Vouchification

I am disappointed to announce that the Chicago Independent Ad Network will cease operation on April 30. This unfortunate outcome is the result of two basic facts: there were not enough sales to pay for continuing operations and not enough outside funding to keep the network in operation.

Launched with a $50,000 of funding from of the Chicago Community Trust last October, ChiAd was a limited experiment and did not receive a second round of funding. During this six-month period, the ad network made sales calls to close to 1,000 local advertisers and agencies. ChiAd made some placements in its first six months, but the network’s sales were not significant enough to pay for the continuing sales and marketing efforts necessary to keep growing ChiAd’s presence in the marketplace.

The Trust’s generosity and the time and patience of our publishers did provide us with some valuable feedback. Among the lessons learned about the current state of digital ad sales by our six-month mark:

• Because we were a completely new entity with no track record, most advertisers would need to run a small test campaign before making a significant investment. But before they could run a test campaign, most advertisers needed months to divert ad spending from other campaigns.
• Larger advertisers, such as those with a regional or national focus, felt ChiAd’s one million monthly impressions did not make a big enough impact in a market with over 500 million monthly impressions.
• Despite the high net-worth audience our network attracted, our $12 CPM price point was considered too high for many local advertisers.
• At least in Chicago, digital ad space is usually sold in one of two ways: As an add-on to another legacy media product or through another reseller like national ad networks and exchanges. From our experience, only the largest media outlets in Chicago have digital ad sales operations that do the same kind of work as legacy media sales forces, such as making regular sales calls and building a pipeline of leads.
• From our limited experience, there is a wide gap between the investment larger, national brands are making with digital advertising and smaller and medium-sized businesses are making in digital. Since regional businesses were our target, the fact that many sales calls needed to begin with customer education slowed us down considerably.
• Many advertisers have already begun to move away from purchasing straight display and are looking to link their ad buys to data provided through retargeting and other cookie-based systems. Available to only the largest advertisers a year ago, these tools are being pushed down to regional and local advertisers quickly.
• Many advertisers and agencies are not interested in seeking out publications for each targeted demographic or psychographic, but would like to have a single point of purchase for all digital ad spending. This may seem elemental, but it suggests that the day of ad networks are passing and that the future is with ad exchanges.

My personal opinion is that there is still potential for local advertising collaboration, but it would have to be conducted as part of a larger operation. In a market the size of Chicago, mass and momentum is critical. Many of the lessons learned above could have been surmounted if we were backed by more resources and existing sales relationships.

Finally, I am grateful for the time and participation of all of our publishers and the advertisers who chose to invest in ChiAd. Thank you.

I come not to bury the Chicago News Cooperative, but to praise it. And if you take the big picture view, you should too.

There’s a lot of schadenfreude going around the news business about CNC. The mostly former Chicago Tribune gang led by Jim O’Shea broke a lot of china by quitting their old jobs and by striking out to create a competitor. News people – that goes for both journalists and businesspeople – tend to be a pretty conservative bunch. This sort of behavior would draw a yawn in the technology world, but the CNC folks did a lot of verboten things in their brief time on the scene.

From any perspective, CNC’s work should be viewed as a great thing. I don’t think I’m biased because I ran a brief joint venture with CNC, Early & Often, because the people at CNC took so many risks that most in the news industry would never even consider, let alone actually do. They got some big things wrong, as others have pointed out, but I’d wager they learned more about the realities of the news business in their two years than most people in news do in ten.

First, the praise:

1. A small newsroom can write compelling content in a big city.

Say what you will, and I know there will be lots of nay-sayers on this point, but I’m leading with it for a reason: From the very start people in Chicago government knew who these guys were and responded to them as if they were a credible news publication. As someone who’s been building my own publications, I can tell you that trick isn’t easy. (“Um, so who are you with? Where’s that?” is a common sentiment.)

On the government watchdog side they did great things. I’ll say it again: The stuff they wrote for Early & Often was awesome. Total wall-to-wall coverage of the Chicago 2011 election. That sort of thing didn’t exist before. Ever. Outside of E&O, I’m convinced their coverage of Police Superintendent Jody Weis and the department’s troubles helped push Rahm Emanuel to make Garry McCarthy’s big changes. And while it wasn’t comprehensive, CNC made a real effort to cover Chicago Public Schools, a beast that requires a squadron of reporters to cover completely.

All of this was done with less than two dozen reporters and editors, not all of whom were full-time. All original content. Not aggregation. Original.

2. There’s room for risk-takers in news.

I hope, hope, hope that people in news take this to heart. There are a lot of people in news that are going to look at CNC and say, “See? It can’t be done.” This is idiotic and similar to saying the same about tablet computers and the Apple Newton circa 1993. The folks at CNC did great work, they just didn’t get all the pieces right. CNC should not be judged as a failure, but as a trial that didn’t work out.

The biggest problem, as I see it, is that CNC would never had happened if Jim O’Shea had not put his personal reputation, relationships and gravitas on the line. It was only because of him that people like Jim Kirk, Jim Warren and David Greising would have been attracted to this kind of project.

Risk taking in the news industry, as I see it, has been stifled because it has become overly professionalized, leading reporters and editors to believe they all require the comfy trappings of a big, stable, profitable company, not a rag-tag entrepreneurial effort. Where most reporters forty years ago came from second-rate colleges (if at all), graduate J-schools abound today, teaching every student they should be at the New York Times (and really, the NYT of 1995, not the one of today).

If the news industry is going to get out of the crapper, it needs to start with scrappy reporters and editors willing to take big risks with their salaries and livelihood. O’Shea’s connections provided a lot of cover for the folks at CNC, mitigating their risk, but future innovative news efforts are going to have to be accomplished without people like O’Shea.

And now, the bad stuff.

1. CNC showed that news is a business, not a vocation.

Except for some isolated cases, there is a core, basic problem with the non-profit news model: Your master is not who uses your services, it is the people that give you your money.

This is made worse by the fact that news consumers are finicky. They require a great deal of care and attention. In the non-profit scenario, they only way a publication can pay adequate attention to the needs of news consumers are if the needs of donors are so satisfied that they give you more than enough money. Don’t believe me? Ever wonder why WTTW rolls out those ghastly classical music-lite shows during pledge drives? Donor pressure.

Jim O’Shea says he stopped fundraising months before the closure, when he saw the Sun Times purchase as his CNC’s potential exit. But what if CNC were a for-profit organization? Would he have stopped collecting subscriptions once he saw a possible sale? Jim O’Shea is not at fault in this case: it was the non-profit model, which took focus away from paying readers and onto big pots of donor money.

It should also be noted that CNC started off as a collection of journalists, not a single businessperson among them. Some of them had covered business or dealt with corporate budgeting in their previous jobs, but that’s far from being a slave to the bottom line for years on end. Just as there’s a discipline to crafting a strong lede, there’s a discipline to knowing what costs to avoid and which to incur. It comes with experience.

This is not to say that journalists cannot be successful businesspeople. Jeff Jarvis points out that most don’t want to (And then there’s Josh Topolsky and Josh Marshall). To be successful in the news business you have to have a single-minded, undistracted focus on running your business. CNC’s business manager was also the managing editor. That’s too much distraction for anyone.

2. The NYT isn’t going to save anyone. (But we didn’t know that two years ago.)

Let’s zero in on an important figure: $15,000 a month. That’s how much the New York Times was paying CNC for their news coverage. At the end, when things were getting tight, Jim O’Shea reportedly attempted to get an fee increase from NYT and NYT said no. More than anything, this says the New York Times clearly thought through the value of CNC coverage to their publication’s profitability, and they decided it was a mere $15,000 a month. $180,000 a year.

That may sound like a lot, but the NYT is an editorial beast. They set all the rules with very specific copy and content requirements, and if one of their reporters is covering an issue, they’ll go with their reporter rather than yours. And still, CNC, or Bay Citizen or Texas Tribune would have to fill the content hole with something unobjectionable to NYT. That stuff gets expensive. You can’t do it with just one $70k editor and two $40k reporters.

The New York Times is a for profit business, and despite its giant Mexican bankroll, it is not in the business of “saving journalism.” It needs to save itself first.

But we didn’t know that in 2009, when CNC was first announced. It seemed like a pretty smart play at the time: Leverage the New York Times brand to build something good in Chicago. What gradually became clear though, was that the NYT audience in Chicago wasn’t a big enough platform to leverage, and meanwhile, $15,000 a month was not paying enough bills.

3. Too many stars on the team weigh it down.

It is unbelievable how many good reporters and were at CNC. Really good.

But a roster of star players can sometimes not equal the sum of its parts. When you have so many great, great people, there’s fewer people on the team that feel the need to prove themselves. Who becomes the breakout player? And oh, yeah, then there’s the issue of salaries and egos – although from all accounts, I’ve never heard anything about outsized egos at CNC. But still, when there’s a lot of deference going on, who’s really pushing hard to do the new, cool thing?

The talent roster at CNC positioned it be the next big news media force in Chicago. But, the publication never grew to fill those shoes. Really, most of those big names should have been heading big teams themselves (as Jim Kirk now is, as head of Editoral Operations at Crain’s). Had CNC limited itself to one or two great people, and a squadron of cheaper lesser-knowns dying to cut their teeth, maybe things would have turned out differently.

Ultimately, I hope and pray that someone else will take a stab at what CNC tried to do. The space for high-quality content is still wide open and someone could probably make money at it if they were able to pick up where CNC left off.

Yesterday the Chicago Sun Times’ announced they would no longer make candidate endorsements, and I think I can see where they’re going. They want to provide High Church Journalism where the product is utterly essential, credible reporting and analysis. If they get out of the endorsement business, the thinking goes, readers will begin to see them as a totally neutral arbiter with unimpeachable trust.

Most of the commentary I’ve seen on Sun Times’ new policy has been from the perspective of journalists and opinion leaders. What journalist doesn’t love the idea of being raised to an unimpeachable platform? Some lament the loss of the guiding wisdom of a newspaper’s editors. All, including the official editorial published by the Sun Times, view it through the prism of what valuable information is provided to or taken way from the news-reading public.

What it you look at the Sun Times’ new policy through a different frame of reference: Community, trust and how readers perceive those things.

Viewed this way, a local newspaper is much more than just a source of information, it is a central gathering point, a “town square” where new ideas are introduced and old ones are debated. Not many town squares physically exist any more, most have been replaced by online gathering points. But just like olden days, if you visit any spot repeatedly, you quickly figure out who the cranks are and who’s got interesting ideas.

For most of their history, newspapers were relied upon as the chief source of straight news and for interpretation of complex events. The public needed newspapers to explain the world in detail, since radio and later newsreels and television, could not do so in the time allotted. At the same time, at least up until the 1950′s, newspapers tended to be fiercely opinionated. Most towns of any size had more than one newspaper, so people could choose which set of opinions they wanted to follow.

Most people in the news business mistake these choices as political, but I believe people choose their news sources the same way they define their identity. Even today there are people in Lake County who read the Chicago Tribune rather than the Daily Herald because they want to be feel connected to the city center. The editorial policies of both newspapers are similar, and if you live on the North Shore, most of the coverage is the same.

Turning back to the town square analogy, if you keep listening (or reading) the writing of a particular person, over time you begin to hear that person’s voice, full of personality and ultimately, bias. The nature of writing by humans makes this revelation inevitable: All reporters and writers are biased, regardless of their protestations to the contrary.

The chief tenet of High Church Journalism is that bias is bad. Reporters are Professionals, many with masters degrees, who are trained to view all stories from a detached distance. This works well when readers have only a few places to get their information, but given a choice, readers will always gravitate towards the news source that already speaks to their existing identity. When a news source refuses to reveal the machinery behind the curtain, in other words the bias that informs decision-making, readers will inherently become suspicious.

People from Ph.D.s to fifth graders are always asking, “What’s their angle?” when offered something. Inherently, news organizations are constantly offering perspective and information. So readers want to know, “What’s their angle?”

Under any transactional circumstances, when you remove open expressions of bias, you only make the other party search for hidden expressions of bias. You create a distrustful environment and a scenario where conspiracy can suspected.

Ultimately I think the Sun Times would be better served by being more open about bias, by allowing news reporters to express it openly, as they do in the British system. Readers are smart enough to make their own decisions about reporter bias, and I think given the choice, they would prefer the tools to do so.

But because the Sun Times has taken the opposite approach, I think they risk not only losing reader trust, but also eliminating the community around their newspaper. For instance, I know more than a few older African-American readers who refer to the Sun Times as, “The Black paper,” and read it solely for that reason. Without editorial support, what will happen to that community?

I don’t know Playboy magazine managing editor Leopold “Lee” Froehlich, and I’m pretty certain he doesn’t know me. But I know one thing: He’s a whiny quitter.

At issue is this statement he made to the Chicago Reader, and has since been rocketed around the country by Jim Romenesko as emblematic of our city:

I’ve lived here longer than I’ve lived anywhere else. It’s one of my favorite places, but I think it’s sad now to see the state of the journalism business in this town. This was such a great newspaper town, it was such an interesting magazine town. I could see a point where there won’t be any newspapers or magazines in this town. The trend, it seems to me, is not friendly to Chicago. They’re consolidating a lot of the stuff in New York. It’s really hard to be a magazine journalist in this town considering 96 percent of the jobs are in New York. If you get a good job, you really have to hold on to it because there are fewer good magazine jobs or journalism jobs in the city than ever before.

What the hell, Lee? You’re at the top of one the world’s most famous magazines, bestowed with tremendous influence and power within the industry, and yet you talk about “they” consolidating in New York. You speak as if you are some kind of powerless loser, just another cog in the machine that can only take what’s given them.

I suppose that once you get used to a nice salary, plenty of benefits and the cozy warmth of being at the top, you just don’t want to take responsibility for the world you live in any more.

Here’s the thing: Talent and capital goes where there’s opportunity and innovation. What happened in Chicago in the past three years?

• The Sun Times Media Group lost buckets of money before going private. Upon its purchase, new owner James Tyree announced that he was keeping the money-losing company’s ownership in place. No innovation for two years. Just layoffs.
• The Chicago Tribune was bought and placed into a torture chamber by Sam Zell and Randy Michaels. No innovation here. Just layoffs and sad people.
• The Chicago Reader was bought by Creative Loafing and then stripped bare in an effort to pay massive debt payments. No innovation here. Just layoffs.
• Same with Daily Herald, Ebony/Jet, and so on.
• Playboy magazine lost subscribers like that was its job while its format and content remained cryogenically frozen.

But you know who saw growth? The little guys with nothing to lose. 22th Century Media. Chicagoist. Brown Line Media. And a getting big guy: Time Out Chicago. We’re hiring. Perhaps we’re not the big colossus of industry you’re used to, but we’re innovating, which is more than you can say, since your magazine has barely changed since 1990.

Here’s what I have to say to Lee and all of his big media colleagues: Stop whining. Forget about your golden handcuffs. Start innovating.

Because we’re coming for you.

Yesterday Sun Times Media LLC announced it is adopting a metered paywall for the metro daily Sun Times and its suburban papers for $6.99 a month. Paywalls can be good, but judging by the plan’s execution so far, it’s clear that the paywall plan wasn’t entirely thought through.

Half-measures and dithering is endemic at Sun Times Media LLC, especially since it went private a few years back. Not that anyone’s asking, but here’s my prescription to the company’s leadership to turn Sun Times Media back into the great newspaper group it should be.

1. Decide what kind of newspaper you want to be.

It isn’t enough just to have “quality journalism.” Like everything else in this world, “Sun Times” is a brand and as such you need to make it clear to prospective readers what they’re going to get. Choosing what you want to be also provides focus to an organization and makes it clear to the team what’s important.

This means you also have to decide what kind of reader you want to buy your newspaper. It may mean cutting away some legacy properties that were once, or still are important to elements of your team. But once you have focus, your company can get down to making great work out of the limited products you still produce.

We live in a “long tail” world where consumers and readers have a thousand different options for everything they buy. To survive, companies have to produce products and services with a clear value for the consumer. What is the clear value the Sun Times offers to readers who can choose from a thousand different news sources every day?

Right now, the Sun Times is all over the place; the company defines itself in too many ways. A brief, incomplete survey in no particular order:

• Blanket City Hall and courts coverage
• Tons of columnists
• Nationally-known tech writer Andy Ignako
• Nationally-known movie reviewer Rogert Ebert and his reviews section
• Home-grown, but now nationally-known Washington reporter Lynn Sweet because she’s from the President’s hometown
• A group of profitable suburban daily newspapers (at least when you went private)
• A group of money-losing suburban weeklies (ditto the above)

Look at this list! Is there any clear order in here?

Pick something. It means you’re going to have to get rid of some other things, and that choice will be emotionally painful and maybe temporarily economically painful. But to survive in this environment you need to be bold and do great things.

2. Stop the hemorrhaging.

This wouldn’t be a problem if you adequately executed #1, but it has been going on so long it needs to be said.

This whole drib-drab business with layoffs is terrible. Everyone talks about it. And I don’t mean just people in the news business. I mean EVERYONE.

From the outside it makes you look like the weak man on the field and that it’s just a matter of time before you disappear. From the industry-perspective the hemorrhaging warns good people away from working for you, because what kind of future would they have? From the inside of your company the hemorrhaging is so demoralizing as to be crippling. Your employees are asking every day: How much longer does this place have? When should I start looking for a new job?

I’m sure there’s still more losses to come. But really, stop the quarterly layoffs. Figure out how much you’re likely to lose, build in a cushion and cut so you can stay to a path for at least a whole year. Your people need some stability so they can move forward and start building a profitable company.

But also, don’t forget to do #1 first, otherwise #2 just won’t work for you long term.

3. Treat the web like it’s your future.

In case nobody’s told you since you relaunched your website this past year: It’s totally underwhelming. Yes, it’s serviceable, but guys, the design is taken from a WordPress template. It doesn’t demonstrate any real thought put into what special things you offer nor does it have any pizazz. There is nothing about the design that makes it look like a special destination.

And when I say “web” I mean, mobile, email, social media, the whole works. Some ideas:

• Make a cool iPhone app. You could do it on the sly for less than $5k.  Sell it for 99-cents. Instant profit!
• Create a specialized email list for a topic you really want to cover. Like the Bears, or the latest Ebert movie review or breaking City Hall news. Thousands will subscribe. Collect basic demographic info from the subscribers and sell advertising. Instant profit!
• Make a better store for your photography and archives. Sell them as e-books on Amazon for $3.99 a piece. Instant profit!

Also, this is incidental, but I think it is important to tell you: Drop the whole pay wall idea. Read this piece by Clay Shirky. You are trying to escape the commodity news market. But the difference between you and the Times of London and the New York Times is that you are not a first-buy newspaper, for either advertisers or readers. Declaring that you are quality journalism isn’t enough unless the market agrees with you.

If you insist on keeping your current paywall plan, prepare to be ignored by readers and advertisers alike.

4. Go up market.

Getting back to #1, the Chicago Tribune has a clear plan: They want to be the USA Today of Chicago news. Not only Red Eye, but also the Blue Tribune, has become a quick read with sparse in depth writing.

Yes, Trib has their great data visualization/programming team and the occasional investigative reporting, but there’s not much in the middle between the big splashy investigation and the light brush over a topic. If you want to follow something in depth, like say Natasha Korecki’s killer Blagojevich trial coverage, you need to go elsewhere.

It’s not as if the Tribune hasn’t thought about it. Remember the five star edition they kicked around a year back? Looks like they gave up that idea. Make sense since they’re the first-buy newspaper and have more to lose. But you don’t.

And say…How about that group led by John Canning and Michael Ferro that’s talking about buying the Sun Times? Don’t Canning and Ferro sit on the board of the Chicago News Cooperative? CNC certainly knows how to go up market. But because they don’t have your marketing muscle, most Chicagoans haven’t heard of them and so don’t know where to get the good stuff.

Like Tribune, you could have your down-market free paper, let’s call that Red Streak for fun, and your up-market regular paper called Sun Times that’s super thin, charges $3.00 a day and has killer news. You could even fold in the CNC folks to run your up-market publication. Market your new website traffic to people that want to sell to the lakefront and North Shore.

5. Choose a strategic area of news and cover it like there’s no tomorrow.

I know. You think you’re already doing this with City Hall and courts coverage. The trouble is, that it’s what everyone thinks a newspaper is supposed to cover, so readers tune out. You really had something with Hired Truck, but now that Rich Daley has left the Fifth Floor, that one doesn’t work any more. You need to pick something that pervades the city consciousness, is important, full of intrigue, and you can market the crap out of it.

There’s plenty of things you could do, but I’m going to use the upcoming G-8/NATO conference as an example of bringing out the awesome:

1. Assign one reporter full-time now. Get them to start writing two stories a week on the million different ways this conference will affect regular Chicagoans. Jobs created, police coverage, how Occupy Chicago is doing test runs, how big business thinks this will bring Chicago onto the world stage.
2. Launch a pair of websites, ChicagoNATOCoverage.com and ChicagoG8Coverage.com and point them to a special section on your website that contains all your coverage.
3. Eventually, assign a national reporter to start pulling in the international/national angle on how global companies, Washington think tanks, Pentagon staff, Brussels people, etc. are all thinking about and preparing for the conferences.
4. Create an email subscription for free news from the special section. Cold call places like RAND and international national think tanks to tell them about and get them subscribed to the email list.
5. Sell ad space on the site and email list to big, national security companies like Lockheed, TRW, EDS. They love this kind of audience and will pay dearly for it.
6. The week before the conferences, attack them with gang coverage. Get eight people to write the crap out of it from every angle. Be huge. Make coverage partnerships with CNN or MSNBC, Al Jazeera. Show the world how the Sun Times owns that conference.
7. Publish a daily 16-page bulldog paper that is only distributed in the conference zone with nothing but conference news. Sell ads to the big defense companies.

It could be awesome. You have the ability and resources. You would make all Chicagoans proud and we’d want to read you every day because you showed the world how tough Chicago can really be.