Tuesday, November 19, 2013

Thoughts on Urban Milwaukee's Purchase of Third Coast Daily

Third Coast Daily, the online publication where I was a partner and senior editor between August of 2009 and Sept. 2 of this year, has changed hands. My friend John Shannon, who bought TCD in September of 2012, has sold it to Urban Milwaukee, led by publisher Dave Reid and president Jeramey Jannene.

Jannene knows TCD intimately. He built TCD's site and was its contract webmaster from the beginning (March 2009). Bruce Murphy, former Milwaukee magazine editor and Journal Sentinel reporter, joined Urban Milwaukee as editor some time ago and will oversee both publications.

Urban Milwaukee has always focused on politics, land use, urban planning and design and the economics of all that. TCD had ceased hard news about a year ago and became more focused on the arts and lifestyle, with strong travel and fashion coverage in addition to Milwaukee's most complete arts coverage. Together, the two publications will be Milwaukee's only full news and features online-only daily. It will command a hefty audience from the outset, and it's not beyond this team to build that audience.

Looking at it from a distance and objectively -- I am not sentimental about such things -- this strikes me as a good idea, even a natural. But it won't be easy. TCD has always relied too heavily on unpaid contributors, which I do not see as a viable option going forward. The good writers find jobs and go away or just stop writing, because they won't give it away forever. The poor writers require so much editing and hand-holding that they're not worth it. If Urban Milwaukee/TCD is to thrive, it will thrive with a small roster of professional writers rather than a long list of amateurs.

Advertising revenue alone will never be enough to support a professional operation. Jannene and Reid have sold branded t-shirts, artwork and other such items for a long time. They can market these things to an expanded audience through a more robust website. That's good, but insufficient.

To make any real money, UM/TCD will have to generate significant reader support. Forget about pay walls, they just drive readers elsewhere. You have to make your audience love and identify with you to the point that they will pay a little something to keep you going, even though they get no tax deduction, as they do with public radio.

You must give them incentives and go to special lengths to make them care. Someone charismatic must be the face of the organization. You must give them stuff, personal attention and special discounts to profitable events related to travel, fashion and the arts. That will require dedicated personnel and a marketing effort beyond social media. Those things cost money, and they will take a year or two to show much return.

I learned the hard way at TCD that you can't build a business of this sort out of sweat equity alone. You must have capital investment. I estimated that investment for TCD to be in the neighborhood of $600,000 to staff up, launch revenue initiatives and stabilize the company for two years.

We didn't have $600,000 -- or $600 -- for capital development. Every penny that came in immediately went out to meet our tiny payroll and keep the lights on. Our marketing budget weighed in at about $150 a year. We tried now and then to put on special events, but we had to stage them ourselves with no money. They wore us out and never really worked. We never could put the building blocks for success into place.

UM/TCD is a good idea and they have some talent. (They'll have a lot more if they bring the excellent Matthew Reddin, current TCD managing editor, onto the team). It fills an obvious niche in the market and it will attract eyeballs. But without capital, it's going nowhere. The bottom-line question: Are the pockets deep enough -- or are investors daring enough -- to make it work?

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