Bay Area Online News Renaissance: Seven Pointers on the New Business of News

Includes: NWS, NWSA, NYT
by: Ken Doctor

The Bay Area's online news scene is now popping, waking up from a prolonged period of somnolence, and pointing a way toward an online news renaissance across the country.

Friday, we got the official news that financier Warren Hellman's long-planned independent online news operation would get off the ground soon, with $5 million in initial funding, and partnerships with local public radio powerhouse KQED and the New York Times (NYSE:NYT). Hellman says he'll be hiring "dozens of journalists." That news followed the huge success of California Watch's maiden voyage. California Watch, an initiative of the Oakland-based Center for Investigative Reporting. It saw more than two dozen news outlets -- including the state's top papers -- pick up its first big story on dubious homeland security spending, reaching almost two million readers in print and many more online.

Such activities mark a wakening of online journalism in the Bay Area, and I think hold many portents for what we will see in 2010. Certainly, what's happening here has parallels in other cities, but the rapidity of the announcements suggests that we're moving into a serious shift in who produces the news and how it gets to readers. Too early, to re-hang the News 2.0 shingle out -- that's been tried numerous times, but failed to stick -- but clearly something's happening here, and what it is is increasingly clear.

Before we look at seven pointers coming out of the announcements, let's recall the Bay Area context.

The San Francisco Bay Area's short online news history has been an odd one. We out here near the capital of the Left Coast like our reading and like our news. It's a highly educated place, and one that's a traditional great newspaper market, with income levels leading other metro areas. At one point, the San Jose Mercury News boasted the fattest classifieds sections in the country, and those profits helped launched Mercury Center, the first online news site in 1993.

Now more than 15 years later, the online news landscape in the Bay Area is a strange place.

Mercury Center, once a pioneer in the online technology coverage and other areas, is a humdrum newspaper site, with numbers to match. In September, 2009, users averaged 4 minutes, 42 seconds a month on the site.

SFGate, too, one was early out of the gate. Long independent of the paper San Francisco Chronicle, its found an audience, too, but not a huge one. In September, it averaged 7 minutes, 1 second per user.

Craigslist, Yelp, Yahoo (NASDAQ:YHOO), Google (NASDAQ:GOOG), Open Table and a host of others have gotten earlier and deeper traction in the Bay Area, inflicting deeper pain on those two newspapers' print editions and their websites than that experienced by peers across the nation. Meanwhile, their parent companies have been scrambling. Hearst has lost more than a quarter of a billion dollars on the Chronicle since it bought it in 2000, and MediaNews, which bought the Merc and put together the expanded Bay Area Newspaper Group in 2006, has narrowly averted default on the financing it used to grow the company.

Both companies have shed lots of expenses -- including hundreds of newsroom staffers -- over the last several years. In a recent Sunday front-page plea to readers for ideas on how to save the Merc, columnist Mike Cassidy reminded readers that the once-proud Merc had housed 400 journalists as recently as 2000, but is humbled to a staff of 125.

Twin the backdrop of failing metro dailies and these two start-ups, and we can see many strands of the soon-unfolding news tapestry. Here are seven for starters:

  • Reporters are their own brands and can win jobs and audiences quickly, given new umbrella organizations. CIR received more than 600 applications for its 11-person staff. The Chronicle's Lance Williams, who co-authored the award-winning Balco steroids scandal series, was one of those hired. Others staffers came from the Des Moines Register, the L.A. Times, the San Diego Union-Tribune and Milwaukee Journal Sentinel. A lesson for daily newspaper: yes, you can cut costs by letting go of lots of experienced and young talent, but that talent may come back and compete with you.

It's astounding how quickly the California Watch journalism attained legitimacy.

  • Public radio is a logical successor to daily newspapers, as they give up much of their traditional reporting. With fewer bodies able to cover fewer stories, many stories and beats are no longer being covered. Think about it: which other locally and regionally focused news organizations hold similar values to print journos? I'd say public radio news people are the closest, preferring more depth than their commercial broadcast peers. KQED's website is starting to look more news-like and less programming-oriented. That's a trend we're seeing take root nationally, as the Twin Cities and WBUR now read increasingly like newspaper sites, with more multimedia tossed in.
  • Foundations solve the one fundamental problem that's needed solving: M-O-N-E-Y. Yes, the Internet ad and reading revolutions have changed everything and caused a press emergency. As many have pointed out, though, it's not news-reading that audiences are forsaking; they're just abruptly changing a business model that long seemed stable. Sure, journalism can be better done (and web innovations like user-gen content, blog tools, multimedia, commenting, etc. are part of that improvement), but we've not seen a thumbs-down vote on journalism. Plain and simple, when the business models shifted, and then the recession took a hammer to what remained, the 50,000 U.S. newsroom jobs could no longer be justified. The result: more than 10,000 jobs lost in the last two-plus years alone. The readers want to read the stories, and publishers and aggregators would like to run the stories, but someone has to pay journalists to report and write them. So when foundations (and angels) move to bridge the gap, they get the supply system back going. The Knight, Irvine and the Hewlett foundations, among a growing list of others, are re-energizing the supply.

It's as if the journalism system that we knew has had a heart attack. It survives, but we're seeing new distribution vessels forming to replace those that withered.

  • For daily newspapers, the growth of alternative journalisms is both a promise and a threat. It's a promise of getting high-quality, low-cost (California Watch charged large metros just a few hundred dollars, though it is reviewing its business models going forward), without having to pay all the high-salaried, troublesome reporters. It's a threat that some outlets like Hellman's, MinnPost, Voice of San Diego, etc., will simply bypass local newspapers and find ways to reach readers directly, and through other partners. Put another way: Downsized dailies have left themselves newly vulnerable, exposing their flanks. Their dominance, built in part on sheer size, is waning.
  • The old fraternities are fraying. Not long ago, we though of the New York Times as the same kind of company as the Mercury News or the San Francisco Chronicle. No longer. It's a global media play, and of course, it needs to seek new markets and audiences and low-cost content -- all to better amortize the high, basic costs of doing business. So, look for the Times and the Wall Street Journal -- each of which get no more than 5% of large metro markets in print -- to see the shaken regional news marketplace as a huge opportunity. In Detroit, for instance, as the Free Press and News have cut positions and coverage, they've opened greater opportunity for the Journal to expand its auto industry-centric coverage.

Similarly, look, finally, for rapid change in the traditional wire services over the next couple of years. Parsing the value of the New York Times News Service in this shaken and stirring news marketplace, for instance, is a lot harder than it used to be.

  • It's a back-to-the-future revolution, in part. It's got fancy, digital clothes, but this revolution may bring us back to the time when cities like San Francisco had a half-dozen papers -- not just monopoly dailies. Our post-heart-attack digital distribution system opens up lots of routes for new aggregation and aggregators, to knit together all these multiple inputs, and deliver them to our iPhones, laptops, plastic newspapers and probably even niche print.
  • Though the elders may be flummoxed, youth will do the serving. Hellman's project also includes a partnership with the University of California, Berkeley Grad School of Journalism, tapping the labor of as many as 120 students. If you remember internships and your first jobs, you'll recall how eager and passionate new talent can be. The school has already done some impressive experimenting with such sites as

There are tens of thousands of journalism students across the country. Appropriately paired with experienced journalists, think what they may be able to produce.