There is a gap between these rosy projections and the more bleak reality. Debbie Galant is the "Queen of Hyperlocal," as crowned by new-media consultant and hyperlocal cheerleader Jeff Jarvis. Her site, Baristanet, serving Montclair, New Jersey, is often cited as proof that hyperlocal can be profitable. But Galant declines to specify what that profit is. "It's real money," she says. "We'll share that our ad revenue is six figures. But we won't go into more detail than that."
The truth is that billions are not migrating to hyperlocal sites. "Advertisers have no interest in community Web sites," says Gordon Borrell, CEO of the analyst firm whose statistics are routinely cited as evidence of hyperlocal's bright future. "They don't have the type of material advertisers want to be around," referring to archetypal hyperlocal stories about high school basketball and drug arrests. "Sites are connecting the dots inappropriately."
Even if the editorial mix changed, the ad model may be irreparably flawed. Consider the business model that Patch is pursuing in its three original New Jersey towns. Maplewood, South Orange, and Millburn have a combined population of around 60,000. Patch charges advertisers $15 per thousand impressions. If every resident in all of these towns contributed one impression a day -- and all of those impressions were sold out -- Patch would make $900 a day in revenue, or about $325,000 a year. Not exactly a windfall after expenses.
"Every town in America would benefit from having a Patch," says publisher and GM Warren Webster. "The local-ad market represents a great opportunity to create sustainable community-specific information sources." What's not clear yet is how these operations would be sustained.
The Times' executives behind the Local, to their credit, aren't fooling themselves that they will succeed based solely on advertising -- though targeted local and national ads are two parts of the Local's three-pronged business model. "We're talking about several hundred thousand dollars a year in personnel costs," says Jim Schachter, editor of digital initiatives at the paper. "I don't think the local digital-advertising market anywhere -- not Maplewood; not Fort Greene, Brooklyn; not Dubai -- would cover those costs."
The third aspect of the Local's strategy reveals where the Times sees the most opportunity. If the Local's test run proves to be successful -- meaning that it creates a vibrant content site with an engaged audience -- the Times would look to license the Local's platform to bloggers in other towns as a prepackaged tool kit. "Our hypothesis," Schachter explains, "is that there is a swath of people -- experts of various sorts, journalists, self-trained bloggers -- who would want our assistance in professionalizing their work and who would love to be associated with the Times. We could help those people mobilize their communities and gather local-advertising dollars in extremely low-cost ways. That could work, economically, for these local journalism entrepreneurs, and, at scale, it might work for us."
A New York Times-branded blogging platform would also come with some unsettled issues for the Gray Lady. Right now, every word that appears on the Local has a Times editor reviewing it. Would the newspaper oversee franchised content delivered under its name in the same way? "It's safe to say that we would exercise whatever level of oversight was required to protect the standing of our news brand," Schachter says. Would that even be feasible? "You are ahead of where we are," he admits.
Schachter isn't the only one who sees the potential in creating a franchise model. Baristanet's Galant and her business partner, Liz George, are now helping interested bloggers build sites, offering tips on maintaining a personality, and most important, assisting in securing advertising. In a model conceived by Jarvis (who also had the original idea for Baristanet, sits on Patch's advisory board, and connects his students with the Local), Baristanet receives a chunk of the new site's revenue and an equity stake.
The future of hyperlocal -- according to the people who have studied, lived, and championed it -- seems to be in convincing others that hyperlocal is the future. "Someday soon, somebody will make [hyperlocal] work and turn it into a successful business," wrote hyperlocal pioneer Mark Potts after his company Backfence folded in 2007. "If there's anything I've learned, it's that the power and potential of local communities still is waiting to be tapped." And so it remains.
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Recent Comments | 33 Total
August 14, 2009 at 9:51am by dennis mcdonald
Seems odd that someone familiar with the newspaper business could have written this story without at least some reference to community and local newspapers.
August 17, 2009 at 5:34pm by Paul Maiorana
In other hyperlocal-news news, MSNBC announced today that they're acquiring EveryBlock.com, another site in that space.
http://www.techmeme.com/090817/p47#a090817p47
August 18, 2009 at 3:44am by Randy White
Bright Neighbor will be next.
August 19, 2009 at 11:14am by Paul Baron
We at Hometowntimes.com already have a successful business model/platform that is currently operating in 524 cities across the US - most at the hyper local level <100K, finding its audience, readership, and delivering real local content of value from local editors/publishers and original content sources. To the point of several comments, the stakeholder and commitment is important to the success of the site and we have also solved that concern or 'issue' with our 'franchise' business model. Having just begun, the jury is out whether the owner will be the journalist/reporter or a business manager or another local business operator. In any case, we're pleased with the early results, as are our franchisees. And we are capable of ramping up our services to far more local communities in virtually no time at all with a proven, replicable model.
August 23, 2009 at 10:11am by Tim Streightiff
These sites are popping up everywhere. A fairly new one based in Washington, DC (http://www.yournewcity.com)looks at providing this information to folks who are looking to move to DC. Great place to look for information if you are planning the move.
August 28, 2009 at 6:58pm by Harish Keshwani
Omaha, Nebraska has one such start-up (WikiCity) that is using a wiki model coupled with news, feeds from local bloggers and twitter, serving entire United States. In many rural areas, in absence of print newspapers, it doubles up as a local, online newspaper.
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