News and publishing: Inverse scale?

56 percent, 36 percent, and 30 percent — the share of large, medium, and small news organizations that have experienced lay-offs since January 2017, according to Pew. These are interesting numbers that describe the inverse scaling problem in news. After the New York Daily News cut half its staff yesterday, New York is facing a lack of local news coverage. Yet Tronc, the owner of the Daily News, said it will concentrate on breaking local news.

The problem is, the Daily News will not maintain beats to uncover news, rather it will simply focus more on covering stories when they break. That’s a reactive approach when a proactive, deep-digging press is needed to ferret out real news, you know, the issues that impact our lives, policy-making, and other material issues citizens face every day.

Back to the numbers. If large papers are being cut deeply, with 56 percent suffering lay-offs in the 16 months of The Pew Research Center’s study of newsroom attrition, perhaps smaller papers are the way to go. That is, focus more on local activity and leave break non-local news to bigger news organizations. Only 30 percent of smaller papers were hit by lay-offs, though it is likely because they have been cut before. However, they may have stabalized as publishers realize there is a lot of money is well-made local news and information.

The net has inverted news coverage while the newspapers and many online organizations blithely focused on fewer traffic-driving topics, allowing smaller news teams to do a better job.

Every community — physical and virtual — needs coverage. Launching and running a publication is never easy. Local or specialized coverage can be affordable, but not on the traditional newsroom model that attempts to provide a global view of events. Beat-based tenacious reporting uncovers news people need. Apparently, that’s working for smaller papers and sites that don’t try to implement news gathering in the industrial model. Local craftspeople make local news.

 At minimum, the smaller papers (which include their on- and offline offerings) seem to be finding an equilibrium between the market they cover and the cost of covering it. More small, very targeted news sources can respond to our crisis of confidence in media by returning to the news’ primary function: Explaining what is happening instead of mostly concentrating on who is winning.

Larger newspapers – those with circulations of at least 250,000 – were more likely than smaller-circulation newspapers to have experienced layoffs between January 2017 and April 2018. Nine of the 16 newspapers with circulations of 250,000 or more (56%) had layoffs. By comparison, that was true of 16 of the 44 newspapers with circulations between 100,000 and 249,999 (36%) and 15 of the 50 newspapers with circulations between 50,000 and 99,999 (30%).

Source: About a third of large U.S. newspapers have suffered layoffs since 2017


GoDaddy doubles down on SMB social commerce

GoDaddy has acquired Main Street Hub, a social marketing tools and services company, for $125 million in cash with $50 million in  performance incentives, according to TechCrunch. This is interesting for several reasons:

  • SMB marketing must evolve to support on-demand and in-home engagement.
  • SMBs generally favor Do-It-With-Me and Do-It-For-Me (DIFM) models over Do-It-Yourself marketing services. Only 22.5 percent of respondents to the latest BIA/Kelsey survey of SMBs preferred DIFM services.
  • Scale in services is difficult to achieve, and at 10,000 SMB customers Main Street is at a tipping point that will determine if it can grow.

GoDaddy’s 17 million U.S. small business customers must appear a ripe target for Main Street. GoDaddy, too, has searched for additional revenue from SMB customers. At some point in the negotiations, someone at the table must have said “Pitch [Main Street} to the 28 million SMBs in the United States, and we’re sure to generate a billion dollars or more in fees.” In fact, it would take 333,000 customers at Main Street’s current entry price to make that goal.

However, scaling up a services-centric business is much more complicated than automated services, such as website hosting or email marketing delivery. The cost of delivering marketing services rises with each client as that client adds services, scaling linearly, at best, or producing lower margins in many circumstances. When I worked on web hosting at hibu a few years back, the only viable way to deliver web sites was outsourcing to the Philippines, and even that was challenging.

The other factor to consider is SMBs’ tendency to bring services in-house once they feel they have a process they can reproduce. Main Street’s best customers are likely to migrate to automation and in-house resources if they succeed.

The next phase of marketing requires local familiarity, not simply marketing competence. This means people must be familiar with the culture they are marketing into, and that points to lots of U.S.-based consultants. That is not cheap, yet TechCrunch calls this acquisition a “perfect match.”

Main Street assigns an account manager to each small business client, with pricing starting in the $250/mo. range, or $3,000 a year. That’s a small market, representing a few million U.S. businesses, at most. Meanwhile, Salesforce, Oracle, Amazon, and others continue to move their services down-market, into direct competition for these companies.

GoDaddy is taking a big bet in an intensely competitive sector. It isn’t a sure thing, and requires additional features and local expertise that will be hard to scale.