Jeff Elgie, Canadian media unicorn.

Village Media CEO Jeff Elgie

March 5, 2024

There’s not much reason for optimism these days in Canadian news journalism. It’s red ink, layoffs and closures as far as the eye can see.

Opponents of government aid to news journalism point to the many digital start-ups but, inspiring as that is, those are opinion sites or niche, single-beat journalism rather than broad spectrum news outlets.

Rare bright spots include La Presse and the Globe and Mail, two news outlets that hold the privileged (and well earned) title of being a number one national news outlet.

But the reason why news journalism is still in crisis is the relative dearth of financially sustainable news journalism in regional, metropolitan and local markets.

Enter Jeff Elgie, Canadian unicorn.

Elgie is the owner and publisher of Village Media, headquartered in the Ontario city of Sault Ste. Marie (population 70,000). A 48-year-old native of “the Soo,” Elgie headed his own digital advertising and IT consulting firms before getting into publishing. Since 2014, he has grown a chain of hyperlocal community news websites from its original base in the Soo to a network spread across the near north and southern regions of Ontario.

He’s continually growing and his operations are in the black. MediaPolicy interviewed him to find out how.

You have a new community news website launching soon in the downtown core of Toronto, south of Bloor Street to Lake Ontario?

Yes, it’s a hyperlocal digital product for people who live and work in the community, like we have for our other 23 local markets. It won’t have a provincial or national focus and we aren’t going to imitate the lifestyle news products that are already out there. It will be local news and information, mostly text journalism, with about eight to ten reporters. I wouldn’t consider it as head-to-head with the Toronto Star or CP24.  

It took you ten years to get to 23 markets and now you’re really picking up speed. You’ve just added two Golden Horseshoe communities, Oakville and Flamborough. Now you’re looking at a foothold in Toronto. Are you profitable?

Yes. We have some markets that are stronger than others. Probably about ten of them could not be profitable as stand-alone enterprises – meaning, they wouldn’t support the necessary infrastructure to run independently. Building scale has helped a lot. We launched our own content management system nine years ago. It was purpose built for our business model. It’s not just for publishing editorial content but classifieds, auctions, business directories. A lot of commercial thought went into it. Now we license it to other community publishing companies, like Black Press and Glacier. So our technology line is now a profit-centre, not a cost.

I asked you on Twitter some time ago what makes for a successful market, and you said the saturation level of the ad market was important but the most important thing was whether the local audience was looking for hyperlocal content, as opposed to looking past you to the nearest metropolitan daily?

Yes. So long as the community thinks local first, we’ll succeed. It’s very important to give the community more than just news, but also information.

That’s what print newspapers had in the glory days right? The bundled product. The bundle of news, weather, classifieds, comics, entertainment listings. Then the Internet took that away.

Yes, but you can re-create that in a digital product, adding all sorts of community information. Weather, classifieds, school bus schedules, community web cams and so on. People want that. It’s a huge draw. And if you think about it, it’s the only way we can make this work. Thirty-seven per cent of our monetized page views are news. A third of that slice is basic service journalism, information about what’s happening in the community. The other 23% to 24% is original news reporting, the expensive stuff. We have two full time employees over our entire operation collecting and publishing obituaries. Obits are 20% of our traffic. But it takes 90 journalists to do the original news reporting. 

Why do you have so few imitators? Torstar’s Metroland community papers are going through bankruptcy. Black Press is re-organizing its finances. 

I have often said that we are digital first and only. Creating a digital publishing business is an entrepreneurial pursuit and we built our model from scratch. We were never a print operation, so we have a different mindset. Repurposing print for digital cannot be an entrepreneurial plan. Doing print and digital at the same time splits your focus. We only focus on digital. Our advertising sales reps are entirely digital oriented. Also there’s an audience focus issue. Where markets have lost their print dailies, the audience shifted to digital and we were there to serve. Digital is not a high margin business; you have to be lean and efficient to make it work. Legacy publishers are going to struggle with it.  

What’s your next content innovation? 

We want to win back the hyperlocal topical discussion from social media platforms. It’s lower cost than original news reporting and it has important community information. I would describe it as “Facebook groups meet Reddit meets NextDoor.” It will be a safer, more moderated and more regulated discussion of community topics than what you see on social today. We’ll have postings from local experts and organizations, who can also host and moderate – we’ve done a lot of research on this. We’ve been working on it for a year and a half and we will be ready to pilot it by summer. There have been attempts by other news organizations to create this kind of forum, but we think ours is more thought out as an editorial product. 

What’s it called?

“Spaces.”

And if it works?

We think it could be a game-changer for the business model of local publishing.  And we’ll scale it as quickly as possible.

What I really want to know is if your success can be replicated in metropolitan markets. You are succeeding in digital news journalism at the hyperlocal end of the spectrum, and the Globe and Mail has proven the same thing at the other end, at a national scale for premium journalism. But in the big fat middle there seems like so little hope and Postmedia and Torstar are just hanging on.

We like to say that over the years we have been encircling Toronto. We’ve succeeded in a lot of markets where the print publication failed, like Orillia. In the Guelph newsroom we employ seven journalists [Ed Note: approximately the same number of journalists at the defunct Guelph Mercury]

We are going to establish our toehold in Toronto with our new site. If you ask me what would happen if the Toronto Star went out of business, not that I am wishing for that, but yes I think there would be an opportunity and we could make a go of it. But it would take time to scale up to replicate the same news coverage. In time, absolutely we could do it. When you think of it, in markets of 75,000 to 100,000 we cover a lot of institutional news beats. In a larger city, you can cover the same beats with a greater audience scale.

Let me change the subject to ask you about employing journalists. We were both at a news industry roundtable back in 2018 where Paul Godfrey of Postmedia speculated out loud that you might be succeeding by underpaying young journalists. Any truth to that?

(Laughs). We absolutely pay comparatively or better than unionized in the same market. We employ full timers with benefits. Since day one, ten years ago. We are also a Living wage certified employer.

When I organized small market newsrooms many years ago for Unifor I found most were a mix of 20-somethings getting their career start next to lifers from the local community who knew everything about the community. What about Village Media newsrooms?

More of the latter I would say, the local lifers as you call them. It’s not that easy to attract young journalists to some of our markets, especially in the north. But in our Toronto operation we should be able to hire some good young journalists. The challenges of hiring the right journalists is more of barrier-to-market-entry problem than you might think.

Let’s talk about something you and I don’t agree on, government subsidies and the Big Tech bill, C-18. 

Okay.

I once asked you how dependent you were on these different programs and you said it was a small portion of your overall revenue.  If it all disappeared, what would the impact be on your business?

Well it would all be a direct hit on our bottom line. We could stay in business. I think many other news publishers could not. We might have to shut down some of our more marginal publications. There’s no doubt the extra revenue from government programs has allowed us to scale faster. If it was gone, our growth would slow and we would shut down some unprofitable or new markets. One of the reasons we are launching our Spaces pilot is in anticipation of losing these government programs.

You were very critical of C-18, especially after Facebook embargoed news in response to the Bill.

Yes, our Facebook traffic was 17% of our business. We haven’t lost that much, partly because we’ve been doing other things to grow audiences, like our newsletters, because we anticipated this was going to happen. We’ve also lost the licensing income from Facebook. But we were able to launch in Flamborough anyway, it’s doing okay, although it would have done better if Facebook was available to gather audience. Losing Facebook distribution makes life very difficult for start-ups. The other thing about Facebook’s exit, is that it really hurts any news operation that is in second place in the local market, we’ve seen that happen. That has actually helped Village Media where we are in first place. But it makes start-ups more difficult. If we still had Facebook money and distribution, it would be a gold rush.

Okay, so the big question: what is to be done? If you were Heritage Minister, what would you do about subsidies, incentives, or digital news policy in general?

I look at all of these programs, the Local Journalism Initiative, Aid to Publishers, Special Measures for Journalism, the QCJO salary subsidies, and Bill C-18. The only one I would keep is the QCJO salary subsidy. I would prefer nothing from Big Tech, the traffic is way more valuable than the money. If government wants to do something, the QCJO salary labour tax credit is the best. 

And if they are gone under a new government?

If all programs gone, it’s a disaster scenario model. It will devastate a large part of the industry. Although that does leave us an opportunity at Village Media. But I don’t want 3000 journalists to lose their jobs and we can’t fill the gap overnight. We can’t replace 3,000 journalists in a year. 

Are there other survival strategies that haven’t been explored?

Well If you look at some of these regional local markets, and you take into account the gradual retreat of broadcasting news, it seems to me there is room for one high quality digital news outlet in each local market publishing in multiple formats, audio, visual, and text. That might be newsroom collaboration and the sharing of news copy among competitors. Imagine if we could focus local journalism investment into one top quality product.  Or we may end up with a last man standing. 

Speaking of competitors how does the CBC fit in?

It’s time for implementing the idea of a creative commons, where the CBC shares content with private news companies. It would be a win-win and more news would reach more of the population. 

And CBC digital must get out of advertising. It’s obscene that the public broadcaster is competing with us for ad dollars. To do that, the government could replace their advertising revenue and fund them properly. They should get out of the ad market and get out of sponsored content. It would make a world of difference. 

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