The Daily Peg: Pegasus News, Inc. Founder's Blog

Does Ricky Gervais work at the DMN?

As promised, Belo released two memos this morning with a lot of words about their strategy and their circulation investigation, which is the sort of thing that publicly held companies have to do.

There's a lot of the usual corpra-babble in here, but here's what's interesting for us:

• Belo's workforce will be reduced by approximately 250 positions by November 1, with the majority coming from The Dallas Morning News. Belo's total revenue from all sources in the Dallas/Fort Worth market has been essentially flat since 2001, making changes in the expense structures of The Morning News and WFAA-TV, Belo's ABC affiliate in the Dallas/Fort Worth market, necessary.

Like we said, not exactly staffing up Metro. Reading that statement as conservatively as possible, they're cutting at least 126 people at the DMN; probably more like 200.

I submit that we can produce a more useful product than the DMN with less than 200 people. Wish we knew where the cuts were coming -- if enough are in News, I'd say that we could produce our products exclusively with our management team and the laid-off Belo-ites.

At least the Belo brass were sensitive enough to throw the fearful masses this bone:

• A review of the Company's executive compensation plans, particularly their bonus structures, is being conducted to ensure that the Company continues to maximize performance and that appropriate incentives are in place to retain Belo's most talented executives.

The rank-and-filers must be so relieved. Regardless of what it really means (and who can tell), it comes off like that episode of  The Office where David Brent tells the staff that the bad news is that they're being downsized; the good news is he's being promoted.

---

UPDATE: Seriously, if any of you laid-off Belo-ites want to use the time covered by your severance package to stick it to the man, drop us a line.

We don't have any paid positions available yet, but apparently neither does "one of the nation's largest media companies with a diversified group of market-leading television, newspaper, cable and interactive media assets."

How better to bounce back from a layoff than to help create the competition? We could use some smart folks to help us refine the launch plan and to help design our prototypes.

Conspiracy theory

I really want to get off the Belo stuff and back onto our concept, but a couple more things on the layoffs:

• Tim Rogers has more info on the demographics of those being laid off.
• Coming back from lunch, I made my Wednesday afternoon pickup of the Dallas Observer. Sadly, no weekly Belo update in the Buzz column.
  
  Then it occured to me-- why was today's announcement made, well, today? Why not Monday? Why not Friday? Why not Tuesday?
  
  Could it be because the only non-monthly media outlet in town who would cover the story critically goes to press on Tuesday night?
  
  Yet another reason we need another voice.

Welcome to our 448 new friends

First, a hearty welcome to all of you who have found this site via today's Frontburner post. Definitely reinforces for me that there is some interest in what we're trying to do here.

I'm sure it's unrelated to our introduction to the larger Dallas media audience today, but apparently a strategy announcement is coming from Belo tomorrow. Somehow I doubt it involves hiring up for the Metro section.

In other news, PaidContent interviews Audible.com's Don Katz. Applicable quote:

It is arguable that the growth of no industry has been more dependent on external invention than the media business ... And invariably - ironic though it always seems in retrospect -- each newly minted format or distribution mechanism that arises to propel the culture's best intellectual output into peoples' lives with new efficiency - creating powerful new revenue streams in the process - has been fought or ignored by the creators and content businesses of the moment.

Fear, or just loathing?

An anonymous reader asks:

Is there any way you can hope to compete with a monster like the Morning News? Aren't you afraid that they'll just crush you?

I appreciate the concern for our well-being. Certainly, any discussion on the downsides of our endeavor always conjures up images of the Belo building sprouting arms and legs and lumbering down Main Street looking to flatten us.

I do, on occasion, worry about such things. On occasions like when I breathe, sleep or wake. (I'm crazy, but not stupid.) Then, I look at their new attempt to merge the worlds of print and online advertising, and breathe a lot easier.

Let's say that I'm looking for someone to get rid of the bugs in my yard. Apparently, there is some thought that I'll go to the DMN site and see that they have something called Adsearch. I'll then figure out that I should click on a friendly button:

Then, after waiting 15 seconds for the page to load (on a broadband connection), I'll pick through a list of 60 categories to find "pest control." I'll click.

I find an ad for "Las Colinas Pest Control." Not just any ad-- their exact small-space print ad from the paper. It's clickable! Not to their website, of course, but to a detailed zoom of a piece of the ad. (A tiny frame listing on the side will link me, eventually to their website.)

I'm willing to wager that I'm the only person to get to that ad today. If not, I'm one of a precious minority. It's like a SuperPages for people who hate finding things. And the resources required to put in clickable, zoomable images of every little ad can't be inconsequential. I wonder if these webads count against the "future advertising credit" makegoods the News has had to hand out.

It should also be reiterated that our enterprise is not about beating the DMN. Whether we succeed or not, we fully expect the DMN to still be a major, if not the dominant, player. Local markets need a second voice, and we think we've cracked a model that will allow us to that in Dallas and (once we've proven ourselves) maybe twenty other markets.

And, my anonymous friend, when I see initiatives like Adsearch, I take heart. Not to the point of hubris, but it's like a local media pundit said to me when I posed your question to him:

They're just not cool. And they can't buy cool.

Summary

UPDATE 11/30/04: A reader (see Rex's comments) points out that our description of open source journalism is pretty silly in the wake of the Rathergate scam. That's the beauty and danger of blogging a startup-- that language came from the early days of Rathergate and didn't seem so ridiculous way back then. It's since been dropped from our official literature, but the post lives in infamy. Here's the current and still-evolving language for our elevator pitch:

Great ideas often start with a conversation. Pegasus News is the product of a conversation between seasoned media folk, young journalists and “outsiders.” The starting point of the conversation was:

“Laying aside the structures of the old-model newspapers, and starting from scratch—how, in 2005, does it make sense to find and deliver local news and advertising in a major metropolitan area?”

The “answer” (which will continue to evolve as the content market changes), looks almost nothing like the incumbent model, which is in an admitted state of catastrophic decline. While the incumbents realize their troubles, because of entrenched infrastructures and slavery to the public capital markets, they are incapable of enacting the revolution that is necessary to create and implement a new model.

Our model has five key differentiators:

• Hyper-local (neighborhood-level) content updated continually and archived for long-term access
• Journalism 2.0: A conversational method of reporting that engages the end user in the process, as opposed to the traditional monologue
• Creation of textual and graphic content without regard to constraints of any specific medium to be delivered via as many mediums as possible
• Subscription price is based on level of engagement, with more specialized content at a higher price; and users who allow us to gather data on their online reading and real-time purchase behaviors paying less (or even nothing)
• Primarily pay-for-performance advertising across all mediums, including print

We will launch our suite of products and services in Dallas, Texas in late 2005. At launch, the offerings (for content and advertising) will include:

• A deep and robust website, which can be customized to each individual user
• A limited-circulation daily print tabloid edition
• Self-printed PDF edition (home, office, other public computing centers)
• Email newsletters
• Customized Really Simple Syndication (RSS) feeds
• Wireless text messaging
• Rip-and-read syndicated content for radio and television
• Business intelligence consulting for local retailers, enhancing the value of the pay-for-performance advertising

After proving our concept in Dallas, we will leverage the scalable system built for these offerings to launch in other major U.S. metropolitan areas, focusing first on large markets with monopoly incumbent newspapers.

---

We finally have a circulatable elevator speech (executive summary with the financials and proprietary stuff redacted) that I created for some folks at the Harvard Business School who are helping us out.. Since it looks like we'll be getting some Carnival o' the Capitalists traffic (thanks. Evelyn!), today seemed as good a day as any to unveil it:

---

Pegasus NewsÔ

The Local Media Revolution

==================================

Pegasus News is a local news company that has reinvented the broken content and business model of daily newspapers. We are launching in Dallas, Texas, in 2005 with a hyper-local, news-rich website that will have as many editions as it does users. Within a month of launch, the most broadly interesting and immediate content from that site will be published in a daily tabloid print newspaper. Once we have achieved key benchmarks with the Dallas product, we will leverage our scalable systems to roll out in every top-25 U.S. market with a monopoly newspaper.

 

Key distinguishers of our product include:

• Hyper-local news, with neighborhood coverage producing 10x the local news and information of the incumbent providers.
• “Open source journalism”: The immediacy of blogging with the spelling, punctuation and fact checking of “real” journalists.
• Edgy, insightful news with opinion and personality.
• Fully integrated local news model: Website, email, text messaging, print, radio and TV.
• Innovative subscription model: Price based on level of engagement – more active and engaged users pay less (or nothing).
• Innovative advertising model: Pay-for-performance advertising on both digital and analog (print) products. Proprietary processes allow for performance tracking in real-time.
• Lower cost structure than legacy media.
• Experienced team with leadership experience across all media streams.

Contact: publisher@pegasusnews.com.

Follow our progress on the Peg blog at www.pegasusnews.com.

 --30--

AP gets it -- sorta

PaidContent.org chats with an AP muckety-muck about plans to enlist bloggers to provide local content. The post is novel in that it's an audio interview, but the sound quality is iffy. I thought I picked out a remark along the lines of "we don't expect to make any money on this."

That seems the wrong mindset, for any company. I realize that may seem to conflict with my recent remarks on our mission, but it doesn't. Profit isn't the driver -- utility is. But if there's no profit, the market is telling you that there isn't (enough) utility.

More bad news for incumbent newspapers

Courtesy MediaDailyNews: Demand for almost all media other than online is declining, with newspapers seeing the worst of it.

I'm noticing a real swing of conventional wisdom leaning back towards online marketing for the first time since the overhyped bubble burst a couple years ago. I had an interesting conversation the other day with one of the principals of Dallas largest independent ad agency, in which I asked them how they (being very TV heavy) were responding to commercial-skipping Tivo customers. It was a long conversation, but the simple answer was: "online."

Next on the reading list

The Baltimore Sun has a nice review of Ken Auletta's new bio of Ted Turner. As expected, it contains some points supportive of our vision.:

If the march of human history represents clear-cut progress, well, then, all that consolidation would be swell. But it's hard to be buoyed by the current state of the media. Some innovations, even in the corporate press, are welcome ... Meantime, mainstream news organizations, suffering from dwindling ratings and circulation, traffic in endless tales of celebrity suffering, true crime, health fads and can't-miss diets - all indulgences that, like empty calories, fill us up without giving sustenance. Many of the stories we might need to function as citizens - or might give pleasure, inspiration or unexpected pause - go undiscovered.

Blogroll

http://rpc.bloglines.com/blogroll?html=1&id=mikeorren@alumni.duke.edu

Mission

I just returned from the 30th anniversary luncheon of my alma mater, D Magazine. It was a much-needed dose of inspiration... [section redacted -- irrelevant]

The speaker and cover subject for the anniversary celebration was Bishop T.D. Jakes (whom I named "best preacher in Dallas" in a 1998 issue of D). The good Bishop talked a lot about how partnership and collabaration make great things happen -- and even almost directly stated one of our core tenets:

Communication should be a coversation, not a monologue.

It also occured to me... [section redacted -- irrelevant] that the stark dividing line between a job/business and a mission/crusade is one of the key differences between the dying and the remarkable enterprise. In yesterday's discussion of streamlining, there was never even a passing reference to how this was going to better enable us to serve our customers -- it was all about operating margins. I seriously doubt that the folks at Newsday or Belo were thinking about how to enable conversations between their customers when they were ginning up their circulation numbers.

Even I've been guilty of missing this line. One of the main reasons I left D was that once we got out of relaunch survival mode, I was still so blinded by everything but the income statement that I couldn't think about anything else. I had spent so much time worrying about making payroll and paying the printer that once those were in the bank, I still thought all that mattered was racking up more nickels fast so we'd have them to rub together on a rainy day. My boss/mentor, Wick Allison, knew that once we emerged from that mode, that the real work of hosting a civic conversation could begin. I couldn't see it, and couldn't understand that there was more than the bottom line. In the intervening years, D has grown and prospered quite nicely.

This is not to say that one can or should operate a business solely on passion without regard to economic realities -- income is an easily discerned metric of success, and, more importantly, the fuel that enables us to create more and better conversations. But nothing more. Otherwise, we should go make widgets.

Conversations are much more interesting and impactful than widgets. Conversations allow a small-town West Virginia preacher to change the lives of literally millions of people; they allow a Dallas kid to change the direction of civic discourse over three decades; and they allow us to deliver local news and information that enriches lives untouched by the legacy media.

That's why we're here.