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San Francisco Chronicle and SFGate share their transitioning business models

By Shelley Seale

INMA

Austin, Texas, USA

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One of the main factors behind The San Francisco Chronicle’s success is that it has multiple revenue streams. From print and print services, to paid and free digital, to marketing services such as branded content, CEO Bill Nagel said this diversification is key.

Speaking to INMA members during a Webinar, Nagel said print and print services have been lucrative and are still a strong, stable business for The San Francisco Chronicle, which is owned by the Hearst Corporation, but it is a shrinking market.

With digital, the newspaper — which has two Web sites, the free SFGate.com and paywalled SFChronicle.com — enjoys both paid digital traction and a massive audience with the free site. These are separate audiences, Nagel pointed out. Adding a service such as Apple News also allowed them to triple their audience virtually overnight.

“We’ve found that’s a really good revenue stream for us,” he said.

The pandemic accelerated digital subscriptions, and Nagel believes that by the end of 2021 the company will have enough digital subscription revenue to pay for the newsroom.

Having two Web sites for free and paid content drives a lot of market opportunity, but it also presented many challenges in terms of confusion between the two, and subscribers not being sure what they were subscribing to. To combat that, the organisation separated the two sites out completely and now runs them as two distinct business models.

He introduced the editors-in-chief of both sites to discuss each Web site and business model.

Emilio Garcia-Ruiz, editor-in-chief of The San Francisco Chronicle, outlined the company's shifting strategy.
Emilio Garcia-Ruiz, editor-in-chief of The San Francisco Chronicle, outlined the company's shifting strategy.

San Francisco Chronicle

Editor-in-chief Emilio Garcia-Ruiz opened by saying The San Francisco Chronicle is a robust 155-year-old print brand, with a relatively new digital offering.

This was originally created as a separate brand, with the URL of SFGate.com — one of the first major newspaper Web sites launched. For years, all of the Chronicle’s content went onto SFGate.

“All of the Google and Facebook ‘juice’ exists on SFGate,” Garcia-Ruiz said. “But a little while back, the decision was made to create SFChronicle.com as its own separate brand. Soon thereafter, the decision was made to make it paid.”

When setting out to create a paid digital news model, he said that there are several things publishers can likely agree on.

“If you really want to have a big, regional newsroom, a non-subscriber base model isn’t going to work. You can’t do that solely on advertising. You just aren’t going to have a going enterprise unless you can build a large subscription business.”

While building a digital subscription business, print still has to be maintained. 

“Yes, it’s getting smaller, but it’s too big a part of revenue,” Garcia-Ruiz said. “So as you’re setting up your newsroom and structure, it really has to be dual. But while you’re doing that you need to continue to shift your emphasis to digital.”

He added that despite much speculation that local news is dead, that isn’t true in the San Francisco Bay area or for the Chronicle. Focusing coverage on local news allows them to break through the competition of larger, national players.

How to build a digital model

So, how does a publisher break through to accomplish this? Garcia-Ruiz said the strategic approach is fairly straightforward: scale plus subscriptions.

“You want to build a massive top of the funnel, people come in, and a small percentage will subscribe,” he said.

For national newspapers, the Trump presidency provided a bump in subscriptions, but local newspapers can’t capitalise on that nearly as much. Garcia-Ruiz said the answer is for local publishers to identify the topics that might be their own “Trump Bump” — issues that are key to local readers — and build readership with that. This approach requires a few things:

  • Restructuring the newsroom to tackle those topics, eliminating the old print structure. For the Chronicle, the issues identified included climate change, income inequality, tech transformation, health and Covid coverage, and government/police accountability. Changing management structure to diversify and better reflect the communities you serve is also important.

  • Implement the right tactics. The Chronicle has mountains of data that shows them what readers want, but implementing the steps needed to achieve that isn’t easy. The most critical conversations in the newsroom are between assignment editors and reporters. If the wrong story or approach to the story is assigned, it will fail.

Readers want two types of content, Garcia-Ruiz said. They want to know what is happening right now, and they want high-quality journalism that offers long-form articles and investigative reporting.

“What you want to get rid of is what’s in the middle," he said. "We call it the ‘dreaded middle.’ Stories that used to run on page A7 of the print newspaper, that were put there to fill space.”

The dreaded middle area between breaking news and quality journalism is what news media should avoid.
The dreaded middle area between breaking news and quality journalism is what news media should avoid.

Once you have your strategies and tactics, what type of stories are you going to want to tell? Garcia-Ruiz urged people to look at their content and put it in a matrix that consists of four quadrants: fascinating, critical, dutiful, and meh. The content that lies between the fascinating and critical quadrant are the stories a newspaper should focus on.

“Most content falls between dutiful and ‘meh’,” he said. “We are the only organisations in the world where a good 60% of our content, of the product we produce every day, fails. It does not find a big enough audience.”

Garcia-Ruiz believes most news organisations rely way too much on 10% of the stories to attract 90% of the audience: “We need to fix that, and that is fixed in the assignment editor process.”

What The San Francisco Chronicle has learned

Garcia-Ruiz shared what he and his team have learned about the local news process.

  • It’s hard. Monetisation power has shifted to the newsroom from the business side.

  • Unlike with national politics, the local news audience does not have a particularly long attention span. Stories come and go.

  • Once a newsroom buys into digital culture change, management must meet the expectation that the company will provide resources to execute on that vision.

  • The concept of scale might be shifting as massive storylines of the past few years (Trump, COVID-19, racial inequity) are replaced by smaller issues.

What has worked

Garcia-Ruiz also shared some of the things that have worked well at the Chronicle.

  • Local opinion writing, which has really struggled in the digital world, can build a strong audience on issues that impact relatively few people, but those people care deeply.

  • Investigative work establishes immediate credibility and validates subscriptions.

  • Subscribers are wowed by experiences. Combinations of video, photos, graphics, and text allow multiple entry points into an issue.

  • Utility journalism is effective in keeping subscribers happily informed about what they need to know to live their lives.

  • Communication between all aspects of the subscription experience, from the newsroom to marketing, must be excellent to prevent good opportunities from being squandered.

  • Employees are willing to attempt change, but the strategy must be simple and clear.

Where does the Chronicle go from here?

“We know that we need to continue to impress upon our newsroom that digital subscription sales are like hand-to-hand combat,” Garcia-Ruiz said. “Everybody needs to get a handful every day. If we can achieve a hundred digital subscriptions a day, we will do very well.”

Retention is also very important. Attracting new subscribers is only part of the game, but retaining them is equally important, if not more so. Low sign-up offers create churn moments.

There is also the likelihood that the team will have to continuously tweak its structure to cover topics that are important to their readers.

“You’re never finished,” he said. “News will slow down. How do you adapt to that slowdown? And how do you change your tactics to be able to serve those readers who now have different appetites?”

Grant Marek, editor-in-chief of SFGate, explained his organisation's transitioning strategy.
Grant Marek, editor-in-chief of SFGate, explained his organisation's transitioning strategy.

SFGate

Next, editor-in-chief Grant Marek of SFGate led INMA members through his team’s strategy.

Launched in 1994, SFGate.com was one of the first large-market media sites in the world. After the Chronicle launched its premium paywall site, sfchronicle.com, in 2013, varying amounts of both free and premium Chronicle content appeared on SFGate. This lasted until 2019, when the two Web sites became separate entities with their own editorial staff and independent newsrooms.

“We started to build a staff to support a major content shift,” Marek said. 

When people ask him what SFGate is, or how it’s different from the Chronicle, he gives them the analogy of The New York Times and New York Magazine. His goal is to become the New York Magazine of the West — a publication that’s more “voice-y” than the Chronicle, with thought-provoking essays, interesting points of view, and reporting that digs into issues of importance to younger audiences.

In building this new team, one thing stands out: they hired writers who love to read. As well, instead of only bringing on experienced newspaper journalists, they’ve hired people with a distinct voice and a following from a diverse array of various publications.

Content shift and verticals

Another important aspect to the transition was bringing verticals to the SFGate Web site. For years, it existed solely as a breaking news site — which was great, Marek said, except for when there wasn’t any breaking news.

“We’ve added a better balance to the content mix, which now is almost a 50/50 split of news and features. And we’ve put it into affinity verticals and have guided all of our feature content around a simple goal: write great stories that people actually read.”

To find those stories, they’ve looked at the topics readers have an emotional connection to, things that drive a curiosity read, or stories that have built-in social lift.

Marek shared a recent example of a profile that was done on actor Danny Glover, a San Francisco native and resident. Though many stories have been done on the celebrity, none had really focused on his local activism.

A story about Danny Glover's activism in San Francisco was very popular amongst SFGate readers.
A story about Danny Glover's activism in San Francisco was very popular amongst SFGate readers.

“When we were invited to the launch of a vegan restaurant that was featuring Danny Glover, the assignment was simple: profile Danny Glover,” Marek said.

This resulted in a story that readers really connected with, not only because of the fame of the subject, but his love of and investment in his (and readers’) hometown of San Francisco.

“The curiosity click was why is Danny Glover fighting for San Francisco,” Marek said. “But it also got picked up by other local media outlets, which pointed to the nugget that he’s become a vegan, and is an investor in this burgeoning restaurant empire.”

This story was one of the best performing on SFGate.com in the last week.

Expansions

Marek said that the organisation also expanded in a somewhat unexpected way.

“Rather than pushing resources into San Jose or Sacramento, we opted to pass on a geographical expansion in favour of an affinity expansion. We targeted things our core audience already cares about — as do people in [other] California markets we want to grow in.”

This affinity expansion targeted things such as parks such as Yosemite and destinations including Disneyland, Hawaii, and Lake Tahoe. But instead of writing about these places from a purely travel perspective, the team wrote about them from a local perspective.

“We hired the foremost authorities in all four — people who were born and raised in and around them, and let them tell stories that matter and aren’t being told, knowing that our audience cares deeply about these places,” Marek explained.

The team also launched a new travel section that focuses exclusively on California. They hired a former New York Times travel writer to run it, writing about under-covered California experiences.

The result of all this is that SFGate has expanded in all the markets they targeted, from Los Angeles to Honolulu. Whereas the organisation could have moved into the target markets and begun reporting from within them, they opted instead for this affinity approach — and it worked.

More importantly, Marek added, is that they covered stories that otherwise would never have been told — many of which gathered national media attention. 

What SFGate doesn’t do

Marek said that almost as important as what they do, is what they don’t. Unlike a lot of media properties, they’ve focused efforts almost entirely on the written word. They don’t do video or have a podcast.

They don’t do Snapchat or TikTok, but rather invest in social platforms that drive people back to their own Web site, such as Twitter and Instagram. They also don’t write stories with tiny funnels, but rather focus on great stories that people will actually read.

“We take a funnel approach to every story,” he said. “We don’t do stories only 500 people want to read, but we find a way to make sure another 50,000 people want to read that, too.”

What next?

In conclusion, Marek shared what’s on the horizon for SFGate.

  • More expansion into news deserts their readers have an emotional connection to.

  • More talent — sports writer Drew Magary drives more visits per article than any other writer, and they want more of that.

  • Focus on things they still need to solve, such as growing their owned channels.

  • Figure out how to translate its success into a larger, more dispersed staff.

“We started with 20, are now at 32, and have aspirations to grow by another 25% in the next year. How do we identify the blind spots of running a larger staff?” he asked. “Ultimately, though, I think we’re up for these challenges.”

About Shelley Seale

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