Lessons From The Rocky Mountain News

Lessons from the Rocky Mountain News Thank you for inviting me to speak to you today. I hope by sharing what I learne d from my experience as editor and publisher of the Rocky Mountain News I can he lp get this conference off to a good start. Recently, when I asked my former col leagues at the paper for reflections on their experience since its closure, Bern ie Lincicome, a fine sports columnist, wrote me back: “I feel like the cadaver b eing 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 p aper 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 tod ay is controlled by the founding family. Scripps started as a newspaper company, but navigated through the advent of radi o, TV and cable - starting successful new media businesses each time. In the ‘9 0s, 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 Inter net era. The Rocky published its final edition on Feb. 27 of this year, the fir st 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 ass embled 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 t hat since 2000 had won four Pulitzer Prizes, a total topped by just six other ne wspapers in that same period. And the staff knew that from a circulation standpo int, when the papers competed head to head on weekdays, the Rocky came out on to p. So, why did the Rocky disappear? Looking back now on that difficult day, the wor d that stands out in Boehne’s statement is “newspaper.” As one former Scripps ex ecutive told me in talking about what has happened to the newspaper industry, wo rds 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 And today I’m going to walk you through its largest paper’s failure. While this I believe you’ll find that the lessons s and other media, too.

anymore in what was its biggest market. the lessons I think might be taken from is going to be a newspaper-centric talk, apply broadly across radio, TV, magazine

But before I subject the past to scrutiny, you need to know I don’t exempt mysel f 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 newsp aper product. That said, the first lesson I hope people who care about the futur e of local news take from the Rocky’s experience is this: Being a “great newspap er” 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 th ink of now and forever. At a newspaper, people largely think about tomorrow. Thi nking about tomorrow isn’t enough anymore. Consumers today want services when, w here and how they want them, and they want to be able to participate, not just r eceive. 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 onl y newspaper in town - something we thought of as “owning the Denver market.” We thought winning would guarantee a stable and profitable future. We misunderstoo d the competitive landscape and put the vast majority of our efforts into the pr int war. The problem was we were fighting the last war. We didn’t understand what was hap pening 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 thi s new era, consumers were going to be in control. So that trying ls from ent. If ut.

brings me to Lesson #2: Know your competition. If we had spent more time to build the depth of our connection with the community using online too the very start, perhaps the outcome for the Rocky would have been differ we have time later, I can give you some examples of what I’m talking abo

The Rocky’s first foray onto the Web came in 1995. The newsroom provided a Cox-o wned site called Fastball with Colorado Rockies stories and data. To give you so me perspective, that same year Colorado’s leading television station put up a We b 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 als o fax on demand. And 900 numbers, for such things as out-of-state lottery number s 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 i t considered at the time a major play, launching an electronic service called th e A LA CARTE EDITION. The paper sent software to a few thousand users, many of w hom had 400 baud modems. You can see from this introduction to our first electronic service that we thoug ht of ourselves as newspaper companies right from the start. We wrote that the g oal of the new edition, was “ultimately to strengthen and preserve the printed d aily newspaper.” The service was shut down after about 9 months, but not before scooping the pape r 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, b ecause “we just couldn t show that it was having any measurable impact on retent ion 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 ou t 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 direc tion 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 anywhe re. 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 dec ision 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 achieve d 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 col umn by the editor began: “I have never been much good at saying goodbye. But tha t 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: “Nonethel ess, some of our key stories, features and photographs will still be available o utside our new service area. This will be possible through our two new electroni c ventures.” One was the World Wide Web site. The other was a wire service we had set up to g ive our content to smaller Colorado papers to print at the same time as it appea red 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 customer s. 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 k ept 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 i nitial “About us” page. Which brings me to Lesson 3: You have to have a strategy and you have to be comm itted to pursuing it. We perceived the Web site as a newspaper online, as a comp lement 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 t echnology 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 ou r 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 obj ective. But our online objective kept changing. Of course this is partially unde rstandable, because what was possible in the online world was also changing rapi dly. Because the Rocky’s newsroom was unionized, management felt it had to quickly ma ke a decision about where to house the new service. The fear was that union rule s governing the newsroom would limit what we could do with the Web and potential ly increase operating costs at a time when there was no revenue to speak of asso ciated 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 allowe d to dictate how a new operation works. Lesson #5: Keep new ventures free from t he rules of the old. Over the years, the company had agreed to conditions it mig

ht not have liked but could accept because revenues of the newspaper made them p ossible. 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 poss ible for the Web staff to carve their own path. But it also separated the newsro om - the paper’s most valuable asset - from its new online product for five year s. And that clearly had its downside. Even without a clear goal or strategy, the Web team - and the company - did go o n to do some interesting things. Scripps partnered with Cox to produce an outdoor recreation site called “Go West ,” another short-lived effort because costs so exceeded revenues. The Rocky boug ht 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 catc hy url.) We ventured deep into high school sports. This is an early example of a RockyPre ps page, incredible detail about girls volleyball. This was the first time we th ought Web first, posting results online immediately and then outputting select d ata 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 par t. Except that we were already aware that our classifieds needed to have a home onl ine. Then we changed the site’s name to InsideDenver.com. We thought the Web was goin g 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 ho w 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 ad vertisers. 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 a nd newspaper Web sites. Although it tried to put the focus on readers, in the en d 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 nimb le 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 instea d 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? Pr obably because editors would have gone ballistic over reader reviews with misspe

lled words and would have felt uneasy with reader contributions being given prio rity. The Rocky’s Web team producing InsideDenver.com used the slogan, “Before y ou 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 We b - came on the morning of April 20, 1999 when two students opened fire at Colum bine High School. The world was watching. At that time, we had one content producer whose job was essentially to shovel th e newspaper onto the Web. The Web team was on the first floor of our building. T he 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 thi s 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 partn er 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 anywhe re near the resources of the two Denver papers to cover the story. But both pape rs won Pulitzer Prizes for their print coverage. Something else happened that day, though, that changed the perspective of the ne wsroom. 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 nex t morning. The staff saw the tangible benefits of sharing in real time. The qual ity of their work captured the attention of the world and raised the paper’s pro file. That day was a turning point for how the newsroom worked with the web, alt hough 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 cont ent online. But in the late ‘90s, Denver was an experiment in essentially free n ewspapers. By the peak of the newspaper war, more than 400,000 subscribers to th e two Denver papers were paying a penny a day for home delivery. The Rocky was b leeding 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 operat ing agreement, which allows newspapers to merge business operations while mainta ining separate and independent newsrooms. The agreement, written in 2000 under the direction of two seasoned newspaper exe cutives - 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 perceiv ed as central to the success of the new business. It was believed that savings f rom combining the business operations of the two papers plus the ability to rais e 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 t anked, too. The JOA is a complicating factor in the Denver story. I’m not going to explore i t today, except to say that such agreements lead to economically inappropriate a ctivities that ultimately undermine a business. And that’s part of the explanati on 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 f lexible contracts with the Newspaper Guild to move the Web editorial team and pr

ogrammers back into the newsroom - this 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 sa le. 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 cont ent management systems and supported by a third advertising system. The papers still were competing with each other online, even though the owners e ach 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 k new they would achieve savings by doing so) and $100 million to build a new head quarters on a prominent site in downtown Denver. The Web was essentially in limb o for a long time, with the Web leadership on the business side continuing to tu rn 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, inclu ded 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. Lesson #7: If you want to compete in a medium, you have to understand it. The ne wspaper industry didn’t understand the web in the beginning. That’s understandab le. 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 real ly 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 pas t? 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 adverti sing, 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 wen t live. Executives in Denver perceived a need for a vehicle to compete with week ly newspapers, which they thought were taking local ad share. In response, the R ocky launched YourHub.com, a network of more than 40 “citizen-journalism” web si tes serving the Denver metropolitan area. All content appeared online first. Mos t came from readers. The best content of the week - again, almost all from reade rs - was published in 18 weekly zoned print sections. The first site went live t hat spring. But guess what? Google couldn’t find it. The company that built the site was a key contractor for a major newspaper compa

ny and worked for other large companies, but it didn’t adequately understand sea rch 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 di dn’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.) Ul timately, 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 r ankings. See what I mean about the importance of having people who understand th e medium they’re working in? Another example from that effort. Craigslist had come to Denver four years earli er, but we still couldn’t get the classified advertising leadership to agree to compete with Craigslist by offering free classifieds on these community sites, e ven 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 mana ging circulation accounts to make sure they met the requirements of the Audit Bu reau 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 t heir allocation of resources. This doesn’t mean local news organizations should stop doing investigative reporting because most web traffic goes to freaky stori es about teachers having sex with students, but it does mean that they should us e 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 newsro om to finally change its attitude. Police officials complained that they were an swering questions from one reporter for the Rocky Mountain News (a Web journalis t) 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 report ers and finally the traditional newsroom staff took over reporting for the Web a nd 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 ne ws 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 comp anies going to get out on the edge and develop new offerings? Now that newspape r companies are filling the bankruptcy courts, they’re scrambling to find ways t o 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, Facebo ok, 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 s hould 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 survi ved a lot of change. I wouldn’t count it or other historic titles like Hearst o r The New York Times out. But I’m concerned about their future. There’s still to o much of a sense of entitlement in the industry. The Associated Press spends to o 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 pr oducts and services. Are companies making the same mistake in this decade that t he 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 t heir 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 sp end more time trying to understand their customers instead of focused on their o wn internal issues - such as which newspaper department should get credit for We b revenue - they’re more likely to be successful. That’s a hard switch for tradi tional manufacturing operations like newspapers to make. But I don’t think I nee d to explain why it’s essential. The following quote explains the dilemma newspa pers 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 Sc ripps marketing exec put it. That has to change. So, given my experience at the Rocky, what are some things I think newspapers sh ould do going forward? Newspapers should think bigger at the same time as they think smaller. They shou ld 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 som ething to teach newspapers. I’m not saying it’s a great site or that I necessari ly think it’ll succeed. But it’s growing rapidly at least in part because they’v e invited thousands of people to become experts, or examiners, on their sites an d because they’ve built the service as a national brand based on local sites. Ne wspapers can’t think anymore of building or selling one monolithic audience. The y need to build many niches and many audiences. But interests align across geogr aphies, so there’s no reason that everything they do need be limited to their “m arkets.” Newspapers could end the criticism of an ever-shrinking amount of content if the y 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 th inner, we can’t forget that it also creates a negative impression of what’s happ ening 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 sam e way? Newspapers have traditionally served a small percentage of the businesses in the ir communities. Instead of trying to hold on to their piece of the pie, newspap ers should be using technology to make the pie bigger, along the lines of the wa y ebay expanded buying and selling opportunities. Newspapers should find more wa ys for more local businesses to reach potential customers. Newspapers should give consumers more control. They’re still thinking too much a bout 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 sh ould stop making decisions about new business opportunities based on how they’ll affect their legacy business. The main newspaper cannot dictate the shape of th e future.

Thank you for listening to the lessons I’ve taken from my experience at the Rock y. I hope this autopsy was useful and that my suggestions help others avoid succ umbing to the same fate as the Rocky Mountain News. I’d be happy to take any que stions. As a reminder, here are the 10 lessons I’ve discussed today. I’ll keep t hem up during our conversation. Lessons from the Rocky Mountain News. 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, regardle ss of the potential impact on the old. To compete in a new medium, you have to understand it. Invest in R&D.