A Deeper Look at 'Michele's List' of Independent Local News Sites Reveals a Gloomier Picture | Street Fight

A Deeper Look at ‘Michele’s List’ of Independent Local News Sites Reveals a Gloomier Picture

A Deeper Look at ‘Michele’s List’ of Independent Local News Sites Reveals a Gloomier Picture

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After taking a second, closer look at “Michele’s List,” I’m more worried about independent community news sites than I was last week. I got gloomier when I graphed all the  startups based on their revenue.

This is what I saw:

Majority of news sites stuck at lower revenues

More than two thirds of the sites are weighted toward the wrong end of the chart. I was surprised to see that more than half of them generate only $50,000 or less in revenue, hardly enough to run a “Ramen-noodle”-type operation. Only 14 of the 80-some sites produce revenue in the ranges from $101,000-$250,000 to more than $1 million.

Just two months ago, a community publisher on “Michele’s List” who was generating $150,000 in ad revenue on his two editorially respected platforms in suburban Charlotte went out of business. He was David Boraks, who closed down his Davidson News and Cornelius News because he couldn’t attract enough advertising from local businesses — many of  whom preferred to place their marketing messages with Google and Facebook.

If $150,000 isn’t enough revenue to make it at two clustered community sites, then only 20 and possibly fewer of the 90-some platforms on “Michele’s List” may be certifiably sustainable — or less than one quarter. One quarter: That’s a scary number because 35 sites are at least five years old; time enough, I would guess, to develop best practices. Boraks started Davidson News in 2006.

The issue goes beyond “Starting a New Business 101” — it’s the increasingly urgent question of whether most Americans have access to enough information to make democracy work at the community and neighborhood levels. Local digital sites continue to proliferate, but how many of them tell us what we want and need to know about where we live?

As of May 29, when the Davidson News was closed, the Town of Davidson (pop. 11,750) in metro Charlotte’s North Mecklenburg County has been without a reliable sources of local news. Davidson is the home of Davidson College and, despite its relatively small size, wrestles with fair-housing and other diversity issues which Boraks’ site covered. But wait, what about Facebook? Well, here’s Davidson’s page on Facebook. A featured news item is about the Davidson Committee on Aging “hoping to establish an organization to help older adults ‘age in place.'” Thank you, Mark Zuckerberg and your team, for helping to strengthen the senior community in Davidson.

Michele McLellan, the diligent monitor of independent digital news platforms who compiled “Michele’s List,” has produced a follow-up analysis on the “value of professionalizing ad sales operations at news startups.” McLellan did her report for the Tow-Knight Center for Entrepreneurial Journalism at City University of New York, which collaborated with her on “Michele’s List.” The study details “a number of [best] practices” that she found among 22 community sites, including ones that were not part of “Michele’s List.”  McLellan highlighted three best practices:

  • “Professional sales staff: Hiring a sales rep or bringing on a partner to focus on revenue may prove critical to many operations. … Ask David Boraks. ‘Finding a full-time sales person earlier would have made a difference,’ Boraks said. ‘We tried. We couldn’t find the right person who could work for us for what we could pay. They were six-figure persons…’
  • “Realistic rate structure: A rate structure has to reflect revenue requirements of the site and it should be consistent.
  • “Avoid CPM pricing: Successful sites have developed a following that enables them to charge premium rates. Most favor multi-month contracts. … Sites that rely mostly on CPM (cost per 1,000 impressions) or network rates, struggle.”

McLellan doesn’t say how many of the 22 community sites in her report have actually professionalized their sales. But my look at the spreadsheet accompanying the report shows that 11 of the sites generate revenue that doesn’t appear to be enough for sustainability. The 11 sites reported revenue in the range of $100,000-$200,000 in 2014. I don’t see how a site with revenue even at the high end of that range could pay for a professional sales staff — even if the “staff” is just one person — plus a publisher, reporter, freelancers, office-equipment-miscellaneous expenses. All these expenses would surely add up to more than $200,000.

I asked Kelly Gilfillan, co-founder and CEO of Home Page Media Group, whose four news sites in suburban Nashville are in the $501,000-$1 million tier on “Michele’s List,” how important McLellan’s best practices in sales were to her operation, which is in direct competition with news media giant Gannett’s Nashville Tennessean:

The first two people we hired were straight commission sales professionals,” says Gilfillan. “It is important, if you can, to go straight commission at the beginning so that they do not cost you unless they sell. I am still using straight commission in year six. On potential advertisers, we made a list of targets and that list has changed over the years. Our goal this year was to get in front of as many agencies as possible as we try to broaden our customer base to more stable large-budget advertisers. On rates, ours have always been monthly and we find that our small business owners like that for budgeting purposes. It can be more challenging when dealing with an agency who is used to a CPM model but we can usually overcome any objections.
 
 “The decision to hire a sales professional directly correlates to the business strategy you have in place.  Do you want to stay one site?  Are you in growth mode vs. maintain mode?  If you want to grow beyond where you are, a sales professional is a logical next step.”

I put the same question to Scott Brodbeck, founder and CEO of ARLnow’s four sites in Northern Virginia and the District of Columbia and one of the publishers in McLellan’s 22-site study of best sales practices:

“Having professional, full-time sales help is key to growing revenue,” said Brodbeck. “We did okay for awhile with advertisers approaching us directly, but that will only get you so far. You need an active sales and client support effort. Having a well thought-out rate card based on market pricing and effective advertising options also helps greatly.

“We could have kept running ARLnow without a salesforce. But we could not have expanded. I do think that if you have great content and a big audience, that you will attract smart advertisers to reach out to you.”

Brodbeck did not participate in the 2015 “Michele’s List” survey. His sites are in the $251,000-$500,000 revenue range.

Tom GrubisichTom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of hyperlocal news network Local America, and is also working on a book about the history, present and future of Charleston, S.C.

4 thoughts on “A Deeper Look at ‘Michele’s List’ of Independent Local News Sites Reveals a Gloomier Picture

  1. Tom, your article doesn’t ask the obvious question – with or without a professional sales staff, is ad sales alone sustainable at the hyperlocal level? Platforms like Facebook and Yelp focused on engagement FIRST and monetization second. Hyperlocal publishers are missing out (in my humble opinion) on their biggest strength – that they should have very high search authority in their local community – after all, how many other sites are adding fresh, new and compelling content daily? But they aren’t taking advantage of this authority to be a destination for “intent based” searches by consumers. Engagement is critical to their success and their ability to monetize their site with local businesses.

    1. Scott, I should have made it clear that the baseline for the community news sites under discussion was a credible level of editorial quality. That’s what Michele McLellan uses as a major criterion for her list.

      1. Tom, I’m also assuming that the publisher has high quality to begin with. This discussion is so parallel to what I’ve seen in the software community for 25+ years. The argument that “great software will win” – it’s just not true. There’s tons of examples of mediocre software that has great market acceptance. It’s the same with local publishers. Great content is not enough. There needs to be engagement, and it’s clear it won’t be just from the articles and ads. In other words, my claim is that even with the best ad sales person in the world, the hyperlocals will still struggle, because the ad isn’t the selling point of their site. It will generate *some* revenue, but not enough for them to grow and thrive.

  2. An interesting piece. But I would say the problems are even deeper. Even though Michele’s report leaves out significant players and her report is flawed, it points out that these digital only plays are having trouble making money but the issues when you look at the legacy media properties that have digital (properties) websites, most of them are in the same boat or worse and their expenses are significantly more. There are many Newspaper websites that fall into those same categories when you just look at their digital revenue. And the percentages of where they sit revenue size mirror the above report. There are very, very few that are exceeding the $1mm in true digital on their property revenue and yet their traditional revenue is eroding very rapidly.

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4 thoughts on “A Deeper Look at ‘Michele’s List’ of Independent Local News Sites Reveals a Gloomier Picture

  1. Tom, your article doesn’t ask the obvious question – with or without a professional sales staff, is ad sales alone sustainable at the hyperlocal level? Platforms like Facebook and Yelp focused on engagement FIRST and monetization second. Hyperlocal publishers are missing out (in my humble opinion) on their biggest strength – that they should have very high search authority in their local community – after all, how many other sites are adding fresh, new and compelling content daily? But they aren’t taking advantage of this authority to be a destination for “intent based” searches by consumers. Engagement is critical to their success and their ability to monetize their site with local businesses.

    1. Scott, I should have made it clear that the baseline for the community news sites under discussion was a credible level of editorial quality. That’s what Michele McLellan uses as a major criterion for her list.

      1. Tom, I’m also assuming that the publisher has high quality to begin with. This discussion is so parallel to what I’ve seen in the software community for 25+ years. The argument that “great software will win” – it’s just not true. There’s tons of examples of mediocre software that has great market acceptance. It’s the same with local publishers. Great content is not enough. There needs to be engagement, and it’s clear it won’t be just from the articles and ads. In other words, my claim is that even with the best ad sales person in the world, the hyperlocals will still struggle, because the ad isn’t the selling point of their site. It will generate *some* revenue, but not enough for them to grow and thrive.

  2. An interesting piece. But I would say the problems are even deeper. Even though Michele’s report leaves out significant players and her report is flawed, it points out that these digital only plays are having trouble making money but the issues when you look at the legacy media properties that have digital (properties) websites, most of them are in the same boat or worse and their expenses are significantly more. There are many Newspaper websites that fall into those same categories when you just look at their digital revenue. And the percentages of where they sit revenue size mirror the above report. There are very, very few that are exceeding the $1mm in true digital on their property revenue and yet their traditional revenue is eroding very rapidly.

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