20th Anniversary -- The Fine Print
A peek at the key details of publishing a profitable paper.
Thursday, October 9, 2008
Many years ago, a mentor who publishes a great weekly newspaper in Colorado asked me what I was looking for in this business.
I never got a chance to answer.
My back story at the time was that I had founded a newspaper in Missoula, Mont. after college and run it for six years. In 1997 I sold the paper, settled my debts and accepted an employment agreement to work for the new owner as publisher. The guy owned a bunch of radio stations and he knew media– he knew the business so well he fired me six months later.
Mr. Smith (his real name) actually made his attorney tell me I had an hour to clear out my desk. Before I met that deadline, the locksmith was at the front door changing out the security system. I was devastated. And broke. It was a week after I’d drained my savings to buy my first home and a week before my wedding. A couple of blissful weeks in Mexico calmed me down but ran up my credit card. Then I was hard on the job search, thinking about a new venture. Eventually, that led me to a meeting with my friend John Weiss in Colorado Springs where he started asking a bunch of questions about my motives.
He didn’t wait for an answer– he simply offered me some sage advice: The way to make a million dollars in newspaper publishing, Weiss said, was to start with two million.
So let’s just say that I’m– we’re– not in this for the money. The rewards of publishing a weekly newspaper in a small community are plentiful, but they are not primarily financial. To be sure, newspapering can be a very stable business. This issue you hold in your hands is the largest that Monterey County Weekly has ever published. It has more pages than any other in the last 20 years and a fancy schmancy glossy cover. There are a lot of ads from a legion of local businesses in this edition. That’s by design: We offered our clients advertising rates from 20 years ago on big ads to help them help us celebrate this milestone. This is also the most expensive issue we’ve ever produced, and still the price we charge to you readers– zero– has remained unchanged.
I HAD AN HOUR TO CLEAR OUT MY DESK. I WAS DEVASTATED. AND BROKE. IT WAS A WEEK AFTER I’D DRAINED MY SAVINGS TO BUY MY FIRST HOME AND A WEEK BEFORE MY WEDDING.
Twenty years into the project, Monterey County Weekly has very similar goals as in year one. They are values that I share. We seek to provide our readers with a product worthy of their time and attention. This newspaper, if it’s fulfilling its mission, should leave readers better informed, better engaged and every now and then, all riled up. We also offer our advertisers access to the best audience in this community. Chances are if folks found last week’s issue credible and informative, they’ll also pick up this week’s paper. Most of our advertisers are shrewd business operators and successful precisely because they get a good return on their marketing investments. The third goal of the paper is to provide our co-workers with a work environment where they will be challenged and rewarded both personally and professionally.
In most ways, newspaper publishing is very similar to the other businesses in the community. We seek to offer our customers a good product for a fair price and ask them to come back. Like most other enterprises in the community, 2008 has been a down year financially for the Weekly. And like most other businesses in town, we anticipate that we will ride out this economic downturn and emerge in good condition before too long.
In one central respect, however, newspapers are different. The press, as we all know from civics class, is the only commercial sector that is specifically mentioned in the Constitution. In addition to the freedom of assembly and freedom of religion, the freedom of the press is central to the identity and history of this country. Newspapers were granted this protected class specifically so that they could operate free from government interference and hold the powerful and influential to account. That is part of the publishing heritage that we at the Weekly hold dear and try to celebrate.
Of course the irony is that today much of the media establishment has become exactly that which they were set up to cover: powerful and influential companies. Measured in dollars and cents, Monterey County showcases that reality starkly. The daily newspapers in this market are affiliates of a couple of the largest media companies in the country. For years the consolidation of newspapers under ever-larger corporate structures has worked to grow the revenues and profits of those companies. In recent history, attempts to maintain those profits margins have often come at the expense of some of the most experienced local journalists; staff layoffs have become commonplace in the pursuit of profit. Both the employees– and by extension the community– suffer while Gannett and Scripps-Knight Ridder-Hearst-MediaNews (or whoever buys the Herald next) work to preserve shareholder value and retire massive debt.
But according to a study released last year, daily newspapers’ habit of trying to cut their way to higher profit has had the opposite effect. Murali Mantrala, the Sam Walton professor of marketing in the College of Business, and Esther Thorson, director of research for the Donald W. Reynolds Journalism Institute and associate dean for graduate studies in the Missouri School of Journalism, published the results of a 10-year study in April 2007. The objective of the research project was to track spending on newsroom, advertising and circulation at newspapers with circulations under 85,000 and track that data against the companies’ profits.
“The most important finding is that newspapers are under-spending in the newsroom and over-spending in circulation and advertising,” Thorson said. “If you invest more in the newsroom, do you make more money? The answer is yes. If you lower the amount of money spent in the newsroom, then pretty soon the news product becomes so bad that you begin to lose money.”
“By looking at the data, investing in news quality does pay off,” Mantrala said. “It improves circulation and advertising revenues, which are the bulk of a newspaper’s revenues. Better news quality drives circulation, and circulation drives advertising revenues.”
In this tight economy, we at the Weekly completely understand businesspeople making difficult decisions. At the same time, we are heartened that our philosophy of investing in our people and our editorial product while keeping the paper free to our readers seems to be a strategy that might just buy us another 20 years in this racket.
As another man I am fond of quoting told me when I was starting out, “Son, you got to make it survive as a business if you want it to thrive as a mission.”