“The basic point about the Web is that it is not an advertising medium, the Web is not a selling medium, it is a buying medium. It is user-controlled.” —Jakob Nielsen, web usability expert, 1998
The journalism business these days often seems like a strange new world. As Jack Sweeney, who has been the publisher of the Houston Chronicle since 2000, puts it, “I thought I knew this business, and I did. But this business-model blowup is totally different.” Sweeney has had a long career with newspaper advertising departments in Washington, D.C., Trenton, N.J., and Boston, and he could have been talking about a number of the efforts news organizations are making to grow—like a Utah TV station’s classified-ad service that has turned into a community resource, or a national media company selling ads that never appear on its own sites, or his own initiative as a service provider to small businesses. The tactics differ, but they share a common strategy: News companies are developing new businesses, not just propping up the old ones. And in doing so, they are challenging some of the orthodoxies that had slowed their transition to the digital world.
For most of these companies, the revenue from such new initiatives is modest; it doesn’t begin to replace the dollars lost in the traditional business. But there are encouraging signs. The process of finding new readers and dollars is forcing media companies to redefine who they are and what business they are really in.
Sweeney makes his point with a spreadsheet that shows how much some of Houston’s biggest retailers spent in 2010 on ads in the Chronicle. The numbers aren’t what they used to be, and he knows they’re not coming back. Even though the Chronicle remains the country’s tenth-largest newspaper, its circulation dropped by more than 10 percent in 2010 over the year before, to 343,952. A decade ago, it was nearly 550,000. Moreover, online display advertising, which was just under $28 million in 2010, won’t make up the difference on its own.
So the Chronicle, with guidance from its owner, Hearst Corporation, is looking to a sector often ignored by big media—the small fry. “We didn’t used to go after mom-and-pop businesses,” Sweeney says. “Houston has 310,000 businesses with ten employees or less. The potential is huge. As department stores have consolidated, we needed something new.”
What makes the Chronicle’s approach interesting is that it isn’t based on selling ads that appear on the pages of the site or in the newspaper. Instead, the Chronicle is launching a consulting business—selling a host of Internet services, from website design to improving businesses’ rankings on search engines. And when the Chronicle does sell ads as part of this outreach, those ads are just as likely to appear on Yahoo or Facebook as on chron.com.
To get started, Sweeney hired about thirty employees, some of whom who knew the world of small businesses from having worked at Yellow Pages. The Chronicle also retrained some of its own staff. The sales pitch it makes to businesses is this: The Chronicle evaluates their websites, improves their rankings on search-results pages, and helps them write press releases that are posted on the chron.com site to give traffic a boost.
The Chronicle charges $500 and up a month for the service, asking its clients to sign one-year contracts. As of April 2011, the fourth month of the program, it had enrolled nearly 500 businesses and booked more than $2.5 million in contracts. Sweeney’s goal is to reach around $7 million in annual revenue.
Others are also in this business. One firm, ReachLocal Inc., signed up nearly 17,000 advertisers, booking nearly $300 million in revenue in 2010. McClatchy has partnered with WebVisible, a California-based web services firm that says it has more than 10,000 clients.
But even if the effort is as successful as the Chronicle hopes, Sweeney figures it would do no more than match the current revenue from one of the paper’s biggest advertisers. In other words, it will be a big help but is not, in itself, a replacement for the old business model. “This has become a nickel-and-dime business,” he says. “And you need a lot of nickels and dimes.”
A decade ago, KSL, a local TV station in Salt Lake City, came up with what was then a novel idea: It would start its own classified-ads section on KSL.com and end its relationship with a company that was already providing that service for the site.