BG: One of the things we were looking for was: What are the companies—newspapers, but also broadcast outlets, new digital-only outlets—what are the companies that are doing something that we thought was really interesting, and that would be revealing to people who have read and heard a lot about this situation? So I went to the Detroit newspapers, for example, because they drastically cut back their home delivery to four days a week, and I was interested on the level of, What does that mean when you cut back your cost structure in that way, what does that mean for your digital growth? We were interested in an outfit in Denver called Examiner.com, which is a site that’s only been around for three years, but that has already built an audience of well over twenty million unique users a month: How did they achieve that rapid growth, and what is the economic model?
And I noticed that you focused on just for-profit organizations, correct?
BG: Yeah. That was actually pretty important. There are one or two nonprofits that show up at various times, but we really wanted to define the question in such a way that would really help to answer the issue that I think people are really curious about, which is, Can the market support digitally-based journalism? There’s no doubt that ProPublica or the Voice of San Diego or MinnPost, organizations that get some or all of their funding from the philanthropic means, or even organizations like NPR that get some government funding, they do outstanding journalism, and they’re really leading the way in many ways on the digital front. But we were really interested in both the traditional sources of revenue—advertising and circulation—as well as new sources of revenue: What are media companies finding, and what does that say about what’s going on in the news business overall?
Lucas, I’m curious, were there any surprises, any conclusions that you came to at the end of this process that you didn’t expect at the beginning?
LG: I think we were a little bit surprised—I was certainly surprised—by what we found looking at some of the smallest organizations that we spoke to. In some ways, very counter-intuitively, their prospects are among the brightest, because they don’t have, they’re not freighted with a lot of the built-in costs of the legacy infrastructure—the large newsrooms, the physical printing and distribution apparatus—that a lot of the largest news organizations in the country have to carry into the digital age. And so a lot of these small, very lean organizations have been able to take very unexpected approaches to making journalism viable commercially.
One thing that—I’m not sure if this is a little too technical—but one thing that really surprised us is that they basically ignore completely the ad sales model that most online news sites use, which is, instead of using individual impressions and selling ads against those impressions, they operate much more like traditional newspapers or weeklies in small towns, where they just sell by the month. So they’re not counting up page hits, they’re not counting up click-throughs. They completely ignore all that, and just sell on this much older model.
In your conclusion section, you wrote that media companies should rethink their relationships with advertisers. Are those the kinds of things that you’re talking about?
BG: Right. Well what we also said, that we firmly believe in here at the journalism school is that this is not a way of saying that advertisers ought to be able to dictate coverage by journalism organizations. We believe that that’s a critical element to the credibility of reporters and editors everywhere. But we found that advertisers are much more aware of the many, many options available to them to reach consumers. If you start from the standpoint that advertising has historically generated the huge amount of revenue for most news organizations, what news organizations are facing, although a lot of them have not really dealt with the consequences of this, is that advertisers can reach out to consumers in ways that don’t require a media company.