Charge people for funding local news

You could almost hear the trumpets blaring in the background of Mark Zuckerberg's announcement last week that Facebook would now promote local news stories in its News Feed.

"People who know what's happening around them are more likely to get involved and help make a difference," the Facebook chief wrote, espousing an eat-your-vegetables view of local news that jibes with his new effort to turn Facebook into a force for global good.

There's little reason to doubt Zuckerberg's noble-sounding intentions. The internet has decimated the business model for large and small metropolitan newspapers, and Facebook, like other tech giants before it, just wants to help.

Still, when it comes to the news business, hasn't Facebook already done enough? Just last month, the social network said it would play down national news in its feed. Considering all that has gone wrong with Facebook's half-decade dalliance with news - the rise of filter bubbles, clickbait, rampant misinformation and propaganda, and in some places the very unmooring of democratic society - the new embrace of local news arouses instant suspicion. Picture Godzilla, having thoroughly savaged Tokyo and New York, now turning a hungry eye toward Peoria and Palo Alto.

There may be another way to save local news. Over the last few weeks, I chatted with Jessica Lessin of The Information and Ben Thompson of Stratechery, two of my favorite sites for understanding what's going on in the technology business. In different ways, both talked through a new way of thinking about local news, and a novel business model for funding it, one that doesn't depend on the beneficence of Facebook or Google (which also has a new plan for local coverage).

The plan, for any would-be entrepreneur brave enough to try it, goes like this: Hire some very good journalists; just one or two are OK to start. Turn them loose on a large metropolitan area - try San Francisco, Los Angeles, Houston or any other city going through waves of change, and whose local press has been gutted by digital disruption.

Have your reporters cover stuff that no one else is covering, and let them ignore stuff that everyone else is covering. Don't do movie reviews, stock market analysis, Super Bowl coverage or anything else that isn't local. Instead, emphasize coverage that's actionable, that residents deem necessary and valuable for short- and long-term planning - especially an obsessive focus on housing and development, transportation, education and local politics.

Package it all in a form that commands daily attention - probably a morning email newsletter - and sprinkle it with a sense of community, like offline and online networking events for readers.

How will you fund all of this? This is the most important part: Shun advertising. Instead, ask readers to pay for it with real money - $5 or $10 a month, or perhaps even more. It will take time, but if you build it right, you just might create the next great metropolitan news organization.

This plan may sound simplistic, almost like a joke. Wait, Sherlock, your big idea is to create a really good product and charge people money for it? Haven't people tried this before?

Less than you might think. The short history of digital media is lousy with advertising, which promotes all the wrong incentives for online news - volume over curation, aggregation over original coverage, speed over accuracy.

More recently, there has been a surge in online subscriptions. Netflix is doing it for TV, Spotify for music, and Patreon for podcasters and YouTubers. And many news outlets - big companies like The New York Times and startups like The Athletic, which covers sports - are making subscriptions the center of their journalism.

Yet few entrepreneurs have jumped on the subscription bandwagon for local news. The reticence makes sense; local markets are by definition small, and journalism is expensive.

But after studying Lessin's and Thompson's methods, I suspect there's a market for subscription-based local coverage. Someone just has to build it.

How? Consider Lessin's plan for The Information, the tech news service she started in 2013 after spending eight years at The Wall Street Journal. Back then, online subscriptions seemed antiquated; many companies had experimented with charging users, but most had failed to win large numbers of subscribers, and the big money in media was in ad-supported sites aiming for rapid expansion through viral traffic.

"People thought no one would pay for news, especially tech news," Lessin told me last month. "The problem was the news business hadn't been focused on a key question: How do I deliver a differentiated product that people would pay for?"

Her idea for differentiation was to charge a lot for The Information - a subscription is $399 a year, close to what The Wall Street Journal charges for print delivery - but she would offer readers quality instead of volume.

The Information publishes just two or three stories a day, often scoops and analysis, including a handy daily roundup of the most important stories in tech that day.

The effect is like that of a filter, and a necessary one. And The Information has broken many big industry stories, including last year's news of sexual harassment allegations against venture capitalist Justin Caldbeck and Roy Price, Amazon's former entertainment chief.

Thompson, who worked in the tech industry at companies like Microsoft, started Stratechery in 2013. It offers a daily newsletter featuring strategic analysis of developments in the tech industry. (Here's one example: Thompson's argument for why subscriptions are the best answer for local news.) In 2014, he began charging for the analysis. Now he publishes one article a week for free; to read the others, you have to pay $100 a year for the service.

Thompson's overhead is low: He is the only writer of Stratechery, which has become required reading among tech executives and many others in the industry. He declined to divulge any subscriber numbers, other than to say he's doing very well.

A high-priced subscription site may well have a natural audience ceiling. Lessin declined to divulge her subscriber base but said it was "significantly north of 10,000," which is lower than the audience for many ad-based digital publications.

Still, two years ago, she said, the site became cash-flow positive - that is, it pays for expansion from its subscriptions - and it plans to hire a half-dozen more journalists this year, adding to a workforce of 31 full-time employees. It has also started an "accelerator" program that invests $25,000 in new subscription news businesses; one of them, Detour Detroit, is a planned news service aimed at covering the Motor City.

Sure, there are reasons to be skeptical that this model could work in local news. Many subscribers to The Information and Stratechery think of the publications as a business expense - they work in tech or finance, wealthy industries that will pay just about anything for business intelligence.

Yet there are striking overlaps between what those publications do and what a subscription-based local news startup would look like. For one thing, a lot of those wealthy people also live in undercovered urban and suburban areas; if they're paying for news about tech, wouldn't they also pay for in-depth investigations into their kids' school district, their city's mayoral race or the traffic clogging their commute?

There's also the opportunity to pay for a sense of community. The Information - through the Slack chat service, conference calls and in-person meet-ups - constantly brings subscribers together to talk about the industry. A local news startup could do the same, selling not just news but a sense of belonging.

Now we just need someone to build it.