Making a business out of local news. Not just difficult, but lemon difficult

Philanthropy fills some of the gap, but a new business model is what is needed

Welcome to Unmade, kicked off on Saturday morning on board flight VA1544 home from Adelaide, and completed on Sunday afternoon at windswept Sisters Beach, Tasmania.

You know it’ll be gusty here when the BOM severe weather warning pops up in the weather app. And you know it will be really gusty when the surfers arrive.

Today’s writing soundtrack: Bruce Springsteen, Letter to You. A year on from release, and it’s still standing up.

It’s been four weeks today since Unmade kicked off, and there are now 1,211 of us.

Thanks for your support, and as ever please do invite your colleagues to sign up.

This week I’ll be doing a 9.10am send each day to see what that does to open rates.

Welcome to new subscribers from South Australia. I see we picked up a few signups after I hosted the Adelaide Advertising & Design Club Awards on Thursday night.

I suspect the new awards ceremony Covid etiquette is something we’ll also see in the larger states when lockdowns ease. Facemasks on to stand and chat, but no drinks in hand. Masks off to sit at the table to drink and eat. And no handshakes on stage.

There was some great work to recognise. I wonder how many people outside the market have seen the SA Police “Selfish Prick” road safety ad from Blacksheep, for instance.

But I did pick up a vibe after the ceremony that some eyebrows had been raised about some of the major choices. I’m not close enough to the local nuance to understand all the dynamics, but I am intrigued to note that the Madtown advertising blog, run by mono-named creative Sputnik, had something to say about it.

Exactly what though, I don’t know, because Madtown went down, with the site’s bandwidth exceeded, before I could read it. Which suggests Sputnik went for something quite spicy. Given that the headline was “Let’s burn some bridges”, I’ll be intrigued to find out, when it comes back online.

As I was walking through Adelaide’s Botanic Park to visit a creative agency the next day, I found myself discussing media business models on the phone. On the call, I was talking about local news, and struggling to express just how hard it is to figure out how to make it pay.

Words almost failed me as I tried to sum up the size of the challenge. I found myself leaning on the wisdom of political hack Olly Reader in the movie In The Loop, defining the opposite of “Easy peasy lemon squeezy”.

“It’s difficult, difficult, lemon difficult,” I told the person on the phone.

The reason local news was front of mind was a session on the topic hosted by The Walkley Foundation during the week.

When I watched the stream, it occurred to me that of all the disrupted areas of media, local news is the one that has seen the least progress towards a new model, despite its importance.

The victims of most disruptions to the media over the last couple of decades have been shareholders. But in local news, communities have lost out too.

There’s been a market failure that has not self-corrected.

The single biggest gap has been in scrutiny of local councils. It’s unglamorous but important stuff.

The early years of my career were spent sitting in council chambers, locked in a battle of wills with councillors trying to bury the most questionable of their decision-making until late in the evening in the “any other business” section of the agenda.

Similar things happened in council chambers everywhere. Sometimes it was a council trying to avoid a controversial headline over a difficult decision, other times the scrutiny was one of the things that discouraged out-and-out corruption. I remember as a nervous junior reporter being psyched up by my chief reporter to call the chair of a planning committee to ask if he was corrupt, after a particularly unusual meeting. The local authority ombudsman of the day later ruled that there had indeed been maladministration.

With no reporter in the council chamber - and there usually isn’t these days - there is nobody around to ask those hard questions. Even towns where local newspapers survive don’t have the staff to cover every meeting.

And it’s hard for the public to know what it’s missing when it doesn’t know what it doesn’t know.

When I was writing my book Media Unmade, one of the themes was the existential challenges faced by Fairfax’s metro newspapers. As I wrote in the book, a team led by Chris Janz figured out a way of saving The Age, The Sydney Morning Herald and The Australian Financial Review.

But even this smart group of people could not devise a way to save the company’s community newspapers.

When Nine absorbed Fairfax, the community papers were the least loved asset of the takeover. Nine soon launched Project Cashews designed to offload them to anybody willing to take them off the company’s hands.

The buyer was Antony Catalano in partnership with Alex Waislitz from Thorney Investment Group. The headline price was $115m, although it was reduced before the sale was even completed. And the deal looked even sweeter once the real estate that came with the printing presses was factored in. Money from Google and Facebook from the News Media Bargaining Code standover helped too. And once largesse from Job Seeker and the government’s Public Interest News Gathering Fund kicked in, it was a decent deal for the Cat.

But the fundamentals of local newspaper publishing are much harder, particularly to run well resourced publications that service their communities rather than simply republishing press releases.

News Corp’s own local print operations were drastically scaled down during media’s Covid downturn. There are few signs yet that News Corp’s digital replacements have anything like the same heft.

Where I am in NW Tasmania, News Corp launched The North West Coast News as a digital masthead in August last year. Staffed by a single reporter and acting as a feeder for the state masthead The Mercury, It averages around one news story a day, generally a court case from a couple of cities away. It’s better than nothing but not by much.

Around the country there are now various types of gaps. Some are simply the news deserts that have been widely discussed in the US, where there is no local paper at all. But other gaps are the ones where publications, in print or online, are so under-resourced they are not able to cover all the important bases of a local democracy including council, court and cops.

Reasonable estimates are that more than 200 regional and rural publications have closed since 2008, and more than 3,000 local journalist jobs have gone. That’s a lot fewer people on the local beat.

The problem is the same as it has been for the bigger papers. The classified advertising - the jobs and cars and real estate - has been vanishing online, and far fewer people are buying the print edition. At the same time, persuading the public to take out an online subscription is a slog, and its marketing is expensive.

Many of the smaller independents that remain do so more as a service to the community from local owners than thriving businesses with a strong future.

Which brings me to last week’s session, which examined philanthropy as a route to funding local journalism.

Among those on the panel were Dan Stinton, MD of The Guardian, which announced last week that it is launching what it described as a rural news network. It’s philanthropically funded to the tune of $1.4m, by the Vincent Fairfax Family Foundation.

It will see five UTS journalist grads working in rural communities, along with a network of “trusted regional contributors”.

Yet compared to the lost resources, the project represents just a drop in the bucket.

If local news is going to be revived at scale, an actual business model is what is needed. The philanthropy needs to be a bridge to that moment, as it’s unlikely to be the solution on its own.

There just aren’t enough philanthropic dollars out there, and where they do exist they still often serve the passions of the benefactors. For instance, much of the funding delivered so far from the Judith Nielsen Institute has paid for increased coverage of Asia by the major news outlets, which reflects the part of the world she is most interested in. The coverage is independent so the dollars are welcome, but nonetheless the outlets are not free to spend the grants how they want - the funding is tied to the proposals from the big players (and it seems mainly interested in funding the big players).

That’s what makes the PS Media model so important to watch.

Former Buzzfeed Australia general manager Simon Crerar, one of the PS Media cofounders, was among those on last week’s panel.

The eventual ambition for PS Media is somewhat larger than simply being another philanthropic-funded news ultimate.

It is trying to create a digital platform that can provide a back end for individual local PS news sites across the country.

The ambition - which admittedly may not be achievable - is to persuade a large number of local people to effectively become shareholders in each publication and use that to fund journalists until a title becomes profitable. And the vision for PS Media is to do this through advertising, not paywalls.

And rather than the tiny CPM model that programmatic advertising brings, for PS Media this may be through the support of big brands wanting to do their bit to be good corporate citizens nationally.

With excellent salesmanship, this is possible. After all, Andrew Jaspan managed to persuade CommBank to come up with something like a million bucks when he was founding The Conversation in 2011.

But the part of the PS model where I have my questions is the assumption that 1,000 people in each locale could be persuaded to each stump up $500 over four years to make their own publication viable. There might be an outlier community or two where a charismatic, well connected champion makes it happen, but routinely motivating that many people in a single area to sign up seems to me unlikely.

But the nature of many startups is that by getting close to the problem, the founders first fail, and pivot to a model that works better. If PS succeeds, I’d suggest that is what would need to happen.

Local news is the hardest place in journalism to make money. That’s why there are so many news gaps.

Even if the first attempt to find a model beyond philanthropy does not succeed, I hope they stumble towards a model that does. The stakes are high.

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Have a great week.


Tim Burrowes

Proprietor - Unmade