Mike Orren of The Dallas Morning News on The Pivotal Year for Local Media
Jacob Cohen Donnelly: You’re the first person from a local newspaper to join the show, which I’m incredibly excited about because I’ve never actually worked for a local publication. I want to learn more about how the whole thing works, but before we do, as someone who graduated with a degree in political science, I wanted to learn more about how you, who also graduated with a degree in political science, found your way to being the chief product officer at the Dallas Morning News.
Mike Oren: That is a long and circuitous story. I actually, very early on, thought I wanted to be a newspaperman. I actually ran the student newspaper at my high school for two years, managed to turn it profitable enough that we bought early Fishbowl Max for all the classrooms in the school. Then accidentally blew it up when we tried to address some pretty serious racial issues in our school and it led to a mini-riot. At that point, I swore off media, which is how I wound up in PolySci at Duke. I literally wasn’t on campus six months before I got dragged into a student publication and then wound up running the publishing board at Duke, which is everything but the Daily Paper.
At that point, I shrugged and said, “Okay, God wants me in newspapers. I’m going to be in newspapers or in media, at least.” My first serious gig was after moving to Dallas and being here for about a year. I was at the relaunch of D Magazine, which is one of the city mags. It’s like New York Magazine, Boston Magazine. Here at Dallas, ours is called D. It had gone out of business under the stewardship of American Express. I joined the group that brought it back and say that that’s where I got my street MBA in publishing.
I think I started there at age 22 and was maybe the second most experienced magazine person in the building at the time. I’ve followed a pattern after that of a couple years of something entrepreneurial, a few years of something corporate, and then back to something entrepreneurial, and probably, my second most recent entrepreneurial venture is what got me in the orbit of the Dallas Morning News. I started a pure play local publication. It was back in the days when hyper-local was first becoming a buzzword in the early 2000s, called Pegasus News.
It was nominally a competitor to the Dallas Morning News with the idea that we would try and scale and go off and do other markets. I wound up in the Morning News‘s orbit and there’s a infamous story of how they were looking at possibly buying us. It was a case of keep your enemies close. The deal went south. I might have lost my cool a little bit and neglected my tact and found myself getting walked out of the building by security at the Dallas Morning News. It was pretty funny when, I guess, maybe eight, nine years later, I got approached to work with them on a content marketing agency. It was great fun to go in for the first meeting and say, “Last time, security walked me out. How’s this going to turn out?” The fact is, I was there because I’m a news junkie, and I’ve always been a news junkie and particularly, a local enthusiast.
I ran the agency with them for a few years and then we rolled that agency up into a larger group of agencies that we bought. I saw that as my opportunity to hop back into the news, the paper, or the web news side of the business. I hopped in, I started out doing marketing and business intelligence and a lot of operations stuff. We were at an inflection point a couple years ago where we knew we needed to do something different. Digital product via Pegasus News is really what I was known for by that point. I like to say that I staged a coup. I just walked into the publisher’s office and said, “We don’t have a product team. We need a product team. I’m starting one. We’re going to rebuild the website. We’ll launch in a year. Here’s how much money we need.” Fortunately, he and I are really good partners, and he just looked at me and said, “Good, now I don’t have to ask you.”
That’s when I became CPO which, I guess, would’ve been mid ’18 as we started moving towards our digital relaunch that we did last year.
Jacob: Now, at a media company that is both print and digital, what is the specific focus of the chief product officer? Are you strictly focused on the digital transformation of the organization or do you have additional responsibilities?
Mike: I’d say I’m 90% focused on the digital transformation of the organization and our digital products. I sit on the management committee, and so it’s a small group and we all have our hands a little bit in everything. I do have a little bit of responsibility in the print product, particularly where we take digital things and think about how we’re putting them in print a little bit because marketing’s under me. Eyeballing our page count and making sure that that’s not getting out of line, because if it gets out of line, it’s probably because we’re running too many barter marketing ads. I would say, I wake up and go to bed thinking about digital.
Jacob: Then you mentioned the intelligence unit and your LinkedIn says that you’re still the president of Belo in Business Intelligence. What exactly is that and how do you handle those responsibilities relative to the CPO responsibilities?
Mike: They’re really interlocked. The agency I had done with the Morning News was called Speakeasy, and we rolled it up into this larger group of agencies. The original concept before I took over the website was that BBI, as we call it, was the connective tissue between the newspaper business and the agency business, and to some extent, it still is. Where that really came together was in terms of our BI and analytics teams. I also, at one point, had an advertising product team rolling up to me. It started there, but it was also, just to be completely candid, we had three leaders in the business and each of us was being given a business to run. So each of us got a president title on that and it just hasn’t gone away.
I’m very tangentially involved in our agency work in terms of supporting it with our analytics team, but they’re pretty self-sufficient. My focus, these days, I’d say is probably 60% on product, 30% on marketing, and 10% on analytics. Funny, when I first pitched the idea that a newspaper have a chief product officer, which seems strange at the time. I dug up an article, was a really good article, I forgot where, but it lined out what the ideal chief product officer role was, and it pretty much covers those areas. If you’re going to evolve the product, you’ve got to be really tight into what the analytics say. The best marketer of the product is going to be the team that knows the product best. So all of that fits together nicely, but it’s not something that was MBA engineered on an org chart.
Jacob: So is the team structure today, analytics, marketing, and product, rolling up to you? Are there other departments as well?
Mike: Yes, all three of those roll up to me.
Jacob: Let’s move a little bit and talk about local, kind of overall. When we were discussing you coming on the show, you said something both interesting and perhaps a little ominous. It was, “This is good timing to come on the show because this is a pivotal year for local.”
Mike: Did I say, “A,” or, “The”? I might have even said, “The.”
Jacob: You might have said, “The.” “This is the pivotal year for local.”
Mike: Yes. We have been on a slow-motion collision course with local having to become primarily a digital business for the last 20 years. I was probably out there a little early howling at the moon saying that there’s not going to be print newspapers by 2010, get on board. I was a little early with it, but we’ve been moving that way gradually, and like I think we’ve seen in many, many businesses, Coronavirus was a big hit. It’s going to go away eventually, but it has accelerated a lot of the good and bad fundamentals of a lot of businesses.
That’s why you see so many businesses in any industry that are marginal, going under. What I think it’s done for newspapers and particularly local, is it’s accelerated what we were already going through. We’re all moving towards a digital-first, subscriber-first mindset, but with print advertising taking such a hit this year, most of us, our peers are anywhere from 20% to 30% down in print revenues, a lot of which don’t look like they’re going to come back, candidly, so it’s jumped us ahead a couple of years.
It used to be we could set it like clockwork, “Okay, print is going to be down 8% or 11%,” and that advertising stream has fallen so quickly that we’re having to get more real about what our digital future looks like. Don’t take this to say that there won’t be some form of print, there will. The overwhelming portion of our, and when I say, “Our,” I mean the industry, not just Dallas Morning News. Most of our revenue is still in print. A lot of us are on various iterations of a mission to get to the point where digital covers the costs so that we know we have a future going forward.
I think some of the hedge fund-controlled companies are more of in a milking and harvesting mode, and I’m not quite sure what’s going to be left when they get to the other side of that. The way we look at it at least is we’re going to try and skim off the runway as this thing comes down on the print side and make it to the other side on digital. That is going to be a tough trick for all of us.
Jacob: You and I actually met, or virtually started talking, a few months ago because I wrote a piece that said the reason local media is struggling so much is because of all the fixed costs tied to the print papers. I used the Dallas Morning News as an example because you’re one of the only single paper public companies because you’re owned by Belo Corporation. What you suggested was that there’s more than meets the eye in the raw financial numbers because of this transition from a print product to a digital-first product. What specific steps has DMN taken to help facilitate that transition? For example, you dismantled some press machines and stopped printing for commercial clients. What else has happened, and in your opinion, needs to happen over the coming years for this transition to continue taking place?
Mike: Yes, so you’re correct in that we pulled back on our commercial printing business. We’ve really pulled back on any business that isn’t additive to the core, and that started a bit before even that conversation you and I were having, in terms of even after Belo split into TV and newspaper companies separate. Seven or eight years ago, we sold off our other newspapers, and then we sold off our real estate. That’s not an unusual story. Where we are unusual a bit is that, yes, we’re publicly traded, but we’re still basically controlled by the founding family, and we have no debt, and we have cash in the bank, largely because of some of those moves.
It’s allowed us to invest in several ways that not a lot of our peers have been able to. Part of it has just been as simple as not cutting as deeply as you’ve seen a lot of folks having to cut into the news operation and into parts of the business that cause people to want to buy subscriptions. I’d say we have a really good-sized newsroom compared to a lot of our peers. Another big piece of that is it’s allowed us to invest in digital. We’ve put a lot of headcount and emphasis on building out our digital products and on growing subscriptions.
This is a company that had probably not spent any meaningful external money on marketing in 10 or 15 years, and now, granted it’s part barter, but we’ve got a pretty robust marketing budget that we’ve been working on top-of-funnel consumer, which I haven’t seen newspapers doing in a long time. It’s allowed us, too, to just move a little more methodically and be less reactionary to what happens in the market. We didn’t go enact layoffs or furloughs when the pandemic hit. We did have some pay cuts and we eventually restored all of that pay. I think it’s just that we’re able to put our dollars behind that digital future. Does that mean we ignore print?
Absolutely not, because like I said, it’s still the lion’s share of the revenue, and we’ve got a lot of subscribers that we want to satisfy and keep happy and keep with us because really, it’s the print subscribers that are financing the digital growth. If you don’t have that one side of the business, then somebody’s got to be dumping cash into the business, and that’s tough in this economy. Really, we take the attitude of, if there is a dollar to invest, let’s invest it in digital. Sometimes, we find ways that the digital then comes back and actually enhances print. We’ve got a product that started its life digitally called Forward DFW that’s kind of a cause-marketing, corporate-sponsored product, but it also does a lot of pages in print.
In fact, if you rolled it all up into one product, it would be probably one of our biggest advertising accounts. We’re focused on the whole business but I think there’s more of a sense of urgency, certainly in the last five years. Now, with the pandemic bringing down some print streams faster than we’d expected, that I think you’re going to see everybody thinking towards a primarily digital product now. Really, as far as the whole industry goes, I just pray we’re not too late.
Jacob: Mark Thompson, the former CEO of The New York Times, has said that he doesn’t think there will be a print product in the next 20 years. You thought print product would be gone in 2010, which was a little early. How do you see that transition occurring? Is it just one day all the presses turn off, or will it be more gradual? How is the Dallas Morning News thinking about that?
Mike: Yes, so it’s going to be gradual and as I explain what I’m going to delve into the bringing down print, but I want to make it clear I’m speaking as somebody in the industry, somebody who’s got a breadth of experience across news orgs. I am not at all laying out the plans of the Dallas Morning News in this context. We have not made any decisions to do anything at this point other than keep printing seven days a week. That said, I think you’re going to very much, this year, it will be in 2021, see the norm for local newspapers become five or six days a week in print. McClatchy has already gone with its papers to six days a week. A lot of the European papers have gone to six.
What I’ve heard from everybody who’s gone through that is that cutting one day doesn’t really lose you any customers. One exec used the phrase, “100% accretive to EBITDA,” to describe their move to go to six days a week because you don’t cut the price and you stop a weaker day of the week that didn’t have much advertising revenue associated with it and it’s not enough to bust somebody’s habit. What we’ve heard from some of the European papers is that when you cut to five or you cut to four, then you start losing people. Then you’ve got to just start doing the calculus. It’s the same calculus that we do now as a seven-day, thinking that we could stay seven day.
The average age of your reader is up in the high 60s and how much longer are they going to be with us because there are not new print readers coming up behind them. Right? I think what you’re going to see, there’s an interesting angle in this that I’ve really changed my mind on in the last two years. I think the digital replica, what a lot of people call the E-papers, is going to really be a major part of this transition. What I’m talking about is it looks like a PDF of the paper but it has a little more interactivity to it.
Being more of a pure digital guy, it’s a product I used to always pooh-pooh, but what I’ve come to learn particularly over the last 10, 15 years is that the pure digital reader has no interest in print. By the same token, the person who has been a pure print reader, the last thing in the world they want is your website. There is almost nothing I can imagine that you could do with a web news experience that is going to make them happy, and so there is this middle ground of an e-paper, of a replica.
I like to see them a little more interactive. I jokingly call them the Harry Potter papers, if it could be done right, but that top end of your subscriber base who is aging and print-centric and frankly paying a whole lot more than the digital subscribers, will accept that as a substitute. They won’t accept a web or a mobile web experience or an app experience as a substitute. Obviously, that’s a generalization. There are exceptions, but the engagement we see on our e-paper product, it’s like 28 minutes a day for the average reader.
They treat it like a newspaper. They actually dig into it. I think a lot of how we make this transition over the next few years is going to be how cleverly do we use the e-paper to keep the, let’s call it 60 plus audience on board, while we get the 40-plus audience, that’s always been our core audience, as a business, as an industry, to start paying for the digital, and be ready for the 20 to 30-something audience when they age up. I can go onto a separate tangent about why chasing the youth market in this context is a fool’s errand, but I don’t know if we have time for that.
Jacob: Why is chasing the youth [unintelligible 00:23:16] group of people a bad exercise for local media?
Mike: Because whether it was ancient times, pure print in the ’70s and ’80s, the beginnings of digital, people subscribe to local newspapers when they own homes, pay taxes, vote, and have children. That is the demographic psychographic. I have seen no less than 100 different efforts over the course of my career to go after the youth market. “Let’s do a young hip product and get 20-somethings on board.” It’s not a matter of missing the youth market. They’re not ready for you yet. That’s not what their interest is and that’s why you see so much of the alt-weekly market is free publications because people expect arts and entertainment coverage for free.
They’re not in the mind to pay for watchdog city hall or school board coverage or home and design type stuff. I think the problem in our industry is we messed up and lost the current, say, 40 to 50-something generation because they were the hybrids and we didn’t really give them a great experience in print or digitally. We left them hanging on both ends and so that market is drastically underrepresented in our industry subscriber roles. I’ve never seen anyone succeed in local in getting the kids on board until they grow up and buy houses.
Jacob: I want to pivot the conversation now and focus on digital products specifically since that is where you spend the majority of your time thinking. I’ve got a multitude of questions, so I’m just going to jump right in with them. Starting with analytics, because data informs decisions but doesn’t actually make decisions, what numbers are most important to you to running a healthy subscription and local news business?
Mike: There’s a few. The set that I think is actually the most useful and impactful really ties around the content and what content is converting people. We’ve built a pretty robust attribution model now, and everyone in our newsroom has access to it, pays attention to it. We have about three different levels of contributing before you even get to the direct conversion. We keep feeding data back to the newsroom literally on a daily basis of what content is converting subscribers. Then we help connect those dots as to why. A lot of it is topic, some of it is frequency, but keeping our newsroom armed with the knowledge they need to make the right decisions.
When I say, “Make the right editorial decisions,” that’s not do you go right or left, it’s are we going deep on real estate or retail, for one example. That is the core. That is the thing that we’ve got everybody in the organization looking at every day. Beyond that, from a product side, we look a lot at what content gets people to do what I call lane skipping. What you find is most of our readers, they either read sports or they read entertainment, or they read news or they read real estate. They have their one nation, that’s what they read us for.
The value proposition becomes clearer to the reader when they start reading you in multiple contexts and you’re ubiquitous in their lives. We’ve done a lot of work in the last year and will do even more next year on are we getting people to lane skip? Are we getting those people out of sports and into news, and there’s a number of ways of doing that with customization. I’d say the last thing we’re really watching, which is something that I fear we’ve neglected too much in the early days of being a subscriber business, is we’re also really starting to look at what’s our market penetration of visitors in the local market. I think we’ve gotten, as an industry, pretty good at converting the people who come in and use the site, but we’ve ignored the top of funnel a bit, and at least for us, we’re at a point where we’ve got to get that top of funnel back and bigger in order just for the math, so that the algorithm can work.
If you’re going to convert X%, you’ve got to get them there. That’s why we’re doing some of the brand awareness work and doing a lot of things in promotions, just to get people reacquainted with local news sites or using them for the first time.
Jacob: In a piece published over the summer, Scrolls CEO, Tony, I believe it’s Hale, it might not be. Said that The New York Times has more digital subscribers in Dallas Fort Worth than the Dallas Morning News. That same statistic can be said about Seattle, Los Angeles, San Francisco, and I imagine the list goes on.
Mike: Pretty much everybody but Boston, and they might even have more in Boston than Boston, but Boston’s the only one that is possibly over that threshold. Boston got really good at subscriptions early ahead of the rest of us. They’re a good bit ahead of us on that. Yes, I would say almost any true local paper in this country has more New York Times subscribers in its market than they do their own.
Jacob: It’s an interesting problem because there was some research, and I can’t remember by whom, that suggested that people who are willing to pay for news are typically only willing to pay for one subscription. If people are opting to choose The New York Times, how do you think local can compete with this monolith eating up so much of the subscriber revenue, and what is Dallas Morning News focusing on to try to combat that?
Mike: Boy, that’s a complex question and one that I hope I can come back in a couple of years and tell you we’ve cracked. I think there’s a couple ways though, that that can be addressed. One is we think of ourselves not just as competing with the New York Times or say the Fort Worth Star-Telegram. We’re also competing with Peloton and Disney Plus and Netflix. There are so many subscriptions, not even new subscriptions, that somebody is going to buy. If only one of those is news and somebody is really committed to national and World News, we’re not going to get that slot. One answer is to get another slot, right? One of the areas that drives the most subscriptions for us is commercial real estate coverage and reporting, so maybe we fill your B2B slot if you’re in that industry.
One of our other heaviest drivers of subscriptions is insider foodie dining news in our market, so maybe it’s a lifestyle subscription that we’re filling because if we go to war with the New York Times on national and international news, we’re not even going to be able to compete, and that’s not really what we’re here for. That gets to the next angle and it’s something that we’ve debated a good bit with our ad agency over the last year, is do you have to engage people in the community in order to get subscribers?
I hope that that’s not our primary avenue because that makes it a really steep climb. There was a study we looked at from back in the ’80s but that I still believe has some validity today. They said that the top indicators that you were going to subscribe to a local newspaper were, you owned a home, you had children, you went to church, you volunteered somewhere, and you voted. Each one of those things was like a multiplier on each other. If you look at the numbers and the statistics societally, the numbers on all of those things, most recent election aside, have been trending down. One of the angles is to get people engaged and proud in their community and that makes them want to be subscribers.
I’ll say there’s a campaign we’ve had some success with that on. We’ve done a big marketing campaign around voting. Dallas traditionally has the worst voter turnout of any major metro in the US. Again, I’m going to take the most recent presidential election out of the equation because I think it’s an anomaly. If you go back for the last couple of elections, we’ve seen the voting turnout increase based on our ad campaign, and we’ve seen our voter guide drive a tremendous number of subscriptions. If you follow all of that, you probably are panning and saying, “Oh, my God, that sounds exhausting to go through all of that to sell local subscriptions, but that’s how hand-to-hand tactical I think it may be.
Then finally, on this front, and this is something that I’ve been shouting for a number of years. We have to, as an industry, find a way to have a bundled new subscription that works absolutely for the consumer, but also just as much for the publisher. Not an Apple News is way of thinking about it. I really do believe that we’re going to need to see some time in the next five years or so, a one subscription to rule them all, that gets you your local news site that is a paid subscription plus one of the nationals. It could be The Times, it could be The Post, maybe as a dark horse, it could be The Journal. I really think we’re going to have to bring consumers that because they really don’t want a dozen new subscriptions. I’m sure we’re going to talk about the matchup a bit and that’s a Trojan horse into that model.
Jacob: We are going to talk about the matchup, but we are also going to talk about that same article that Tony wrote, which that statistic about where the subscriber numbers were, was an introduction to the idea that you needed this local and national bundle. It’s not going to be The New York Times, because The New York Times is eating everybody, so why share with anybody? His argument was it should be the Washington Post, the number two large national newspaper. It’s more tech-driven than The Times. It might be more in its DNA to do this.
How do you see that sort of a relationship playing out with the Washington Post partnering with local papers? Then from a technical perspective, how could that even be introduced, because you’re dealing with payments and you’re dealing with user information where everyone’s going to want to control everything? How would that even work?
Mike: That’s a good question. While they’re certainly not going to be in all or even the majority of newsrooms with their ARC platform, which is what we are using as our CMS, as a ad delivery system, and now, as a pay meter, they’ve got their hands in a lot of local media businesses now. In digital, they’re my three top vendors are all the Washington Post. They’re getting a closer view into local and they’re not all hep to it yet. I know their guy who’s the head of local who focuses on like the D.C metro area for The Post and he’s not seeing the kind of resources that the development that’s going towards local papers is. My point is they’re getting a little bit enrooted into our businesses in ways that I think they’re going to start seeing some benefit to that.
In terms of who owns the consumer relationship, I want to put a pin in that one and come back to it and we talk about the matchup because I do think that that’s really a key piece. The Post certainly has subscription room to gain. They’ve got headroom to gain against The Times and they need something additional to offer and I think that a local news product could be a meaningful part of that. The thing is, 30 years ago we were all trying to be The New York Times. We were all trying to be The Washington Post. The Dallas Morning News had bureaus in multiple continents and all over the country. We all sent reporters to the Olympics and the World Cup. That’s changed with digital and it no longer really makes sense to have 500 companies covering the same thing necessarily.
Now, you need 4 to cover it and 100 to aggregate it. I also think that part of it is, journalism organizations have over the centuries not always behaved rationally for good and bad. There is a bit of a religion of freedom of the press and journalism for all that is embedded in all of these organizations at their core. I pretty much believe that neither The Times nor The Post want to see a world without local newspapers. We’re their farm teams, we’re a feeder, we’re a canary in the coal mine for a lot of the things that they’re trying to cover. I think if we’re not here, God help them, they’re going to be tempted to go into the business themselves. I think before they do that, there will be some partnerships tried to see if we can’t all make it work together.
Jacob: Before we talk about the matchup, I do want to close the loop on a few other components of The Post— sorry, of Dallas Morning News’ business. I slip up and mention The Post because you’re obviously a big fan of their technology. Launching or relaunching a website and changing a CMS for an organization as old as the Dallas Morning News must be a daunting exercise. Can you walk through why the organization decided to go and move forward with ARC Publishing? How you got the entire newsroom and the executive team and all of the various stakeholders on board with it, and then what actually went into that transition? Because like I said, it can probably be very painful.
Mike: We were in a unique position and it goes back to the old, we were all trying to be The New York Times at one point. We were on our own homegrown CMS that we had built hoping to, and this is before my time, but hoping to be the one CMS to rule them all, and we’d go license it to all of our peers in the industry. The way I put it is we invested severals of millions of dollars in that and then The Post turned around and I don’t know what they invested, but I’m sure it was probably hundreds of millions of dollars in theirs.
We were in a position where we actually had only one developer in-house. We had an out-of-house agency that was both building and maintaining the site for us and the CMS. We were literally having to blow our entire budget every year just to stay even, just to stay functional, right? We weren’t able to really invest in new features or in UX in the way that we wanted to. The calculus became very simple that we did not want or need to be in the CMS business ourselves. I wanted somebody else to take care of the plumbing so that we could focus on the fixtures inside the house that consumers really used. At the time, when I looked out at what was out there, I probably didn’t give the digital new CMSs tied to print providers much of a shake because they were tied to print. I looked hard at doing WordPress and I think we could have gone that route.
At the time, it was just the CMS. They brought a really great proposition in terms of they were doing the R&D, they were keeping the ship afloat. They were doing all of the core tech that kept us alive, and they were providing the AWS piece, they were providing the CDN. Today is a great example. AWS was down all over the country today and caused a lot of problems for some sites. Yes, it caused us problems too, but I didn’t have to worry about it because there was nothing we could do. It’s The Post problem. It was like if The Post is down, we’re down. Other than that, we’re covered, which frees us then to do our own UX work and unique features like this local graph product we’ve created that’s like a localized knowledge graph behind the news that we never would’ve gotten to if we weren’t working with somebody like Arc.
The calculus on the decision, we wound up being able to hire a room full of developers and move the site to a better platform and save significant money that we could then go back and reinvest in content or marketing or wherever we needed it. It really made sense on all levels. Just the same as we don’t need to be building our own printing presses, we don’t need to build our own CMSs. In terms of getting the management team on board, I was very fortunate in that I had got a history in local digital news product, so there was a great deal of trust built up. My colleagues really let me go and do what I needed to do. Getting the newsroom on board, it’s a little sad to say was easy. Also, because our existing CMS was so terrible and workflow for them was so bad that I don’t think we could have made it worse in going to a new CMS. It was only improvements and upsides.
Nobody uses a CMS that doesn’t have a gripe with it somewhere. We actually did before and after surveys with the newsroom, and I think we went from 20% approval rating on the old site to something like an 87% approval rating on the new site from a workflow perspective. It was just kind of a win-win-win all the way around. The engine underlying, like I said, it’s the plumbing, it’s the stuff we shouldn’t have to worry about. The really more significant thing about the relaunch was that it allowed us to take control of our UX and be able to iterate that on an every-other-week Sprint schedule as opposed to once a quarter when our outside developers were able to do a big deploy, and boy, do we hope it works when it goes live, right? It gave us the tools to free us to focus on the things that we could be unique on.
Jacob: You mentioned that you are focusing more of the business on becoming a subscription-first company, but obviously you still have a pretty decent component of advertising both on the print side, but I imagine also on the digital side. How do you envision the advertising business evolving at Dallas Morning News, considering the third-party cookie is going away? With that in mind, how is DMN capturing additional first-party data so that you’re able to still offer your advert advertising partners the data they need to make good advice?
Mike: Advertising will always still be a component of what local news does. I remember learning very early when I was at D Magazine, our publisher sitting me down and showing me the fashion ads at the front of the magazine. I think I’d been disdaining them somehow. He was like, “You realize that this is news to our readers, right? Even though it’s a paid ad, and it’s clear who paid for it, the fact that this new thing is available at Highland Park Village is news to them.” Local advertising has a role, particularly where it’s unique, and always will.
I think we’re seeing more sponsorship-type advertising on the local level. We’re seeing more, for instance, we’ve got a local grocery store that has partnered with us and is really down to being embedded in some of our features as the sponsor of our food section. I think the model is much more of that than, “Hey, here’s a CPM, we’re buying ads.” Because of that, it’s kind of funny, local is the one place where Zeus actually doesn’t really make a huge difference in monetization. Not because of anything wrong with Zeus, but the way Zeus works is it makes the ads much more viewable and advertisers at a national level pay more for viewability.
Most of your direct local advertisers don’t even know what viewability is, and if they do, they’re still not really thinking about it much. We weren’t able to raise our CPM on our local advertisers because we had better viewability. We have to show them value in other ways. That they’ll come around on that over time, but the local advertising component, I think it’s going to be more sponsor-driven, more partner-driven. The nice thing with Zeus is it lets us, on the national level, when we do arbitrage out that inventory, actually get a better price for it. In terms of the first-party cookies, I actually think this is going to be a big boon for local news orgs. The kind of data we have about the interests of our readers got commoditized by programmatic and by Facebook, right?
It got to the point of where, to reach Dallas Cowboys fans, I don’t go to the Dallas Morning News. I go to Facebook and say, “Get me all the Dallas Cowboys people.” In the programmatic world is that becomes harder in concept with the demise of the first-party cookie. With the kind of content data we have on people, I think there is a great opportunity. I still question though whether or not we have the scale that we need to make that really sing. That’s another project that the local media consortium where I’m on the board is working on is how can we as publishers work together to share that so that we get to something like a second-party cookie between us so that we can take advantage of that.
There’s always going to be that core of local advertising. I just think we’re going from a world where 10, 20 years ago we were 75% ads, 25% subscriptions. That’s going to invert itself by the time we get through this. I think the thing to watch in local news this year in particular is what happens to inserts, because so much of what drives that print revenue are inserts, and for multiple reasons, those may not come back, right? You’ve already seen the best buys of the world pull out of inserts because they just can’t afford to do it anymore.
Then on the flip side, we saw the grocers during the pandemic pull out of inserts because they didn’t need them because they were so overrun with business with everybody staying home. As we transition back to normal, what happens with inserts will be a big multiplier on whichever direction the business is going, more print-centric or more digital-centric. Right now, my money is, and I take no pleasure in this, my money says that the insert business is going to universally dry up a lot faster than any of us thought, which is going to push us faster into digital.
Jacob: Now let’s jump into The Matchup, which is actually a really interesting project that if it works, should help local media quite a bit. Can you explain what The Matchup is and how it came to be?
Mike: Yes. I mentioned a second ago, I’m on the board of the Local Media Consortium, which is a trade organization. Historically, what we’ve done is negotiate on behalf of the local news industry. For instance, Google for ad serving treats us as one big account in terms of pricing, which gives us a much better deal than what any of us could get on our own. We’ve negotiated deals with many, many vendors, and over the last couple of years, I’ve started to look at how we can build– That’s a great defense. We wanted to go on offense, and how we could build products for the industry that would be good and helpful to everyone. The Matchup came out of one of those early conversations. The concept is this, is in pro and college sports, particularly in pro sports, nobody covers the hometown team like the hometown newspaper. We like to say nobody covers the Cowboys like the Dallas Morning News.
If you live in Philly, and you’re playing the Cowboys, we can’t expect you to buy a subscription to The Dallas Morning News for that game. If you’re really interested in all the NFL teams, well, you can’t buy subscriptions to all the papers and all those markets. The idea here is that The Matchup will be a product that includes all of the content from our members, covering pro and college sports. There’s a couple of different ways you’ll get it, but the primary one is the destination site, so somewhat in competition with, say, The Athletic, or espn.com and you can follow teams, you can follow leagues. Basically, if it’s a pro or major college conference team, we’re going to have coverage on it.
The twist here, and this is the thing I was putting a pin in earlier in terms of the consumer relationship is, the only way to get a subscription to The Matchup is to be a subscriber or a member of your local media outlet. If you’re in Dallas, and you’re going to read content on The Matchup, and you’re a Dallas Morning News subscriber, you automatically get in free. If you’re not a Dallas Morning News subscriber, The Matchups going to say, “Hey, it looks like you live in Dallas, you can get all the sports content you want from all the teams and all the news reports around the country. You’ve just got to subscribe to The Dallas Morning News. If we picked wrong where you live, here’s a list of the member outlets. You’ve got to subscribe to one of them,” but the consumer relationship stays with the local market.
That’s how we’ve gotten the member media companies to really agree to this and get excited about it is, unlike the athletic that basically has got to please VCs and VC kind of numbers, all we’re trying to do with The Matchup is not lose a ton of money on the core business and drive as many local subscriptions as we can. Like our General Manager, Kevin Lockland, who we’ve hired recently, he’s going to be judged based on how many subscriptions he sells in Minneapolis, and Seattle, and Raleigh, and Miami, and Dallas, not on how big a media business we build.
We’re able to do that because at least the core content is free because that’s what’s being contributed by the member companies. There’s also a secondary model that we actually already have out in alpha right now, and that’s more of where Dallas is playing Philly, and therefore, if you’re on the Dallas site, you can see everything that the Philly writers are saying about that matchup that week. We’re testing that in about 70 cities right now around the country and looking to watch the full site probably next spring.
Jacob: Building on that article that Tony wrote, do you ever envision that there could be a national-local bundle, or will that just never work?
Mike: No, I believe there could be. I absolutely do. As you alluded to you and I, and Tony, and Jared, and a lot of these other folks, we’ve been talking about this in the corners for a while. I’m absolutely a believer in that. I just think we have to get the industry there to the point where– take the local media consortium, we represent 3000 media outlets, and it’s about 85 different companies. We’ve got to make it make sense for the critical mass of those before anybody’s going to jump on board.
That’s why I think that The Matchup is actually a good half-step where we can minimize the risk and learn some things. I think the industry, if we’re going to survive, has to get there sometime in the next decade, and depending on economy and pandemics, maybe sooner.
Jacob: One final question on The Matchup. Do you philosophically think about that as a offensive tool to get a bunch of new subscribers or more of a defensive tool to reduce subscriber churn since they’re now getting so much more content?
Mike: I think it’s a little bit of both. I think of it more as an offensive tool, though, to gain subscribers, first and foremost. The folks who read sports in a local newspaper or site, they’re very avid, but it’s a small percentage of the audience. We find, again, to go back to the lane-switching conversation earlier, that once you get them in the ecosystem, they consume content in other ways. The only way in which I think of it as a defensive move– I think it will save us all some churn. Churn is not as much our problem, I think, in general as new business, but there is a defensive posture there, in a sense.
The Athletic built its local shops, largely by rating the newsrooms of local newspapers, and made a lot of noise early on about their intent to kill local newspapers with their product. I think we’re all a little sore, one, that they were able to take our talent, and two, that that talent may not have had the opportunity to do everything that they wanted to do as they moved on. I think it is a little bit of a defensive move for us in terms of helping retain our sports newsrooms and give folks who maybe want to be national in stature more of an outlet, and hopefully, a product that will be around for a longer haul.
Jacob: I want to talk just for a little bit talking about the differences between a media product manager and a big tech product manager because they are different. How do you view the two roles? More specifically, what skills do you think a Media PM needs to have, and what do you look for when you’re evaluating hiring them?
Mike: I’m much more versed on the media side than on these general product manager sides, so I’m going to be speaking a bit from some supposition on that. I think the media product manager, I see it as an amplification of some of the skills that are needed in terms of being able to mediate between different groups in the organization. Having both ad sales and a newsroom, and consumer sales, is something that is a little bit unique to media, and that I think that juggling all of those is a really delicate balance. Also, depending on what kind of media you’re talking about, the world that I live in, you probably don’t have the resources of the big tech product manager.
I know my head of digital product, Silvia, she came out of Yahoo, and she was good about this, but she had to learn really quickly, we don’t have Yahoo resources. There’s a lot of sleeve rolling up, there’s a lot of getting deeper in the weeds than maybe you would be in a big product organization. There’s some benefit to that too because it means you’re so close to the data, and you’re so close to the marketing.
I think you have to really know how the whole business works. Media is not a simple business. Never has been. Isn’t particularly now. I think also, you do have to have some respect for the legacy side and make sure that you’re not doing anything to damage that. To use a small example, but our product team pitched in to help the newsroom some with graphic visualizations and data feeds for election results for the website this year. We didn’t think about the fact that somehow that had to get into print until somebody in the newsroom raised their hand a week before and said, “How are we going to get this into the newspaper?”
You mean that thing that carries over half of our revenue and of people who are going to be adamantly wanting to see the elections? We’d better figure that out, I think it there’s some complexities and sensitivities that get added, particularly in this time for a media product manager.
Jacob: I want to wrap up with the same two questions I ask everyone I interview on the show. Looking at your career, what is a mistake that you made and what did you learn from it that made you better professionally?
Mike: I’ll go back to when I had this Pegasus News site. A very short backstory, it wasn’t hyperlocal, it was pan local, it was covering the whole market. I sorely, sorely underestimated the value of an incumbent local brand. What that meant was, in the anecdotal sense, again, they were talking in the early 2000s here, the number one customer service complaint I got at Pegasus News when people would call in was that they had not received their Dallas Morning News on their doorstep that day.
People know existing brands and people don’t necessarily know what they are consuming if it’s not a legacy brand. I’m not by any measure saying that you can just coast on your legacy brand and get away with it, but particularly in local, where scale is hard to achieve, you can’t underestimate the value of– when I did the content marketing agency with the morning news, I would call it the halo of credibility that comes from being the Philadelphia Enquirer or the Seattle Times or the Minneapolis Star Tribune. I completely, in that startup, underestimated that.
I think that caused us because us to make some bad decisions along the way that really kept us from achieving the scale we could have. Part of it was being overly proud about partnering with the incumbent local newspaper. If I had been of a better temperament to partner back then, I probably would’ve gone through a lot less grief in the intervening years between then and getting to where I am now.
Jacob: Then my last question is, if you could offer some advice either to product managers looking to break into media or media operators overall, what would that advice be?
Mike: Absolutely learn how to do it all yourself, even if that means starting small. Having the DIY ethos early in your journey. Look, it’s a joke right now among my team. If the world was ending, I don’t know how to fix anything on the website, nor should I, because I’ve now been through enough cycles of this that I’m focused on the strategy and I’m focused on how we’re going to market and how we’re working with other groups. I wouldn’t be able to do that if I hadn’t, early in my career, hand-typed set a website. I built the First City Magazine website ever.
Just getting deep into it and understanding every bit of somebody pays you money. How do they pay you money? What system does that go through? How do you pay taxes on that? How does that go into a financial statement? How much money did you make on that piece of the business versus the other piece of the business? I really am a big believer in– long-term success may mean staying out of the weeds, but I would tell everyone early on to get as deep into the weeds as you can.
