Deal Flow

Cheaper, better, faster: Creative Circle Media launches new print software design product

Local firm rebounds by carving out innovative niche in software design for print publications

Photo by Richard Asinof

Bill Ostendorf, the founder of Creative Circle Media Solutions.

By Richard Asinof
Posted 7/17/17
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SEEKONK, Mass. – In the world of redesigning print and online publications, Creative Circle Media Solutions has come full circle: moving from redesigning print publications to designing print software to designing content management systems for web platforms and now back to launching a new product in print software design and content management, what it calls newsroomQ.

The last decade has been a roller coast ride for Creative Circle and its software platform, which was founded in 2004, and which raised about $3.5 million in investments, including $750,000 through the Slater Technology Fund, with the largest investor being Cherrystone Angel Group.

In 2008, when the firm’s software company was four years old and its consulting company was at its peak, the economy crashed, and the newspaper industry crashed even worse, according to founder Bill Ostendorf. Creative Circle went from $1.2 million combined revenues to $400,000 in two years.

“It was just unbelievable,” Ostendorf told ConvergenceRI in a recent interview. “We had employed 16 people, and we ultimately went down to three. We hovered at about $400,000 in income for seven, eight years.”

The business was barely sustainable, according to Ostendorf. “The board would meet and say, well, time to close the company, and I would say, give me another quarter. And we eked by.”

The economic salvation of Creative Circle Media began with the recognition that there was an urgent demand for a better, lower-cost software content management system for print publications. One company, Newscycle, based in Bloomington, Minn., had captured a dominant 80 percent share of the market through consolidation, and promptly doubled their prices, according to Ostendorf.

Clients kept calling him, asking for help, Ostendorf explained. “What can we do? What product can we buy?”

“I told them: I really can’t recommend any of them; I’ve looked at all of their software, it’s all bad.” The response from clients: “Bill, you’ve got to help us, you have to do something.”

So Ostendorf and his team hunted around and found a company that had built its own content management system that helped print newspapers products.

Creative Circle Media licensed it, and then spent two years improving it. Now, the company is rolling out its print-centric product. “Nobody thought anyone else would ever bring out another print production system,” Ostendorf said.

Here is the ConvergenceRI interview with Bill Ostendorf, a tale of innovation and reinvention and perseverance within an ever-changing news industry market.

ConvergenceRI: How would you describe the story of your firm’s reinvention, creating a software product targeted at print publications?
I’ve often been a contrarian in a lot of ways. When I see everybody doing something, I have to ask myself: Is that really smart?

Often, people behave in herd instinct, but it’s not necessarily a smart move.

I have often been one who’s said: wait a minute; why not go this way? I have never been afraid to do that. We were, for a long time, a print-centric redesign and consulting firm. We redesigned newspapers, and we trained journalists to do better jobs – to write better headline and take better photos.

In 2004, people started saying, you designed my newspaper [we’ve redesigned more than 600 print publications], why don’t you redesign my website.

Initially, I was resistant. Then, I thought, well, I really should spend more time on digital, to be into that as well. So, I designed a couple of websites for newspapers, and they said, well, that’s cool, but our software can’t do anything like that.

I was appalled. When I was at The Providence Journal, I was involved a little bit with the website, but it was kind of a separate thing. It was non-union, so they had it in a different building.

So, I interacted with them, but I didn’t know much about what kind of software they used, and I didn’t know what was possible or not possible.

I was really stunned, because, the things we were trying to do were pretty basic. I wanted to move things around, to make things bigger when we had a good photo, and they couldn’t do that.

Well, that’s really stupid. So I raised about $3.5 million dollar through local investments. The state of Rhode Island invested $750,000 in this company through the Slater Technology Fund; Cherrystone Angel was the biggest investor, along with myself. I put in quite a bit myself; I put in my life savings. It was really not the brightest thing to do.

ConvergenceRI: What happened next?
We started a software firm, and the mission was: to develop software that newspapers needed that was better than what was out there [in the market].

The first product was classified [advertising] system. It seemed to make sense. A chart of the classified industry showed that there was a cyclical pattern, which had just plunged again, and you had to assume that is was going to go back up.

Newspapers needed to be digital; there weren’t any good digital classified platforms out there. The investors were really optimistic that helping an industry transition from print to digital and particularly in classified advertising, was a good bid.

We raised the money, launched the company, and we had good success initially.

We then expanded rapidly into a couple of other [products]. We started building a CMS [content management system] that managed the website, We were the first to [create] user content, which editors thought was crazy; why would I [want to] have people contributing to my website?

We did polls and surveys, and we found that people would love to contribute things to a website – they thought that was cool.

We were the first to do a paywall; we were the first to do hyper local sites; we were the first to do sites that could change templates.

We were building all this innovative stuff, and we got some big jobs, [building] 200 hyper local websites for The Chicago Tribune.

We did classifieds for NBC-owned and operated stations across the country. Things seemed good.

Then, in 2008, when the software company is at its peak, the economy crashes, and the newspaper industry crashed even worse. We go from $1.2 million in combined revenues to $400,000 in two years.

It was just unbelievable. We had employed 16 people; we ultimately went down to three. We hovered at about $400,000 in income for seven, eight years.

It was barely sustainable. The board would meet and say, well, time to close the company. And, I would say, give me another quarter. They would say, oh, alright.

They would come back a quarter later and say, I can’t believe the doors are still open. And, we eked by. And, we kept investing in R&D as best we could. Nobody else did, and a lot of our competitors went out of business. There was a lot of consolidation.

ConvergenceRI: How much consolidation?
Instead of 20 competitors, we emerged 10 years later with half a dozen. One of the things that started happening was because of consolidation, and probably because people were trying to make up from the recession, a lot of these companies got into a lot of debt, so people were raising prices aggressively.

A company called Newscycle bought up five of our competitors, and they [captured] 80 percent market share.

Their parent company was a venture capital firm. So, they doubled the price of their software; that’s what they do. They own dentistry software, and parking lot software, and newspaper software. Wherever there was a stressed industry where they could gobble up a bunch of market share, they did it cheap, and then they doubled the price.

We were getting calls from our clients, saying: we have all these systems [print centric systems, software systems that help produce print products and magazines], and they are doubling our costs. What can we do? What can we buy?

ConvergenceRI: What was your response?
There weren’t many players left; the players that were left were Newscycle, and a couple of smaller, weaker companies that had not done R&D in a while.

I said: I really can’t recommend any of them; I’ve looked at all of their software, it’s bad. And our clients – print redesign customers and software web CMS customers – said, Bill, you’ve got to help us; you have to do something.

So, we hunted around and found a company that had built their own little system, it’s a print CMS, to manage the process of producing a print publication.

We licensed it, and I invested a lot of time and energy [to improve the product]. I tried to get my investors to invest in this process, but I couldn’t do it. So, we ended up doing it out of operating funds, which was difficult. It took us almost two years to get this thing to the point where we could sell it.

And we’re rolling it out, it’s a print centric product that nobody thought anyone else would bring out another print production software system.

We’re coming out with a whole new system that’s brand new. None of the stuff that is currently out there is really new, it’s all old.

ConvergenceRI: How old is the technology? Fifteen to 20 years?
Ten to 15 years, before the recession. Most of it is pretty old, it’s pretty awkward, it’s buggy, it’s expensive, and it’s slow. We have engineered a system that is very different.

It is based upon off-the-shelf design programs, either InDesign or Quark. When those systems came out, 20 years ago, 25 years ago, they were pretty basic. To publish a newspaper, you needed a lot of add-ons to get it done.

Over the years, those platforms have gotten better; you can produce almost anything with InDesign and Quark today. And, you can do it efficiently and effectively.

But, there are a handful of things that [these programs] still don’t do well. They don’t talk to other platforms. They don’t take information in and they don’t push information out. They don’t take your print content and put it on your website.

They don’t let you attach information to a story. All Quark and InDesign do is let you take a story and typeset it and put it in a newspaper.

We want to be able to attach photos and video and artwork, all kinds of things that might be used in print, or might be used online.

They also don’t keep track of where something is [in the editing process]: this is ready for editing, this is ready for the web, this is ready for print, this has been designed, so it doesn’t track the status of something. And they don’t archive anything.

Everything else they do is better than any of these other systems.

ConvergenceRI: Is there a problem with the older systems when you have to update them?
All of these other systems were built at a time when you took control of the Quark or InDesign [software], you had to add functions to it, which made it very complicated and made it expensive to write. And, it locked you into a particular version.

Every time Quark came out with a new version, you had to rewrite all the plug-ins that ran it.

In our new software product, we don’t really use plug-ins, we used all the very native ways to communicate with InDesign and Quark. We used their protocols.

So, it is kind of like a print production-lite; we can sell it for about half of what the other systems used to sell for, before they started doubling their rates. Our pricing is really a quarter of what the current pricing is.

The end result is that we’re rolling out a system that is much more modern and much cheaper, that will allow print publications, which don’t have much money any more and can’t afford expensive software, [to keep publishing].

We’re optimistic.

ConvergenceRI: What do you see as the takeaway from your reinvention?
The secret to our success was, one, recognizing that we were in a completely disrupted industry – the newspaper industry along with our own core business.

Our consulting business was completely disrupted. We kind of saw that coming, and we made the decision to expand beyond print early. In 2004, we created the software firm, but we really didn’t have enough time to build up a healthy business before the recession.

It was the combination of the recession, and the fact that our industry was one of the worst hit, and never fully recovered.

The newspaper industry was completely disrupted; nobody cared about print, nobody cared about training, which was one of our core values, originally.

We never abandoned what we were good at, which I think is a big mistake made at a lot of places.

When you talk about disruptive technology coming in, a lot of people jump up and say, oh my God, we’ve got to stop everything and go do this.

We keep doing what we were good at in our core competencies, but we also expanded into other things, like software. And, we were open to new opportunities.

ConvergenceRI: Was your approach counter-intuitive?
Yes, even though it was counter-intuitive, the whole idea was to do something that everyone else was in the process of abandoning. I think we became smart.

Everybody thinks that print is dead. I don’t think print is dead. Radio isn’t dead, for heaven’s sake. If radio isn’t dead, then print isn’t dying anytime soon.

But print is definitely heading toward a smaller and smaller footprint.

So, why would we develop software for that? When you have this cannibalism going on in the marketplace, where venture capital firms are buying everybody up and then doubling the rates, there’s actually a market for doing it cheaper, better, faster.

Even in a declining industry, I really believe that this is going to work. We haven’t proven it yet, but we had nine companies sign up for this before we officially rolled it out, saying: I’ve got to have that. We’re pretty sure that there will be a tremendous demand.

ConvergenceRI: Can you talk about the shifting paradigms in the news media, in print and in radio and TV, about what is happening in the marketplace that may not be apparent to a layperson?
Well, I don’t think radio is particularly healthy. I mean it’s consolidated, a shell of what it used to be, but it’s still a multi-billion-dollar industry. They still put one in every car.

And, they still own the airwaves. It’s still a big part of our infrastructure, our society and our culture. I don’t know if it will go away anytime soon. I think radio will go away before print does, certainly.

Radio was [pronounced] dead, like 10 times. Television was going to kill radio, and Walkmans were going to kill radio, and iPods were going to kill radio, and satellite radio was going to kill terrestrial radio. And none of that happened at all.

I’ve studied this a lot. Mediums don’t die; they just don’t.

Movie theaters were going to be killed by the VCR and the DVR, and television was going to be killed by all these things. Yet we still have broadcast television. It’s going to be a long time before any medium ever goes away.

It just morphs, it changes, there’s something [about it] that is so much a part of our society. It’s part of the way we think; it’s not something that goes away.

There’s a reason why radio has value. It’s cheap, it’s easy, it’s mobile. It’s got a certain serendipity to it; you don’t know what comes next. And, there are certain kinds of commercials that are very effective on radio.

Print is the same way. As we become more and more digital, I think print might actually have a kind of comeback. I mean, my God, people are starting to buy vinyl records again, who would have ever thought that?

When I spend my whole day staring at a computer, it’s actually more of a relief to have something tactile and physical to look at.

ConvergenceRI: Is that difference related to what happens when you read something off-screen, because it involves different kinds of sensations?
It does, really. It’s a different experience to read a newspaper. There’s a serendipity to it, you turn a page and you don’t know what you’re going to get. There’s a hierarchy to it that we haven’t yet duplicated online.

There’s a big story with a big photo, and there’s a small story with a small photo. There’s a relationship between things, between advertising and editorial. Between the photo and the headline that are not easily replicated online.

There are the size limits of the screen, you have to build things to be the size of your palm with your phone. That really limits how much you can add to it, how much value you can add, how much you can rely on spatial relationships, whereas on a printed page, which is quite a bit larger, you can have white space; you can have spatial relationships.

I think that’s a big deal.

ConvergenceRI: White space. I think of all the training I ever had in designing newspapers and magazines, and they key lesson was: how do you create white space, which is pleasing to the eye.
It’s really hard to do in a digital format; HTML doesn’t know the edge of things. You cannot easily design white space in computer code. You can’t say, this word is too long, so I’m going to break it here, you just can’t program some of that stuff.

It’s never really going to be the same experience. And there are some advantages to digital. You can be sitting on the toilet and have a phone conversation and interact with people.

ConvergenceRI: And tweet.
[laughs] And send out a tweet if you’re the President. Digital has wonderful advantages, and it will now dominate moving forward, but print is a different way to communicate. You can convey meaning through layout and design, which is really hard to do digitally. I do think that print is more credible, because it stays around.

In digital, you could change the content 10 times, and would not ever see the original story. So, the act of fixing a moment in time, and saying, this is what we knew at this point, and having it not change. I think there’s a value to that, and it’s also a liability, too. You can’t take it back once you print it.

The printed newspaper is still the dominant mass media. People think newspapers are dying, but there used to be three TV networks, and each had a third of the market. And then there were four networks, and now, there’s 500 hundred cable channels, and probably thousands of OTP – over the top – channels.

So, there are thousands of competitors to television networks, and today, the four networks share one-third of the market. It’s odd that advertisers haven’t picked up on that and haven’t abandoned television the way that they abandoned print.

ConvergenceRI: What do you think went wrong in the newspaper business?
I think print newspapers were so profitable and so successful and it was so easy, that they became lazy. Suddenly they had to be smart and lean in the recession, and they couldn’t do it.

I often say that newspapers are staffed with some of the smartest people anywhere, and that they are the stupidest institutions. Because they were making 15 to 50 percent profits, and they were doing it by being totally lazy. They didn’t innovate. They didn’t do anything for decades, and the money just kept pouring in.

And, when they had to suddenly be innovative and smart, they couldn’t do it.

People say, when you’re disrupted, you have to take risks. And the newspaper industry has been unable to take risks; they haven’t been good at it.

I understand why. The whole culture of a newspaper is: I can’t fail. When you peel it back, everybody who works at a newspaper understands that tomorrow’s newspaper has to get out, and that’s the primary mission. And everything else is sacrificed to get the paper out.

Not only does it have to get out, it has to get out at a specific time, every day. You start your day with nothing, and you end your day at a fixed time, and you have to fill x number of pages with stuff, you have to write, essentially, a novel every day, and publish it, and get it right, and copy edit it, and arrange it, lay it out, and photograph it and distribute it in less than 24 hours.

And so, that process creates a culture where it can’t fail. Now, you tell that culture, this is now a digital, innovative, disruptive environment.

I imagine it is similar, in some ways, to an emergency room, where you can’t fail, and yet you have to innovate. How do you try new things and guarantee that you’re not going to fail?

ConvergenceRI: How do you, as a consultant, try to change that culture?
Part of my mission is to be outside of that culture, and teach them that it’s their culture that is holding them back. They have to let go of all these thing that they hold true – all these values they have, all these rules they have, that were written for linotype operators 50 years ago that they still follow.

The inverted pyramid, that was invented during the Civil War to save money, as a cost-cutting move, and yet we still write news stories using the inverted pyramid.

The solution in print, for me, is to stop being boring. The experience of reading most newspapers is pretty dull today.

I would argue, it’s because we’re still producing a newspaper and writing a newspaper like it was 1956, and we have really changed. The reader has changed. Instead of seeing 4,000 media impressions a day, they see 180,000 impressions a day, so we’re peppered with all these messages, billboards, ads, TV commercials and stories.

We’ve got all this competition, and the human brain is actually changing. It doesn’t have the same attention span, it has a shorter and shorter attention span.

Newspapers haven’t changed the way they write or present information; we still write headlines in the back-assward way – “City council may consider tax increase.”

A lot of eye-tracking research shows that people only read the first three words of headline before they decide whether or not to keep going. So, if you say, “City council may…” I’m gone. But, if you say, “Tax increase imminent after city council vote,” I’m reading.

Simple things like that, which you think would be obvious and easy to do, yet when you sit down with newsroom, they say: I can’t write a headline like that.

ConvergenceRI: We traveled quite a distance in our conversation. But, getting back to the lessons learned in the process of reinventing Creative Circle Media, what are the lesson learned?
Out success story is that we held on to what we do, we didn’t walk away from our core competencies. As we broke into new areas that we had never been in before, such as software, we kept asking the same question: what if we did the opposite of what we’re doing now. The big epiphany is that there isn’t one answer; there are lots of answers.

When everybody is going in one direction, it’s rarely because they’ve thought it through and made some kind of conscious choice. It’s just because they didn’t know where to go and they saw someone running, so they started running, too.

Editor’s note: In the interest of transparency, Creative Circle Media designed the ConvergenceRI website and online newsletter format.


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