Mark Bittman + Top Chef Recipes?) that might make consumer sense.

“The metered model is simply a tactic,” says Gary Farrugia, publisher of The Day. “The database is the strategy.” That database was built by Daniel Williams, whom Farrugia hired a year ago from the New York Times Regional News Group, and it’s indeed the next step in the evolution of print-based, throw-it-on-the-driveway local newspaper company.

“It’s basic human psychology,” says Silas Lyons, editor of the Record Searchlight in Redding, Calif., VP of new media content and a co-chair of one of the Scripps’ task forces that pushed forward with the game dynamics idea. “We’re not trying to solve an audience problem — we’re trying to solve an engagement problem. The reader is being rewarded for consuming, sharing, commenting, and finding insight.”

In any city, the number of print journalists far outnumbers broadcasters, even though in America the daily reach of TV news is fairly close to that of newspapers. Too often broadcasters follow up on (and feed off) work begun by print journalists. (At worst, it is “rip and read”, driven by ratings, with far less of a balance of public service and profit.) Without that daily work in print, the whole ecosystem of news spins out of balance, as it has already begun to do.

That’s the dream that the MediaNews’ new made-for-the tablet, TapIn taps into. Potentially — and I cannot emphasize that word too much — it may become a prototypical product for the news industry, pointing a new way out of the hollowing-out landscape into which the news industry has meandered. TapIn, which launched today, is parent company MediaNews Group’s big play for the iPad, “a better version of Patch,” says MediaNews exec Steve Rossi.

For Reuters, it’s a leg up in the agency world, and part of its big U.S. push (see my Thursday Nieman lab column, “The newsonomics of Reuters’ Americanization”). Reuters gets a semi-exclusive, able to exclude a handful of key competitors, including AP, from doing similar syndication. The wire offers no financial guarantees, but offers the three promises INN members, and Davis, are banking on to propel them forward, and importantly establish a new syndication leg of revenue, as non-profit funders push for funding diversification.

It’s the offense that represents a problem. Most pay tests have yielded relatively little new revenue. Digital circulation revenues, if broken out, would be minuscule for most, leaving publishers underwhelmed. While buoyed by the defensive wins, without significant new circulation revenue, they’ll have a hard time reversing their business fortunes. If they were looking to new circulation revenue to bolster profits, pay down debt, or reinvest in news products, there are few new dollars to go around. Morris Communications, for instance, counts $42,000 in four-plus months in new digital circulation revenue since its two tests in Augusta and Lubbock launched in January.
Overall, we’re seeing less than one percent of unique visitors open their wallets. For The New York Times, even one percent — or 300,000 — would be significant, and when achieved, will be a milestone. For smaller papers and sites, it’s a long, long ramp.

Just as the digital marketing world has increasingly provided agencies and advertisers with a trove of audience data, the print world is slowly responding. While advertisers can only track these differing print niches with differing coupon codes, or a spectrum of differing 1-800 call-in numbers, print at least can be niched in some ways, even though it doesn’t offer the intensive harvesting of data that digital does. Of course, the various e-alternatives, from “online” to tablet to smartphone, are offering advertisers the ability to say “I’ll take this, but not that” and to mix and match print and digital buying as never before. While advertisers could do some picking and choosing before, they were often flying blind and these new categories of circulation counting — verified circulation and branded editions to “requested” or “targeted” delivery — give them better data on which to make those choices. Consider the data advertisers get with this first report just the beginning of new sets of metrics to come.

Still, those numbers are bound to chill many a journalist. You think posting reader metrics in newsrooms is still a point of contention — wait ’til story cost accounting becomes mainstream. And it will. It’s just simple manufacturing, and like it or not, that’s what the news business has long been. Manufacturing, with lots (New York Times, Wall Street Journal) of quality added or with (insert your favorite rag here) just enough to draw ads. News creation used to be a sunk cost, with headcount a small and usually polite battle between editors and publishers. That was in stable times. In these times, knowing business drivers, down to the dollar, is going to be part of the new world.

So, if California Watch were to be totally supported by foundation money, it would take an endowment of $54 million to throw off $2.7 million a year, at a five percent spend rate. Now $54 million raised one time isn’t an impossible sum. Consider just one gift: Joan Kroc left NPR more than $200 million eight years ago. Consider that the billionaires’ club started by Bill Gates and Warren Buffett (encouraging their peers to give away half of their wealths) is talking about newly raising a half a trillion dollars for the public good.