A New Way for Local Newspapers to Make Money

March 7, 2010

Our last few posts have concentrated on defining the major problems facing local newspapers. Now it’s time to start looking for solutions.

As I’ve already stated several times in the last few weeks, local newspapers are in desperate need of a new business model. While ads may still be a part of revenue for a time, they aren’t going to keep the shop open on their own. Local newspapers need to find a new way to make money. In this post, let’s look at one of the possibilities.

Major social networks are now making money by selling access to their large scale communities to businesses. Online social networks foster connections between people to create communities. They then can use these connections to stir up excitement in these communities about a product, a service, or a cause. Companies are now beginning to pay for access to these networks. This is a totally new way of monetizing media which is quite different from traditional advertising. Rather than selling a two-dimensional block of ad space, social networks are selling access to a three-dimensional web of connections between people.

But the great thing about local newspapers is that they already have their own community built in! Unlike the big guys, they don’t have to go through the years of work necessary to build a network. When we built our own online social network, the Sales Roundup Podcast, it took years of blogging and emailing to create that community, to foster a “tribe” as Seth Godin would put it. But a local newspaper is already a tribe. The journalism and other local services provided by local newspapers have already been creating and maintaining connections between the citizens of individual towns and boroughs for years. They already have something—just by coincidence—which is becoming more and more in demand every day.

Here’s just one example of the rising demand for access to social networks: I recently had a chef from a small town restaurant ask me just how he could use social networking to increase his profits. “Well,” I said, “first you’ve got to establish some sort of presence on the web. Then start writing a weekly blog about food, giving cooking tips or interesting tidbits about rare varieties of mushrooms or cheese. Do this for about two years and create opportunities for people to respond back with polls about their favorite dishes and a form where they can make suggestions for new ones…” and I kept talking his ear off with a thousand other web 2.0 savvy ideas until he said, “Wait! I can’t do all that! I’m a chef; I spend all of my time cooking, and the little time I have left is used up doing all of the other things a small business owner has to do. Even if I were a writer, which I’m not, I wouldn’t have time to scribble out a blog every week.”

But everything that this small town chef lacked, is exactly what local newspapers already possess: a preestablished network of people right in his neighborhood and a group of trained professionals whose core competency is writing. His town’s local newspaper already has both people to write his blog and an entire community of locals to read it.

Jeff Jarvis, Associate Professor and Director of the Interactive Program at CUNY has said the following about the transition that local news must make: “Most important, I think, is that we won’t be selling media to merchants — banners ‘n’ buttons — so much as we will be selling service.” I completely agree. Local newspapers need to move to a service business model, selling access to their community resources and language skills to local businesses. In a sense this is what major social networking players like Facebook are already doing, only they’re doing business with major corporations. Local newspapers just need to shrink this model down to the appropriate size, before someone else does it first.

Think Outside the Newsstand,

{ 1 comment… read it below or add one }

1 Dave Holroyd March 27, 2010 at 12:21 pm

There will be another strong competitor in the local news market: the network TV affiliates. I was speaking to the technology guys at Hearst Argyle recently (they own 13 network TV franchises) and asking how they see the evolution of network stations as more content & viewers moves online (hulu.com). They see their value added in more local content, especially local news.

It’s also true that news content doesn’t just mean print here or video there. Both are components of any local news stream. As for the monetization of content, no workable model has emerged yet. Classified ads? Gone to Craigs List. Real Estate ads? MLS links. Display ads? You’re joking, right?

Something will emerge. Maybe it’s based on retail coupons (why print them, just show them on your 3G phone), maybe it’s review based local service advertising/listing, who knows, but what’s certain is that it’ll be online, local and different.

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