Pegasus News provides a good model for going local

Lots to like about the neighborhood-centric focus of Pegasus News: a useful and user-friendly site, with interactive maps for categories like homes, garage sales and drink specials (to name just a very few) for the Dallas-Ft. Worth area.

While speaking with Matthew Sollars of News Innovation, Pegasus founder Mike Orren explained the business model behind his ambitious venture and explained why going hyperlocal isn’t enough:

You’ve got to have the hyperlocal neighborhood information in the context of what’s going on in the larger market. There is such a finite universe of people in a specific neighborhood that care enough to go out of their way to look for information and news about where they live, that universe is not enough to sell advertisers. But if you can put that in the context of ‘where am I going to go eat tonight, what’s going on locally in niche areas of interest that I have,’ that’s an opportunity to bring a lot more people into the fold. Then when you put neighborhood information in front of them they’re more likely to engage with it.

Another feature I really like about Pegasus is its commitment to value-added advertising for businesses: direct marketing, highly targeted e-mail blasts and geo-located mobile ads via an iPhone app that Pegasus developed itself.

To provide its news content, Pegasus maintains an impressive roster of contributors, and links to major news sources like the Ft. Worth Star Telegram and  The Dallas Morning News. The next step, if I’m the online producer, would be to add a social networking function that harnesses the power of the site’s 500,000 unique visitors each month and helps build the brand as an indispensable source of news and information.

What good are page views if you can’t monetize them?

Bill Grueskin, Dean of Academic Affairs at Columbia University, has a must-read article at paidContent that supports the position I took in a recent post about how overrated the quest for page views has become:

What good is Web traffic anyway when the online advertising model is so badly broken? …

… It’s troubling that, even as traffic to news sites is growing, their once-lucrative home pages and article pages are displaying house ads or remnant ads with CPMs of no more than $1. At that rate, even a link from Drudge, which could refer 500,000 page views, generates only $500. …

… In other words, even if it’s true that aggregators are siphoning off users from news sites (and it’s pretty clear that they refer traffic to sites as well as drain traffic from them), does it make a big difference in a world of $1 CPMs? …

… The value of advertising online ought to be measured more by engagement than by sheer numbers, that is, more by metrics like time spent or page views per user than by the sheer number of people coming to the site, many of whom may not assign any value to the journalists who generated the content.

Build your community, not numbers

While it’s easy to spot the news outlets that, desperate to survive in the new media ecosystem, stray outside their local focus and engage in an obvious grab for page views, others have realized they must expand their concept of business operations and provide the communities they serve something of value.

And blogging about whatever’s hot in Google Trends isn’t it — that’s just  playing a short-sighted and pointless numbers game. Sure, a site may see a spike in traffic because a blogger made sure to put up a post about whatever was most popular in Google search that day. But to what end? How long until advertisers see the stats for themselves and discover that they aren’t getting the click-throughs those misleading numbers promised, that all those eyeballs were a just an ephemeral occurrence?

WestSeattleBlog.com tries to build a relationship with local businesses by providing free seminars. Men’s Health offers an iPhone app that users can purchase in order to buy its Workouts. While the The Seattle Courant didn’t have the capital to make good on its ambitious vision, its business strategy is worth filing away for future reference:

Beyond advertising revenue

UPDATE: USA Today regrets not charging for its iPhone app.

Paul Bradshaw, who writes for Online Journalism Blog, says forget about making money from online content (which is what USA Today recently announced it will be doing with its digital edition) and focus instead on value-added services:

Bradshaw’s points about newspapers needing to build new revenue streams is echoed in this post from John Temple, former editor and publisher for the Rocky Mountain News:

I don’t think the industry can get there if all it does is try to hold on to its legacy revenue streams and its legacy business. One thing that concerns me is that newspapers don’t seem to be working with local businesses to help them find their own foothold on the Internet and at the same time possibly place themselves in the middle of transactions. This might enable them to find a new revenue stream they couldn’t have tapped before.

And here’s just one example, provided by the Center for Strategic and International studies, of a news outlet that is going beyond advertising for its income:

European companies have also been finding creative ways to thrive in a changing media environment. Norway’s VG Nett, which is affiliated with the popular Norwegian tabloid, Verdens Gang, rivals Google in Norway and has a profit margin of nearly 30 percent. It does this through charging for services such as a $90-a-year weight-loss club, a pay-for-upgrade social networking site and streaming soccer games.

Bringing the news to readers, one app at a time

Writing about the popularity of mobile news and the New York Times‘ iPhone app, Nieman Journalism Lab’s Martin Langeveld suggests that ad sales don’t have to be the only source of revenue for newspapers:

One implication of the small screen, when it comes to news: we may be less inclined to work hard for news by searching, surfing and visiting aggregators, and more inclined to let the news come to us, by whatever means. The challenge, then, for publishers, may be to create apps that deliver custom-tailored news to fit preferences and interests of phone users.

Perhaps the figures Langeveld provides will be the nudge newspaper execs need to focus less on setting up pay walls and more on providing their readers with the kind of value they want, and building revenue streams upon that.

It would appear some are doing just that. Editor & Publisher reports that the new iPhone operating system will give publishers the tools they need for specialized content delivery and advertising:

The new technology has the ability to deliver user-location information at the browser level. For example, when a user accesses a newspaper Web site, the browser knows the user’s location. The newspaper can send relevant content and, more important, relevant targeted advertising within 2 blocks on a person’s location. “This makes local advertising on mobile highly potent with high CPMS,” Howe said.

Second: There is a new capability for publishers to charge for subscriptions or micropayments through one application. For example, a user could be reading about the new quarterback in town and with one click can purchase premium content like an exclusive video interview the quarterback.

Does your newsroom know its community?

Take about a minute and look at Mark Glaser’s 10 steps to saving newspapers in the digital age (via CyberJournalist). And then take note that the thread running through each of these steps isn’t about cutting costs as much as it is about being innovative in the effort to engage the local community.

Because I’m a good netizen, I won’t reprint the short post here and deprive CyberJournalist of the traffic, but I will say that Glaser is right on target in telling news sites to focus on what businesses want, rather than viewing them as an endless source of advertising dollars. And his recommendation to engage the community in face-to-face meetings recalls Gina Chen’s fine Save the Media post on how journalists can create communities of readers.

The last people the news industry needs in a crisis

From Newspaper Death Watch, in its commentary on a meeting of newspaper executives seeking to implement a paid content plan for their websites (emphasis below is mine):

The newspaper industry’s paid content debate sounds more and more like the desperate protests of the music industry when file-sharing began to dismantle its business model. The two industries have some characteristics in common. Both are mature, traditionally stable and highly profitable businesses with predictable growth and high barriers to entry. The people who gravitate to such industries excel at managing costs and limiting risk.

These are the last people you want to run operations at a time of crisis. Crisis demands innovative thinking, fast reaction times and tolerance for risk. One reason we’ve seen so little of this in the newspaper industry is that the people at the top have no capacity for making dramatic changes. The innovation that we’ve seen comes almost entirely from startups or skunkworks operations that publishers have had the sensibility to leave alone.

Thinking outside the paid content box

In his recent post about Journalism Online’s intent in proposing a system for news sites to charge for their online content, Steve Outing notes the absurdity of asking readers to pay for content offered by outlets whose quality has diminished after laying off  thousands of journalists:

The minute paywalls go up on content on the web, all but the most devoted will click elsewhere to find alternatives. Consumer behavior will make an abrupt change online. Brill and his supporters think that newspaper content is so special that bloggers and new news players online won’t match the quality, yet newspaper quality has been sinking badly as thousands of journalists have been pushed onto the street.

Setting aside the issue of quality, news sites that intend to charge for content have their heads in the sand if they think people will pay because “Who else will provide the coverage?”

Plenty will. And plenty are, as Mark Potts pointed out during a panel in Baltimore, titled “The End of Local News? If Communities Lose Newspapers, Who Will Fill the Void?”:

How to outsource your newspaper to India

That’s what one alt-weekly did.  The New Haven Advocate outsourced nearly an entire issue — to India! But what started out as a lark may offer a lesson to newspaper owners and executives:

Call us old-school, but we think good, old-fashioned shoe-leather journalism is worth the price. Outsourcing could certainly fill pages, probably very cheaply, but what’s lost is the very essence of local newspapers: presence. At city hall, the local music club or out on the street talking up average folks, presence is what sets local newspapers (dinosaurs though they are sometimes) apart, and what outsourced news could never replace.

Gawker Media's Nick Denton knows where the money isn't

An awfully provocative comment about the news industry from Gawker Media founder Nick Denton, taken from this Q&A with Advertising Age:

People — particularly if they’re under 40 — have news priorities other than those of the editors of The New York Times or producers of the “NBC Nightly News.” A new tablet from Apple — or last night’s episode of “Gossip Girl” or the adventures of the hipster grifter — is a bigger deal than the latest petty scandal in Albany. You think that’s a damning indictment of modern society and a recipe for idiocracy? Fine. Start a nonprofit to cover all the local-government news you think a healthy society needs. But don’t expect advertisers — or commercially-minded publishers or readers, for that matter — to share your interests.