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Lessons from the Rocky Mountain News Thank you for inviting me to speak to you today. I hope by sharing what I learned from my experience as editor and publisher of the Rocky Mountain News I can help get this conference off to a good start. Recently, when I asked my former colleagues at the paper for reflections on their experience since its closure, Bernie Lincicome, a fine sports columnist, wrote me back: “I feel like the cadaver being asked by the funeral director, how did you like the flowers?” I’m not sure what that makes this talk. Maybe the funeral director being asked to perform his own autopsy and offer guidance from the other side on how to save the lives of others suffering the same malady. First, a little history: The Rocky Mountain News was Colorado’s oldest newspaper, founded in 1859 when Denver was little more than a hamlet of log cabins. The paper went on to cover the news in three centuries, from the Civil War to the War on Terror. It became so much a part of the fabric of Colorado that many readers called it “My Rocky,” a term of endearment rare for any newspaper. It was owned for more than 80 years by a deep-pocketed company, E.W. Scripps, that still today is controlled by the founding family. Scripps started as a newspaper company, but navigated through the advent of radio, TV and cable starting successful new media businesses each time. In the ‘90s, after going public, Scripps innovated with its free cash flow and hit a home run building lifestyle cable networks, including HGTV and the Food Network, now worth more than $5 billion. So some pretty smart people were at the top of the company that owned the Rocky Mountain News. Yet none of that was enough for the Rocky to survive in the Internet era. The Rocky published its final edition on Feb. 27 of this year, the first major paper to shut its doors after the economic crash of the fall of 2008. On the day the closure was announced, Scripps CEO Rich Boehne told the staff assembled in the newsroom: "You are the model of what a great newspaper should be. It's a tragedy for the industry that you disappear." He was talking to a staff that since 2000 had won four Pulitzer Prizes, a total topped by just six other newspapers in that same period. And the staff knew that from a circulation standpoint, when the papers competed head to head on weekdays, the Rocky came out on top. So, why did the Rocky disappear? Looking back now on that difficult day, the word that stands out in Boehne’s statement is “newspaper.” As one former Scripps executive told me in talking about what has happened to the newspaper industry, words that I think apply to the Rocky, “We had all the advantages and let it slip away. We couldn’t give up the idea that we were newspaper companies.” Well, Scripps isn’t a newspaper company anymore in what was its biggest market. And today I’m going to walk you through the lessons I think might be taken from its largest paper’s failure. While this is going to be a newspaper-centric talk, I believe you’ll find that the lessons apply broadly across radio, TV, magazines and other media, too.

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But before I subject the past to scrutiny, you need to know I don’t exempt myself from criticism. I was the top editorial person for the Rocky’s final 11 years and part of the business leadership team. I bear my own share of responsibility. It’s easy when looking back to see things that might seem obvious to us today, but it was a lot more difficult when we were in the thick of the fight, and most of the revenue growth and almost the total revenue pie came from the main newspaper product. That said, the first lesson I hope people who care about the future of local news take from the Rocky’s experience is this: Being a “great newspaper” isn’t enough in the Internet era. You have to know what business you’re in. We thought we were in the newspaper business. Working on the Web, you need to think of now and forever. At a newspaper, people largely think about tomorrow. Thinking about tomorrow isn’t enough anymore. Consumers today want services when, where and how they want them, and they want to be able to participate, not just receive. Look, it’s understandable that we thought we were in the newspaper business. In the 1990s, Denver was the site of what was sometimes called America’s last great newspaper war. The Denver Post and the Rocky Mountain News had competed for 100 years and each saw the grand prize close at hand. Each wanted to become the only newspaper in town - something we thought of as “owning the Denver market.” We thought winning would guarantee a stable and profitable future. We misunderstood the competitive landscape and put the vast majority of our efforts into the print war. The problem was we were fighting the last war. We didn’t understand what was happening to the playing field. Media companies used to think they were in control. That they could “own” a market. What we didn’t take into account is that in this new era, consumers were going to be in control. So that brings me to Lesson #2: Know your competition. If we had spent more time trying to build the depth of our connection with the community using online tools from the very start, perhaps the outcome for the Rocky would have been different. If we have time later, I can give you some examples of what I’m talking about. The Rocky’s first foray onto the Web came in 1995. The newsroom provided a Cox-owned site called Fastball with Colorado Rockies stories and data. To give you some perspective, that same year Colorado’s leading television station put up a Web site, but all it had was a picture of the station’s building, its address and phone number. No links or news at all. At that time, believe it or not, much of the talk about “new media” at many newspapers was about things like AudioText, where users could call in and select different categories of news. There was also fax on demand. And 900 numbers, for such things as out-of-state lottery numbers or sports scores, horoscopes and even a dating service. The Rocky had been burned in the new media world before. In 1990, it made what it considered at the time a major play, launching an electronic service called the A LA CARTE EDITION. The paper sent software to a few thousand users, many of whom had 400 baud modems.

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You can see from this introduction to our first electronic service that we thought of ourselves as newspaper companies right from the start. We wrote that the goal of the new edition, was “ultimately to strengthen and preserve the printed daily newspaper.” The service was shut down after about 9 months, but not before scooping the paper on the start of the First Gulf War, reporting 12 hours before the paper landed on most doorsteps that the war had begun. The project was halted, I was told, because “we just couldn't show that it was having any measurable impact on retention of print subscribers and it wasn't producing revenue.” Right from the start, new offerings were measured by what they did for the core product, not on their own merits. A big mistake. The Rocky’s first Web site, this is the home page on the very first day, grew out of the newsroom’s night copy desk crew, a few of whom had learned some HTML. It was a bottom up effort. There was no advertising involvement. Under the direction of the senior night editor, a small team built a Web site that went live on March 1, 2006. The Post had put up a site late the previous year so we knew we needed to do it, if only because we couldn’t let them have a leg up on us anywhere. The launch of the site was a perfect example of how the attention of the paper’s leadership was on print, not on new possibilities. We were wrestling with a decision to pull back print distribution to 13 counties adjacent to Denver, a money-saving move to match the $5 million in savings we believed the Post had achieved by narrowing its printed page. We cut about 30,000 circulation, or 10% of our total, in one day. The Post kept delivering to all 65 Colorado counties. On the day before the Rocky opened its doors to the world online, the page 2 column by the editor began: “I have never been much good at saying goodbye. But that is my task today for many loyal readers of the Rocky Mountain News.” It wasn’t until the fourth paragraph that he introduced the Web site. He wrote: “Nonetheless, some of our key stories, features and photographs will still be available outside our new service area. This will be possible through our two new electronic ventures.” One was the World Wide Web site. The other was a wire service we had set up to give our content to smaller Colorado papers to print at the same time as it appeared in the Rocky. There was no promotion of the Web site. Our PR efforts at the time were attempts to control the damage from cutting off 30,000 paying customers. The message to the newsroom at that time regarding the Web site: “Do not let it interfere with the print edition.” And as managing editor, I made sure that we kept our focus on the print competition. We knew the Web was a place we needed to be. But we didn’t have a clear strategy. Mission. Or objective. It was a “complement to the paper,” as we said in our initial “About us” page.

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Which brings me to Lesson 3: You have to have a strategy and you have to be committed to pursuing it. We perceived the Web site as a newspaper online, as a complement to the paper, not as its own thing. That’s not a strategy. Senior management’s focus in the 1990s was on keeping the newspaper alive. Again, to be clear, that’s understandable, at least to a point. We were fighting for our lives and the money then lay in print. We didn’t understand the Web or new technology and didn’t have the time to learn much about it. We weren’t a consumer-driven company, except that we knew our priority was to get papers on the porch on time in the morning. Otherwise, we feared our subscribers would switch to our competitor. Without clear objectives, an organization stumbles from one priority to the next. The 4th lesson: You must know your goal. On the print side, we had a clear objective. But our online objective kept changing. Of course this is partially understandable, because what was possible in the online world was also changing rapidly. Because the Rocky’s newsroom was unionized, management felt it had to quickly make a decision about where to house the new service. The fear was that union rules governing the newsroom would limit what we could do with the Web and potentially increase operating costs at a time when there was no revenue to speak of associated with it. So the newsroom lost its role on the Web until five years later, after the “war” was over. Legacy labor/management relations and organizational structures cannot be allowed to dictate how a new operation works. Lesson #5: Keep new ventures free from the rules of the old. Over the years, the company had agreed to conditions it might not have liked but could accept because revenues of the newspaper made them possible. The problem was they would strangle a startup. It was probably a smart move to get the Web out of the newsroom. It made it possible for the Web staff to carve their own path. But it also separated the newsroom - the paper’s most valuable asset from its new online product for five years. And that clearly had its downside. Even without a clear goal or strategy, the Web team - and the company - did go on to do some interesting things. Scripps partnered with Cox to produce an outdoor recreation site called “Go West,” another shortlived effort because costs so exceeded revenues. The Rocky bought an online real estate service. It built web sites for customers. It became an internet service provider. But the Web leadership kept changing, which meant new marching orders; there was tension between corporate and local leadership about direction on the Web; and staff turnover was heavy. Indicative of the struggle to find a strategy was how the name of the site kept changing. It started as Denver-RMN.com. (A really catchy url.)

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We ventured deep into high school sports. This is an early example of a RockyPreps page, incredible detail about girls volleyball. This was the first time we thought Web first, posting results online immediately and then outputting select data to print. It was popular with readers. But advertisers shunned it. You can see initially there was a strange lack of commercial interest on our part. Except that we were already aware that our classifieds needed to have a home online. Then we changed the site’s name to InsideDenver.com. We thought the Web was going to be more about what to do than about news. (The story is that Denver.com was available but the $50,000 price tag was considered too steep.) Finally, we chose to go to our newspaper name, RockyMountainNews.com, despite how unwieldy it was as a url. This was an era where we didn’t fully believe in the value of the web. So, like other papers, we created the bundle, selling web space as an add-on for print advertisers. We generally saw the web as a few advertising boxes we could sell. We didn’t see the value of audience. Scripps bought sophisticated software to run its cable and newspaper Web sites. Although it tried to put the focus on readers, in the end it let technical people develop a culture based on how they wanted technology to work - stable and secure - rather than putting the priority on remaining nimble in a rapidly changing world. We kept trying to build perfect systems, slowing our progress, instead of working iteratively. And in Denver, we thought we needed to reinvent everything for our market instead of accepting solutions that would work across the company. What did we discover? That the people running a new business need to be free to do what’s best for that business, regardless of the potential impact on the old. That’s lesson #6. Why couldn’t newspapers have invented something like Yelp? Probably because editors would have gone ballistic over reader reviews with misspelled words and would have felt uneasy with reader contributions being given priority. The Rocky’s Web team producing InsideDenver.com used the slogan, “Before you go out, go InsideDenver.com,” that could have led in that direction. But the mission was changed because InsideDenver didn’t sound like a newspaper and didn’t encompass the idea of our all-important classifieds. A pivotal moment - perhaps the most telling about the paper’s approach to the Web - came on the morning of April 20, 1999 when two students opened fire at Columbine High School. The world was watching.

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At that time, we had one content producer whose job was essentially to shovel the newspaper onto the Web. The Web team was on the first floor of our building. The newsroom on the third. After news of the shooting broke, the producer came to the newsroom and asked the city editor for any news he could give him. “I’m not giving you anything for the Web site,” he remembers being told. “They’ll steal it.” They, in this case, was The Denver Post. The culture of the newsroom at this point was still to save any possible scoops for the morning paper to keep the Post a day behind us. The Rocky’s Web team ended up relying on our TV news partner for its reports. Even with that, the traffic numbers that day weren’t matched for two years. Neither the Rocky nor the Post won an Eppy Award for coverage of Columbine. That was taken by the Boulder Daily Camera, which didn’t have anywhere near the resources of the two Denver papers to cover the story. But both papers won Pulitzer Prizes for their print coverage. Something else happened that day, though, that changed the perspective of the newsroom. We decided to give all our best photographs from the high school to the Associated Press as soon as we had them in our computer system. The result, the Rocky pictures you’ve just seen appeared on front pages around the world the next morning. The staff saw the tangible benefits of sharing in real time. The quality of their work captured the attention of the world and raised the paper’s profile. That day was a turning point for how the newsroom worked with the web, although the results wouldn’t become fully visible until a few years later. The newspaper industry today talks a lot about the need to get paid for its content online. But in the late ‘90s, Denver was an experiment in essentially free newspapers. By the peak of the newspaper war, more than 400,000 subscribers to the two Denver papers were paying a penny a day for home delivery. The Rocky was bleeding money and the Post was heading the same direction. So the owners called a truce, asking the Justice Department to approve what’s known as a joint operating agreement, which allows newspapers to merge business operations while maintaining separate and independent newsrooms. The agreement, written in 2000 under the direction of two seasoned newspaper executives - William Burleigh and Dean Singleton - didn’t even mention the Web. Yet another sign that the Web was an afterthought all along. The Web wasn’t perceived as central to the success of the new business. It was believed that savings from combining the business operations of the two papers plus the ability to raise advertising rates would produce very healthy returns for both owners. Instead, what happened was that classified revenues dropped by more than $100 million a year from the start of the JOA to the end, and national and display categories tanked, too. The JOA is a complicating factor in the Denver story. I’m not going to explore it today, except to say that such agreements lead to economically inappropriate activities that ultimately undermine a business. And that’s part of the explanation of what happened to the Rocky. The JOA did offer one significant benefit to our Web efforts. It gave the papers enough economic cushion to make them feel comfortable enough to negotiate new flexible contracts with the Newspaper Guild to move the Web editorial team and programmers back into the newsroom - this 6

time at the very center of the room, not in a dark corner on the 1st floor, a symbolic move to try to indicate the site’s importance to our future. This was critical to the multimedia and database creativity that followed on the Web. And I think it was critical to our growth in traffic, from roughly 600,000 uniques a month in 2001 to 2.2 million a month when the paper was put up for sale. But again, the focus in Denver when the agreement went into effect in early 2001 and for the next few years was on print. The Web in many ways became even more problematic. The papers had two basically similar Web sites using different content management systems and supported by a third advertising system. The papers still were competing with each other online, even though the owners each got 50 cents of every dollar earned from the Web sites. Instead of focusing on new media and new ways to serve audiences with niche print, online and mobile products, the owners spent $130 million to upgrade their printing plant (they knew they would achieve savings by doing so) and $100 million to build a new headquarters on a prominent site in downtown Denver. The Web was essentially in limbo for a long time, with the Web leadership on the business side continuing to turn over, making it hard to gain any traction except in the newsroom. Still, we produced some work of a national, even global caliber. The online version of this story that won 2 Pulitzer prizes, Final Salute, included 8 slide shows 5 movies in a custom built Flash application And a separate video trailer that preceded the publication of the print special section. A related story in our coverage of the war at home was called Wake for an Indian Warrior. The slide show that was part of the story of the first Sioux to die in Iraq had somewhere in the neighborhood of 2 million page views.

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Lesson #7: If you want to compete in a medium, you have to understand it. The newspaper industry didn’t understand the web in the beginning. That’s understandable. But it’s not clear that the newspaper industry understands it today. That’s partly because you need to get the right people into an organization, people who can see and seize new opportunities. We were lucky to be able to hire some really talented people who made the work you’ve just seen possible. The question is why would talented people want to join companies that are held back by their past? I think that’s a real problem for legacy media organizations. Smart, talented people have choices. And it’s hard to imagine the best and brightest in advertising, for example, wanting to join a newspaper online operation when they could be working in a pure play environment. A good example of our lack of understanding of the Web came in 2005 when Denver took its first big leap online under the JOA. This was the same year YouTube went live. Executives in Denver perceived a need for a vehicle to compete with weekly newspapers, which they thought were taking local ad share. In response, the Rocky launched YourHub.com, a network of more than 40 “citizenjournalism” web sites serving the Denver metropolitan area. All content appeared online first. Most came from readers. The best content of the week - again, almost all from readers - was published in 18 weekly zoned print sections. The first site went live that spring. But guess what? Google couldn’t find it. The company that built the site was a key contractor for a major newspaper company and worked for other large companies, but it didn’t adequately understand search engine optimization and built the site in such a way that it didn’t show up in Google searches, although Yahoo and MSN did find it. We weren’t smart enough as a company to know that needed to be a basic requirement of the project and didn’t know how to evaluate programming to make sure it was. (I don’t have to tell you that if Google doesn’t find a site, its opportunities are very limited.) Ultimately, it was Scripps employees at Shopzilla who studied the architecture of the site and advised us how to rebuild it so it would show up in Google search rankings. See what I mean about the importance of having people who understand the medium they’re working in? Another example from that effort. Craigslist had come to Denver four years earlier, but we still couldn’t get the classified advertising leadership to agree to compete with Craigslist by offering free classifieds on these community sites, even private party under a certain dollar amount. The argument went on for almost a year, a year when we sent the message to users that we didn’t understand how they wanted to use the web or that advertising content was valuable to them. Lesson #8: Measure, measure, measure. While newspaper companies had experts managing circulation accounts to make sure they met the requirements of the Audit Bureau of Circulations, they were less committed to an intense focus on web data. I think newsrooms and entire news organizations have to use data more to guide their allocation of resources. This doesn’t mean local news organizations should stop doing investigative reporting because most web traffic goes to freaky

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stories about teachers having sex with students, but it does mean that they should use the tools available to them and be honest about what the data tell them. It took the move into the newsroom of Web journalists for the rest of the newsroom to finally change its attitude. Police officials complained that they were answering questions from one reporter for the Rocky Mountain News (a Web journalist) and then having to do the same thing again later in the day for another (this time a print reporter). That was making it more difficult for our print reporters and finally the traditional newsroom staff took over reporting for the Web and became committed to updating news when it happened. One of the ways we encouraged that was to count what we were doing and share the results. They saw that breaking news updates were driving usage of the site. By the end, Scripps’ former Web VP felt we were cooking on all cylinders as a news Web site. But that’s probably too generous a view. I think we had far to go. Which brings me to Lesson #9: Ask yourself: Without R&D, how are local news companies going to get out on the edge and develop new offerings? Now that newspaper companies are filling the bankruptcy courts, they’re scrambling to find ways to survive on the Web. But their efforts seem mostly about making money off their current offerings. You don’t see them developing Yelp, YouTube, Twitter, Facebook, etc. I think they still could develop successful new services. But it would require something they haven’t historically done, research and development. The Rocky looked to other newspapers and news sites to assess how it was doing. We should have been looking more closely at pure-play Web operations. To conclude, Scripps, the owner of the Rocky, is about 130 years old. It’s survived a lot of change. I wouldn’t count it or other historic titles like Hearst or The New York Times out. But I’m concerned about their future. There’s still too much of a sense of entitlement in the industry. The Associated Press spends too much time making the case that copyright violation is the problem bringing the industry down when the industry should be focused on building new and better products and services. Are companies making the same mistake in this decade that the Rocky made in the ‘90s, not understanding the competition? I think so. Newspaper companies have to look for ways to answer the needs of the people in their communities. They have to know what business they’re in. We thought we were in the newspaper business. It seems like that’s what too many still think. They’re not. They’re in the news, information, knowledge and connection business. Which brings me to the final lesson: Know your customers. If newspapers would spend more time trying to understand their customers instead of focused on their own internal issues - such as which newspaper department should get credit for Web revenue - they’re more likely to be successful. That’s a hard switch for traditional manufacturing operations like newspapers to make. But I don’t

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think I need to explain why it’s essential. The following quote explains the dilemma newspapers found themselves in. “We were not used to the market telling us how things should be. We were used to telling people what we thought they needed and how they needed it,” is how a Scripps marketing exec put it. That has to change. So, given my experience at the Rocky, what are some things I think newspapers should do going forward? Newspapers should think bigger at the same time as they think smaller. They should look for opportunities to scale. They’re still too focused on unique, market by market solutions. Examiner.com in Denver is an example of a site that has something to teach newspapers. I’m not saying it’s a great site or that I necessarily think it’ll succeed. But it’s growing rapidly at least in part because they’ve invited thousands of people to become experts, or examiners, on their sites and because they’ve built the service as a national brand based on local sites. Newspapers can’t think anymore of building or selling one monolithic audience. They need to build many niches and many audiences. But interests align across geographies, so there’s no reason that everything they do need be limited to their “markets.” Newspapers could end the criticism of an ever-shrinking amount of content if they would partner more with others and invite more people to participate on their sites. (When people say what you often hear, that newspapers seem thinner and thinner, we can’t forget that it also creates a negative impression of what’s happening to their Web sites.) The I-phone APP model is something newspapers should explore. Apple built a platform and lets others use it. Couldn’t newspapers work together and with others to benefit readers and users of their services the same way? Newspapers have traditionally served a small percentage of the businesses in their communities. Instead of trying to hold on to their piece of the pie, newspapers should be using technology to make the pie bigger, along the lines of the way ebay expanded buying and selling opportunities. Newspapers should find more ways for more local businesses to reach potential customers. Newspapers should give consumers more control. They’re still thinking too much about themselves and not enough about what the consumer wants. Newspapers should stop looking longingly in the rear view mirror at 30% margins. It sometimes seems the whole game of the industry leadership is trying to find a way to get back to their old margins. (Because of the competition, by the way, the Rocky never had those kinds of margins.) And, of course, finally, the most difficult recommendation of all, newspapers should stop making decisions about new business opportunities based on how they’ll affect their legacy business. The main newspaper cannot dictate the shape of the future.

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Thank you for listening to the lessons I’ve taken from my experience at the Rocky. I hope this autopsy was useful and that my suggestions help others avoid succumbing to the same fate as the Rocky Mountain News. I’d be happy to take any questions. As a reminder, here are the 10 lessons I’ve discussed today. I’ll keep them up during our conversation. Lessons from the Rocky Mountain News. 1. 2. 3. 4. 5. 6. 7. 8.

Know what business you’re in. Know your customers. Know your competition. Know your goal. Have a strategy and be committed to pursuing it. Measure, measure, measure. Keep new ventures free from the rules of the old. Let the people running a new venture do what’s best for their business, regardless of the potential impact on the old. 9. To compete in a new medium, you have to understand it. 10. Invest in R&D.

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