Axios is the latest media company to try to make money from local news. History is not on its side.
By Paul Farhi,
Wolfgang Kumm Picture Alliance/Getty Images
In the past quarter-century of the media industry’s transition from the printed page to the digital space, there’s been no category more vexing than local news.
The costs are high and the revenue low. Start-ups face competition from established news outlets, which in turn have hemorrhaged local ad dollars to the likes of Google and Facebook. More than 80 news sites were started in 2019 — and an equal number failed, according to one authoritative study of news “deserts,” the growing phenomenon of towns and regions no longer served by a news outlet.
And yet another digital-news operation plans to take a swing at it. Axios, the Washington-area-based national politics site, says it will establish online newsletters focusing on news in eight places this year, with a goal of expanding to 50 by the end of next year. The initial list comprises D.C.; Atlanta; Chicago; Dallas; Philadelphia; Columbus, Ohio; Nashville; and northwest Arkansas.
Axios, founded by alumni of Politico, got off to a fast start in 2017 by focusing on national politics and policy. With a quick-read format — its stories are broken into bite-size chunks, with a summary paragraph headed “Why it matters” — it broke a number of stories about the tumultuous Trump administration. It also got an enormous promotional boost from a weekly news and interview show on HBO.
Axios knows a bit about local news as a result of its purchase last year of a small Charlotte-based news site, the Charlotte Agenda, since renamed Axios Charlotte. The purchase preceded its first foray into local newsletters earlier this year in five cities, including Charlotte, Denver and Des Moines.
The company makes no pretense of trying to match the journalism firepower of a local newspaper. Axios co-founder and chief executive Jim VandeHei said its local operations will have no more than two or three reporters on staff, at least at first; they will cover regional politics, business, education and major cultural events. Business operations will be stripped down, too, with no offices or production facilities in any of the cities. Axios will handle ad sales, promotion and tech support out of its headquarters in Arlington, Va., even while it expects the bulk of revenue to come from local advertisers.
“Google and Facebook eat up a lot [of ad revenue], but they don’t eat up everything,” said VandeHei, a former Washington Post reporter who co-founded Politico in 2007. “Most of our investment is going to be in journalism. If we can hire two or three of the best reporters in each market, we think we can develop a loyal following.”
Axios’s model resembles one launched by an earlier digital-savvy player with roots in national politics. Huffington Post (now HuffPost) started local versions of itself a few years after its founding, in Chicago, Denver, Los Angeles and other cities, and then gradually shut them down after they failed to catch on.
And VandeHei knows how quickly the wheels can come off a local operation: Politico’s owner, Robert Allbritton, attempted to build on its early digital success by launching a local-news follow-up, covering the Washington area under the title TBD, which folded after less than a year in 2011. VandeHei says he was not involved in the TBD venture.
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National news — which was Axios’s initial strategy, and the one that has built the readership of a few big digital news operations, including The Washington Post — has been more successful for digital news publishers, allowing them to draw from a larger pool of readers. Local news by definition appeals to a smaller regional audience, limiting its attractiveness to advertisers.
“The nationalization of politics and news has habituated people to consuming the big national TV and print and radio brands,” said David Plotz, the chief executive of City Cast, a start-up developing a network of local-news podcasts and newsletters. (It is backed by Graham Holdings, which was formed after its principal owners sold The Post to Amazon founder Jeff Bezos in 2013.) “It’s hard to get something new in anyone’s diet.”
Plotz, the former editor of Slate, said that “partisan sorting” has affected local news consumption, too: Readers and listeners often seek news or information that reinforces their political beliefs, a tendency that can limit a nonpartisan start-up.
What’s more, he noted, the rise of quasi-news “communities” — principally Facebook groups and Nextdoor — means “you have low-cost competitors that are meeting a lot of your potential audience’s needs for local information.”
One of City Cast’s advantages, Plotz said, is that podcasting, while growing, does not have a dominant player yet. “If people are going to make podcasts part of their local news diet, and many signs suggest they will, we will be waiting for them,” he said.
A further issue confronting news entrepreneurs is a lack of public awareness, said Tim Franklin, who heads the local-news initiative at Northwestern University’s Medill School. Trust and credibility “are paramount” in building an audience, he said, but doing so takes time: “Some start-ups simply don’t have a long-enough runway of cash to do that.”
In most cases, advertising alone will not support a venture, because giants such as Facebook soak up so much of the ad market, said Franklin, former editor of the Baltimore Sun and Orlando Sentinel. Yet it is hard to sell potential readers on subscriptions, because “many don’t know anything about this new news outlet,” he said.
VandeHei is confident but not blind to the challenges ahead.
“Can for-profit journalism work in local markets?” he asked, somewhat rhetorically. “We think it can. But it’s one of the hardest jobs in journalism.”
