Dealing with the elephant: Build the software you need, then sell it.

This is the fourth post in a short series I’m pretty much done with about the business model for online news before I go back to my usual routine of pointing out the obvious to people wearing dark glasses.  The starting point, the givens in the equation, are listed here.  Suggest which windmill I should tilt at next using the Skribit widget in the sidebar of my blog while it’s still there.

elephant by droolcup on Flickr
“elephant” by droolcup on Flickr

There’s something funny about software for publishing online news.

Newspapers don’t develop it.

There’s an exception or two to that rule of course, but I hope I’ve force-fed you enough fine LJWorld.com products at this point to hammer that exception home.  (I almost wish they had an affiliate program.)

But usually, instead of spending money to hire developers to build software to match the specifications of their own needs, newspapers and the companies that own them reach out the third-party vendors on a daily basis in order to provide basic functionality to online readers, consumers, and advertisers.

Follow along with me for a moment, substituting your own organization for the Royal We, in the parlance of our times:

  • Classifieds? Let someone else build it, sell it, and profit from it.  We won’t have much input into what they build for us, but we won’t need to worry about the servers or credit card processing.
  • Databases? If we know what to do with them, we certainly haven’t hired anyone who can build them with journalistic intent.  We outsource them, or we trust the one developer in the newsroom who knows what they’re doing to build a framework we can use more than once, or that we can use when they move on.
  • Calendars, content management systems, even project management tools? We seem to have been out sick from school on the day “vertical integration” was covered in AP Economics.

No, I wouldn’t recommend you drop everything you’re doing so you can re-invent the wheel, especially when some of those wheels are pretty darn good at filling your needs for a relatively small short-term price.

But yes, I heartily recommend you build an extensible Web application for the next unserved need in your organization.  Just pick any one of those that pops up in the next month or so, and go at it.

After you’ve launched it and earned the praise of your peers, slap a price tag on a license and get to work marketing it.

You’ve made a long-term investment by hiring developers.  The capital is coming back in the form of the application that’s useful to your organization; think of the license fees for the software as interest income.  You’ll be supporting the software for your own papers, anyway; might as well serve a few other organizations at the same time, for a price.

So ask yourself which software needs are going unmet in your own organization.  If you can’t find the right tool for the job, chances are, no one else can either.

A caveat: I’ve given out a lot of advice (some of it unsolicited) to newsrooms about using free, Web-based tools for online news production.  I still think that’s the right approach for many news-related purposes, but as soon as you find yourself paying for a mediocre service that’s part of your core business routine, it’s time to build something better.

4 Replies to “Dealing with the elephant: Build the software you need, then sell it.”

  1. I’m afraid this is really bad advice:

    “Just pick any one of those that pops up in the next month or so, and go at it. … After you’ve launched it and earned the praise of your peers, slap a price tag on a license and get to work marketing it.”

    That’s like driving down the street, spotting an empty storefront, renting the building and then trying to figure out what business you’re in.

    Smart business decisions are not random.

    This is not new territory. Newspapers have been developing software for years. Many companies have marketed their software. Nando did it. Gannett has done it. We at Morris have been selling software since around 2000, and currently have installations serving Belo, Advance, Media General, the Washington Post, and companies in Brazil, Australia and Denmark.

    It’s not as simple as hanging up a shingle and declaring you’re in the software sales business.

    Sales costs money. Sales support costs money. Installation support costs money. Operational support costs money. Do you have a call center?

    And what are you going to do when you have sales contracts that require performance and service level guarantees, and a sudden internal need arises that you can’t meet because your resources are all encumbered?

    And how long will it be before the randomly chosen application you’re selling is surpassed by a free, open-source alternative?

    Marketing, by the way, doesn’t start after development. It starts before development.

    Marketing is about understanding the needs of potential customers, assessing the competitive landscape, and identifying a set of benefits and only then creating a product.

    Then, if you’re working in a tech field, you do it all over again. Because technology moves quickly, and today’s great idea is tomorrow’s old hat.

    I’m raising these issues because they’re all real. There is a whole herd of elephants in this particular room, and they have been known to stampede.

  2. All excellent points, but I think there’s a key difference in the way we think about software and development that explains some of this:

    I’m imagining a team of two developers and a “people person,” getting tired of working with vendors and seeking to produce one small application at a time.

    37signals is more of a model for me than Gannett: See a need, fill it, keep it simple, take an agile and iterative approach to development. Think like a start-up, not a conglomerate.

    I don’t think any newspaper company has taken that approach yet; I don’t see simple applications when I look at their products — I see overfeatured bloatware produced in an attempt to meet *every* possible need of *every* property that might use it.

    But I’d love to exchange some examples here…

  3. I think you are both right on. News organizations need to change the way they value and invest in software. Because software is changing… Open Source and web API’s are changing the world of software quickly.

    Steve’s right, responsible software development is a complex, tricky business. Maybe there is a middle ground between black-box software development and low-profit open source?

    After the interactive conference in June I challenged my team to build a marketplace site inspired by LJ’s. This is about 80% done. It took about 200 labor hours, well within the budget of most medium sized papers.

    http://intodaysmarket.com

    PS: Ryan, want to be the first member of our affiliate program?

Comments are closed.