Think niche – or why you don’t want to be Sears

I had a quick conversation the other day with someone interested in using my colleagues at GrowthSpur  to help launch his news web site. As usual, I encouraged him to charge ahead – but urged him to pick a niche, not launch a general news web site.

This goes against years of training and experience most of us have as traditional journalists: Bigger is better, right? Cover more things, get a bigger audience?

It’s hard sometimes to pull ourselves away from topics we know too well. So to understand why niche sites work so well, let’s look instead at the same issue in another industry – retailing.

The Sears logo, circa 1970

Sears' logo, circa 1970

In the middle of 20th Century, Sears was the dominant store in America. It offered most things to most people, conveniently located at almost every mall in America. Their shirts weren’t the greatest, but they had a plentiful selection. Downstairs, the hardware department had most of the tools you’d need; out in the garage, you could get a new Die-Hard and fresh tires.

Today, Sears is a mere shadow of itself – and it wasn’t dethroned by Montgomery Ward or others who tried to do the same thing, just better.

 Sears was beaten by competitors who seized niches and exploited new technology: Wal-Mart’s legendary information systems and overseas outsourcing allowed it to offer mass-market goods at lower prices. Nordstrom and others catered to some consumers’ desire for premium goods and outstanding service. Home Depot and Lowe’s stripped away the hardware business by combining more selection,  cheaper prices and  a lumber yard.

Today’s mass media – newspapers, tightly formatted radio stations, the Big Four TV networks – are Sears in the mid-1970s.

For the past 50 years, the economics of scarcity meant programming “most things to most people” was a terrific model (especially when you could jack up your ad rates at will because advertisers had few other options). But digital technology has destroyed the scarcity that made those models work.

The general daily newspaper during the Golden Era of the 1960s-1990s was a happy accident of economics. No one could possibly afford to publish just international news, or just sports news, or just the comics. In a world of $75 million printing plants, $600-a-ton rolls of paper and all those delivery trucks, bundling together many niches made the product work.

But none of those costs exist in the digital world. In fact, bundling the traditional newspaper mix together leaves mainstream news sites with a huge problem: Too much good stuff, all competing for attention. The result? Early newspaper.coms had home pages stuffed with hundreds of links, none of which stood out enough to have an impact.

So to entrepreneurial journalists: Don’t be like Sears. Don’t try to be all things to all people. Don’t try to recreate the newspaper model of covering everything, but not particularly well.

That why niche sites are the fastest growing part of the digital world. Here are a couple of my favorite examples. What are some of yours?


#1 Mary Kate on 02.18.10 at 7:25 am

It’s a niche web site with a print edition. We paid out more in ad commission last month than we did for editorial content. 14 months old and growing.
And don’t forget our partner site/publication:
Someday we’ll be one of your favorites!

#2 tgd on 02.18.10 at 7:29 pm

I love that you’re paying more in ad commissions than content! Somewhere along the line, for many at least, the traditional “wall” between editorial and advertising turned into disdain. The symbiosis got lost, and we’re paying for it today.

And given that The Star is run by some of my favorite people, I’m confident it’ll make that favorites list.

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#3 Make The Local Business Community Your Business « GrowthSpur Blog on 02.23.10 at 12:11 am

[…] If you want to know a bit of geeky economics because why this works, check out our Tom Davidson’s blog post here. […]

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#4 Michael Andersen on 02.24.10 at 2:35 am

I very much agree, Tom.

One point you leave out: classifieds. Until quite recently (I’d estimate 2005 for the major metros, 2007 for smaller cities, still ongoing for the smallest dailies and the weeklies), the network wealth of the classifieds was still a very powerful centripital force, pulling all the various niches of content together into a single product.

Here’s my way of thinking about the advantages of niche content in economic terms: niche content is more valuable to its small number of readers than general content is. And because it takes time to consume content, every minute spent with general content is a minute that you could have been spending with niche content.

In other words, the value of general-interest content isn’t falling. But its consumers face rising opportunity costs.

#5 Defense loses this ballgame | Tom Davidson on 04.27.10 at 10:06 am

[…] Daunting? Sure. Simply regurgitating your print product in digital formats won’t grow your audience ten times. No single product will, either. […]

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