Imagine a time in the near future when your news organization is once again paid by local businesses in spades. Not for ad space — that ship has long sailed — but for myriad other business services: branding, sales, staff recruitment, IT and accounting, just to name some broad categories of help that companies need right now and always will.
The opportunity is vast. New entrepreneurs especially struggle to cobble together best-in-class services to get their company running like clockwork. It’s no wonder more than half of new businesses fail in the first five years.
Making money is all about solving pain. Legacy newspapers can be the hero again: More than anyone else in their local markets, they still have the trust cred, the Rolodexes, and the in-person proximity to gain a competitive advantage.
They just need to summon the imagination, the willpower — and what the late innovation guru Clayton M. Christensen called being “discovery driven.” Through a willingness to experiment over the next three years, newspapers can once again harvest the cash they need to grow.
Here’s how they do it.
Reporters and editors have always been quick studies. Name an issue facing a community — a proposed zoning law, hospital budget shortfalls, school attendance woes — and within a few days these news professionals are asking the relevant questions and pointing the community to the right solutions.
Publishers, you don’t need an MBA to understand the rudiments of business. A former reporter myself, even before I earned my own degree in business I founded a video production company and learned by doing. If I can do it, anyone can. Interview the business owners in your community, find out what they’re struggling with and imagine ways to bring them help.
Vet the best third-party products on the market — payroll platforms, cybersecurity tools, staff recruitment services, to name a few — and resell them under your own trusted brand. Negotiate real margin, pass some of it back to the customer, and become something your local chamber of commerce never could: an actual one-stop shop for local business.
Here’s the part most publishers get wrong: They try to build B2B innovation inside the existing organization, usually under the ad department. It can’t survive there. A personal example: In 2010 I sold my production company to a publisher who aimed to sell digital video ads about the time YouTube was taking off. But his own ad reps resisted selling the new service. That’s what Christensen found companies built around an existing revenue stream naturally do.
Christensen’s famous 2000 book, “The Innovator’s Dilemma,” spotlights a workaround: When the disk-drive company Quantum Corporation needed to chase a smaller format, it spun off a separate entity — Plus Development — with its own executives and facilities. The company funded Plus by selling a minority stake. Plus went on to win the new market segment, while Quantum proper declined. Quantum later bought back the rest of the company and made Plus Development the new center of the legacy company’s enterprise.
Newspapers should follow that playbook. A new business-services unit, separate from the ad department, needs its own reporting line, its own incentives and, ideally, its own legal structure — a true “skunkworks” operating adjacent to the newspaper. Let the new venture prove itself on its own terms. Offer it resources, but don’t try to police it. Once it has succeeded, bring it into the fold and let it be the main driver of year-over-year revenue increases.
Winning isn’t about protecting the legacy ad product at all costs. It’s about increasing the year-over-year revenues of your total product mix — while also making a profit.
Newspapers will only be able to increase the number of full-time journalists again when they serve up something new to local business. After all, it’s always been B2B revenue that powers the news, especially in smaller markets. But advertising alone no longer feeds growth. Subscription fees, nonprofit “ecosystems,” tax breaks and class-action lawsuits won’t fill the gap either, at least not for long.
It’s time for newspapers to be discovery-driven, to “follow the money” on the business side — and dream big again.
Just imagine.
