What Happened to Spirited Media and Lessons Learned

By Michael Shapiro

The last several years have been marked by more fits than starts in local news. The most recent fit came in the form of Spirited Media’s announcement that it sold one of its sites, Denverite, and is in the process of selling off Billy Penn and the Incline. Spirited Media was heralded by many as a bright spot that was building out a business model that was supposed to work in the otherwise dreary local news landscape.

The idea was to create a chain of digital-first local news outlets that catered to a younger local audience and focused initially on generating revenue through advertising and events. They landed investment, hired staff — mostly journalists — and got to work. The outlook was promising to be sure. Spirited Media hit many of its targets for audience and growth. Unfortunately, it wasn’t enough. They pivoted to membership and largely succeeded in growing that segment too. Still, it wasn’t enough, and they ran out of breathing room.

A quick read of the Spirited Media story yields the stomach-churning conclusion that local news can’t work in our current media environment. Digging deeper, however, there are important lessons to be learned and resulting optimism to be had.

Diagnosing the Problem

I write and talk about scale and growth constantly. Growth and scale have been the Achilles’ heel of the local news industry. Digital media upstarts seek to build massive, engaged audiences then monetize later, or at the very least prioritize audience growth over monetization. The idea is if you have the eyeballs on your content, you’ll be able to turn them into profits down the line.

The problem is that revenues and profits in many cases never materialized, principally through advertising, and events in Spirited Media’s case, in the way that investors expected. Revenue and profit woes become even more problematic when outlets have to support overhead including office space and technical infrastructure. This failure to meet expectations has forced publishers to try to pivot to new sources of revenue, like subscriptions, membership or e-commerce, make cuts in the newsroom or ultimately sell-off.

A Lean Model

So where is the lesson in all of this and does it give us a path forward? I believe it does. The big lesson for me is that advertising can work, but only if we realign expectations and rethink the model. We, as an industry, need to get leaner when testing new models. Prove the model, build trust, then look to scale. Creating unrealistic expectations for profit up front establishes an environment in which publishers can neither focus on creating good journalism nor building a sustainable business.

At TAPinto, we started with a single site in New Providence, NJ. From there, we began building deep local relationships with readers and advertisers and expanded to two neighboring towns. It worked and residents in other towns began reaching out to us to expand. Initially, we did so to meet demand, but also fulfill our quest for the elusive “hockey stick” growth chart. Soon we found that because we did not have the local relationships with readers and advertisers in those towns, those sites were not nearly as successful as our first three. Learning our lesson, despite demand for expansion by residents in other towns, we hit pause to focus on getting the model right in our existing sites. We knew that it was critical to avoid exporting and scaling a flawed approach. During that time we thought hard about how to create a model that both met demand and fostered strong local readership and advertising relationships.

Because we were deliberate and took care to address the big issues at the expense of short-term, but shallow, growth we were able to come back to the table with an effective blueprint that empowered franchisees through giving them ownership of their own local news site, provided them with the tools they need to repeat the process we used to build our first TAPinto site and the necessary tech infrastructure and editorial support. Today we’ve grown to over 8 million readers across 80 sites in NJ, NY, PA, SC and FL — all supported by advertising.

The advertising works because we’ve created an ecosystem — a credible, trusted place for the local community to meet online and stay informed. This ecosystem allows for franchisees to run their own independent local news business without the encumbrances of maintaining excessive infrastructure while providing real value for readers and advertisers. Our content marketing, display and sponsorship opportunities give advertisers the ability to connect on a deeper level with a targeted and engaged local audience and, if needed, scale their reach to other TAPinto sites seamlessly.

The point is, the impulse in local news has been to put the cart before the horse. To save local news, we need to find new ways to scale deliberately and provide value without succumbing to the urge to grow too quickly.

Michael Shapiro is CEO and publisher of TAPinto.net, a network of more than 80 independently owned and operated local news websites in New Jersey, New York, Pennsylvania, South Carolina and Florida. This post originally appeared on Medium at https://link.medium.com/CppWSJnSpV, and is re-posted here with the permission of the author. 

Categories: Jandoli Institute, Media