Daily Voice Reports First ‘Unit’ Profitability (With an Asterisk)
The regional hyperlocal news network Daily Voice says it has recorded its first “unit” profitability for operations covering its 41 sites in the hotly competitive suburban Connecticut and New York market.
The profit — which does not include corporate costs — was a tiny $2,000 for August, according to CEO Carll Tucker. But it comes after the company burned through $18 million in four years and experienced near-death six months ago. Tucker, who reclaimed leadership after the company went to the brink in March, says the profit was no accident: “It came after six months of on-budget performance,” he said.
Daily Voice, of course, still faces formidable challenges — namely, covering its $110,000 in monthly corporate costs. Tucker says the company, based on current performance, should be able to close that gap in the first quarter of 2014.
Tucker is an eternal optimist (“This company belongs to the future,” he told Street Fight Deputy Editor Steven Jacobs in November 2011, when Daily Voice was burning through cash at the rate of more than $300,000 a month). But this time, his crystal ball may not be as clouded. Closing the gap in corporate costs will require Daily Voice to increase ad revenue by 83%. But because of its small revenue base, that only amounts to an increase of a little more than $3,100 per month per site. The network can erase the corporate red ink by attracting an average of two more small ads per month at each site. That’s not nearly as formidable a job as AOL’s Patch — a Daily Voice competitor — faces in reaching the profitability it is promising by year’s end, based on this analysis by TechCrunch.
Tucker maintains Daily Voice’s most important numbers are costs to produce editorial content, acquire ads, run technology, do marketing and rent space — balanced against revenue from advertising and sponsorships. It’s these operations beyond the executive suite that produced the $2,000 “unit” profit. (Corporate expenses include the top leadership, finance and analytics, top-level marketing, tech development and governance.)
“This is incredible,” Tucker said. “We have decreased costs 60% since January 2013, and increased revenue 17%.”
Daily Voice’s performance comes as one competitor in its media-crowded market, Cablevision, picked up its digital marbles and went home. Meanwhile another – Gannett’s print-digital Journal News in Westchester County — cut 11% of its staff. Patch is closing hundreds of its community sites, although AOL has not indicated whether any of them will be in markets where Patch competes with Daily Voice (Fairfield County in Connecticut and Westchester County in New York).
Tucker said despite deep reductions in Daily Voice staff, including reporters and editors, “we have doubled down on news and are providing more of it.” Where Daily Voice staff used to provide “95% of the news,” now editorial content comes from three, often inter-mixed sources: staff, aggregation of outside reports, and contributions from the community. Editorial staffing has shrunk down to 20 reporters and editors (four of whom focus on curation) for the 41 communities.
“What I discovered, and others too, is that the old formula is unsustainable with the available revenue,” Tucker said. “But worse, it produced the wrong product. Our job is to tell neighbors what’s going on. They don’t want long pieces. The new mantra is first, fresh, fast, abundant, various and fun.”
The formula, Tucker acknowledges, is not original (“We picked up a lot of it from Huffington Post”). But Daily Voice’s community bloggers don’t have the same open door that Patch gives its contributors, who tend to be over-represented, at least at some sites, by self-promoting local businesses looking for new customers. “Our blogs are not crowd-sourced,” Tucker said. “We want the mayor, the legislator and the county executive.”
Tucker maintains that the new model lives up to its original mission, when it was founded as Main Street Connect in 2009:
“Our service was and is to create and maintain the digital town green, where all citizens can be heard and businesses tell their stories and hawk their wares,” he says.
Tucker said user numbers show the new content model is connecting with the community. Daily Voice’s unique visitors have increased to 440,000 monthly in the two-county population of 1,500,000. Now, Daily Voice has to convert that traffic into revenue. Tucker has anecdotal evidence that businesses are responding, and there’s the 17% increase in ads and sponsorships since February. But still, revenues are a puny $37,200 per site annually, and this is in some of the most affluent communities in the U.S. Some independent one-off sites around the U.S. are pulling in triple that revenue, and sometimes more, they say. One “indy” that tells me it’s doing quite well is long-established Westport Now, which is squarely in Daily Voice’s market.
To increase revenues, Daily Voice is focusing on three major business sectors — real estate, health and used-car sales. Tucker said the renewal rate for real estate advertising is at virtually 100%, thanks to a news- and data-packed home section that he said Daily Voice has spent three and half years perfecting at a cost of “maybe $1 million.” (The renewal rate of Daily Voices advertising overall has risen from 30% to more than 60% since March, Tucker said.) Partnerships with the market’s many hospitals is generating revenue from community-focused content about popular and highly regarded physicians, patient experiences and institutional philanthropy. Daily Voice is beta-testing used-car ads with three dealers in a new feature called “Auto Mall.” Click-through rates on the ads are being competitively priced with major services like AutoTrader.com and Cars.com.
For all the focus on the here-and-now, Tucker, as always, abides his dream: building a network of as many as 2,000 sites across the U.S. Tucker raised $2 million from his board – including himself – to make it from the dark days of March to “the horizon.” That’s what’s funding the $110,000 monthly gap of corporate costs. Now he’s seeking another $2 million in investment money “to recruit my successor as CEO and create the systems we need to bring in a long-range partner” — and turn the expansion dream into reality.
A big-pockets partner has been Tucker’s goal since he created Daily Voice as Main Street Connect in 2009. That strategy took a big hit as the new regional network failed to achieve early rosy projections and burned through the money that was put up by Tucker and his board.
Tucker still believes in a future that includes that deep-pockets partner who will pay $100 million or more for Daily Voice. But his network’s recent near-death experience chastened him: “We misunderstood what users wanted, and what advertisers wanted and were willing to pay for. Otherwise, we got it right.”
Tom Grubisich authors The New News column for Street Fight. He is editorial director of LocalAmerica, which is partnering with InstantAtlas to develop sites that will present how communities rate in livability. Local America is featured on the Reynolds Journalism Institute’s Pivot Point site.