A newspaper business model that's working

We make community news free and have watched profits soar.

Opinion

It's widely reported – and has become generally accepted – that the newspaper model is either dying or already dead, when, in fact, thousands of newspapers across the country are doing quite well. Thousands of newspapers deliver for their readers and advertisers every day. Thousands of newspapers are positioned to embrace – not be destroyed by – emerging technology.

But we don't get to read much about those newspapers. Sure it's news when giant corporations crash and burn and lives are disrupted. Stories that report on incompetent leaders who, ironically, receive outlandish compensation are widely read. Documenting the downfall of powerful entities, whether they are governments or businesses, is a legitimate pursuit. But, as any respectable journalist knows, when you tell only half the story, the story is incomplete – or just plain wrong.

In this instance, the half that receives little to no attention from big media involves the men and women in the newspaper industry who write the stories, sell the ads, print and deliver the papers and update the websites every day, without fail, for media companies that are far from dead.

The National Newspaper Association (NNA) last month reported on a study that showed community newspapers were far less affected by the challenging economy than the industry in general (or the economy in general, for that matter). The Suburban Newspapers of America and NNA's reporting group showed 2008 fourth-quarter advertising revenue of $428.7 million, only a 6.6 percent decline from the same quarter in 2007. The Glennco Consulting Group estimate was much worse, however, for the overall newspaper industry. There it showed decline in fourth-quarter advertising expenditures of 21 percent, according to the NNA.

So while advertisers cut their spending by 21 percent across the industry, the impact to community newspapers was less than 7 percent.

In addition, 26 percent of the SNA/NNA reporting group launched new products in 2008. Indeed, many community newspaper companies are growing.

The fact is that gains among progressive community newspaper companies are offsetting a large part of the massive losses being suffered by the staid, big newspaper companies.

"Community newspapers certainly are not immune to the economic downturn that is affecting all businesses, but, as the primary and sometimes sole provider of local news in a community, they remain strong and viable," NNA president John Stevenson said in the article.

These "strong and viable" companies recognized and adapted to the changing economy in a way that larger newspapers – for the most part – are not. They adapted to evolving reader habits and emerging business models. They abandoned the traditional, head-in-the-sand mentality of denial and exploited the opportunities presented by their often larger, but undeniably obsolete, brethren.

At Elauwit Media, we learned long ago that people don't want to "pay" for their news anymore.

We know that, for advertising to be effective, people have to actually see the ads. Our business model and philosophy of making sure "Everybody Gets It. Everybody Reads It." pushes us to bring local news not found elsewhere to everybody who has an address in town. It fills a very specific need for our readers and it works so well that, for the past two years, we have been listed among South Jersey's 10 fastest-growing privately held companies. We've gone from a start-up in 2004 with $100,000 in revenue to a thriving company with revenues in excess of $2.4 million in 2008.

That's certainly not the story we're hearing about newspaper companies today. But that's the story of so many of us smaller newspaper companies that have adapted to the changes in the market.

This success is no great mystery – it's the American way. Ingenuity, creativity, and the entrepreneurial spirit always have been rewarded. The newspaper companies that have altered circulation methods and policies, have focused their content and developed news delivery methods to fit today's audience and advertisers are thriving. They found new streams of revenue and ways to reduce costs that didn't eviscerate their core products.

In other words, they ran their businesses the way businesses ought to be run. For instance, huge regional daily newspapers would do better to stop requiring people to subscribe and instead deliver the paper to everybody in their target demographic (the market that key advertisers want to reach). If big newspapers would charge the advertisers, not the readers, they could still turn things around. That would be a bold way to evolve. It is highly doubtful they'll do that. We did.

So as the giant media conglomerates continue to watch their kingdoms crumble, and the self-styled scribes of truth chronicle their every misstep and blunder, the rest of us will continue to vacuum up their former readers and advertisers. We'll continue to grow. We'll continue to adapt. We'll continue to profit. And we'll do it all while upholding the standards of journalism that make newspapers so important. And therein lies the future of newspapers – one that's not so gloomy for everyone.

Dan McDonough Jr. and Alan Bauer are founders of Elauwit Media, a community newspaper/media company based in Haddonfield, N.J.