'Digital First' Strategy Reaps Gains For JRC

Three years ago, the Journal Register Co. was one of the newspaper industry’s worst black eyes. After building up mounds of debt -- in part by paying $415 million for publications in, of all places, Michigan, in 2004 -- the sprawling chain of small to mid-sized newspapers, shoppers and magazines was careering toward a crash. The New York Stock Exchange delisted its stock in 2008. Bankruptcy followed in February 2009.

Today, the company looks more like the shiny poster child for change, with industry onlookers hoping at least some of its many experiments succeed.

Earlier this year, Editor & Publisher listed three Journal Register newspapers on its annual “10 Newspapers That Do It Right” list. The young publisher of one, Matt DeRienzo, was named to E&P’s “25 Under 35” list.

JRC has opened its newsroom and editorial meetings to the public at The Register Citizen in Torrington, Conn., reached out to citizen journalists and bloggers at its Community Media Labs, and used its Ben Franklin Project to show that newspapers can grab free technology off the Web to publish online for less.

In March, the company’s new CEO, John Paton, crowed to rank and file employees that JRC had beat its goal of $40 million in 2010 profits and bonus checks were on the way.

It’s worth noting that that profit was just EBITDA -- earnings before interest, taxes, depreciation and amortization -- and not the real bottom line. As executives at companies that borrowed to buy newspapers before the market plummet of recent years can attest, interest expenses do matter. But JRC emerged from bankruptcy a private company owned by former creditors, with less debt and less need to share financial details

Through all this, Paton has emerged an industry star. E&P had already named him Publisher of the Year in 2009 for his work as co-founder, chairman and CEO of impreMedia LLC, the nationwide Hispanic publishing company. After joining JRC in January 2010, he added Newspaper Association of America board member to his resume.

Paton has become a sought-after speaker at conferences anywhere the future of newspapers is discussed, regaling audiences with his message, “Digital First.”

Paton has called on legacy media execs to put the tech-savvy in charge, stop investing in print, slash or outsource any effort not tied to gathering the news or generating ad sales, and aggressively chase “digital dimes.”

NetNewsCheck recently caught up with this high-energy CEO.

An edited version:

You’ve said the newspaper model is broken and must become digital first and print last. Can you elaborate, and describe what that means in terms of what you’re doing at your own company?

In essence, the 'digital first' strategy is about allocating resources appropriately to how news is now created and consumed. It means that news breaks on CMS, the Web. That process continues ’til the very last thing we do is print.

So the business model actually allocates to that new news ecology as opposed to the other way. Most newspapers are still allocating all of their resources to how the paper’s actually printed. That doesn’t make any sense anymore.

We actually have a bigger digital audience than print audience. We’re trying to allocate resources to what people want, and that’s digital. We have currently 19.6 million Americans access our product: 11 million of them are online customers -- [monthly] unique visitors -- and 8.6 million of them are readers of our print product [dailies and non-dailies].

[Online was] 5.5 million a year ago. Print has stayed the same and digital has doubled.

We’re outsourcing everything. If it doesn’t have anything to do with the creation of content, marketing and research … then we’re either outsourcing it, reducing it, stopping it or selling it.

So, yes, we’ve been getting out of printing. We’re getting out of distribution -- the physical distribution of the newspaper.

Tell me about what your company has been doing with crowdsourcing.

On a daily basis, we now crowdsource news in all of our newsrooms. We have community media labs where people can come into the newsroom and work alongside the journalists. We do that in 20 of our locations.

That’s different from our open-to-the-public newsroom in Torrington, where the public can come and sit in on news meetings and participate. Basically it’s become a community center. That newspaper -- which wasn’t making any money two years ago -- is now in its second year of profitability. Its digital audience is almost 6 times its print audience on a monthly basis. We know that from a bottom line perspective it has been very good for the newspaper itself. This will be the model for all of our daily newspapers going forward.

We have gone from 5.5 million uniques to 11.7, and we’ve gone from nearly zero bloggers to more than 1,500 in the same time frame (bloggers that reside on our site or their content does). Clearly they’ve played a role in expanding our content offerings and expanding our audience. As has our partnering with companies like SeeClickFix, which is a phenomenal success for us. SeeClickFix lets us do old-fashioned journalism about fixing a pothole here or raising an alarm about a dangerous intersection there.