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[on-hold music] Welcome to the Rebooting show.

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This week's episode and this end of the year series on, uh, independent local journalism is underwritten by our friends at Outbrain. This is a vitally important conversation.

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I can't thank Outbrain enough for their support, uh, in making it happen.

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Also, if you're gonna be in Las Vegas for CES, and I hope you will be, please come to an event, uh, we are holding at the ARIA in their Catch restaurant.

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We're gonna have a, a lunch and a discussion about the role, uh, advertisers have to play in supporting sustainable, incredible journalism. Uh, the event is on Thursday, January fifth. It starts at eleven thirty AM.

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It'll go about an hour and a half. There'll be good food. I'm told that there are co-branded chopsticks that are gonna be involved.

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So if you're interested in coming, and I hope you are, send me a note, uh, bmorrissey@gmail.com. Uh, I'll also include the RSVP link, uh, in the newsletter and also in, uh, the, the podcast show notes.

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This week, I'm gonna be speaking with Max Cabot. Max is the founder of Big Bend Sentinel, one of my favorite local news initiative, uh, out there.

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And Max has a great story, and we'll get into how, how, uh, he's, um, building a local journalism business in Marfa, Texas, a town that I've never been to, but I assume I would like very much.

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Uh, Max, thank you so much for, for joining me today. Yeah. Thanks for having me, Brian. Appreciate it. Okay, so tell us, I-- 'cause I love this story.

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Like, so, so give me the backstory about how, how in the world you found yourself to be, like, a, a local, a local news entrepreneur in West Texas. Sure. Sort of cliché, not going to sugarcoat it. Uh- [chuckles]...

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New Yorker meets Texan. I'm a New Yorker, my wife's a Texan. She makes documentary films. Mm-hmm.

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And as a photojournalist, we decide we wanna get out of New York, uh, where we met and I've been living most of my life, and I was pushing for the Hudson Valley, Marfa, Texas one as a place that was sort of rooted in community and was way out of the way, and we could sort of live our lives a little bit differently instead of in the hustle and bustle.

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This is about twenty-fifteen, twenty-sixteen when we, when we did this. We knew there was gonna be a pandemic, you know- Yeah... in twenty-twenties, we're like, "Let's get settled." [chuckles] So, [clears throat] so

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I have a brand and growth strategy consultancy that works with B Corps, which we'll get into, sort of companies that are using business as a means of some kind of social environmental change.

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And the pa-people that used to run the paper, Robert and Rosario, uh, it's a hundred-year-old newspaper almost, they, they ran it for thirty years, and they asked Macy and I if we wanted to take it over 'cause they were gonna retire.

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So that's how I got into the media business. Okay. So you didn't, you didn't, like, sort of, like, grow up or- I don't, I don't have a background... yeah- No... you didn't sort of, like, grow up and be like, "All right.

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I need to, like, get into..." So when, when this, like, sort of opportunity came around, was it like, was Macy the one, like, pushing, like, "Hey, we gotta do this"? [chuckles] Or, like, how did you- Yeah.

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How did she go, "Shh"... how did you get, how did you get convinced, basically, is what I'm trying to get into, Max? Yeah, yeah. I mean, fir- well, our first answer was no. Like, what are we, crazy? Idiots. Very smart.

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Like, this is crazy. And then it was like, well, there are all these things that are really interesting. You know, I-- It, it could be another expression of what Macy does from a journalistic standpoint. It could...

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This is, like, s-purely selfish reasons, right? It could help us sort of root ourselves in a place and stop running around the country, being on planes, trains, and automobiles all the time.

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And then also, you know, we started sort of doing the work. The demise of our democracy has been contributed by the fact there is a lack of local and regional, uh, regional voices. Uh, local journalism is suffering.

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It, like... I mean, all the things that you've talked about with- Yeah...

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like, Chris Cruzen, for example, in, in your last thing, like, you know, I don't need to belabor the point, but we just sort of looked at it and said, "Okay. Well, what is, if-- What, what might the future look like?

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And what is this? What does a local newspaper or a local journalistic endeavor sort of own?" And I sort-- We-- She put her journalism hat on, and I put my brand hat on, and we sort of, like, went down the rabbit hole.

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And what we realized was, like, journalism owns this concept of community. It's, it's always been the community hub, right? In the, in the physical paper part or the digital part, it's, it's brings people together.

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It builds bridges. It gives people a common thing to talk about. Uh, they...

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You know, national media might say that we're like, "You're either this side or this side," but local media, like, it, it, you, [chuckles] you're gonna care... Everybody cares about what the roads are like. Yeah.

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People care about, like, very sort of local-ish issues. It's your community, your friends, taxes, all those kinds of things.

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And so we thought, well, we still wanna have our careers, and so how might we make the financial model work? How might we make more money and invest more money into journalism?

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Marfa, the Big Bend region, this is far west Texas. For, uh, a land mass larger than the size of the state of Maryland, we have eighteen thousand permanent residents.

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It sort of, like, gives you an idea of the expanse of space. And it's a tourism-based economy, so we sort of said, "Well, that's interesting. How might that work for the paper?"

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And so we came up with this idea that we call... The Big Bend Sentinel is the, is the hero name of the paper. The Sentinel is the idea that we came up with, which is a community gathering space.

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It participates in a capitalistic society. It's a restaurant, a cafe, a coffee shop.

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We do events, anybody from, like, hoity-toity weddings to the Marfa ISD prom, and sort of it's like this, there's retail, there's high... And we participate in sort of this high-low.

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I guess, as a brand strategy, as a, as a brand strategist, you never wanna be... You say, uh, don't be, uh... Our strategy is the art of sacrifice. If you're for everybody, you're for nobody.

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We are sort of for everybody in some kind of capacity because that's where we are. That's what we sort of have to do. Being in the middle of nowhere-You gotta do a lot, a lot of everything- Yeah... to sort of survive.

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And, and Marfa is a, is a unique place, right? Sure. I mean, I side choked about how, like, I, I've never been, but I imagine I've liked it. You know what I mean? The...

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Like, it's, it's a, it's a small place, but there's like, you know, you go to, like, some sort of, like, high-end bookshop and they've got, like, you know, a, a photo book about Marfa and stuff like this.

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So it's, it's unique in that way, right? So I think it's sort of... I, I made a little joke. I wanna, like, sort of have full disclosure. Which, which episode did I do this on? [laughs] I don't even remember.

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I think it was with the six, the 6:00 AM city guy. Yeah. Yeah, I made a little joke- That's the guy that was-... about bringing local news to- Just a minute.

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'Cause, like, there's a lot of different local communities, right, like this, and Marfa- I just, uh-... is a little bit unique. It's like, that's why I sort of made a little joke about it. Yeah.

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I mean, we said, we said yes because we, like, sort of thought- Yeah... about how it all might work.

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And by the way, our first idea was like, it's going to be a, a coworking space, and then, like, a month before we're like, "This is really the wrong model. We need to, like, make it work better for us- Yeah...

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and for the community." Yeah. So, like, let's get into to the model, right? Mm-hmm.

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Like, so I mean, 'cause what I find it, it interesting is there's a lot of media businesses that are the front end to different businesses, and I feel like a lot of times,

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particularly in the local space, you know, people have been looking f- to try to recreate the old model of, of local papers and stuff like this, where what I was always, like, attracted to with, with, with what you and Macy have been doing is that

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it's not going to the old mo- And I, I wonder if, like, maybe your background, you know, being, like, a brand strategist and stuff like this, you just weren't necessarily, just necessarily think coming from that place of thinking about the old model, but instead thinking about the model in the way, like, you know, a, a brand strategist would.

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I think our naivete totally helped us. We said yes to buying, you know, taking over a local newspaper in, uh, in 2019. So I think, like, that's not something that, uh... So let's just start from there. Yeah. You know?

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But I do think that papers or local journalistic endeavors have always had a side hustle. Yeah. Always. Like, you know, you look at EO Publishing, they're one part of, like, a conglomerate that has real estate.

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This is the, the, the paper in Charleston. They have real estate. They do management consult- They do, like, 16 different things, and one part of it is this really awesome Pulitzer Prize winning local paper.

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And so even if you look back in our archives, you know, there was... We used to own a printing press. We don't, we don't print ourselves anymore. We have a partner.

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But, you know, we, the printing press printed other things besides the newspaper. It printed holiday cards, it printed books, it printed marketing materials.

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Whatever it was, there's always been a side hustle for a paper. And so that wasn't really... Looking back, what we did was just, like, an evolution. Mm-hmm.

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People have talked about pairing coffee and cocktails, two things that journalists do the most. We just were the first people to do something about, like, to do it. I don't, I don't think it's that...

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I don't really think it was that unique of an idea. We just did something about it. Come on. If that makes sense. Come on, Max. We gotta sell this podcast. Sure. I mean, yeah.

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No, I mean [laughs] Let's just like- It was revolutionary. No, but I think it was like- I think it was evolutionary.

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[laughs] [gentle music] 'Cause I think you ma- you make a great point a- about the side hustles and stuff like this.

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But, like, I think sometimes, like, I wonder whether the journalism is the side hustle or the coffee is the side hustle. Yeah. I, we think about that a lot. I mean, I think both are really hard, like, running a small...

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I will tell you that I know the model works. Yeah. But the th- the thing that we chose, being in a small town with a small labor pool, being part of, like, a tourism-based economy, is it's hard. It's a hustle.

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So sometimes we think that, like, are we spending more time on the Sentinel than the Big Bend Sentinel?

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And maybe we haven't done as many things with the paper as we would've wanted to because we're spending so much time running a restaurant- Yeah...

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and a cafe and a coffee shop, things that we have, by the way, had no experience in. Okay. [laughs] So you- Um, so- So you made it even harder on yourself. Totally. Totally made it harder on ourselves. Yeah.

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Um, but there's revenue. Like, we have more revenue. Right. We have hired more journalists.

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You know, we just did a partnership with Texas Monthly for, like, a 5,000-word long form piece that just came out yesterday, and that took, like, six months for one of our reporters to report on.

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And I don't know that that [laughs] would've been possible to do unless we had this really wacky ass model. Yeah. So break down the, the business model exactly and how it works. Sure. So

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we throw a lot of stuff at the wall and see what sticks, I think is probably... We're, we're entrepreneurial in that sense. Yeah. The...

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Having a, uh, I think the best way for any of this local stuff to survive, and I agree with what Chris Krewson has said in this regard, is, like, you gotta be diversified.

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So we have a legacy business that has subscribers. It's, you know, h- print heavy. It's a weekly. Uh, we actually publish two weeklies.

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One's the, uh, El Internacional, which is a bilingual paper for the border 60 miles south of us in our same county of Presidio County, Texas. It's a town called Presidio, Presidio, Ojinaga.

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It's a port city into Mexico, to the state of Chihuahua. So we're still print heavy, but we have a really great digital presence. We have a newsletter that is really amazing and has a really wide reach.

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We've started to sell advertising against that, so we have advertising. Mm-hmm.

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There's another revenue stream, obviously, in paper, in digital, and in newsletterThat we have, you know, I like to say people talk about events. You know, the Texas Tribune has a really great event strategy.

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We have an event every day, and that's The Sentinel. And so there's a lot of different revenue coming out of that. There's branded merchandise that we've made.

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We've made a paper cool and sexy, and we have, like, uh, anything from tote bags to T-shirts to hats. We've done partnerships with artists that have created art. We've tried it. We're trying it all.

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Uh, we aren't done trying it all, I guess. And then there's the cafe, the coffee shop, restaurant that sort of operates on a daily basis.

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Uh, it's open from 7:30 to 3:00 o'clock in the afternoon every day, and we have Sentinel Saturdays, which is like, it's a bar at night. But we have been open at almost, you know, 18 hours a day at certain times.

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This is the model that really works for us right now. We have a one-year-old kid, so, uh, being open as a bar is not something that's really great when you have a one-year-old. So, you know, this is, this is sort of...

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We've played with it a gazillion different times, right? Like, we had nine months with this idea pre-pandemic. Yeah.

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We shifted and changed and morphed so many times within the pandemic, and one of the great things about the pandemic was, like, from a revenue standpoint, was that we live in the middle of nowhere, so everybody wanted to come to the middle of nowhere.

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And so that- Oh, that's a good point... that, that like helped us- You don't hear a lot of things, uh, great things about the pandemic, but like [laughs] That helped us.

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That totally, like, that totally helped us get through that part because there was nothing going on, you know? But did, did you have to close The Sentinel for a while or no? We closed for a month. Okay.

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We, we never stopped publishing the paper. We closed The Sentinel for a month. Right. And then there were times where, like,

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I was, you know, taking consulting calls and making lattes and, like, putting it at the front door and then, like, walking away 'cause we no- no- everyone had masks.

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Like, it was just a weird, it was a weird time selling advertising, and we were just sort of doing it all at the, at the ultimate. Yeah. So I think, like, the diversification thing is, is like critically important.

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I always say, like, "Oh, the best way to make money is multiple ways," but there's like an asterisk, [laughs] like, but not too many ways because like- Sure...

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I think one of the challenges, 'cause, you know, like, I think you make a really good point about the side hustle thing because, and media always being that, 'cause, I mean, my experience is, is mostly on the B2B side.

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And, you know, events there, I mean, most of these companies are re- the majority of their revenue comes from events, right?

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Like, I mean, when I was at Digiday up until, like, a few years prior to me leaving, like, it was like 75% of revenue.

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So there were times where I used to joke that the event side was like my full-time part-time job because you, it, trying to run, like, both sides o- of the business is, like, really difficult. And like sometimes- Yes...

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I was wondering, I was like, are these things even, like, totally [laughs] tied together?

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I mean, they were tied together and stuff, but, like, analyzing the business became really difficult because anyone looking at the business would be like, "Oh, just pour mo- more in events.

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You're spending too much on publishing because, like, you're making way more money in events." But, you know, we sort of knew that- But you need the st- Yeah, we needed- Yeah, but you need the, you need the publishing.

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Like, without the publishing there is, uh, nothing. Like, people- But that, well, that's what I'm saying... the content. So, like- Right... The Sentinel, like- Yes...

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d- I mean, 'cause you have to think about it as a business person obviously, right? Like, I mean- Sure... there's a mission and stuff like this, but, like,

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how much d- is that dependent on, on the, the journalism and the news part? It wouldn't exist if there wasn't, if the w- if the paper didn't exist. So maybe that's a fair place to start.

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Not to say that, that people come in and they just say, like, you know... Th- there's a lack of food in Marfa at times, and so people just want something. [laughs] And so- Okay...

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being open also helps, you know, but we're three and a half years in. Like, we have a very, we are a thing to do on the tourism map. We've- Yeah... gotten press.

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Like, uh, but at the same time, there are people, some people just come because they want something to eat or they know that they're gonna get a, a, a good cup of coffee, and then some people come and they are like, it's, it's one of the,

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like, the highlights of their trip. There's a newspaper or there's this local journalistic endeavor and they're gonna do something different.

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Both people end up buying the paper and sitting outside or sitting inside and drinking a cup of coffee and, like, going through it and, like, reading the articles, and then they'll come up and say...

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I mean, like, everybody's involved in it.

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And so I don't, I know it wouldn't have existed, but I do know that it makes the whole thing much stronger and it helps, it helps from a revenue standpoint, it makes the whole thing work. Yeah.

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Without The Sentinel, like we, you know, we wouldn't, if we were paying rent we would have, we would have been in deep crap. [laughs] The paper wouldn't have as many reporters as it does.

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The journalism wouldn't be as strong. You know, we publish only, we publish all original journalism that is about this region, nothing, nothing else. Right. So I think that's helped us really stay focused on that stuff.

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We don't, like, we've republished some Texas Tribune stuff over the last three and a half years. That's, that's it. Yeah. So how many people do you have on the paper?

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We have three full-time journalists, one ti- one of whom is the managing editor. Okay. Me. Yeah. So what, what is the- Me... what, what is the revenue break- breakdown then? I don't really wanna get 100% into revenue.

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Ah, just go, go into percentages. Let's go into percentages. Wait, that's safe.

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Percentage of, like, top line versus- Well, what I mean is, like, how much is, like, advertising subscription versus, like, I don't know how- Okay...

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you divide up, like, The Sentinel, like, stuff, like events versus just, I guess, coffee shop. I don't know. I don't know how you break it down. I mean, they're two separate, they're technically two separate businesses.

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They're two separate LLCs, but- Oh, okay... Macy and myself, uh, own, like we're, we're co-owners of, of, of both of them. But let's just put it this way. The, the Sentinel pays operational costs for the Midnight Sun.

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Yeah.

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[gentle music] So I guess, and I think this was, this was a point I was trying to make with the 6:00 a.m., maybe not, but, like, from what I remember, was like how ex- how, like, sort of extensible is this model?

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Like, I mean, do you think- Mm-hmm... that this... And it's hard because I know you're in it, like, the day-to-day. [laughs] Like, I'm just trying to, like, fight to, you know, the next day or the next week. I, I...

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Trust me, I understand that feeling. But, like, how much do you think that is replicable in other communities? Because as I said, like, Marfa is unique, and I think that was the point I was trying to make. Sure.

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I, I think we didn't create this idea to be scalable, right? Right. [laughs] But I do think it is in the end of the day, if that's- Yeah... if that makes any sense.

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Like, I do think that events are a part of a revenue stream that publishers, whether legacy trying to do something different or, and I'm talking about, like, local independents. I'm not talking about anybody else.

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I'm literally just talking about local independents. Legacy media trying to, like, figure out a way how to do something different.

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And, like, uh, just to clarify, local independent does not include anything that participates in sort of a stakeholder capitalistic society where you are extracting value instead of trying to unlock value.

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So a public company, uh, a hedge fund, those kinds of things. Okay, so no Gannett. No Gannett. Okay. [laughs] No Lee. All right.

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Family-owned, independent, small stuff like us, that's, that cla- classifies for me as independent. And I don't know exactly if there's, like, an official- No, I know... thing.

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So the, the events, the event every day sort of I think brings people into the fold in a different way. We get leads coming out of it. Like, I, I think that, like, if you were to go...

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It wouldn't work, I don't think this sensor would work in a really big city. I don't think it would work necessarily in Austin. Let's just say in Texas, in Austin. It's not gonna work in Austin.

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It's not gonna work in Dallas, not the, some of the biggest cities in America. Yeah. But in s- in smaller towns, I think it would, you know? It's not gonna...

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In the As, in top, you know, the D- if you're looking at DMAs, in the As it's probably not gonna work, but the Bs, Cs, and Ds, the Cs and Ds definitely would work. Yeah.

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And I think that is the key, right, for a lot of this. 'Cause the... I mean, there's many challenges on the local side, and there's like... Sometimes they all get, like, lumped in together. I guess that was- Sure...

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the point I was trying to make, in that, you know, the big city challenge is different than, you know, the town challenge. It's different than the midsize city challenge and, and so on and some so forth. Like,

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starting, like, a local news publication focused on Brooklyn is different than on Trumbull, Connecticut. Like, it's just very, very, very different. Right. Right.

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But, uh, to me, like, I think the big test for a lot of these, you know, local deserts a- and whatnot is it has to start with the community.

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Like, the community has to at some point want, want to solve this problem and be willing to participate in, in it existing. Otherwise, like, it's not gonna happen.

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I think a lot of times I'm reminded of back in the office, back when we went to offices, like, you know, there would be, like, a spill on the floor, and a lot of people would, like, walk around it.

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It would, like, [laughs] drive me crazy. It's like, well, wait a second. Like, why does everyone just want someone else to, like, clean up the big problem?

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Like, ultimately communities, and I feel like a lot of these models will need to get the community, like, really buying in, like, instead of just being like, oh, it's, it's a problem for the Knight Foundation to solve or, or even- Sure...

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like, you know, Lion with Chris and stuff. Like, the community has to want this to exist and support it, right? 100%. And I, I think that concept of community, I don't...

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I, uh, that's gonna be one of my keys to 2023, that we as a society might, uh, redefine what this concept of community is. I'm sort of playing with it a little bit.

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I think that, like, brands have sort of put us into these tribes, and national- Yeah... media has put us into these tribes.

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But, like, something that's very interesting about community or on a local basis is maybe that's the only pure definition of community. It, it grounds you in, in these commonalities that are not, that are not transient.

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They are very fixed. There aren't, there aren't variables to it. It's like you share a police, you share taxes [laughs], you share a school system. You, like, you live in a place. You go to the same places.

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That's actually community. Whereas things are sort of like we have this concept of, like, the community in the ether, in the digital stratosphere. Yeah. Like, I don't, I don't know.

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I think they're two very different things, but we use the same word to describe both. Well, I think local is just, it's, it's just more tangible, right? Like, I think what it'd be- Yes... people...

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And I think when people are using, you know, community in air quotes for a lot of things that are basically just an audience or a collection of people- Sure...

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it, it's funny 'cause they're, they're actually going back to, like, the definitions of community that, that exist in reality, like, on the ground in places like Marfa, like, at the end of the day. Right.

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You know, you have a commonality. You've got common interests. And, and yeah, there's things that, that divide you with the politics and whatnot and stuff like this. Sure.

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But ultimately, like, when, when you're on the ground [laughs] in a local community and when things are wrong, like trash collection or something like this, it doesn't matter who you voted for president. [laughs] Yeah.

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Like, and, and it doesn't. And I think that that's a really great point, and I think that this idea that news is sort of a dirty word is it's a national...

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like national news, our obsession with breaking things, our obsession with the, like we... our obsession with the president.

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Like, why don't we get more obsessed with what's happening in things that are, like, very much in our control, things that we can affect, things that we can interact with?

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And I think that's what local journalism does really, really well. It helps sort of bring people backTogether and builds these bridges and, and accentuates this concept of, of place and space and community. Yeah.

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And so brands, I think we're just sort of in- on this unfortunate place where from an advertising standpoint, I think brands are, you know, have said like, uh, you know... Or how could I say this?

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It's so f- but at the same time it's so fragmented. It's so hard to like, even if a brand wanted to advertise locally, it's so very hard. So I think that we need to like...

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I'm really interested in unlocking value out of things that exist. I, I think from a cons- from what I do as a consultant and the kinds of companies I work with, I don't like newness for the sake of newness. Mm.

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I like things that exist because they support people and planet and things that are around them, and so I'm more interested in unlocking value- Yeah... instead of extracting value. Yeah.

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So explain, did you set this up as a B corp? 'Cause I'm interested also in how- We didn't... in how local news becomes sustainable.

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'Cause I feel like it's caught between the capitalistic impulse that, that drives everything really in this country [laughs] and this sort of mission and like the nonprofit sphere and or, and/or bene- quote unquote, "benevolent billionaires" and whatnot.

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Mm-hmm. And I think there's... It's interesting because there's, there, there needs to be elements of both, right?

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Because, and that's why I was like joking about how did you get into this, 'cause like from a pure capitalistic endeavor, I think it's possibly questionable. 100%. [laughs] If I could say so. You don't get... Yeah.

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You don't get in this for like the money. That's not why you buy a local, take over a local paper. No. No. Yeah.

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But I'm wondering like how, what kind of structures end up ha- needing to pop up to, to improve the situation with sustainable local journalism. Because it- it's not gonna be a purely...

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Like I, I don't know, like I'm not waiting for Gannett or, or Lee or any of these [laughs] chains to, to, to, to solve this problem. Sure. Uh, there's clearly new structures need to be, need to be developed. Sure.

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I, I think, uh, the idea of nonprofit is not, it's another way to diversify your revenue streams. Yeah. People want to... Our capitalistic society exists.

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People wash their money through nonprofit dollars via like giving them to foundations and that kind of thing, and write it off on their taxes. Like if a...

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I don't think there's anything wrong with diversifying your revenue streams to participate in that.

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There are large foundations that can give you money, so like I'm, we're not opposed to, to thinking about that in a different manner. We set this up with B Corp language in our

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operations agreement with the thought that that could work that way, but I don't, we didn't necessarily start that way, mostly because

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we didn't know [laughs] how it ex- how it would work, and it's a little onerous starting something from the ground up and like filing all the paperwork for B Corps and all that kind of stuff.

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When you're a little more established, it's a little bit easier. Yeah. But yeah, we, we, we've set it up with the... We, we have a mission baked into the business.

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I, you know, like it isn't like a, it wasn't an idea that was like, ooh, what's the purpose of the... Or what is the purpose? Let's go back and think of something that might be sexy and what's gonna get us press.

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It's like we are the, we are the press. We are the, we're the paper. This is for the community. If it doesn't [laughs] if no one wants this whole thing to exist, it ain't gonna work, you know? Yeah, yeah.

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So what's something that you've tried that didn't work? Well, everything. [laughs] Um, I think we've just continuously iterated and just learned from as many mistakes as possible.

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I think that we, we thought we could have, we could build a financial structure where somebody could run all the different things, and we realized that wasn't possible given the, the situation of where we live and

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the labor pool and all that kind of stuff. You know, I think it's just like we're, we thought that there was going to be a way where

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we would be able to spend more time, like not as very much hands-on, but I think it is very much, everything is very much hands-on all the time. Maybe that was also being naive. What else have we done wrong?

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I mean, like menu choices, hiring people. [laughs] Saying that the one thing that we said w- we weren't gonna be was a restaurant, and we are a restaurant. You know? Not wanting to be a bar and being a bar.

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I mean, like every... We've, we've said we're not gonna do something, and then- Yeah, yeah... done that exact thing because we had to. Yeah.

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I mean, well, you just respond to the market and, and your own like needs to continue, right? 100%. Yeah. Yeah.

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I mean, like we sold, we thought that doing, selling art would be a really good idea, and I think after like trying to ship art and ruining it, and we ended up like maybe breaking even on- Mm-hmm...

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somebody's really hard work and thousands, thousands, and thousands of dollars, like maybe, I think we broke even on the whole deal. [laughs] How about memberships?

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So member... So this is something that we're thinking a lot about. Like, I don't know what the difference is between members and subscribers and all that kind of stuff.

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I think it's just a matter of like taking, get, getting their money is sort of- Yeah... how I look at it. Right. They're paying for you to exist. So I don't know that we've done the best job at

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separating the two businesses in people's eyes sometimes.

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So some people might like come and buy coffee from us every day and come to the restaurant all the time, and they think that they're supporting us in that regard, and they have a subscription.

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And they're like, "We're really big supporters." Some people just sort of slip a check in the mail sometimes and they say, you know, "Really great reporting. Thanks so much."

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And then we also have just a regular subscriber base that's, we've kept, you know, prices really low from a subscriber standpoint because we live in a place where-You know, there's a large percentage of people that, that live at or below the poverty line, and we kept the paper at a dollar and, uh, a yearly subscription is $50.

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But we're seeing that there is growth from...

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Like, something we haven't done a really good job at is, is figuring out how to take it, turn the opportunity of people that want to be, keep in touch with our area and, uh, and be involved in our area in a larger capacity, and they are willing-- they would be willing to pay more money.

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They are willing to pay more money. Yeah. They buy retail things. They do all-- And just sort of keeping that conversation going, we haven't done a really great job at that. Yeah.

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To, to my, my fault because I'm supposed to be the marketing guy. It's okay. [laughs] Uh, you can't do everything. Um- Yeah, that's- And that's- Yeah... that's just the reality.

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Uh, I always think of membership as something beyond the transactional of subscriptions, and particularly when it, when it involves, like, community and connecting with each other and- Mm-hmm... stuff like that.

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That's always been my... I-- But I know it's like a hazy line. Like, The Wall Street Journal claims to have a membership and I'm like, "How is that possible?" Like, I don't feel like a member of The Wall Street Journal.

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Right. I feel like a subscriber. Right. You go online and you get the- Yeah. Yeah. And, and what about advertising? How are you handling advertising?

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'Cause, I mean, local, I think one of the challenges has always been with local is, is, is cracking the advertising piece. Yeah. Very fragmented.

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So maybe this was our first foray into unlocking value out of local independent journalism. Sort of our second foray is this concept, this idea called broadsheet. It's a- Yeah... it's a business we stood up.

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It's a ad network for national brands, uh, self-selecting brands that say that they care to, uh, find their audience through local independent journalism at scale. It is an incredibly fragmented marketplace. Yeah.

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[laughs] The sizes, the ways in which, you know, media is distributed, advertising is distributed, it's, it's really different.

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But what I noticed was like via my relationships, hooking onto, let's say, like, events that happened, uh, influential people come out to Marfa for a thing, being able to package that and sell that to a regional or a national brand, was like, why is...

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Is there something there? We have a newsletter that gets a 60% to 70% open rate. Is there something, is there something there? And so I started just literally calling up other publications

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that were in similar kind of tourism-based markets as us, and they all said similar kinds of things. I have similar open rates.

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I, you know, I have a weekly, I have an audience where I get a lot of people from the outside looking in. So I sort of s- like started to build this case of what that might look like.

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PS, I, I've talked to over 200 papers across the country and sort of separated at-- them out by, you know, demographics and psychographics. It's not as efficient as buying, you know, for pure play digital or- Mm-hmm...

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social media, for sure. But the idea being that, like, if local independent journalism had,

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uh, a way to take national advertising dollars, if there was a call to action, and if they could find their audience, would it be interesting to them?

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This concept of broadsheet sort of morphed into this idea called the 5% Challenge, which is challenging national brands to take 5% of their media budget, the size of a test budget, to find their audience via local independent journalism in myriad forms, podcasts, newsletters, print.

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I know that's not the biggest thing that everybody spends on now, but, and digital as well. You know, the tr- the truth is programmatic advertising is sort of a race to the bottom for all of, all of us because- Yeah...

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the amount of money that us publishers get is 35 cents on the dollar or less. What happens if you sort of flip that whole model on its...

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And what happens if, sort of thinking about stakeholder capitalism, what happens if, you know, 80% of the money went to the publisher?

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What happens if an, an ad network was stood up where the idea was just it needed to build a business to help other businesses, not necessarily to make the most money for its, you know, to fill the coffers of its investors?

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And so I think, like, that's sort of where my whole B Corp, there's this- Yeah... whole circular kind of thing.

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Like, I'm, I'm back to the start of how can I and my business partner, Lisa, who's my, my consulting partner, and, uh, Macy, who's my life partner and my, and our, my business partner here with this stuff in Marfa, like, how can we sort of figure out a way to unlock more value out of local independent journalism?

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Because the truth is, local businesses will continue to exist. Yes, we have local partners that help us support our paper, but to continue to do more journalism and to continue to make it better, you need more money.

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And national brands, there's $170 billion spent on US local media a year, none of which goes down to us.

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What would happen if there was a throughput, there was a way, there was a call to action to, to get people to sort of think a little bit differently? Yeah. So what's been the response to that?

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I, I love the idea of the 5% pledge because, like, there's a lot of people who like to get on stages at different events and stuff like this and talk about, like, s- thing- concepts around stakeholder capitalism, uh, right?

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Sure. And, but then, you know, when it comes time to, like, hit KPIs, I think that stuff sort of fades into the background a little bit. And it, and- Sure...

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you know, obviously we're going into, uh, a difficult economic situation next year, and I'm, I'm focused on whether or not a lot of the pledges that were made in, in, in 2020 and 2021 are still around in 2022.

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And I've always wondered whether media buying in general almost needs its own ESG movement, right? 100%. So, like- Yeah. I love this idea.

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ESG, ESG has forced-The, the topic of stakeholder capitalism i- on, uh, into the board level, right? And there's a lot of critics like Elon Musk and stuff like this of, of ESG.

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He's a critic of a lot of things these days. But ESG has had a, a, a major impact on a, on a mindset shift in that.

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And to me, like, that's the only way to really make sure that ad buying is not just this race to the bottom, does not just benefit, uh, the, the massive platforms.

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Because when it's just about, like, see a cookie, hit a cookie, and acquire customers for the cheapest, uh, in the most efficient manner and stuff like this, there's a reason why all the budgets pool in a few massive technology platforms.

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'Cause they have amazing scale, and also because we still, we exist in this...

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This is w- the one thing that isn't really analyzed or is, I think it's very much in the first inning, where it's, uh, a situation where you spend the least amount of money and you expect the greatest result. Yeah.

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And you don't think about the implications that that has on, like, the... There's just this, you know, you kick the can down the road and don't think that anything bad is gonna happen about it.

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Lo and behold, like, oh, well, here we are.

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And so I'm not saying, listen, I'm not saying that, like, you should take all your money and divest from Facebook and go into local journalism, because there isn't enough media, there isn't enough placement for that.

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I'm, I'm not saying that at all, and I'm not saying that, like, this local independent journalism is a save all. But

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to Chris Krewson's point about, like, the govern- or the podcast that you were, you just did with Chris and talking about this bill that didn't, that, that- Yeah...

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failed and maybe it was should have failed, like government isn't gonna do anything about it. Brands continuously decide they are going to do something about it.

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And so sort of like awakening brands to this concept, to this idea is something I think that's hasn't been done before.

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I think legacy and local media has just sort of sat there and said like, "Okay, where's the phone call?" Yeah. Like, no one's got out to, to sort of talk about it in a different way.

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And when you're a weekly, I don't have people coming, the same person coming to our website every single day, but I do have content that matters to people on a very visceral level.

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It matters to their families, it matters to their school system, their taxes, their friends, things that, that, that involve their every day. And so that is a scalable idea.

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Um, it's small, and it's gonna take a lot of, a lot of it to get to a lot of scale, but it is a scalable idea. And, and brands do care. It is... we're sort of the pendulum is swinging back to from quantity to quality.

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Yep. And we have quality. Yeah. Sure. So I think that's a, I don't know, something I'm sort of working on. Yeah. No, that's worthy. And I'm even going to Las Vegas to advocate for this, so I, I'm doing my part.

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Yeah, sure. [laughs] Awesome. I, I think, I think the concept is really great. I, I, I think you'll get a lot out of that, uh, out of that talk for sure. Okay, cool. Well, I'm gonna leave it there.

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Uh, Max, thank you so much. Really appreciate you joining and, and sharing, uh, the story. Thanks so much, Brian. I appreciate it, man. Thank you so much for joining us, and thank you all for listening. Uh, stay tuned.

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Right now I've got a, uh, conversation with Yaron Galai, the co-CEO of Outbrain. We're gonna be talking about, uh, the need for consumer-driven business models. [upbeat music] Yaron, welcome back. All right.

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So let's move on to shifting to consumer-driven business models. This is critical, right?

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Like, I mean, I think we talked about this a little bit already, but you know, I always like think about publishing as, like, this a really difficult situation when, particularly when you have a pure ad model, in that you're trying to solve for the problems of a few different constituencies, and sometimes they're in opposition.

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You need to... obviously, without an audience you have no business, right? So you have to cater to the audience, but you also have to cater to the needs of advertisers, right?

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And, and then on top of that, you have to also cater to the preferences of algorithms. And, and so trying to, trying to solve that puzzle is really, really difficult.

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And I think what we've seen over the last several years is increasingly publishers have, have focused on solving for advertisers' algorithms and then users, I would say, last.

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And I think that, that order needs to be changed. I a million percent agree. You know, I think one of the worst things, uh, that happened, uh, for our industry is, uh, about 20, 25 years ago, the decision

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that content is, uh, generally free on the internet. It could be paid for in the newsstand or subscriptions to print, but it's free on the internet.

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And I think we've created this, uh, state of mind of content can never be paid for, and therefore the only adverti- uh, the only business model possible is advertising.

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Uh, which gets us to a point where really the, all the consumers are viewed as, uh, as the product to be sold to the first constituency, which is the advertiser.

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You know, I, I, I don't think most publishers are gonna put, be able to put that genie back in the bottle and say, "We're now a subscription, uh, only business."

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There's gonna be very few of those, usually the ones where people can charge the subscription to the, to the employer.

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Uh, but I do think that it's so valuable to have, you know, even if just 2% of the audience is a, is registered or subscribed, I, I think you start having that state of mind of the users are actually, uh, my customers as well, and I, I better give them a good user experience and, and measure those KPIs of engagement and, and user satisfaction, which really we didn't have for the past, uh, 20 or so years.

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Yeah, and I think that can't be, like, underestimated, that sort of mindset shift. Because once you start, once the audience starts to be, like-Comes first and is like, is first in decision making.

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You know, the trade-offs you inevitably have to make, and businesses are all about trade-offs. I mean, most of life, I believe, is about trade-offs.

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[chuckles] There's downsides to pretty much everything, and you just have to manage your trade-offs. That trade-off becomes a little bit different, right? And I think the, the choices you make are different.

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Like, you know, I go back to what Neil had said, you know, they, they don't have a subscription model, but, like, having that, having that across most of their properties, I guess with Meredith they have some.

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But, like, having that mindset really changes the kinds of decisions that you end up making. Yeah.

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It's, it's all about trade-offs, and I think one of the most important things for sustainability of publishers, uh, going forward is gonna be that diversification of, uh, of revenue or business. It's...

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That diversification is gonna be looking very different from publisher to publisher, but I think the shared thread of, uh, to succeed in any of that diversification is to be putting the user, the user first.

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And it's very difficult because it... as you said, it's always trade-offs, but it's also it's trade-offs where around the table the one persona that doesn't exist is that, is the user.

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Uh, you know, the advertiser are very vocal. They're signing papers. Yeah, yeah. They're signing, uh, checks. The, uh, uh, the tech platform's very vocal. Everyone is very vocal around the table except for the user.

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Yeah. And so that does really go to the leadership to make sure- Yeah... that their voice is, uh, important. Yeah. No, I've been at a lot of, uh, publishing meetings, and the, the users are, are, have never been invited.

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[laughs] They're never, they're never dialing in. At Outbrain, at Outbrain, that's, that's what I view my role as. You know, we obviously have- I know...

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a bunch of smart people for the advertising side and the publishing side. I view myself as the, the voice of the user. Yeah.

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I, I would always say that, like, I would be like, I would be the person to sort of raise, raise, raise their hand and be like, "If this were you, would you want this?

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[laughs] Like, would this be an experience that you would want?" And it's like, uh, they're like, "Well, that's not the point." I'm like, "It kinda is, actually." It is. [laughs] In the long run.

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But I think the question then ends up being how do you... It, it sounds good, like, in theory, and everyone wants to be like, you know, user, audience first and stuff like this. But to me the, the, the test comes

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when you have to make a decision that is going to, I don't wanna say hurt, but, like, in the short term it's not in your financial interest to, to make, to make that decision.

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And I, 'cause I think that, you know, is really what it comes down to is, you know, nobody... I, I would always say, like, uh, you know, nobody wakes up in the morning and say, "You know, I wanna suck today."

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Like, they... Uh, very few people, I don't, I think, you know. But they're presented with a series of decisions in which it's the easiest decision is to suck. Yeah. I...

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Look, I, I think every business in the world, every organization is probably managing sort of this virtual piggy bank of goodwill with, uh, their constituents.

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And, uh, you know, as with any piggy bank, you can, if you need some of the change, you can, uh, tap into it and, uh, and take a few coins. But you should be generally depositing into it.

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And, uh, you know, I think it's about finding that balance where we're depositing into that goodwill piggy bank of, uh, of consumers and what the reasons they find value with us, uh, you know, depositing into the piggy bank much more than, than extracting- Yeah...

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from it. But I think the que- uh, like, that doesn't show up on dashboards very easily. Do you know what I mean?

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There's, there's lots of things that, like, that, that appear on the dashboard that you can see, but the, the goodwill and, like, the trust, that's not as easily seen. Do you know what I mean?

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Like, a lot of that to me, that like, the maybe this is just in my... Like, I felt like that was more, like, gut and feeling and stuff like this.

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Whereas, like, everyone wanted to go to, like, you know, uh, spreadsheets and dashboards and stuff when you can see RPMs and things like that on, on those. But you don't see trust.

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I mean, I guess you could have, like, you know, NPS scores and stuff, but you really don't see it.

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Well, I, I think you don't see it on the kinda traditional advertising industrial complex dashboards that are presented because the whole ad tech system is really, uh, built towards maximizing RPM, which users don't care about.

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And it's not about user engagement, especially with everything that's programmatic.

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Just think of, uh, you know, between the ad being served and the ad showing up for the user, there's probably 17 layers there that each are running, uh, and passing the, the ads from one company to the other.

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No one is really understanding the publisher as much as the... or the ad, the user as much as the, the publisher does. Uh, but I think that's the, that's the task of, uh, the publishers.

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And I think there are many proxies. N- NPS is a great one, but it's harder to achieve. But even just user engagement.

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How, what percent of users are actually second time or more on your properties versus kind of fly by one time, uh, cookies?

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That, that's easy to measure, and I think that should be a paramount kind of, uh, first level KPI for most publishers. Yeah.

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And I feel like the pendulum is now swinging more towards, like, really over-indexing on loyalty to some degree.

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I think, you know, a lot of the industry over years was really built on, like, attracting fly by night visitors, whether that was from Google or from Facebook.

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Thanks again to Jay Sparks of Podhelp us for producing this podcast. To find out more about how you can get your own podcast, please visit podhelp.us and get in touch with Jay.

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We'll be back next week with, uh, another episode.

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