Chronicle Crackdown Prompts Question: Where's the Bay Area Online Super Startup?

We knew that Hearst's moves in Seattle -- saying in early January that it would sell or close down the Post-Intelligencer -- was just a dry run for San Francisco. After all, the Hearst-owned Chronicle has bled more than a quarter of a billion dollars by most estimates since Hearst bought it in 2000. Now that's pre-recession loss. If we say the storm of recession is taking down the weakened trees, we'd have to say that it will of course taken the fallen timber with it.

It's been an amazement, really. How could you use a quarter of billion dollars publishing a monopoly daily in one of the most affluent cities and metro areas, in and around San Francisco? You can point to the unsolved issues of combining the old Chron and the Examiner, but still. You can point to the belief that the Chronicle has always been a better features product than a news one. You can point to the endless dance around who would run SFGate, the Chron's site. You can point to a lot of things, but still it's an amazement.

Down the road to the south and to the east, Dean Singleton's proud vision of a Bay Area publishing colossus wobbles as well. The Mercury News hosts less than half the newsroom staff it did at the turn of the century, and the wear and tear on the once-proud paper shows every day in its pages. Like a lot of newsroom staff across the country, the remaining staffers keep one eye on the keyboard and another on the door. Singleton has pledged to keep MediaNews out of the bankruptcy hole, but each new wider economic reckoning makes that more difficult. He's the ultimate survivor -- so far -- keeping a keen gaze while Scripps blinks in Denver and going with the reducing flow in Detroit. But even his bag of tricks is wearing thin.

So, in the Bay Area -- a highly educated, civicly minded, affluent region -- we see the effects of being ground zero in the internet revolution.

Sure, it is the deep recession that is forcing new Hearst New President Steve Swartz to move on his 100-day agenda of change and causing Singleton's Bay Area News Group to circle its wagons tighter each day.

It's the underlying webbiness of the region though that made the recession so much more damaging. Think craigslist first. I recall working at Knight Ridder New Media in the late '90s when KR employees starting reporting that they got 10X better results on craigslist than with (discounted!) Merc News classifieds. Like today's news readers, who have dropped their subscriptions and get the news free online, they felt a bit ambivalent, even odd about it. Like Walter Isaacson, though, they didn't want to be chumps, so craigslist there they went.

Long story short, usage of Yahoo, Google, eBay, Yelp, Palm and iPhone all have added up. Reading time on both SFGate and MercuryNews.com are low, as web-savvy locals know where to get what they want fast -- and it's not usually on newspaper sites.

Yes, there are 21 daily newspapers covering an 11-county area,  but surprising no vibrant, metro-wide local news/city guide online site. There have been efforts over the years, but none big, none well-funded. (A shoestring start-up, The Public Press, is moving forward.) If there were ever a region that could and should support community journalism, you would think it would be the Bay Area. MediaNews still owns BayArea.com, but makes use of it.

Could the Chronicle indeed go away? Well, don't expect anyone to buy it. The newspaper market is, to use the kind word, illiquid. Frozen solid by two minor problems: 1) the credit meltdown, which will someday ease; 2) no one knows how to hell to value a newspaper company because no one has "visibility" in future revenue, which is a nice way to say no one likes what they see ahead.

Maybe, Hearst and MediaNews, once close, but now more distant partners, can figure out some new cost-sharing plans that will pass government review.  If not, we can now imagine the Chronicle indeed closing, if it doesn't get the "significant" cost reductions it wants. My guess given our times, is that it will get reductions, and then reduce itself in product and people to some sense of immediate sustainability. It may keep publishing, though it may scrap days like Detroit or whole sections like many of its brethren.

Then again, Hearst -- the Hearst of William Randolph Hearst -- is becoming less and less a newspaper company. It really hasn't been a newspaper company for a long time as cable, ventures and magazines have all provided the profits and revenues as newspapers began to struggle. Yesterday, Hearst brought in Yahoo and CBS vet Neeraj Khemlani as special assistant to Hearst President Frank Bennack, another sign that the future is online and on TV and not in print or its pixelized versions.

Consider, though, we've gone so quickly from an era where two papers in a single metro area could be profitable (Minneapolis, Seattle, Denver) to an era in which a big city daily with several hundred newsroom staffers may not be profitable. As Bernanke searches for The Bottom, newspapers are disappearing into it.

Comments

[Paul Grabowicz]

Ken -

We're not shooting to be a big, metro-wide site, but we have been building a local community site called Mission Local in the city's Mission District.

It's a project of the UC Berkeley Journalism School, and is one of a half dozen such community sites we launched last October. Students will be running the sites year round, and we're using them both to teach our students about digital media and to explore the viability of hyper-local community news sites.

If you're interested, there's more about the project on our school's home page in the Highlights section.

[John Furrier]

Ken,
Nice post and good "Angle" on this topic. One newspaper site that has had a good track record of web content is Boston.com

Focus on the local market but general news as well. Other than that I have to agree with you. For example the SFGate is a navigation nightmare

[David Cohn]

I am a big believer in what the Public-Press is doing and supporting their work where I can.

I run Spot.Us - a nonprofit project trying to pioneer "community funded reporting."

We've funded 13 stories since our launch. It certainly won't be a replacement of the Chronicle. Nor would Public-Press. People can give as little as $5 - and have an impact on local journalism here in the Bay.

But I like to think that Public-Press, combined with Spot.Us, combined with other entities that have a "yes" attitude towards collaboration might be able to swing it. It would be a challenge - but I am up for challenges.

[David Jensen]

The problems with the Chronicle and the newspaper industry go well beyond the last few years and the Internet. Before the Web came along in the 1990s, advertisers were fleeing newspapers and readership was eroding. But the management of most newspapers felt comfortable with the then whopping profit margins and their slowly dying business model. Publishers could only come up with half-baked answers to the flight of food and auto advertisers away from print. Those lucrative clients were what could be called the canaries in the mine, although they were considerably larger birds. Meanwhile, the high priests in the newsrooms KNEW what readers wanted, regardless of what readers were doing, such as unsubscribing to home delivery, spending less time with the paper each day and moving to alternate sources of news decades ago. In effect, the readers were silently telling editors their product was irrelevant to readers' lives. The disease that is killing newspapers needed to be addressed decades ago. Perhaps today's events could not have been averted even then. But a failure to understand sea changes among readers and advertisers years ago lies at the heart of today's dismal reports about the newspaper business.

[Rocky Agrawal]

"Yes, there are 21 daily newspapers covering an 11-county area, but surprising no vibrant, metro-wide local news/city guide online site. There have been efforts over the years, but none big, none well-funded."

This is not surprising in the least. The middle -- which is where something like this would play -- is not a good place to be.

Metro papers are too generic for most people's needs. I don't really care about crimes four cities over. I do care about the stuff next door, but mid-market organizations won't cover that. SFist does a way better job of serving local needs than SFGate.

A lot of event content is available in other forms and given the reluctance of local advertisers to get on board, sustaining such sites through advertising is nearly impossible. If I want to keep up on events at a local club, more often than not I can sign up for a mailing list and get much richer information. That same business no longer has to pay to reach me.