Between a rock and a hard place

how technology is redefining local news

The future looks grim for local news in America. Falling ad revenue and reductions in the workforce mean small newsrooms face an uphill battle to survive. Yet, thousands of small publishers continue to deliver every day.

Americans are hungry for information about their communities. But more readers are bypassing newspapers and getting news from social media (Pew 2016). Twitter, Facebook, Nextdoor, and Craigslist are delivering the much of the information that communities used to get from their local papers.

The publishers that survive will be efficient, offer a high-quality product, and build support within the community they serve. This paper is a snapshot of the trends impacting small-market newspapers with circulations under 50,000. It offers ideas for how publishers can strengthen the local-news business today.

What is local news?

American news is largely local news. Ninety-seven percent of newspapers — 6,851 daily and weekly publications — have a circulation of 50,000 or less (Ali & Radcliffe, 2017). Small-market papers serve a readership that is geographically defined. Content is driven by current events in a community.

Media scholars Christopher Ali and Damian Radcliffe surveyed 400 small-market journalists for a report published by the Tow Center this year. The report describes the varied the local newspaper landscape. Small-market papers include weekly and daily papers, subscriptions, and free circulars. Most are print, but many are also online. Mom and pop shops, non-profits, newsgroups and private equity properties are all included.

Reporters and editors at small market papers also have a range of comfort with technology. Traditional photography, social media, podcasting and even 360 videos are all used at small-market papers (Ali & Radcliffe, 2017).

Trends in news technology

Three major technology trends have the potential to reshape how news is consumed and delivered: computational journalism, digital distribution and personalization.

On the supply side, computational journalism has the potential to lower the cost of investigative reporting by using programming and machine learning to mine data for stories. This includes automating repetitive tasks like writing stories or pushing information to social media. Bots, for example, can turn structured data or uniform information into news copy. Bots already do reporting on crime, sports, and financial news.

Second, digital news distribution online or through mobile apps lowers the cost of production. The incremental cost of creating more “copies” of a story is negligible. Digital news also gives publishers the opportunity to collect data on stories, advertisers, and customers (Lewis & Westlund, 2014).

The third trend is on the demand side. Personalization can improve the user experience. Publishers can collect user data and use it to provide more relevant content for users.

Theoretically, the cost of producing and distributing information at scale is falling. But large publishers are better positioned to take advantage of these trends because they can spread the fixed costs of investing in technology over more users. The economics of investing in technology are not favorable for small publishers who have fewer readers to spread the cost across. Social media presents a second complication for publishers. Social media platforms are intermediaries that own the relationship to the reader and their data.

Finally, it is unclear how much data journalism or coding happens in small papers. Most computational journalism projects seem to take place in large national papers or non-profit news organizations. The discussion around data journalism and coding in small papers must take into account the starting salary for a programmer with less than a year’s experience is six-figures, and the starting salary in a newsroom is around $20,000. It is debatable how much small newsrooms can take advantage of supply side efficiencies from technology.

One supply side advantage available to small-market publications, however, is partnerships. Working with another outlet can expand reach and resources to tell more complicated stories, especially investigative or data-driven stories. Small publishers can partner with neighboring outlets, regional or national outlets, non-profits like ProPublica or even local bloggers.

Trends in local news

Local news once bundled all four information demands: producer, consumer, entertainment, and voter. But producer demand and consumer demand have dwindled — with the exception of information on leisure activities. But local news still serves the voter demand by reporting on government bodies and institutions. The strength of local news today is the entertainment demand. Who hasn’t been charmed by photos of kids at pumpkin patches or school recitals? Small town residents want to know how the high school football team is doing. So, small-market publications can still bundle entertainment and voter demands into a package communities want and need.

On the demand side, small-market papers make a differentiated product — stories that cannot be found anywhere else. As information becomes a commodity, the task before local newsrooms is to create quality, compelling stories.

They key is to invest in solid reporting and storytelling. Long form, narrative stories, and serial podcasts are experiencing a renaissance in America right now. Pew did a study of reader behavior using mobile devices found people spend nearly twice as long reading long form stories than short form stories, on average. The study also found that even though less than a third of the stories were long-form, readers opened them at the same rate as shorter stories, indicating a preference for longer stories with more context to explain current events.

Local publishers also benefit from a strong relationship with the readers. Reporters and editors usually live in the community they serve and are integrated into the fabric of daily life. Small-market papers are “close to their communities” Ali and Radcliffe said, “with journalists sharing similar goals and lives to their audience.”

Impact on the business of local news

Publishers must make an information product that people are willing to pay for. New technologies are changing how news is produced, consumed and sold. Business models are dominated by ads and subscriptions (Ali & Radcliffe, 2017).

Free weekly papers survive on advertising. But many have lost revenue to digital publishing and online classified ads. While the size of the market for digital ads is growing, the value of individual ads is falling. Analysts forecast the US market for digital ads will increase 13.5% in 2017 to $50.2 billion, nearly half the size of the market for print and television ads. But, as ad targeting improves, publishers can serve more customers which will lower the price of ads. Papers are also competing with each other for dwindling ad dollars. As a result, digital ad revenue for individual outlets will continue to fall (Athey and Gans, 2010).

Platforms are also investing in local advertising and dominating that market. Facebook’s reach, is unprecedented. But small publishers could make the case to local businesses that supporting the local news is a way to give back to the community — like supporting a softball team — that has positive spillovers in addition to marketing for the business. Again, much like creating a relationship to the reader, local publishers can redefine and leverage their relationship with local businesses.

The difficulty local publishers face is that readership is trending towards better, longer stories. A feature piece, however, is a resource intensive product. It takes a lot of work to produce a quality long-form story. But advertisers want more ads served more regularly. So, publishers may need to reframe advertising as a way to deliver a qualified audience over a quantity of ads.

The market is also pushing small publishers to seek revenue from readers. Platforms like Facebook are intermediaries between readers and publishers. They dominate mobile. Ad-blockers proliferate as the value of digital ads fall.

There are three main models for asking individuals for money: philanthropy and nonprofits, subscriptions and memberships, and, finally, crowdfunding.

Non-profit or philanthropic models makes sense for local newsrooms. By appealing to a community’s sense of civic duty and identity, small publishers could garner support for their paper. They can also, potentially, get off the hamster wheel of competing to serve digital and print ads.

Subscriptions are a traditional way to sell a paper. Memberships are like subscriptions, but are meant to be less transactional, Robbie Kellman Baxter, author of The Membership Economy said in an interview. Users pay for access to a product and may get other positive psychological spillovers, similar to donating to charity.

Publishers seeking subscriptions or membership revenue could focus on creating experiences and products that are unique both online and offline. This means news outlets need an excludable good. Information, people, other products, a network, access to breaking news, an experience or event — all could work as an excludable good.

Crowdfunding is a one way journalist can raise money to report stores. But, the journalism crowdfunding sites Beacon and Spot.us both failed. While readers may pay for quality news, getting users to pay individual reporters in a marketplace for news hasn’t gained traction. Markets rife with free riding, like news, aren’t a good match for a two-sided marketplace models.

Yet, small publishers could have a Direct Public Offering, like Berkeleyside, to raise capital to invest in technology by selling shares of the news company to the community. Crowdfunding at the organization level may hold untapped potential.

A digital niche for local news

Small publishers can look for ways to take advantage of digital channels with low barriers to entry that are tailored to enhance readers’ experience.

Local publishers can also take advantage of digital storytelling mediums — podcasts, video, data visualization and social media to tell stories. Where small publishers get into trouble is trying to do all these things to keep up with the digital Joneses without a strategy or plan, spreading limited resources too thin. Better to invest in one or two new channels and do it well in a way that supports the organization’s mission.

Publishers investing in digital channels must take care to ensure it is a quality experience online or on a mobile app. A poor online experience undermines credibility, according to a report by the American Press Institute. Newsrooms must avoid pushing reporters to social media just to do it — social media requires a strategy and training. It can be a good source marketing and advertising, but has questionable returns. For small papers in small towns, it’s debatable how much value there is in this kind of marketing, because everyone who lives there will already know of the local paper.

Still, there is an ongoing decline in print readership and circulation, according to the Pew State of the News Media 2016 report.

Newspapers digital readership is outpacing print and mobile readership is growing, according to the Pew report. The future of news is mobile. This creates a problem for local publishers who lack time and money to invest in technology. Plus as a fractured collection of businesses creating boutique information products, for a tiny, local market, small-market newspapers have a hard time taking advantage of digital technology’s ability to scale up and serve more customers.

Despite the optimism Ali and Radcliffe found in American newsrooms, small-market papers remain ripe for disruption.

Looking to the future

The relationship small outlets have with their audience is more precious than gold. Publishers should protect and cultivate that relationship.

Small publishers should look for ways to make more money and diversify their revenue stream beyond ads and subscriptions. Small-market publishers’ have an opportunity to re-define their role in the community information providers, where newspapers are just one way to fulfill that mission.

Above all, small publishers should try and maintain control of their business and avoid selling to private equity. Newsrooms could consider crowdfunding, fundraising or direct public offerings instead.

Newsrooms staff are aging and struggling to attract younger talent (Ali & Radcliffe, 2017). Local outlets need to seek out young reporters. Editors can work to create the kind of newsroom that people will want to work at, despite limited resources. One advantage of a digital model or a model that focusses on quality content is that deadlines can be pushed out. The work load needs to be addressed so people can have a life outside of the newsroom.

Other benefits could include family friendly policies like paternal and maternal leave policies. Position roles to new journalists as a two-year tour of duty. Offer learning opportunities — meaty story assignments, time to work on their own projects, time to ake Linda.com courses, or sending reporters to conferences with training opportunities.

Future research

Scholars lack a shared definition of local news. Regional and metro news outlets like the Dallas Morning News and the Minneapolis Star (Grueskin & Graves, 2011) are sometimes thought of as “local news” even though the daily circulation is 700,000 and 170,000, respectively.

Anecdotes are often used to prove a point about the impact of technology on local journalism. Extrapolating from national trends to a collection of businesses, with a variety of distribution channels and revenue models paints a murky picture. More research is needed to understand the nuances of this industry and to support American journalism.

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Bibliography

Ali, C. & Radcliffe, D. (2017) “Life at small-market newspapers: A survey of over 400 journalists,” Tow Center for Digital Journalism. https://www.cjr.org/tow_center_reports/local-journalism-survey.php

American Press Institute (2016). “How people decide what news to trust on digital platforms and social media,” https://www.americanpressinstitute.org/publications/reports/survey-research/news-trust-digital-social-media/

Athey, Susan and Joshua S. Gans. (2010). “The Impact of Targeting Technology on Advertising Markets and Media Competition,” American Economic Review.

Batsell, J. (2015) Engaged Journalism: Connecting with Digitally Empowered News Audience. Columbia University Press.

BIA/Kelsey (2016) “BIA/Kelsey Forecasts Overall U.S. Local Advertising Revenues to Reach $148.8B in 2017, Lifted by Strong Growth in Online/Digital,” http://www.biakelsey.com/biakelsey-forecasts-overall-u-s-local-advertising-revenues-reach-148-8b-2017-lifted-strong-growth-onlinedigital/

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Hamilton, James. (2003) All the News That’s Fit to Sell: How the Market Transforms Information into News. Princeton: Princeton University Press.

Hamilton, James. (2011) “What’s the incentive to save journalism?” Will the Last Reporter Please Turn out the Lights: The Collapse of Journalism and What Can Be Done To Fix It. Eds Robert W. McChesney, Victor Pickard. New York: The New Press.

Lewis, Seth. C. and Oscar Westlund (2014) “Big Data and Journalism: Espistmology, expertise, economics, and ethics,” Journalism in an Era of Big Data: Cases, Concepts, and Critiques. Routledge.

Pew Research Center, (2016) “Long-Form Reading Shows Signs of Life in Our Mobile News World” http://www.journalism.org/2016/05/05/long-form-reading-shows-signs-of-life-in-our-mobile-news-world/

Pew Research Center, (2016) “State of the News Media 2016,” http://assets.pewresearch.org/wp-content/uploads/sites/13/2016/06/30143308/state-of-the-news-media-report-2016-final.pdf