A former equities trader is quietly proving the potential of a low-cost hyperlocal news network in the UK.
Regional publishers are being battered by COVID-19, furloughing staff, and losing revenue at a rate that threatens to make permanent their decisions to suspend many printed newspapers. But Karl Hancock is talking up the prospects for his 15-month-old Nub News group which now has 32 digital editions in UK towns with an aggregate population of some 750k, the latest launched just this week. His 16 months of progress, with less than £1m of funding so far, implies Nub could become a national network over the next 1-2 years with (maybe) not much more than the £2m he is now seeking from investors.
Just two years ago, Hancock knew little about media. But a university reunion with techie Dean Waghorn led to the plan for hundreds of mobile-first hyperlocal news sites. It started with January 2019 launches in Hancock’s adopted home county of Devon, and has continued this week with Teddington, in south west London, where he had previously lived. Like the local journalists he is recruiting, he knows the territory.
Hancock had spent 25 years working for London investment banks and was nearing the end of a six-year stint as head of equity sales for Berenberg when he decided to raise funds for Waghorn’s idea from five investor friends. They paid some £700k for 8% of the shares, to fund the launch of the mobile sites that put “your town in your pocket”.
The plan is for each town to have a service comprising: local news, classified ads (currently scraped from Ebay and other sites), and a HuffPost-like system of stories from “trusted contributors”, such as local councillors, politicians and event organisers. Readers are encouraged to post their own local news and events – or to “nub it”.
Back to the future
Hancock claims to be in pursuit of “what the local newspaper was 25 years ago, but on the internet. We want to be in the heart of every town and city in the UK. We want to provide everything that a town wants and get the community talking. We want to make local news easily accessible on all devices, particularly mobile, without intrusive pop-up advertising, enforced surveys or clickbait. We will ensure our content remains truly local.”
Nub News is initially targeting smaller towns whose residents may feel neglected by local newspapers that are now published (either in print or digitally) from distant offices consolidated in larger towns.
The key to the business model is a total of, say, two journalists posting some 2-3 news stories a day in each of 3-4 towns (so less than one journalist per community). The company currently has 16 journalists and a head office team of just three which sounds light, even to Hancock. But he claims impressive early results including in the Warwickshire town of Atherstone, reportedly with a “regular” audience equivalent to almost 90% of its 15k population. Similar results are claimed for Penarth, a South Wales town of 20k.
As for almost all digital services, the virus “lockdown” has boosted Nub audiences but total revenues are believed to be less than £100k. Its only just started to think seriously about advertising but claims to be currently negotiating for a game-changing, national sponsor. But that will be just one step in Hancock’s plan for the roll-out of some 200-300 editions of Nub News across the UK during 2020-21.
His plans might worry rival some of the country’s regional news groups if they weren’t already engaged in a bigger fight for survival. Even before the virus outbreak, many local newspapers in the UK and almost everywhere else have been struggling to stabilise advertising revenues – and are conflicted by digital ambitions which threaten to accelerate the decline of the still-profitable print.
Publishers lament their “broken business model”. But their costs may just be too high to compete with the hyperlocal services that consumers increasingly seem to want.
Economies of scale
Karl Hancock talks about re-creating a world where news providers are at the centre of local communities and “giving an identity back to towns… and supporting local businesses and charities…” But his focus is on creating a low-cost, virtual business which is able to exploit the scale economies of technology and advertising/sponsorship sales.
He has plenty of competition. The country’s largest newspaper publisher Reach Plc has its three-year-old, fully-automated “In Your Area” hyperlocal news which, in January, said it has reached 2.5m engaged users and “consistently” recorded double digit monthly growth. The company’s also has “Live” city sites.
As if to emphasise the big-budget contrast, Reach’s Yorkshire Live recently hired 12 new journalists for its launch of Yorkshire Live, in addition to the 18 it already employs in the county. Perhaps the company (which owns hundreds of national, regional and local papers throughout the UK) will spin-off its hyperlocal operations, in order to fight the Nub expansion on its own low-cost terms? But there are lots of other competitors too.
Cardiff University (Karl Hancock’s alma mater, incidentally) has established a Centre for Community Journalism to provide information, training, research and motivation for hyperlocal journalism. It claims to have “inspired individuals and communities to step up to provide an alternative source of information through social enterprises, businesses and voluntary services; delivering enormous civic value.” It’s a cheerleader for the 100 or more hyperlocal operators in the UK, many of which may be expected to move into online video and audio.
Hancock may be even more inspired by the way that Patch Media, in the US, has become solidly profitable after a memorable history of lossmaking during its five years under AOL ownership. The hyperlocal news provider had been co-founded by Tim Armstrong and was acquired shortly after he became CEO of AOL (now owned by Verizon). It was expensively grown into a national brand but never got anywhere near breakeven.
After five years and an estimated $300m of losses, it was spun-off to tech-savvy investor Charlie Hale, one of whose first decisions was to appoint as president a high-calibre journalist, the New York Times’ Warren St John. His appointment brought to Patch the credibility that Politico’s Ben Smith had brought to BuzzFeed. Both added journalistic cred – but only Patch transformed its finances.
Hale says the Patch network of 1,200 hyperlocal sites has been profitable for the past four years, now with some $25m of revenue. It employs 110 journalists (150 employees in total). By contrast, it had 1,000 employees on 900 sites at AOL. An average Patch journalist now generates up to 10 news stories a day and covers multiple towns. It is still growing strongly.
In March, just as the virus started to wreck media profits, Patch had its strongest month so far – for revenue and traffic. Its 48m monthly uniques were said to be 50% above its average, and subscriptions to its morning email were up 8% to 2.3m (having doubled in 2019). In addition to local and programmatic advertising, Patch makes money by converting casual readers to free “subscribers” and then selling site sponsorships around targeting those “hyper-loyal readers”. It also sells access to local events.
“We’re on to something”
Patch’s buoyant news marked the counter-intuitive hiring of additional reporters and techies, and confirmation that the company is working on a “franchise” scheme to support local reporters who want to start their own local news media. Its president had told Digiday: “I think Patch is playing well and will continue to play an important role in hyperlocal journalism. We have a business model that’s made it possible to continue to invest. I think we’re on to something.”
That’s music to the ears of Karl Hancock who, with co-founder Dean Waghorn, owns 92% of Nub News Ltd.
The fledgling UK operator clearly is still just that. A fledgling. Nub will need to invest in: technology (currently the sites lack some basic functionality including search), sales & marketing, video content, and the occasional piece of stand-out journalism. It might have to consider ‘editionalising’ the posting of some content rather than dribbling it through the day: audience peaks are more commercial and may also be the only way to make the service a real habit for readers.
Nub News is a (sort of) prototype and its founders are banking on the potential of hyperlocal services in those 700 UK towns and suburbs with populations of 5k-100k. The fact that the company could achieve almost national coverage with annual operating costs of an estimated £5m shows its potential to shake up the country’s regional news. Even if the stakes are raised, the model looks good.
Karl Hancock, who knows a bit about selling investments, hopes to raise some £2m later in the year. He might be tempted to go for more ammunition. The prospectus could include the gloss of Nub’s first national sponsor, soaring traffic figures for the existing sites in news-hungry times, the transatlantic lessons of Patch, and perhaps even the recruitment of some noted journalistic/ publishing talent. Post-virus investors (including perhaps newspaper and radio groups) may not be able to resist it.
