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Hyperlocal content at a crossroads

Hyperlocal journalism is a concept that has struggled for more than a decade to prove its viability as a profitable business model. Yet the potential for citizen-driven news continues to inspire new efforts in the space.

‘The magic of hyperlocal sites,’ according to Mark Potts, founder of the pioneering Backfence.com, ‘is that they provide a forum for community members to share and discuss what’s going on around town.’

Pott's site shut down in 2007, two years after launch, joining a list of early hyperlocal media casualties that includes the demise of CitySearch and Microsoft Sidewalk in the 1990s. After so many flame-outs, the 2013 collapse of the much-heralded hyperlocal news site Patch.com may have come as no surprise to many. What’s truly remarkable is, after downsizing and retooling, Patch is back and becoming an example of how hyperlocal can work.

Patch ()

Patch is making hyperlocal work

Patch.com was founded in 2007 with the mission to bring community-based news to hundreds of localities. AOL acquired Patch in 2009 and proceeded to invest US$300m in a plan to build the largest employer of full-time journalists in the US. Unfortunately, the anticipated synergies between hyperlocal content and advertising didn’t materialise and substantial layoffs ensued in 2013. In the past two years, Patch has gone from a staff of over 1000 to 123, with 70 in editorial. But Patch emerged revitalised from this difficult transition and, after AOL sold a majority stake in Patch to turnaround specialists Hale Group in early 2014, Patch turned a profit on $17m in annual revenue.  

In the post AOL-era, Patch has seen remarkable audience growth. By August 2015, Patch’s unique monthly visitors doubled year-over-year to 20m. Patch’s editor-in-chief, Warren St. John, attributes the site’s newfound success to several factors. It’s a much leaner company in terms of staffing and other overhead. Meanwhile, they’re investing in infrastructure, as well as new social listening tools that let them tap in to what’s happening locally. They’ve also shifted their ad sales strategy from selling unprofitable small ad packages to focusing on larger regional and national ad buyers, who commit to spending at least $5,000.  

One final success factor is Patch tightened its resolve to deliver only local content. As the number of Patch’s staff declined, they experimented with running a series of viral stories across their 900 local sites. St. John said, ‘It was nearly catastrophic. Our readers hated it, and they let us know. They craved local traffic.’

St. John observes a growing stratification between high value news sites. At one end of the spectrum are high quality national news sites (like The New York Times, the Wall Street Journal, and the Financial Times) and at the other end are a waning number of hyperlocal publishers. In between these groups is an undifferentiated pool of news sites that offer a commoditised type of easily aggregated content. There’s a vacuum in hyperlocal news coverage that is not being served by existing publishers.

Snapshot of local news startups in the US

A 2015 survey of nearly 100 local news sites reveals that while many are generating revenue, the sites tend to be very small and vulnerable because they rely solely on local advertising sold directly.  The survey, produced by Michele Mclellan for the Tow-Knight Center for Entrepreneurial Journalism at CUNY, found that many of the sites were founded by journalists with minimal business experience. Key findings included:

  • 53 per cent of the sites make $50,000 or less (and the number jumps to 79 per cent, when looking at sites less than 4 years old)
  • While 81 per cent are for-profit entities, only 47 per cent were profitable in 2014
  • 32 per cent operate partnerships with other organisations, such as newspapers or nonprofit media centres
  • 46 per cent rely on a combination of professional journalists and citizen contributors
  • Two-thirds have a monthly reach of less than 50,000 unique visitors

Mclellan suggests a number of practices that could improve the financial stability of hyperlocal news sites, including hiring a professional ad sales rep; offering a realistic rate structure that reflects the needs of the site (many sites charge too little); and avoiding CPM pricing, which tends to commoditise the inventory and drive down value.

UK hyperlocal news sites are struggling

Hyperlocal ()

Source: Centre for Community Journalism

Just last month, Nesta and the Center for Community Journalism at Cardiff University released a report Where Are We Now? UK Hyperlocal Media and Community Journalism in 2015. The 36-page study, primarily consolidating findings from existing sources, suggests UK hyperlocal news sites are struggling even more than those in the US. They are not as well funded but face the same problems of discoverability, sustainability (financial and personnel) and recognition by traditional media and regulators.

The report authors suggest a series of steps to galvanise hyperlocal publishers, including:

  • Convince traditional media, such as the BBC, to purchase credited content from hyperlocal publishers
  • Encourage major tech companies (like Google, Twitter and Facebook) to make their content more discoverable by local news sites
  • Embrace growing trends in mobile, social and video media consumption to improve appeal to local audiences
  • Become more sophisticated about SEO and audience analysis to improve site traffic and monetisability
  • Provide community sites access to some portion of the £50m a year spent on statutory public notices
  • Offer hyperlocal sites accreditation from the National Union of Journalists (NUJ), in order to increase visibility of the sector and provide great access to news collection
 

Hyperlocal is worth figuring out

The Nesta report argues that hyperlocal journalism delivers news people care about and it serves a valued role in promoting democracy. Community news sites can hold local bodies accountable by covering local political issues. They can also encourage participation from groups who might otherwise feel disenfranchised from the political discourse. According to Former CBS News anchor Bob Schieffer, finding a sustainable model for local news coverage is critical, asserting, ‘If we don’t find some entity to do what we’ve traditionally turned to local newspapers to do, we’ll have corruption at levels we’ve never seen.’ 

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