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Summary:

The Philadelphia Media Network has launched a tech incubator and the Digital First Media chain have both announced plans to invest in startups. While both of these efforts may fail, it’s nice to see traditional media companies doing something other than simply putting up a paywall.

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We’ve written before about the need for newspapers to be “digital first” and to think like startups as they try to adapt to the evolution of the media industry. Can a traditional newspaper take an even bigger step and actually help give birth to new technologies or services by acting like a startup incubator? At least two of them are planning to give it a try: the Philadelphia News Network just launched an incubator, and Digital First Media recently launched a venture-capital arm and says it plans to invest in tech startups. While both of these efforts could easily fail, at least these two media entities aren’t just sitting back and relying on paywalls to save them.

The Philadelphia incubator is known as Project Liberty, and is being operated by Ben Franklin Technology Partners, a non-profit agency aimed at fostering new business in Pennsylvania — who also chose the three existing entrants to the program — but will be based in the same complex that is home to the Philadelphia Inquirer and the Philadelphia Daily News, as well as the online site Philly.com. The project is being funded by a $250,000 grant from the Knight Foundation, which has backed a number of media-related startups over the years, and gives the three startups six months worth of office space and other support while they work on partnerships with the papers.

New technologies could help companies adapt

Read/Write Web has an overview of the three startups that have been accepted to the program: CloudMine provides an API service that makes it easier for developers to come up with new applications, and another named SnipSnap lets customers scan printed coupons and then use them online — a natural fit for a newspaper that carries plenty of advertising inserts. The third is ElectNext, which is developing a web app to help readers decide who to vote for, a goal that has an obvious fit with the editorial side of the newspapers.

The CEO of the Philadelphia News Network, meanwhile — former Newsweek publisher Greg Osberg — has said he has much bigger goals for the project, and that he wants to “find the next Foursquare and house it at Philly.com.”

Whether that’s going to happen or not remains to be seen, but at least the startup idea shows a spark of life from the newly reformed newspaper company, which was created after lenders to the previous owner of the Philadelphia Inquirer and Daily News bought the assets out of bankruptcy. And it’s not the first unusual venture to come out of the new media company: earlier this year, it announced a plan to offer discounted Android-based tablets to readers who signed up for one or two-year subscriptions to the Inquirer and the Daily News.

Digital First Media, the parent company of the Media News Group — which owns a chain of newspapers across the U.S., including the Detroit News, the Denver Post and the San Jose Mercury News — is also wading into the tech-startup funding game. The company’s CEO, John Paton, who helped turn around the bankrupt Journal-Register Co. before taking the helm of Digital First Media, last month announced the creation of a new venture-capital arm that will invest in media-related tech startups. Paton said this approach was a natural outgrowth of the company’s “digital first” mantra, which he has outlined in a number of presentations as well as on his blog.

Experimentation is something more companies should try

I admit I was skeptical when I heard about Digital First’s new venture-capital entity, in part because it sounded like the media company was going to try and compete with the hundreds of VC firms and angels who are already trying (and mostly failing) to pick the next Foursquare or Facebook. But Paton said the emphasis of the new venture would be on partnering with companies that could help the company take advantage of digital media in new ways, which is something more traditional media outlets should be thinking about.

Other media companies have already taken similar steps in this direction: the Financial Times just acquired the company that developed its HTML5 app, which allowed the newspaper to do an end-run around Apple’s restrictions on iOS apps — as well as the 30-percent fees it charges content companies that offer subscriptions. And the New York Times helped give birth to News.me, a social content-filtering app that was later acquired by Betaworks, a New York-based incubator run by John Borthwick, in a deal that gave the newspaper shares in the company (News.me has since been spun off). The NYT also has its own in-house incubator of sorts in the beta620 lab project.

As Om and others have mentioned, there are plenty of reasons to be skeptical about the explosion of incubators — a trend that didn’t end well in the last tech bubble — but despite the low odds of success, it’s still interesting to see companies like the Philadelphia Media Network and Digital First Media trying to think outside the box a little.

Post and thumbnail photos courtesy of Flickr users John Donges and David Daniels

  1. When you look at the business plan of most startups, the cost of customer acquisition is a critical line item in evaluating the potential success of the concept. In the case of Groupon for example, customer acquisition/marketing is now their largest expense. Radio’s promotional platform is a strong solution that is not being considered by either side. Why isn’t a broadcast company who could provide a network of radio stations with targeted audiences looking to be the voice for customer acquisition for a startup? LIving Social and Groupon even Angies List spent money in traditional media as a last resort to scale and extend reach. It should have been their first move.

    Ben Lerer of Lerer Ventures lamented that they do not have the all-important advertising and media connections to help juice those young companies’ revenues or pave the way for partnerships. Thrillist should be partnered with every rock station in the US and Canada for example. Startups need reach and broadcasters need digital tools. This is opportunity.

    Mike Anthony
    Mike Anthony Media

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    1. I agree, Mike — there are a lot of potential opportunities and synergies there. Thanks for the comment.

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  2. Most seeding funds, search for: 20-23 yo boy with idea “facebook”, company must be in US, have users, have paying customers, rate of return at least 40%. If you are 30 yo, have cure of aids or any idea in other country than Us – forget VC, Seedfunds. The only way is to grow busines by Your own.

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    1. Pawel: Can you actually back up any part of your statement. Based on what I’ve seen in many, many instances, there’s not an ounce of truth to it.

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