[Editors note: This article was originally published on My News Biz newsletter, created by James Breiner. You can sign up for the newsletter here.]

Recently I have been doing a lot of research about how news organizations have turned to collaboration rather than competition as a business model. This would have been unthinkable only a few years ago.

Editors and publishers jealously guarded their exclusive stories and competed to unearth the latest nugget of news for their publications. However, the covid-19 health and economic crisis caused a disastrous drop in revenue for publications dependent on advertising. The disaster gave them both the motivation and the permission to change.

Out of necessity, publishers began putting up paywalls and launched other projects aimed at generating revenue from users rather than advertisers. Necessity also caused them to swallow their pride and turn to competitors for help in cost saving and revenue generation initiatives.

Relief for the local news deserts

An excellent example has emerged in Spain, where local newspapers were hit harder than the national ones. Alayans Media was formed in 2020 by Axel Springer Spain and a number of publishers to share data about user behavior and preferences to drive paid subscriptions and advertising.

The members so far among local publishers are Henneo, Grupo Joly, Diario de Navarra, Grupo Serra, Grupo Progreso, Edigrup, La Gaceta de Salamanca y Segre. But there are also publishers with national audiences such as digital natives El Independiente, Público and Lainformacion.com and newspapers 20minutos and La Razón.

An article in Business Insider quoted these members of the new alliance:

Carlos Núñez, CEO of Henneo newspaper group: “The technology that we are implementing allows us to value the data of all the publishers involved, activating them commercially and editorially, either independently for each publisher or crossed between all the publishers that are part of the network; this will be key to evolve in all aspects in an environment without cookies or third party data.”
Manuel del Campo, CEO of Axel Springer Spain: “We are delighted to explore new projects in the Spanish market that will help us to continue developing our digital business and the enormous potential of our audiences, using the most appropriate technological platforms and taking advantage of the possibilities of collaboration with other media groups with complementary target audiences. This will allow us to improve our commercial offer and provide a much more attractive environment for the advertising market.”

The Alayans group said they were prompted to join forces to take advantage of synergies and complementary audiences to improve profitability. Shared data and technology are at the heart of it. They cited involvement of Google as a technology collaborator, with its ad manager, cloud, and analytics products.

The power of network effects

Each new member of this collaborative network adds audience data that enriches the machine learning algorithm and benefits all members–network effects, in other words. The added data improves the predictions about which users are likely to subscribe or donate (or unsubscribe), and which users will be most (or least) receptive to an advertiser’s message.

In some ways, it is similar to Wikipedia, in which the responsibility for the quality and content is dispersed among many editors who share professional standards but apply them differently according to local cultures and contexts. There are multiple threads of interconnection that strengthen the whole and make the failure of any single threadless damaging–like a spider’s web.

The power of network effects as applied to local media played a role in the decision of digital media powerhouse Axios to purchase the local news startup Charlotte (North Carolina) Agenda, with plans to replicate its successful model across the US.

The promise of local

The New York Times article about the purchase quoted Axios executive Jim VandeHei: “There is an audience — and real revenue — in cities. It’s a tough nut to crack, but creating a daily habit for local readers who care deeply about local issues stirs the possibility of starting to solve the local news crisis.”

Charlotte Agenda’s product was driven by a daily email newsletter, a website, and an Instagram account. Now as part of Axios, it has expanded to Denver, Tampa Bay, Minneapolis, Des Moines, and Bentonville, Arkansas, and is in the process of adding Austin, Dallas, Atlanta, Chicago, Philadelphia, Nashville, Washington, D.C., and Columbus, Ohio.

Ted Williams, the founder of the Agenda (now Axios Charlotte), is leading the rollout and adapting elements of his business model to the network. The formula included long-term sponsorship deals with local buyers, a job board, event board, and membership program.

Axios’s technology allows the pooling of local user data to drive machine-learning algorithms for the whole group and offer national advertisers access to a “smart, influential audience”. The Axios Local group has 350,000 email subscribers, with 100,000 of them in Charlotte and 100,000 in Denver, its first major expansion city.

Williams told Nieman Lab’s Sarah Scire, “The truth is, local media is very difficult. It’s also, in my opinion, not a complicated business. You have to be patient, disciplined, and laser-focused on the reader and very few things. If you do that over a long period of time, you can develop a pretty good business.”

More from The Fix: Op-ed: Time to rethink the media funding model

Photo by ian dooley on Unsplash

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