Sometimes you have to cut back to move forward

If you think that innovation is just about creating new products and services, you’re missing what might be the most important step in leading a publication forward.

A publication makes its greatest progress not when it introduces new products and services but when it shows the discipline to leave tired or failing efforts behind. You must fight the inertia that’s holding you back.

This month I began shutting down what where once the most popular services on my family’s violin website. While these were the first services we offered on the site, and the ones that defined us to our early audience, they’d become a major time drain for me, and were failing to leverage any significant income for the site.

Making the decision to close these services not only created an opportunity for me to devote more time to the stuff that is working on the site, it also forced me to confront the reasons why these services weren’t thriving anymore. An innovator who’s also designing and launching, but never taking a look back at her work – axe in hand – never learns any valuable lessons from the audience and customers she’s trying to serve.

When my wife and I launched the violin website, neither of us had time to do much with it. So I coded up some automated directories, which any registered member of the site could join – one for teachers, another for shops, and later, one for camps and summer festivals. The directories provided content for the site that readers valued, and the chance to be in the directories gave people a compelling reason to register with the site.

Years later, after my wife began spending more time writing for, editing, and coaching contributors to the site, those old directories fell behind our discussion board and blogs in pageview and visitor traffic. Sponsors wanted to be part of those blogs, interviews, and original feature articles on the site. I couldn’t get anyone to sponsor the directory pages, and the click-through data from those channels were just atrocious.

And yet, the directories began eating more and more of my time. No longer were interested violinists joining the site to get access to the directories, now they were attracting sweatshop spammers from around the world. Spammers looking for free backlinks to their scams and affiliate storefronts were polluting our listings with thousands of submitted entries that had nothing to do with the violin.

At first, I manually deleted or blocked the submissions. Then I started writing scripts to block them, or mass purge them after the fact, if they’d gotten through. But the spammers kept getting more sophisticated in their attacks on the site, and frankly, I got tired trying to stay ahead of them.

For what? For directory pages that were hardly unique any longer? When we began, no teachers’ associations had membership directories online. Now hundreds did. Other listings of summer camps and music festivals abounded. Directories aren’t what we provide best anymore. That’d be our original interviews, features, blogs and discussion board – in short, our editorial content. So why not ditch the effort to prop up failing directories and spend our time and effort building more great original content instead?

The only directory we had that retained much unique value was our business directory. So I salvaged that by converting it to a paid directory. If violin shops want in now, they must pay us an annual fee. That effectively eliminated not only the spammers, but also small, undercapitalized shops that really couldn’t handle inquiries from our global audience.

By the way, I can’t recommend enough that local and niche Web publishers develop a business directory for their advertising customers. With so many spam-laden business directories polluting the Internet, readers appreciate a well-targeted, up-to-date directory that lists only real businesses serving a specific community. And business customers are willing to pay to be in a directory that’s spam-free and promoted to a real audience of engaged community members instead of drive-by Web searchers. A directory is an easy sell to a local business owner who can’t spell “CPM” and doesn’t want to hassle with a complicated banner ad campaign, too.

But I wouldn’t have been in position to create that new paid directory for our site (which has led to five-figure annual income for us), if I’d been satisfied to leave our old directories be. By picking up the axe and taking it to the directories, I chopped away a lot of waste that had been covering up a better opportunity for our site.

So innovation involves not just creation, but destruction as well. What are the old pages, services, products and habits that you or your organization is investing significant time and money to maintain for your publication, only for insignificant revenue or other value in return?

Swing your axe thoughtfully, though. I gave our directories over 10 years before cutting them down. They had their run. Killing a new service before giving it a decent chance to find a customer base can cost you far more than leaving a dying service to linger. But once you’ve given it your best shot or a service has run its course, don’t let fear or apathy keep you from killing a project that’s sucking money or time, or polluting your pages with inferior content.

And once you’ve given something a shot, don’t kick yourself if someone else makes it work. Remember, ideas are worthless. If someone else executed an idea in a way you couldn’t, well, good for them. Go find an idea you can execute with success. Focus on what you and your organization do best, and let your axe keep your way forward clear.

With lower costs, independent eBook publishers hold the advantage

Have you been following the Amazon eBook “price fixing” case?

Yes or no, don’t let this story discourage you from eBook publishing. If anything, this case should be encouraging independent news publishers to jump into the eBook market.

Why? As Talking Points Memo explained, this case boils down to an alleged attempt by big book publishers to collude to get an “agency” deal where they would get to set the price of the books they published and were sold on Amazon.

The TPM summary didn’t mention it, but that agency pricing model is the pricing deal that you get with Amazon as an independent eBook publisher. Why is that a price fixing offense for them and not for you? In short, because they allegedly colluded to get particular prices under that deal, according to the TPM summary.

Econ 101 lesson here: If you can enter a market where existing players are colluding to hold up prices, you have a huge business opportunity if you can undercut them on price. Typically, when big businesses try to collude on price, it’s because they have high barriers to entry in that business that keep potential competitors (i.e. disruptors) on the sidelines.

And that certainly was the case in the book publishing industry just 10 years ago. Today, however, the barriers to entry to book publishing are about the same as the barriers to entry to website publishing were 15 years ago – pretty much zilch. You need some tech know-how, but it’s nothing more than a sharp learner can teach herself or himself within a few weeks.

Remember, the big book publishers – like the big newspaper chains before them – have highly specialized, multi-level workforces that can drive their operating costs higher than Voyager 2. The traditional book publishing operation model includes

  • authors
  • agents
  • book editors
  • copy editors and proofreaders
  • interior designers
  • cover designers
  • manufacturing
  • publicists
  • distribution
  • retailers

Each book sold must pay a portion of the salary or wages of each person that chain. And don’t forget that each company involved needs to pay for all the managers overseeing these people, as well as a cut for profit as well. No wonder book publishers are trying to inflate the prices they charge.

Publishing an eBook independently through a retailer such as Amazon takes the manufacturing, distribution and retailing roles off your table. Independent publishing also removes the need for acquiring an agent and a book editor (though I recommend showing your work to a trusted colleague for feedback before moving into copy-editing).

As an online journalist, I have the ability to write my own book, to edit it, and to code up the HTML for the eBook design. As a website publisher, I have built an online community of tens of thousands of frequent readers to whom I can market my books, and the social media skills to help empower them to spread the word virally on my book’s behalf.

All this means that I can handle pretty much all the work of publishing and marketing an eBook. Which also means that I can keep all the money my books earn for myself. Sure, retailers such as Amazon will take a cut, but in Amazon’s case they do bring something very valuable to the table – a recommendation engine and category best-seller lists that help drive sales of your books. That’s worth the cut they take, in my opinion. (Barnes and Noble? Not so much.)

All the rest is yours. You don’t have to set aside anything for managers or for shareholders. That should give you the ability to produce and market your work for a fraction of the cost of producing and marketing that same work through a traditional publisher, even if they were producing only the same eBooks. And you can do that while making more money than you would as an author if you had published through a traditional publishing house. So let the federal government, the New York publishing houses and Amazon fight it out. Ultimately, the future of book publishing belongs to the independents.

I’m nowhere near unique among journalists. If you’ve worked in online journalism, you probably have a similar skill set to me, and can handle the work of self-publishing your best reporting work into eBooks. With lower expenses, you can undercut “the big kids” on price. That leaves it up to you, and your skills as a storyteller, to compete to attract the attention – and purchases – of readers.

You want to stay in the news business? Here is your purest, most direct shot to do that. If you can tell stories that people want to read, eBooks are a marketplace in which people are paying authors – nearly directly – to read them. No employer or publisher can tell you ‘no’, or silence you. No big business can beat you on price.

So why not jump in?

Is your start-up news website legal?

Is your start-up news website legal?

That might seem like an absurd question, especially for readers in the United States, where the First Amendment protects the freedom of the press. How can a news website be illegal?

Well, while the First Amendment protects freedom of the press, plenty of other federal, state and local legislation regulates the conduct of business. And the First Amendment doesn’t give news publishers a free pass to ignore that. So you’d better be paying taxes on your business income. And abiding by legal hiring and employment practices if you’re bringing on help.

“No sweat,” I can hear some of you saying to yourselves. “I pay my state and federal income taxes and work by myself at home. I don’t need to worry about employment law or all that other stuff.”

Ah, you work at home, you say? Then you might not be running a legal business after all.

Have you checked your local zoning code to see what it says about running a business out of your home? You might surprised by what you learn. Even if all you do in running your business is to type on your home computer, the fact that you’re earning income that’s not coming from an employer is enough in some jurisdictions to cover you under local home-business zoning and tax rules.

Every few years, the City of Pasadena (California) sends me a letter asking me to pay up for a city business license and tax. The same letter goes to everyone with a Pasadena mailing address who reported Schedule C income on his or her federal tax return who hasn’t obtained a license yet. (Schedule C is the form through which you report all 1099 or miscellaneous income. It’s the form that home business owners who do not incorporate use to report their business income.)

Pasadena’s hardly alone. New York City, for example, levies a unincorporated business tax that hits many freelance writers and website publishers. The City of Los Angeles also hits freelancers and writers (among others) with a city business tax, but exempts the first $100,000 in income. Fail to pay these local taxes and license fees, and you’re running an illegal business.

Now, even through the U.S. postal service assigns me a Pasadena mailing address, I actually live in unincorporated Los Angeles County. So whenever I get that letter, I just reply with a written note that I live outside the city limits, and they leave me alone. But I always wonder how many less-informed LA County residents don’t realize that, and send in the money anyway. It must be enough to make it worth the city’s postage costs in sending out those extra letters.

But even in unincorporated LA County, I’m subject to residential zoning code addressing home-based businesses. (Writing and publishing don’t fall on the long list of home businesses required to obtain an LA County business license, so that’s not an issue for me.) Now, before I go any further, let me acknowledge that busting writers making money on work they’re creating at home is pretty far down the priority list for most communities. Getting money from unpaid taxes is one thing, but zoning enforcement’s rarely an issue for home businesses that don’t generate excess noise, garbage or foot or vehicle traffic.

That said, if you’re writing stuff that might, uh, tick off the powers-that-be in your community, it’s just smart business to make sure that you’re not breaking any rules a vindictive local official might use against you.

So take a look at your local residential zoning code. Here are a few interesting things I discovered about unincorporated Los Angeles County:

  • “Retail sales” are prohibited for a home business. So if you print up website T-shirts, you can’t legally sell them to a reader who comes to your home. (Storing retail stock in your home for mail-order delivery is illegal in some jurisdictions, so be on the lookout for that, too. LA County’s rules say “No stock in trade, inventory or display of goods or materials shall be kept or maintained on the premises, except for incidental storage kept entirely within the dwelling unit.”)
  • “The home-based occupation shall not be conducted in any attached or unattached structure intended for the parking of automobiles.” So no working out of the garage. Sorry, would-be Hewlitts and Packards.
  • Prohibited uses in a home business include: “Recording/motion picture/video production studio, except for editing or pre-recorded material”. So much for video blogging for your site from your home-office desk. Or Skyping into a conference or classroom. Perhaps this one made sense in the era of bulky, power-hogging cameras and lighting, but now, here’s a classic example of a law written for pre-Internet technology. But it’s still on the books here.
  • “There shall be only one home-based occupation per dwelling unit.” Now this is one that got my attention. IANAL, but I’d be interested to learn the prevailing local definition of “occupation.” Is publishing an eBook a different “occupation” that writing for a website, or selling ads for that site? (If so, I am so busted.)
  • The safest thing to do as a publisher is to rent yourself some office space in a legally-zoned commercial office building. That also can help make your emerging business look more legitimate in the eyes of potential customers and clients. But if the numbers don’t work for you paying that extra rent each month, don’t forget to give your local residential zoning code a look before you get too far down the road with your publishing business.

    Because even if all you’re doing is writing, you don’t want a local commissioner you’ve just busted in an exclusive expose using that zoning code to bust you in retaliation.

    Cover yourselves.

    P.S. And LA County? Please, let’s revisit that whole no “video production” thing soon, please?