Bucking the Trend: A Sustainable Model for Local News

By Michael Shapiro

Photo by Stephan Henning on Unsplash

Trouble in the local news industry has been smoldering for some time. The Coronavirus pandemic came along and doused it with gasoline, accelerating consolidation, cutbacks in coverage, sharp declines in advertising and in some cases, the shuttering of entire local news publications. If one takes a zoomed out view of the local news industry, the outlook looks pretty bleak. But, as the saying goes, necessity is the mother of invention.

The Coronavirus pandemic has laid bare the vulnerabilities of local news models while simultaneously demonstrating the very real need for local news. We’ve seen large local newspapers announce that they’re shifting coverage to national topics, claiming readers demand it. What’s more is, we’re seeing paywalls erected. Really, what’s actually happening is that large newspaper chains are searching for ways to reduce or eliminate the expense of covering local news while simultaneously attempting to increase revenue under the guise that paywalls will help pay for local news coverage. All of these moves create a product that isn’t quite local news and isn’t quite national news either (where there is already a lot of competition). What we’re left with is something that doesn’t really meet a market need.

It’s not like demand doesn’t exist for local news — demand has never been stronger. But, something has gone seriously wrong when you see increased demand for a product, but reduced financial viability. This is exactly what is happening with local news and has led commentators, experts and analysts to sound a death knell for advertising-supported local journalism, and instead point to subscriptions or nonprofit news as the future.

Subscriptions are working for some outlets, but I would argue that it’s certainly not a panacea. We are living in the golden age of subscriptions, and not just news subscriptions. We can subscribe to Netflix, Hulu, Spotify, maybe a national paper, Disney Plus or whatever other services exist. The competition for attention is fierce and doesn’t leave much room for local coverage, particularly in smaller coverage areas.

Nonprofit models necessarily depend on large funders who can cease funding at any time leaving news publications without a lifeline. Meanwhile they walk on eggshells while in operation, constantly looking over their shoulder in case their funding dries up.

So how can local news work and even thrive?

As I’ve said, we need to radically reimagine local news business models. We made a few key decisions that are baked into our business model that have helped us continue to grow during the pandemic.

Local Ownership and Regional Scale

Instead of functioning like a holding company or a hedge fund that puts enormous pressure on its media properties to return profits, we made the choice to structure TAPinto so that our local publishers own the sites they operate. This creates stronger relationships in the communities we cover and in turn, leads to an overall better local news product. While our owner/publishers independently own their sites, they are also a part of a larger network. The TAPinto network allows owner/publishers to obtain regional advertising sales and also collaborate on content, while keeping their own costs low.

Putting More Dollars into Reporting

Local news is the product. If what you’re producing isn’t local, it’s not going to fly. The trouble chains have run into is in large part driven by profit pressures. In traditional local news business models, resources go into real estate (office space), back office functions, technology development and maintenance and marketing. We decided early on that the only way to make this work was to create scale in every aspect of our operations. TAPinto corporate provides the support, technology and marketing assistance for our owner/publishers. This frees up a significant amount of time and resources to focus on reporting and creating sustainable revenue streams, which, in turn, results in better local news.

Quality Advertising Products

The chatter around the death of advertising-supported local news is understandable, but advertising that provides real value for advertisers is critical, even through difficult times. Local news is not only competing for advertising dollars and attention against other news properties, but also against tech platforms. Creating quality, compelling advertising and content marketing offerings helps draw and retain advertisers. To these ends, we’ve created a suite of content marketing tools for our advertisers in addition to participating in the nationally recognized Branded Content Project to develop new tools that integrate with social media..

And, as noted before, the local relationships our owner/publishers create build trust and propel collaboration.

A Model for Every Community

Meanwhile we have developed diverse franchise models that work in communities large and small, suburban, rural and urban. Many of our sites are owned and operated by two people, one dedicated to content and one to sales. Others are owned and operated solo shops. We also have an investor model where someone buys the franchise and brings on sales and content staff to run it.

Excitingly, we have several already existing nonprofit organizations that own and operate local news sites. Here they do not depend on funding to operate the news site; rather the news site becomes an additional revenue stream, a marketing avenue for the nonprofit and helps fulfill the nonprofit’s mission giving back to the community.

Several hardcopy newspapers have franchised from us to be their online site, providing them with additional revenue streams and state of the art technology at little cost.

We also have a University model where St. Bonaventure University’s journalism program franchised as a journalism practicum for their students.

We are living through one of the most profound challenges in living memory and it’s upending almost every industry, including local news. I firmly believe, however, that if we continue to innovate, local news will come out on the other side stronger than ever.

It’s no secret. Local news has been on shaky ground for some time now — having disappeared entirely in some communities. The shift in how people consume information has led to a change in the economics of local news, exposing the cracks in legacy business models.

Readers shifted online, ad dollars became even more segmented and hard copy newspaper subscriptions began to decline. As a result, local news outlets had to figure out how to plug the holes. Some turned to events, others to e-commerce and still more sought to return to a subscription or membership model to support their news-gathering operations. There were some bright spots, but for every silver lining was another crack in local news business models.

Enter the COVID-19 pandemic. While there have been warnings and experts had quietly prepared for the possibility of a crippling global pandemic, most of us could not have imagined what we are now facing. In a matter of weeks, the economy came to a screeching halt. With it came an abrupt reigning in of advertising spend on local media outlets and social media platforms alike. The difference is, tech giants are well-positioned to weather the storm and most local news outlets are not.

The paradox of the pandemic is, many local news outlets are experiencing record readership and traffic but are also seeing a decline in revenue. The pandemic is turning what were cracks in local news business models into canyons. These canyons will only get wider as the economic pressures mount. It will require news organizations and stakeholders to rapidly reimagine how local news business models work. So far, the opposite has happened.

Since the pandemic, local news organizations, particularly those that fall under the umbrella of larger publishers, have continued to cut as demand for local news is increasing. Giants, like Gannett, have announced furloughs and layoffs. McClatchy is rolling through bankruptcy proceedings. And hedge fund, Alden Global Capital, is still working to snap up more newspapers.

Consolidation, which has been the dominant strategy to keep local news on its feet, isn’t working to achieve the primary aim of local news — reporting the news. Instead, it has created a scenario where news organizations are under immense pressure to deliver profits. This approach has resulted in stripping down newsrooms to deliver those profits. Local news is always essential to our civic lives, but now, more than ever, the public needs access to objective, well-reported news. Stripping down newsrooms doesn’t achieve that end.

So what can we do?

Local news outlets need to collaborate with each other to produce high-quality local news efficiently and effectively.

Such outlets need to develop revenue models that embrace features not provided by social media like email marketing and not a strength of social media, like search engine optimization (SEO) of content.

And they need to incorporate advertising innovations provided by social media and incorporate them into their local news platforms like Do It Yourself (DIY) social media promotion of content, sponsored content, and making the purchase of advertising simple and automated.

We are already doing many of these things at TAPinto and have seen significant success. While other media companies are experiencing a massive decline in revenues that has led to the gutting of their newsrooms, our revenues during the first four months of this year exceed that of last year and our sites are producing more original local news content than ever before.

The pandemic may fundamentally change how we work. Local news should follow a similar trajectory. Dollars should be spent on reporting, not overhead.

We are demonstrating that technology combined with a unique business model, franchising local news, has created new possibilities — possibilities that we never entertained before. This can be a turning point for local news. Let’s not waste it.

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 and Florida. This post originally appeared on Medium at https://link.medium.com/jx9LiZUmI7, and is re-posted here with the permission of the author. 

Categories: Jandoli Institute, Media

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