Five things you need to know about starting a local news business

1. Be prepared for long hours.  If you’re not prepared to work 14 to 16 hours per day, seven days a week, you’re not ready to start your own small business.  You might not be able to put in that level of time commitment because you’re recently married, or working another job, or have kids, or just have too many  other interests you want to pursue.  I’ve known a lot of small business owners in my life, and most of them put in long hours even years after setting up shop, but all of them put in these kinds of hours when their businesses started.  It’s not something that is unique to doing a local news start up.

2. Plan to keep your expenses to a minimum.  Clayton Christensen, the world’s foremost authority on disruptive business strategies, says, "Be impatient for profits and patient for growth." The more expenses you take on, the harder it will be to obtain profitability.  It should be your goal to achieve profitability within three to six months.  The more people on your payroll — meaning the more partners you have, usually — the more revenue you need to generate.  If you’re local start up consists of more than you and a partner, you’re probably over staffed.  A spouse makes the best partner because then you really need to pay out only one salary.

3. Be prepared to be a jack of all trades. The skills needed to run a local news start up include, but not limited to, reporting, writing and editing news (plus photos and video), ad sales, ad graphics, marketing, community engagement (online and off), bookkeeping, some level of tech knowledge related to servers and content management systems,* the legal issues surrounding content publishing and business strategy and tactics. If you don’t personally have the skills, you need a partner who does.  The skill sets of partners should complement each other so all bases are covered.  It might be possible — if you have all these skills — to start a local news business as a solo operation, but as you begin to have success, you won’t be able to keep pace with the work demands.  Finally, be a learner.  You might have most of these skills, but you won’t have mastered them all.  When I took over The Batavian, I realized that while I had some PhotoShop skills, there was a lot I didn’t know, so I bought books.  I also studied advertising and revisited some of my sales training.  I never assume I know all I need to know about what it takes to run my business.

4. Be able to think and plan strategically.  Starting a local news business isn’t something you do just because you need a way to make a living, or just want to find a way to stay/be in journalism. If your goals are purely commercial, the crassness will show through and you will fail at finding opportunities to differentiate your business from your competitors. And no matter what your market, you will have competitors. You need to understand both the concept of competitive advantage and disruptive innovation. You need to know what advantages your business has over your competitors and how you are disrupting their tried-and-true business models.  You need to understand why readers and advertisers will or do gravitate toward what you do.

5. Be prepared to have fun.  To be successful, you must love what you’re doing.  Running a start up business is hard, frustrating even some times depressing work.  The news business is unique is that you will have hundreds of critics (which is also another reason why you need a clear vision about what you’re doing and why, so you can be confident of your course in the face of criticism).  Your mistakes will be public. Your failures will be public. There will be times when readers publicly denounce you; and, for any of 100 different reasons that have nothing to do with your business, advertisers will quit you.  There will also be days when you wish you didn’t have to work all day.  You’ll miss your loved ones. You won’t be able to keep up with the latest movies, TV shows or music.  You may not be able to go out of town for a friend’s wedding or a brother’s birthday. Starting a business is and must be the whole of your life.  But you know what, running your own business is much better than working for The Man. And if you do it right, you will be treated in your community far better, with greater appreciation and adulation, than you ever received as a newspaper reporter, or any other salaried job.  If you do it right, you will feel deep in your heart that you’re doing something meaningful and important, and that will carry you through any dark hours.

(Credit where credit’s due: Brad Flora’s post got me thinking along these lines).

VCs chasing fool’s gold in funding ‘hyperlocal’ projects that ‘scale’

Over the past three days or so, I’ve had a few conversations about "scale."

If you haven’t dealt much with the IT side of the online world, you may not be too familiar with the meaning of the word in context.  For years, the only time I heard the word "scale" was when applied to server architecture.  You need software and hardware to scale, meaning grow, in order to handle increased traffic demands. That’s the simplest way to put it.

Now scale is being applied to "hyperlocal" start ups.  And the meaning in this context, as I take it, is that a "hyperlocal" business needs to have the capability to expand in multiple towns and neighborhoods rapidly at a very low cost.

I woke up this morning to this tweet from Jeff Jarvis:

jeffjarvis @howardowens But there’s no way to afford one full-time pro from an organization per town or neighborhood. Doesn’t scale.

He was referencing a debate we had on his blog about a new Times/CUNY "hyperlocal" project.  In comments, I offered up a critique of the approach.

In his post, Jarvis wrote:

The Times is working in two neighborhoods in Brooklyn — Fort Greene and Clinton Hill — and three towns in New Jersey — Maplewood, Millburn, and South Orange. In each of these two pilots, they’ll have one journalist reporting but also working with the community in new ways. The Times’ goal, like ours, is to create a scalable platform (not just in terms of technology but in terms of support) to help communities organize their own news and knowledge. The Times needs this to be scalable; it can’t afford to – no metro paper can or has ever been able to afford to – pay for staff in every neighborhood and town. (emphasis added)

In response to my comments, I received a private e-mail from somebody quite familiar with the "hyperlocal" space and funding such projects and he too raised the issue of scale. A couple of days ago, I had a phone conversation with another expert in the field, and he expressed concern that no venture capitalist would fund a "hyperlocal" play that didn’t "scale."

Now, granted, I have an apparent conflict of interest on this topic because I now run a local news project that from the beginning has faced criticism that it will never scale.

Still, I’m convinced The Batavian approach is the only option if you want to build strong positive-margin local online news businesses.

It may be a bitch to "scale," but it’s the best approach to the problem.

The "hyperlocal" approaches that supposedly "scale" don’t scale in one very important aspect: building new audience for community news.

Sure, they might appeal to a segment of the population that is already involved in a community, but they’re not tackling the "Bowling Alone" problem.

In order to build a high-margin business with local online news, a sad fact must be addressed: that local community news is currently only a niche product.  Entrepreneurs need to think about not only "how am I going to appeal to the people who care now, but how am I going to get more people to care about their community so I can grow my audience?"

It’s an exceptionally hard question, but I’m convinced we’re making progress with The Batavian. Increasingly, we’re seeing people involved with the site who were not previously activists in the community, and I’ve heard from some who were not previously regular newspaper readers.

There’s no way around it: Local news is a high-touch proposition.  You need professionals in the community who champion the community and act as evangelists for the Web site. The job involves more than just covering stories or even asking civic leaders to post their own items (and that in itself is significantly hard, continuous work).

The "it’s got to scale" approach is merely repeating the mistakes of local newspapers from the past half-century or more. It’s creating a sterile and disengaged product that does nothing to solve the problems chipping at the foundation of the newspaper business.

The mistake newspapers have made — and Jarvis hits on it in his own post when he says newspapers never had a correspondent in every neighborhood — is that newspapers have becoming increasingly detached from their communities.

As newspapers became more cookie-cutter (and this isn’t just a chain newspaper problem, but it has befallen family-owned papers as well) and the craft of journalism was transformed into a profession, newspapers have simply become less interesting to many of the people they purport to serve. Editors and reporters are often just passing through a newsroom, stepping along their career paths, blwoing into town with attitudes that maginalize real local news in favor of "hard news" and a "take it or leave it" attitude when readers don’t like what they do.

There’s no involvement, no conversation, no agenda for nourishing the community.

(Caveat: I’ve met some publishers, editors and reporters who very much care about and are involved in their communities, but these are exceptional people.)

Meanwhile, increasingly, we’re getting what we’re after in Batavia — people who know our site LOVE our site. It’s a thrill to walk around town, meet people and have them excited to meet me because of what we’ve done with The Batavian.  I had a little fan base when I was a young reporter, but it was nothing like the response I sometimes get in Batavia.

And that’s the excitement and engagement you want (and I’ll say, I think we’re only half way to where we need to be in Batavia) if you plan to grow your audience beyond a niche concern.

A cookie-cutter "hyperlocal" play, with no paid staff in the commmunity and some regional or national brand, just isn’t to get you that level of engagement.

The Web is all about people. Because the Net is based on technology, many people tend to think that technology alone can solve any problem.  But besides Google, what pure technology company has really been successful? Every other success I can think of has been about people, from the personal voice of blog writing, to the real people who power YouTube, to the stunning success of social networks such as Facebook.  People come to the Web to make connections with real people. A faceless technological approach leaves them cold.

The VCs who are funding these supposedly scalable "hyperlocal" solutions are chasing fools gold. They would be better off pouring their money into today’s stock market, or maybe buying a bank. They are investing in products that will never be better than low-margin businesses, even on a national basis — in part because "scale" also means their easily replicatable, which means low-barrier to entry, which means lots of competition and even low margins and more likely no profits at all.

If you want profits, invest in people, not technology.

Topix getting more aggressive in going after local information franchise

I’ve told you before, Topix is not your friend.  They’ve been taking your headlines and links, even your photos, and using them to build a community of people interested in those local topics, your franchise. And all the while, trying to build a local classified network of FREE classifieds.

Now comes word that they’re going after your event listings, your business listings and your movie listings.

So why are you still letting them scrape your headlines and links?

It would be one thing if they were sending you traffic, but they’re not.

Topix wants to own your local information franchise.  How much help are you willing to give them?

To unlock the value of local, treat it like a vertical

There’s been a great conversation on Poynter’s Online-News list about the value and relevance of local news.

What follows is what I posted to the list

Local news is a niche. It’s a vertical.

This is good news for local newspapers, because one of the things the web does best is help you create verticals.

Your local vertical won’t ever achieve 100 percent DMA penetration. That isn’t the goal of any vertical strategy. Being vertical means you reach the people who are passionate about that subject and make them loyalists; and you provide all of the hooks to keep infrequent users coming back often enough. If you do a really good job, you help engender some passion in formerly infrequent users.

To any local news site manager who has spent any serious time analyzing his or her traffic metrics, he knows there is a core group of loyalists who hit his site frequently. This is good news, because it gives us a place to start and gives us hope that local has some value still.

The goal behind a good local vertical strategy is to increase the size of your core audience, because for most local sites the current core audience size is too small for significant revenue opportunities.

Good verticals require great ownership. By that I mean, when you own a vertical, you should be the master of that subject area.

For a local vertical, you should have all the news (the most complete, comprehensive, up-to-the-moment source). You should host all the conversations. You should have lots of video. You should have all the related databases. You should have all the related links, even links to the cross-town rivals formerly known as your competitors (turn them into contributors by linking to their stories and videos) You should have all the advertising related to that niche, and nobody should want to advertising anyplace else because you so own your vertical.

I see too many local news operators coming to the web from a newspaper perspective, and treating their local sites as they treat their newspapers. Newspapers are appropriately and should remain horizontal packages, containing national and world news, crosswords, Dear Abby, etc. A good vertical has nothing it it that isn’t related to that vertical. For a local news site, for example, most of what you get from AP is not only useless, it’s harmful to the vertical brand. And you sure as hell don’t need Dear Abby on your local site. Now, if you can find the local Dear Abby ….

Because you own your vertical, everything you do should be distributable across the web. This gets to Mark Choate’s issue about being part of multiple communities. We can’t guess at all the communities an individual belongs to, so we should help our users customize their own web experience by disaggregating our own content. We should atomize everything we do so it is mixable and mashable.

Distribution helps drive traffic back to your vertical (thereby increasing the odds of finding and converting more loyalists).

Your stuff is going to get distributed anyway, so you might as well control as much as possible the methods and terms of distribution.

There is no reason that distribution can’t carry advertising with it.

Because local is a niche, the local media company formerly known as the newspaper can no longer rely just on local as its core competency, if it wants to significantly grow revenue. It must expand into other vertical areas, thinking well beyond just news, but getting to the interests of people in their community and attracting audience from people who may not care about news, but they really care about high school sports, or NASCAR or growing roses.

And the great thing is — because you’ve made your own content distributable, you can distribute content that fits into more than one vertical across all appropriate verticals, achieving the benefits of scale.