Three years after North American newspapers began outsourcing ad production, publishers are considering contracting out their editorial operations.
At least two editorial contracting firms are beginning to aggressively woo publishers to use their services and one, Pagemasters North America, in mid-November was tapped by The Toronto Star to handle a portion of the daily's editorial operations. The Star will be the first North American paper to use an outside firm to perform editorial work.
The Star proposed contracting out about a fifth of its editorial work to Pagemasters, about 80 jobs. Final details are still to be worked out, The Star said, and the paper might even decide to keep the work in-house if it can secure accommodations from the union representing its editorial workers.
To date, only one U.S. paper, The Miami Herald, has outsourced some of its copy-editing, and that is only for its international edition. The Orange County (Calif.) Register also evaluated how it might outsource some of its editorial work.
Overseas, however, editorial outsourcing has gained a firm foothold. A number of papers in Australia, New Zealand and - in the United Kingdom the Telegraph Group - use an outside vendor to provide editorial support. Reuters, meantime, has used a Bangalore, India, bureau to compile earnings reports and other news stories for years.
Driving the trend: The continuing requirement to cut costs. Publishers contend outsourcing allows them to concentrate on their core mission: the creation and distribution of local news and information.
James Moroney III, publisher of The Dallas Morning News, told an audience at this fall's Southern Publishers Newspaper Association conference that if he had his way, "everything would be outsourced, except for original content."
William Dean Singleton, CEO of MediaNews Group, caused a firestorm when he said he was considering whether to use an overseas firm to handle MNG's editorial work during a speech he made at the 2008 SNPA meeting.
"In today's world, whether your desk is down the hall or around the world, from a computer standpoint, it doesn't matter," he said.
When The Star first said it planned to contract out a portion of its editing jobs in a bid to cut costs, Maureen Dawson, unit chair of the Southern Ontario Newsmedia Guild, criticized the move.
"Star readers will be shocked to hear that core aspects of its daily journalism, that vital role in our society, are now to be farmed out, likely to foreign interests," she said in a statement.
"Journalism is a collaborative effort, the product of a team of reporters, photographers and editors working in concert to produce the kind of activist agenda that has served Star readers and our community so well for so long," she said. "To remove a critical element of that work is to shortchange everyone who depends on it."
Star spokesman Bob Hepburn told a Canadian Broadcasting Co. interviewer in early November that the paper is being forced to look at ways to decrease its cost structure.
"We pride ourselves on what The Star stands for, but we need to find some efficiencies," he said.
The Star's plan dovetails neatly with the business proposition offered by Pagemasters, which opened a North American office in Toronto earlier this year.
The North American unit is a wholly owned subsidiary of the Canadian Press, mirroring the operational framework Pagemasters has in Australia, where it's part of the Australian Associated Press.
The company's 140 employees already produce more than 10,000 editorial pages a month for papers that include the Sydney Morning Herald, The Age in Melbourne and the New Zealand Herald, said Stewart Muir, who joined Pagemasters North America as its managing director in October.
Ready for a revolution
"The North American market is ready for a revolution," Muir told News & Tech. "Look at the opinion leaders like Singleton and David Black (CEO of Black Press). People are talking about outsourcing editorial. It's not an absence of agreement, but what is missing is a successful implementation."
Muir said Pagemasters "near-sourcing" alternative offers publishers benefits, especially as newspapers wrestle to cut costs.
"It has a proven track record," he said of the firm's services, citing in part the New Zealand Herald, which has used Pagemasters for layout and copy-editing for two years."
"Lots of North American newspapers want that service mentality.
And it's not just the newsroom. The reason they have outsourced ad
production and printing and other operations is because they can get
the results they need."
Muir acknowledges that editorial outsourcing remains a contentious topic, but said Pagemasters does not farm out work to overseas workers who may only earn a third of what a Canadian or U.S. copy-editor might make.
Instead, Muir said Pagemasters opens up production centers in areas close to its clients, and hires trained journalists who are paid equivalent wages and benefits. Cost savings come from Pagemasters policies and procedures designed to optimize how copy flows throughout the day.
"Journalist wages in a Pagemasters shop are totally comparable" to the newspaper, Muir said. "It's about delivering efficiency.
"We're talking about the most precious part of a newspaper endeavor, the creation and editing of editorial material. Nobody is talking about just farming this out."
Muir said Pagemasters North America can work with any newspaper's editorial front-end, or, if the paper chooses, can use Pagemasters' Roxen Internet Portal foundation.
"We know the importance of having procedures," he said. "We are newspaper professionals, and we understand the need to have protocols and standards and follow them."
Mindworks Global Media, meantime, also sees opportunity in North America.
The New Delhi-area firm, with an office in New York, has a dozen newspaper clients.
"The essential proposition is this: Newspapers are going through significant challenges because of the economic downturn, and they are making significant cutbacks, particularly in reporting. This is all coming at a time when competition, particularly from online sources, is severe," said Tony Joseph, Mindworks' CEO and co-founder.
By contracting out ancillary production services such as design and pagination, newspapers can then focus on their primary role: generating content, he said.
"It's time for newspapers to stop bleeding the reporting staff to seek savings on production-related services."
Mindworks has served non-Indian clients since 2005, and in addition to The Miami Herald, worked with The Orange County Register during its 30-day trial in 2008.
Drop in costs
"There is now a significant opportunity for U.S. publishers to recast the way they operate and instead invest much more into their core proposition," Joseph said, adding that contracting work to a centralized editorial production provider such as Mindworks can help a customer cut editorial production costs by as much as 40 percent.
"There are significant gains with centralization," he said. "But like any new concept, there has to be some time allotted to gain momentum, and I think we are at a time where momentum has taken place."
Mindworks bases its 100 employees at a production center just outside of New Delhi. It's ready to consider opening local offices at locations that warrant a closer working relationship, said Chief Marketing Officer Vikas Kaul. "We might do that, and staff it with the workers of the publishers" the company is serving. That approach might mollify complaints from displaced workers that their jobs were replaced by lower-paid editors overseas who aren't familiar with local customs or traditions.
"We also bring to the table process expertise, and strategic initiatives like centralization and consolidation," Kaul said. "It's not just that costs in India are lower; it's also that you might need fewer workers by making changes to the workflow. We want to help publishers determine their ROI, and before we start any project, that has to be done."
Ad providers diversify
Even as Pagemasters and Mindworks market their services to newspapers, the industry's stable of ad production outsourcers continues to diversify their offerings.
"Newspapers have taken a lot of the steps they've needed with ad production, and now they are looking at other areas, such as spec ads and digital ad production," said Robert Berkeley, CEO of Express KCS. The firm made its U.S. debut in late 2006 when it began producing ads at its Gurgaon, India, facility for more than 40 MediaNews Group northern California newspapers.
Since then, Express KCS has also begun processing ads for additional MNG papers as well as dailies owned by McClatchy Co., E.W. Scripps, Media General and the (Minneapolis) Star Tribune.
"We're now also doing spec ads and special section production," Berkeley said, "and we've branched out to digital ads for newspapers as well."
The Commercial Appeal in Memphis, Tenn., has been outsourcing its ad production to Express KCS for two years, said Chris Ford, assistant creative services manager.
"It's worked out well for us," he said. The E.W. Scripps paper is sending about 25 percent of its production to India for processing. As ad sales at the paper decline, the amount of support needed from India has also changed, he said.
"The prime benefit is lower cost, but as our volume has changed we now need the ads turned around more quickly, and they have accommodated that request," Ford said.
Express KCS workers access The Commercial Appeal's Agfa and Multi-Ad Creator-based ad production platform through a virtual private network. The paper assigns two traffic people to determine whether ad files should be produced by Express KCS or done in-house by one of 11 ad producers the paper still has on staff. Prior to using Express KCS, The Commercial Appeal had almost 30 ad production people on staff.
"KCS does some ads better than others, and in the past we had just sent them generic ads," Ford said about the integration of overseas-produced content in the paper's workflow. "But they've become more sophisticated, and they've hired additional staff to become more creative and more responsive.
"We have monthly conference calls to monitor performance, and if we do run into an issue, it's dealt with quickly."
Elgin, Ill.-based Affinity Express, meantime, said it's serving almost 200 properties with 800 designers in offices in India and The Philippines, said Kelly Glass, vice president of marketing. "We're growing and continuing to add," she said.
Among papers using Affinity's service in the United States are Hearst dailies in Houston and Beaumont, Texas, the Chicago Sun-Times and the Columbus (Ohio) Dispatch.
Although most newspapers retain some staffers to handle requests from advertisers, that's not the case at The Dispatch, which contracted everything out to Affinity when it made the switch in late 2006.
In cases like this, Glass said Affinity now offers on-site production, using its own workers, to provide some type of local support presence. "We do production offshore but have support on shore. We're trying to give our clients what they want. In Columbus we have workers who can deal with key advertisers; in other places we might have relationship managers and they will oversee" a larger territory, she said.
"We're seeing a lot of evolution in this type of service. Ad production is already accepted, and as we are showing publishers they can save money (by contracting out non-core operations), they are asking us to tell them where else this model can apply."
To that end, Affinity this month is rolling out a new service, LeadSite Express, aimed at helping publishers woo commercial clients with marketing collateral creation services. "Publishers want to capture all different types of work, and this will help them do that," Glass said.
2AdPro, whose JobDirect software is used by publishers including Freedom Communications and Gannett, is also seeing continued interest, said Todd Brownrout, co-founder of the Los Angeles-based firm.
"It's matured into a good business, and a lot of our early decisions - to be platform-agnostic, for example - have been validated," he said.
The company maintains production offices in two Indian cities, Bangalore and Chennai, with more than 400 staffers working 24 hours a day, six days a week.
"A core part of what we do is preparing digital ads, but there remains lots of activity on the print side, and we're having lots of conversations with publishers. Print may be under duress, but because it still represents a critical part of the revenue stream, it's more important than ever to make sure the (print) ads are done right.
"The urgency around costs remain exceptionally high for publishers and it's a challenge to reshape a staff and organization to meet those costs," Brownrout said.
"It's a huge, wrenching change that nobody wants to see, but the market is giving newspapers an unequivocal message. If your revenues are lower, then our costs have to be lower.
"We have no choice."