After years of working in the federal government, the annual conference of alternative newspapers seemed downright decadent to me, and maybe it was. Taking over a downtown Pittsburgh hotel in July 2003, many attendees wore shorts and t-shirts, while evening conference activities included a rave on top a 9-story parking garage slated for demolition, and an awards ceremony emceed by Dan Savage, where every winner had to either take off an item of clothing or do a shot with him. Savage was drunk by the end, but he’d brought two largely naked go-go boys to help him get through the afternoon.
My friend and business partner Steve Sherman and I were in Pittsburgh to meet some alt paper owners and maybe see if we could find an owner interested in selling to us. I was finishing business school after working in the Clinton Administration and was looking for a new cause to take up. Steve, a commercial banker by training, was attracted by the average 25% annual margins many alts were taking in.
In 2003, the future looked bright for alternative newspapers. Led by the Village Voice, Chicago Reader and Phoenix’ New Times, not only were the papers making money hand over fist, but they also retained the patina of counter-culture, with a balance of local muckraking articles, grunge band and art reviews, Dan Savage’s sex advice columns, along with thick classified sections including thinly veiled ads for sex workers.
They were an incredible, heady mix of money-making and cool. How could anyone resist?
It turns out, just about everyone at the conference thought so too and were ready to party down to celebrate. Yet, big changes were lurking on the edges, and Steve and I were earnest enough to want to warn everyone, but not sharp enough to see who and what would be bringing the changes.
Introduced around earlier in the year by the Madison Isthmus owner Vince O’Hern, by the time we got to Pittsburgh Steve and I had already talked to dozens of alt owners about selling and had looked at the books of at least a dozen publications. There were over 100 alternative papers around the country, most founded in the 1960’s and 70’s, so many owners were looking for a way to sell and sail into retirement. Steve and I saw an opportunity in buying alts, tightening up loose business practices and reenforcing fading journalistic standards to draw in new readers.
But the biggest discovery we’d made talking to alt owners was that alternative newspaper readership was nowhere near the 20-something audience the papers’ counter-culture content led many to assume. In fact, alts’ biggest readership by far was late-40’s to mid-50’s college-educated whites at the time. 20-somethings still read alts, but their interest was soft.
Keep in mind, in 2003, we’d just come out of the first dot-com wave, were still just getting used to the idea of texting, and smart phones were still years away from reality. It was still a paper-based world and Craigslist was still just beginning to rollout from San Francisco.
But from the perspective of alt owners we’d talked to, they were making tons of money and the future was bright. The internet was still mostly dial-up and terrible flip phone apps, so nobody was reading articles online and search was dominated by Yahoo. Still, most alts had at least one “digital editor” on staff, and publishers were trying to figure out where this internet stuff was going. It seemed as if every idea was as good as the last, and conference discussions were open and free-ranging.
Dodging Hawaiian shirt-clad editors and ripped-jeans clad conference-goers, Steve and I desperately tried to pin down publishers and owners of small market alternative newspapers to talk about a sale. We’d put together a couple million dollars of equity from investors, so we could either buy a couple small papers or one medium-sized one. O’Hern, who became a believer in us after we went through his books and helped him make a couple hundred thousand dollars more while keeping our hands off his editorial team, was making introductions for us.
A few owners politely listened, a handful welcomed follow up discussions requesting absolute secrecy. But the vast majority of owners outright rejected us, saying, “Who are you anyway? You don’t work in the newspaper business!”
It was shocking to us, since at the time every single one of the alt paper owners had started their anti-establishment publications from scratch, with little to no previous newspaper business. Now that they were the establishment, alt owners wanted credentials. But outside of our work for The Isthmus and our M.B.A.s, we had none.
As we sat and listened to conference sessions we were staggered by the general lack of forward thinking. The Big Internet Sensation everyone at the conference talked about was a web page created by The Reader that showed all the Chicago zip codes in their delivery area. It had become a traffic magnet since it was one of the few places online that mapped Chicago ZIP codes. Everyone ooh-ed and ahh-ed at how such a simple idea became a great web traffic draw.
Print at conference was given much more credibility than digital. Of course back in 2003 a small percentage of people were surfing the web, but even so, it took a lot of work to ignore the digital future. And yet…the conference hosted innumerable sessions on print design, and only one session on digital. The one with the Chicago ZIP code map.
Being young, I took rejection from alt owners and backward thinking as evidence that I needed to try harder to get their attention. I just lacked an opportunity.
My chance came in a conference session labeled “The Future of Alternative Audiences” or something like that. It was a panel discussion with about 100 or so editors and publishers listening and asking questions. I clearly remember the panel members kept dancing around the fact that their audiences were getting older. Ad revenues were steady, and music venues still placed ads, so there was no real problem, was the gist of it.
O’Hern, sitting a few rows away from me in his own Hawaiian shirt, raised a hand and was called on. Bestowed with a massive brush mustache, hirsute arms and a “dees and does” accent, O’Hern commanded the room when he stood to speak. And then he began to talk about me and the work Steve and I had done for him, and that everyone should listen to us. Then O’Hern stood me up and commanded, “Tell them something they should know, Mike.”
Rifling through my brain to come up with something good, I squared my shoulders and looked around the room as I said something like: “We’ve been doing research for the last year. Your audiences are getting older and your brands are becoming associated with middle aged people. You need to either rebuild your pubs with content for younger people or launch new ones to address younger audiences.”
My speech was as popular as a Nixon campaign button for this room of middle-aged counter-culture warriors.
There were a couple of boos, and more than a few people clucked their tongues. But maybe that’s just my memory covering up the dark, dank silence that met my words. I had come to the big party of successful alts to just dump a big pile of shit on them.
Walking out of the session, Vince said, “I think you did great. They need to hear this stuff,” and truthfully, a couple of owners did seek me out to ask more questions, but I certainly hadn’t endeared myself to anyone.
That night Steve and I went out and got hammered and decided that if we were ever going to get an alternative newspaper to sell to outsiders like us, it would be sheer luck.
What we didn’t know then was that around the same time, the owners of the Village Voice in New York, New Times in Phoenix and Creative Loafing in Atlanta were teaming up with private equity firms to buy other alts. Just like us, the private equity firms also saw a huge opportunity in those 25% annual returns, but unlike us, they came armed with much more money and access to tremendous bank debt.
Over the next four years, almost every alternative newspaper in the United States changed hands, most going to either Village Voice Media, New Times Media or Creative Loafing Inc. As Steve and I made calls to alt owners looking for a seller, we heard stories of huge payouts to founders. The new media groups were doing big leveraged buyouts, offering many times more than current revenues as they planned to grow audiences with digital and increase returns with better operations. It was pretty much the same playbook Steve and I had, except we wanted to target a younger demographic and didn’t have access to the same amount of cash as the private equity firms.
Quickly, Steve and I were pushed out of the game by the big boys.
For us, it turned out to be a good thing, since Craigslist came roaring across the country in 2005 decimating alternative newspapers’ huge classifieds business. Then, after the economy crashed in 2008, print display ads crashed too. By 2009, the one-two punch had eviscerated alternative newspaper groups, forcing asset fire sales and layoffs around the country. It didn’t help that most of the papers still lacked strong digital strategies – and their audiences kept getting older while younger readers started using growing digital arts & entertainment sites like Metromix and Time Out to plan out their weekends.
I’d like to say that Steve and I saw it coming back in 2003. But the magnitude of the crash, the death of alts around the country was just too big to conceive back then. Sure, we thought owners were misguided and headed for trouble, but the death of The Village Voice? Impossible!
And right there is the crux of it: As much as you might believe a daily or weekly newspaper is a pillar of our community, that has nothing to do with the strength of its financial foundation and whether or not enough people think it’s worth paying for.
For too long, people in the news business have been dining out on their own legend: That newspapers are critical, important heros we should all honor and value. But the thing is, average people just aren’t paying attention unless you’re producing something interesting.
The signs were there in 2003: Alternative newspapers were attracting fewer new readers with interesting, valuable content. But those of us who cared about them were too in love with them to see the beginning of the end.