This morning I read a piece in Business Week (BW) that projects a slowdown in local business ad spending online. Fair enough, ad spending is trending downward everywhere.
The premise of the article, "local business not supporting local media" is the inverse framing from what it needs to be. The frame needs to be: can local media serve local business and local people? It can and will have to if local media and businesses combine to remake vibrant local economies.
The BW piece suffers from the common pitfalls of analysis of national–leaning perspective. Here’s a quote from the article:
The author gives examples of national/international web companies, Craigslist, Yelp and OpenTable that barely are able to monetize their local leverage. What’s wrong again with this framing? These are not local companies, they just happen to be web companies applying technology designed to provide local content and scale large enough to monetize a fraction of the action and still generate income to support their far-flung operations.
In other words the problem of the analysis framing has to do with the fact that success is measured only in terms of what a remote web company can achieve on a local level (many localities networked) given the superiority of the technology they provide. Keywords: remote and technology. This bias comes naturally to a Silicon Valley journalist. They are, after all, exposed to a constant parade of technology superstars.
Let’s imagine what this looks like from a purely local perspective.
In the new economic paradigm local economies will thrive and prosper based upon the vitality and engagement of local citizens, local businesses and local media. All of which will consume all things local first. This doesn’t mean that national and international companies are excluded. It just means that local first is the means to reclaim the value of economics for local interests.
According to Bureau of Labor statistics, there is an average of 40,000 enterprises per one million local populations. Some are chains and some are homegrown. Local first focuses on the homegrown enterprises first.
When products and services provided by locally owned enterprises are sourced first for consumption and trade, promising economic progress begins to occur for the local economy. I’ve worked with the BALLE folks for years in the Bay Area and can testify that their research and programs offered are thorough, inspiring, insightful and effective. Rather than repeating this knowledge in this post, go here to the BALLE site for information. See also Michael Shuman’s (founder and Board Member for BALLE) book, The Small-Mart Revolution, for a thorough analysis and guide to jump starting a local economy using local first practices. My own development of Oasis CMS and the integrated local business directory was inspired by BALLE and the concepts of Shuman, whereby local directories represent a foundational starting point.
Local media coordinates both sides of a two-sided market. See the diagram. In the past, this has meant selling advertising in all its forms to local businesses (and a smaller fraction to national too) by attracting attention of local consumers. In a traditional media world, that worked well and made media folks wealthy. Just selling advertising doesn’t work so well today.
It’s the advertising model that has changed dramatically because of the web. Attention is higher than ever. It’s the arbitrage of attention buying/selling, i.e. advertising sales that has changed. That’s because the utility of advertising has changed in a way that favors digital exchange, because of the power it shifts to consumers and businesses. The results of the change haven’t killed traditional media, but has wounded them severely enough to instigate a restructuring.
Local media have a distinct advantage in proximity and presence in the local community and economy. Their weakness to date has to be the foot dragging on imagination. They have to imagine a service role to the local economy beyond the scope of any one previously imagined.
Local media have to embrace an expanded meaning for the term 'service'. While selling advertising is a form of service, it’s only one slice of the service equation. The Newspaper Next project helped expand the role of service definition by proposing that media look at ‘jobs to be done’ satisfaction for local consumers and businesses. (I think it’s unfortunate that they used Newspaper in the project moniker, since the findings are unconstrained to one medium. The methodology they introduced is extremely helpful in getting beyond advertising).
If local media are to advance the prospects of a local economy, the definition of service has to include being the instigator, coordinator and (one of the) resource providers for local first initiatives. It’s a collaborative model that extends beyond ownership and control, and that I believe, is the biggest challenge for local media companies who are accustomed to owning media to extract ad value. Local media will provide tools and resources for local businesses and consumers, but for the most part income will derive from the services provided rather than products owned. In other words it’s a remaking of local media’s role in community from powerbroker/owner to empowering others in the local network through collaboration.
From a purely non-news model, the early success of Craigslist in San Francisco demonstrates this spirit. Craig Newmark created a platform that solved a number of consumer and business needs. His income followed at a much later stage after the efficacy was demonstrated. There are others who provide similar, if not superior, classifieds technology, but miss the collaborative authenticity Craig and his team created. (You can read a related piece on why Craigslist didn't kill newspapers here). Local media have to do this too in ways that are uniquely local serving.
Think of service outside the scope and definition of the industrial era economic skew, which implies servitude and is measured in productivity standards reflective of manufacturing edicts. The definition of service in that old paradigm stems more from the Latin root word servus, to mean slave. Service was something that a company provided after a product was purchased. Recast service to mean idealist, facilitator, coordinator, resources scout, change instigator, network builder, value-generator and maintenance provider. Service is the thing, not the afterthought.
Local media, local populations, local businesses and the local economy are interdependent and offer a new role for everyone. Local media can assume this new role and prosper. They just need imagination and the commitment to create through collaboration.
Added this slide presentation 3/4/2009 after several people asked about what process I use for developing strategy. You can click on the full screen view for best viewing (lower right corner).
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