Please stop the insanity. Time to look into your toolbox beyond another special section or photo contest.

If I told you that the audience is the product and the advertiser is the customer — and the newspaper was simply a vehicle to aggregate that audience — would you believe me? Would you hate me? ”

Guy Tasaka, founder and managing partner of Tasaka Digital

I love local media. That's why I’d like to be part of the solution. While many people know me for some of the things I’ve done in media technology, I’m not a technologist. I started my career as a market researcher, a job that no longer exists in the media. I spent the first 14 years of my career as a researcher and strategic planner. We were the original data scientist, business intelligence and analytics people. Sounds way sexier than a market researcher, doesn’t it?

We were trained to look at hundreds of disparate data points and find stories, test hypotheses and give order to chaos.

Why did I give you my origin story? I recently wrote about what I’ve been calling “Local Media 3.0.” It classifies the local media industry into three periods, starting with version 1.0 — the period up to 2005. According to Pew Research Center, the total revenue for the U.S. newspaper industry went from $40 billion to $60 billion in 15 years. Local Media 2.0, the period from 2005 to 2020, saw the total industry revenue fall from $60 billion to $20 billion.

We are currently in 3.0, though many 2.0-period strategies remain in place at most media companies. 

I recently took a deeper look at the 2.0 revenue graph: 

It is literally a freefall. It made me question how this could be, with the greater minds of 7,000 daily and weekly newspapers all trying to solve the same problem of business sustainability and reversing the revenue decline.

It would be too easy to blame the digital platforms for taking ad revenue or to say that we were the victims of changing consumer behavior and fragmented media. More importantly, I think the problem is fixable. 

What is your product; who is your customer?

I recently asked several publisher friends to ask their year 2000 selves to answer two questions: What’s your product, and who is your customer? 100% of editors and 95% of publishers would say the newspaper is the product and the reader is the customer.

Now, fast forward and ask your 2015 self the same question. You might think news and content are my product and the reader is my customer.

I suggest we have spent the past 15-plus years solving the wrong problem because we didn’t understand our business model. The bad news was we were improving at solving the wrong problem and accelerating ourselves out of business.

If I told you that the audience is the product and the advertiser is the customer — and the newspaper was simply a vehicle to aggregate that audience — would you believe me? Would you hate me? 

The newspaper industry lost money on every newspaper sold on a pure cost-of-goods-sold basis. When you factor in newsroom, production, distribution, and sales and acquisition expenses, virtually every newspaper was upside down financially on moving dead trees. All the revenue came from advertising. All that effort was to aggregate the audience to deliver preprints, classifieds, obituaries and public notices.

News was not the draw. 

In fact, news is a niche product that few people would pay for as a standalone product. They were there for the TV guide, comics, sports box scores, movie listings, etc. Newspapers in 1.0 were the one-stop spot to get locally relevant information assembled by a highly trusted and respected source, conveniently delivered to your porch.

So, how did we mess this up in 2.0?

Somewhere along the line came the strategy to chase scale because ad teams wanted to quote big numbers. This took the industry down a rabbit hole of investing in social media and search engine optimization. And it worked until it didn’t. 

It certainly didn’t help that the digital platforms encouraged and “helped” us grow that audience — until they didn’t. What that did was build a giant useless audience for local advertisers. It also didn’t help that all the programmatic platforms came calling to help monetize that giant, locally meaningless audience. I’ve long said this is an industry that is a victim of “death by a thousand revenue opportunities,” and publishers got used to the “free money” as small as it was because it was better than nothing. The programmatic players validated that this growth model was valid, making the new digital core product less valuable to local advertisers.

The other business model that has gained traction in 2.0 is reader revenue, paid content or digital subscription. This is what I believe has accelerated the downward revenue trend in the industry. If our audience is the product and the customer that helped us get to $60 billion in 2005 is the local advertiser, we have successfully shrunk our high-value local audience by putting up paywalls and, at the same time, marginalized the local advertiser base by creating a product that they no longer value.

Reader revenue is a “pick and shovel” industry.

I first heard the expression in 1997 when an industry friend asked me what I thought of the “internet” thing. I responded, and he said it’s a “pick and shovel” industry. He then told me the expression’s origin came from the California Gold Rush when prospectors went to seek their fortunes. Some made money, most didn’t, but the people selling picks and shovels created the real wealth.

Don’t be fooled by the vanity metric of digital subscriptions that many public and national media companies discuss. Unlike the old ABC countable copies, which were audited, scrutinized and standardized, many of the numbers you hear are self-reported. The accurate measure of success is digital subscription revenue; most digital subscription numbers are low-value subscriptions.

Everything that we did in 1.0 is still the answer. Nothing we did in 2.0 has worked.

I started this column with a plea to stop the insanity, so stop what you’re doing and question the underlying problems we are trying to solve. 

Where will the answer come from? Getting to the solution will require stepping back before we can move forward. It will require not spending time building giant non-local audiences that fuel programmatic “opportunities.” It will require heavy lifting and retraining staff to sell your audience, much of which will not be on your owned and operated inventory. It will require using your core assets to help sell media lower in the purchase funnel to your advertisers.

I believe there is a long, bright future. It will require a new content strategy very similar to the old one, prioritizing audience aggregation and original news as a small subset of the overall content mix.

While many media companies have scaled back on content creation and many digital media startups generate very little content, there is a lot of value in curation. In Chris Anderson's book “Free,” which I encourage every publisher to read, he states that 50 years ago, content was scarce, and time was abundant. Today, content is abundant, and time is scarce. 

What to do in 2024

Take big swings! Pick a number, say 50% of your current topline revenue, set a target to get there in two years, and work backward with the initiatives that will get you to your goals. This will force you to only look at big opportunities. 

Be ok with walking away from “death by a thousand revenue opportunities,” and think about how it affects your overall business. Free up resources and expenses by not doing things that won’t get you closer to your target.

Free programmatic money is ok, but consider the time and effort you spend to grow a big, not locally valuable audience. Consider the diminished user experience those programmatic ads and widgets create.

In 2024, you will compete for programmatic revenue against billions of AI-generated, search-engine-optimized page views that cost nothing to create.

At Calkins Media, we initiated the “10th Man Rule” in our digital group. If it sounds familiar, it’s from the Brad Pitt movie “World War Z.”  The rule states: If nine people with the same information all came to the same conclusion, the 10th person would take a contrarian viewpoint.

Rethink everything.

Newspapers have amazing opportunities to leverage their position as the trusted brand in their local markets for the near term. How and what they choose to do in 2024 will require them to look into their toolbox beyond another special section or photo contest. If done correctly, newspapers can be the center of the digital advertising universe in their markets and all that it brings.

Guy Tasaka is a seasoned media professional with a 35-year track record of leading change in the industry. He has collaborated with renowned organizations such as Macworld Magazine, Ziff-Davis and The New York Times, where he honed his expertise in research, strategy, marketing and product management. As the former chief digital officer at Calkins Media, Guy was acknowledged as the Local Media Association's Innovator of the Year for his work in advancing OTT and digital video platforms for local news organizations. He is also the founder and managing partner of Tasaka Digital, specializing in helping media and technology companies navigate business transformations using his extensive experience and forward-thinking approach. Guy can be reached at guy@tasakadigital.com.