Local news media needs dual business models, not dueling business models

I own and run a hyperlocal site www.sunvalleyonline.com. While we've managed to be one of the few pure-play local Internet media ventures to eke out a profit, the financial returns aren't anything to write home about. This resulted in a minor epiphany when it comes to thinking about the viability of local media.
If you think about what made newspapers viable for so long it was the fact that they had two products/businesses that were largely unrelated but delivered by the same organization. Newspapers have had a news-and-information business monetized by display ads and a classifieds business monetized by classified ads. The classified business was enabled by the distribution and audience of the news franchise. However, it's been clear that that second revenue stream doesn't translate on a sustainable basis online.
To date, most local Internet plays have struggled to make it work relying solely on display ad revenue. I've come to the belief that it's going to take a similar dual business model to support local media (we're working on doing that ourselves). Unfortunately for many local news organizations, it has been more about dueling business models (i.e., worries of cannibalization) than recognizing that what they need is a dual business model to make their online business much more successful.
So the question is what will be the accompaniment to the display ad business? We're seeing a few different approaches explored. For example, micropayments and non-profit/foundation support are oft-discussed. I don't believe those have much opportunity to scale beyond some exceptional situations which are terrific but hold little promise for most media organizations.
Then there’s the problem of transitioning from a for-profit to not-for-profit model which typically begins by laying off the entire staff and getting the investors to agree to donate all of the assets of the enterprise into the new nonprofit entity. My friend Jonathan Weber expanded on this in his Endowed and Out piece. There are a number of other potential second business models but I think the Search-related model is a viable "other" business model.
The interesting and loose parallel with the classifieds being enabled by the news distribution historically is with those sites selling online directory solutions bolted on to a news site. Since most local news sites have the highest PageRank in their area, the PageRank is a form of "distribution" advantage that the news sites have and usually don't recognize. One could argue when we see the demise of newspapers like the Rocky Mountain News that one of their most valuable assets in a liquidation is their high PageRank. When you have a high PageRank site with a leading directory solution, the businesses in that directory should show up very high in SEO and thus the news site has some unique value they are adding to those local businesses competing to be found.
The challenge remains setting up a winning sales model to capitalize on this. I wrote a couple of pieces for David Cohn's and Jeff Jarvis' NewsInnovation.com site expanding on this.

* Five Fatal Flaws that are killing local Internet plays
* Ten Point Plan to (Re)Building a Successful Local Media Salesforce | Networked Journalism Summit

The approach I'd espouse is much closer to Dell than it is a traditional local media sales force, which is generally ill-equipped to sell these new products. When I was at Microsoft and focused on the local space (I was part of the founding team at Sidewalk), we often thought that the biggest asset that the incumbent newspaper and yellow page companies had was their local sales force and relationships. Having gotten closer to "the last mile" of the Internet, I've come to observe that in most situations the local sales organizations of the incumbent media is more encumbrance than asset.
Consequently, the smart incumbent media should setup a parallel tele-sales based model that are filled with "hunters" and leave the existing "farmer" sales force to harvest the longtime advertisers as long as they can. It is important to note that this outbound tele-sales organization is dramatically different than the typical "call center" that newspapers have for classifieds. Thus, thinking that that group will have success is a long shot. The sort of tel-esales organization that exists at a place like Dell is able to prospect and close business into the low six figures. In other words, it's not taking a $150 classified order over the phone.
The sooner local media businesses recognize it's critical to have dual business models rather than dueling business models, the sooner we'll see hiring rather than firing being the storyline of local media.

Source: knightdigitalmedia

Newspapers: 25 things to try before turning off the lights

Here are some ideas on how newspapers could become viable media businesses:

1: Focus on original content, do not rewrite wire stories or press releases. If newspapers start charging for content people are more likely pay for content they can’t get anywhere else.
2: Focus on hyper-local coverage, newspapers should “own” their regional beat because they have the best contacts and the best understanding of local companies and issues. For example, SF Chronicle or the San Jose Mercury should be breaking all the top Apple or Google stories.
3: Don’t run foreign bureaus unless you are the New York Times or the like, or are publishing a unique perspective relevant to your community.
4: Be a regular and visible part of your local communities by making sure journalists get out of the office.
5: Become an active teacher of media literacy and also media production in your local communities. Help teach citizen journalists how to be great journalists, editors, photographers, videographers, etc. Teach how to be effective and ethical.
6: Celebrate the best citizen journalists/bloggers in your communities, publish them on your platform.
7: Become involved in local events, organize conferences. There is a lot of money in conferences. The newspaper becomes a vehicle for drawing people to the conferences.
8: Don’t let advertising networks sell your advertising. They take a huge cut for serving ads and you lose the customer connection. I often see newspapers running Google AdSense on their front page and at the bottom of the ads there is the message: “If you’d like to advertise on this site click here.” That click takes prospective customers to Google and not to the newspaper. Newspapers should always own their customer relationship.
9: Develop a hybrid content strategy for search engines and news aggregators that takes advantage of the distribution power of the Internet without giving away all the content.
10: Adopt a culture of a “news organization” rather than a “newspaper.” Paper or electron, it shouldn’t matter how the news is delivered.
11: Offer some way for readers to pay. Every newspaper has a group of fiercely loyal readers, some more than others, but there is no way for them to pay if they want to read their newspaper online. Many people like the positive ecological aspect of reading online and are proud they are saving resources–and many would be willing to pay for this vastly improved product yet the newspapers don’t offer any way to collect this easy revenue. One way might be witha PBS-style volunteer membership package? With discounts among local businesses.
12: Become the host for all important discussions about local issues and politics. Moderate the discussions to ensure civil discourse. Nothing kills discussions faster than offensive comments made by anonymous people.
13: Newspaper journalists need new publishing skills in video, audio, images, and should have some basic knowledge of HTML and CSS. Being able to type is not enough.
14: Help raise money for schools and other essential local services. Show you are part of the community.
15: Create a safe online experience, free from phishing, malware, and adverts for scam services.
16: Create a search site to search local resources and businesses.
17: Create a news aggregation site that provides your readers with access to news and other articles available elsewhere.
18: Each newspaper section should provide a search engine specific to its topic and region: Business: Company information and financial services. Home: Search for builders, furniture, decorators. Food: Search for recipes, local restaurants, etc.
19: Offer free classified adverts online and also have a free section in print. You can charge for a premium listing that offers better visibility.
20: Create informational pages to help people in your communities with common tasks such as how to get a business license. Where to find your car if it has been towed. Information for people that have recently moved into the area. In different languages. Have your web people create pages that are mashups of available online data but presented in a more accessible form, such as mapping police reports onto regional maps. School information, etc.
21: Hire additional salespeople. It is is a different sales environment today and it requires a fresh approach. Salespeople used to selling full page or half-page print ads are not the going to be able to transition easily.
22: Host web sites for important community groups in your region for free. You can run advertising on them and the groups will benefit from having an easy way to publish online.
23: Create a way of allowing readers to share in the ownership of the newspaper, or somehow give them a role in what the newspaper should be doing to become more useful to its community.
24: Create a directory of local businesses with space for user comments. Offer premium listings for a fee that also shows the business is supporting the newspaper, with a sticker. Yellow pages is a huge local business that the newspapers could easily own.
25: What are your ideas for helping newspapers transition into the online world?

Source: ZDNet