Thursday, February 24, 2011

Hyperlocals like TBD: More hype than hope

The rapid implosion of the high-profile TBD news site is further evidence that hyperlocal journalism is more hype than hope for the news business.

Launched with considerable fanfare and generous funding only six months ago by Allbritton Communications, TBD was the latest effort in the nation’s capital to create websites filled with intensely local coverage that, it was hoped, would attract large and loyal followings. Instead, they cost a bundle and withered for lack of interest.

Prior to TBD, whose staff and mission will be scaled back in, fittingly, a to-be-determined fashion, the two most prominent hyperlocal experiments in the District were Backfence, a pioneering start-up that succumbed in 2007, and Loudon Extra, a lavish two-year effort unsuccessfully underwritten by the Washington Post that folded in 2009.

TBD faltered for the same four reasons its esteemed predecessors could not get off the ground. For the record, these are the same reasons that most ill-conceived media start-ups fail.

:: Small audiences – The thesis underlying all hyperlocal efforts is that a sufficiently large number of individuals in a narrowly targeted geography will be captivated by the information the site provides about their community as to become avid readers of it. Intuitively, this makes perfect sense. Practically, there is not that much compelling news about the average community in the average month. If consumers have a limited amount of time to spend perusing the news, they are more likely to gravitate to such really big stories as what’s happening in Libya or the endlessly fascinating life of Justin Bieber. In any event, eyeballs – and lots of them – are the essential ingredient for every media venture. As the Washington Post and Allbritton Communications learned, it is at once difficult and expensive for even start-ups backed by wealthy media companies to coalesce a sufficiently large critical mass of readers in a tiny geographic area.

:: Big expenses – A quality news report requires feet on the street. Compelling web and mobile sites require sophisticated technical platforms. Audience development requires marketers equipped with adequate marketing budgets. And hyperlocal ad sales – especially among local dry cleaners and orthodontists – requires lots of people spending lots of time calling on prospects with very small (or often nonexistent) advertising budgets. All of this costs money – and lots of it, if you want to do things right. And cheaping out is a recipe for failure.

:: Small revenues – Because backfill banner ads for dubious weight-loss products yield little more than $1 per thousand views, serious hyperlocal publishers have to hire the aforementioned high-priced ad staffs to try to monetize the traffic they are fortunate enough to attract. Because hyperlocal sites for the most part have intimate audiences, they can only sell sponsorships for a few hundred dollars apiece. Unfortunately, the low yields barely cover the cost of the sales effort – much less all the other expenses enumerated above.

:: Big losses – High costs and low revenues add up, of course, to big losses. At some point, the losses become too onerous to bear and you get what happened at Backfence, Loudon Extra and TBD.

The setback at TBD will not spell the end of the hyperlocal experiment. AOL this year is spending $50 million to fund the roll-out Patch.Com in dozens of communities across the land.

Will Patch be the one to break the hyperlocal barrier? TBD.

31 Comments:

Blogger agahran said...

Allan -- In my experience, hyperlocal can be a viable market if you keep it lean.

Don't start with a massively staffed operation, and don't try to emulate too closely the content formats of, or the user experience of, traditional news orgs. Work consistently on community engagement, presence in the field, and community inclusion. And build audience and loyalty first as a key part of your business model.

Patch might be a good answer for some communities, not others. It'll be interesting to see how it fares over time.

But I think the TBD implosion cannot be widely construed across the field of local news/info sites. I think the only lesson you can learn from it is: "Here's what happens when hyperlocal gets run by a company that doesn't understand it and is actually kind of afraid of it."

IMHO, of course

Amy Gahran

Senior Editor
OaklandLocal.com

9:45 AM  
Blogger scott said...

Wow, this is completely off-base. TBD was a regional news organization. Out of 20 staffers, it had two "community reporters" whose work may be considered hyperlocal. It also linked to local news sources. But it was by and large a metro-focused, not a hyperlocal-focused organization.

This is in no way an indictment of hyperlocal as a business.

10:59 AM  
Blogger scott said...

Wow, this is completely off-base. TBD was a regional news organization. Out of 20 staffers, it had two "community reporters" whose work may be considered hyperlocal. It also linked to local news sources. But it was by and large a metro-focused, not a hyperlocal-focused organization.

This is in no way an indictment of hyperlocal as a business.

11:00 AM  
Blogger Daniel Victor said...

I'm a community host at TBD – er, it appears I will be for the next four to six weeks - and I have to dispute a few things here.

Most importantly, TBD is not a hyperlocal site as you appear to be describing it. Jim Brady used to say that it's a regional site with hyperlocal elements. Most of the news on the site applies to the entire D.C. metro area, so it's hard to consider a small audience as part of the problem. It's no more hyperlocal than any other professional news site in the area.

It also did not wither for a lack of interest. TBD exceeded its traffic goals and had more traffic than any other TV station's website in the D.C. market.

TBD's downfall is not reflective of a "hyperlocal" movement to which it did not belong. It was simply the downfall of this particular effort.

11:16 AM  
Blogger Pamela said...

Well said. The Backfence reference was right on the money since some of the Backfence leaders, in the guise of GrowthSpur, were hired by TBD to handle ad sales. That relationship failed, and GrowthSpur was dispatched, early into the venture.
Truth is very few hyper-local sites are inching their way toward financial sustainability. That said, I believe local news sites, with a mix of local, national and even international news, entertainment and information, can become successful. Reflect the depth and breadth of your community and the new generation of digital publishers will succeed.

11:22 AM  
Blogger Scott Leadingham said...

Interesting points, Mr. Mutter. But. . .

I can’t speak to the business decisions behind TBD, but I will say that my view (as a journalism/media industry follower and someone living outside DC) is that their local content was/is better than others in the area, at least anecdotally. And so were/is their engagement efforts.

But I don’t think it’s accurate to suggest that the “hyperlocal barrier” hasn’t been cracked yet. You seem to suggest that Patch is the only hope for that to happen. Take, for example, West Seattle Blog (Disclosure: I’ve interviewed founder Tracy Record for Quill magazine). She and many, many other one-or-two person shops are really experimenting with hyperlocal. Another example: Ann Arbor Chronicle, run by a husband and wife (also mentioned in a recent Quill piece). Do they have long-term profitability? I don’t know; you’ll have to ask them. But they’re sustaining themselves, and it’s their full-time job.

There are many experiments in hyperlocal (or whatever buzz term is assigned to it). Very few have the national recognition of Patch or TBD, nor do they have the same financial backing of corporate entities. Perhaps some recognition of that, and how the two strategies (corporate backing vs. individual entrepreneurs) differ, is in order.

As always, you’ve raised good points and stirred intriguing conversation.

11:34 AM  
Blogger Rod said...

I grew up in the Chicago suburbs reading the Deerfield Review (Pioneer Press). It was the place to go for local High School sports scores and the local police blotter, as well stories about the goings on around town.

It seems very much the equivalent of what I see on my local Patch.com sites, or at least where those sites seem to be headed. All that was old is new again.

Pioneer appears to still be the local news business with the Sun Times Media, PioneerLocal web site.

http://www.pioneerlocal.com/deerfield

Rod K

12:16 PM  
Blogger Jay Rosen said...

I wasn't aware that the DC metro region was a "tiny geographic area." That's news to me.

Small audience, you say. The Washington Post today: "In January, just five months after its debut, it attracted 1.5 million unique visitors, nearly double its December total of 838,000 and far surpassing November's total, 715,000, the internal figures show. Indeed, over the past three months, TBD's traffic was substantially higher than Web sites operated by local TV stations WRC (Channel 4), WUSA (Channel 9) and WTTG (Channel 5), according to Compete.com, which tracks Web traffic."

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/23/AR2011022306405.html

Good practice when denouncing hype is to show us some, and link to it, so we can see what was claimed for tbd.com. You just skipped that. According to Jim Brady, who was hired to run it, Allbritton gave the site a 3 to 5 year window to become profitable. Is that the sort of hype you meant?

12:50 PM  
Blogger Brad said...

If Patch wants to be successful, it can do itself and all other hyperlocals a big favor by leaning on the state legislatures to revise the laws requiring that legal notices be posted in PAPER newspapers. This ancient and increasingly absurd requirement is hindering online local news media. If legal ads could be posted in online news media, hyperlocal would have a solid financial base to work from.

Brad Haugaard
MonroviaNow.com

1:22 PM  
Blogger Alan Stamm said...

AOL this year is spending $50 million to fund the roll-out [of] Patch.Com in dozens of communities across the land.

That $50M figure is correct, and getting one out of two right isn't too shabby.

I'd charitably let you slide on "dozens," Alan, if the reality weren't 65 dozen Patch communities in 18 states and D.C.

No need to grab a calculator: That's nearly 800 daily news sites, up from 600 just since mid-December.

While long-range results are TBD, as you acknowledge, AOL already is breaking a barrier in one category: Largest number of newly hired U.S. journalists in 2010.

Alan Stamm
Birmimngham, MI

Contributor | birmingham.patch.com

1:39 PM  
Blogger Sean P. Carr said...

The premise of this column is wildly unfair. As mentioned above, its audience was large and growing.

http://www.poynter.org/latest-news/top-stories/120625/tbds-course-raises-questions-about-failure-and-success-on-the-way-to-journalisms-future/

"A website that is not even seven months old has not yet had a chance to succeed" ... "If you haven’t had a chance to succeed, then you haven’t failed."

2:46 PM  
OpenID @jmproffitt said...

I'm also disappointed in this analysis. The other failed hyperlocal examples you cite are all local web attempts by huge pre-existing media companies. The successful ones out there started small and have mostly remained small. Only when old-school media companies charge in with their high costs and pre-web thinking do these hyperlocal efforts fail.

(That said, TBD wasn't saddled with old-school thinking, from what I could see -- but their owners always were.)

Plus, I don't see TBD as hyperlocal anyway (as noted by Rosen and others). You're taking potshots at a term (hyperlocal) and using irrelevant examples (TBD, Loudon, Patch, etc.) to score points.

Disappointed.

3:26 PM  
Blogger Scott said...

Ok... Look. I have been on at least 70-80 Patch.com site and most of them have zero ads, even the ones that have been around for months. Though there are some legit ads in the mix- with good local businesses. But this is the exception not the rule. I grew up in California and Minnesota and lived in Central Jersey for 2 years and Philly for 3 years. I've checked out the Patch sites for these areas. By and large, they're doing a very poor job of getting out into the communities to get ads. They are light years from making money on this.

On the plus side... the journalism is far far better that I expected.

3:35 PM  
Blogger Merrill Brown said...

Allan, I'm really surprised that you think there are any conclusions to be drawn from the brief TBD saga other than the obvious. For this company (and probably for all large media companies with local properties) trying to innovate on this scale especially in their existing markets won't fly. We have no evidence that TBD given an appropriate time to find its niche wouldn't have done so. This will get figured out by innovators most likely in startups. Merrill Brown

3:40 PM  
Blogger Steve Ross said...

The term "hyper local" has been hyper-hyped. There are 15,000 communities large enough to have a high school, and even more have a local police department and hence a police blotter. That's perhaps the minimum for "compelling" local news. Yet fewer than 10% of these localities are served by a daily, and about half by a weekly.

In metro areas that ARE served by dailies, neighborhood news and neighborhood advertisers are often ignored. They certainly are in the two metro areas in which I've spent most of my life -- New York City/Northern NJ and greater Boston. Both have thriving local-reach news media that fills the gaps.

Also, 10-12 years ago, a small metro area served by a good 30-40K circ daily could command 75-80% of the region's ad revenue (on half the regional ad volume), with almost all the rest going to surrounding weeklies and a few radio stations.

Today, the little daily will be getting well under half the total revenue, but as of 2007 (just as total regional revenue began to slip mainly because fewer houses and cars and jobs were being advertised in the classified) the local revenue pie was 50% bigger than it was in 1999. That is, online actually stimulated NEW ad revenue. It didn't "steal" existing revenue.

In the recession, local advertising has often held up better than national, precisely because online is a more efficient vehicle for national and because social/mobile media has come into its own as a local vehicle. The exceptions are in regions that have been particularly hard-hit economically (local ads have almost disappeared).

But local papers could capture more of the social/mobile themselves. What's more efficient? A local ad sales staff getting local retailers to try couponing, or Groupon?

9:52 PM  
Blogger Bob said...

The real question to me is not whether hyper-local can work; it's been demonstrated many many times that it can. The question is whether it can scale. On that I'm more cautious.
My experience with a successful (so far)non-profit media project serving a community of roughly 60,000 people is that success depends less on the amount of editorial content or the quality of the journalists than on support from a critical mass of independent merchants to provide an ongoing revenue stream.
My community is 3 years into a project that competes with a longstanding chain of suburban weeklies and, now, two national efforts, including Patch. We have 500 volunteers (mostly non-journalists) providing content, and an advertising base that continues to expand.
The big lessons learned so far are:
1) people will consume the news without thinking much about where it comes from;
2) merchants are very picky about where they invest their money;
3) being non-profit is a very good market position for a hyperlocal media outlet.
The winners at this level will not necessarily be those that provide the best content; they WILL be those that engage the merchants and are willing to work with advertisers in $25 increments.
The economics of hyper local media aren't easy; the profit/surplus of mature independent media at this level is typically in the 10s of thousands of dollars - enough for people who are deeply embedded in their community and work as a labor of love.
But for Patch or any other national corporate effort, I question whether the potential return will ever justify an investment as large as that being made by AOL.
My guess is that the first fully scaled hyper-local media business will not be one that starts new websites like Patch; it will be the consolidator that successfully acquires (without ruining) existing, independent efforts. Doing that will take a completely different skill set.

4:57 AM  
Blogger jstevens said...

Five telling developments probably contributed to the end of TBD. They have less to do whether a "hyperlocal" approach is doable (in fact, it's the core of the new news ecosystem with thousands of successful examples), and more to do with the organization required to achieve something like this.

1. Jim Brady leaving. When the top guy leaves, it's likely there's been a critical change in commitment or approach at the top. In this case, at least one change looked to be the long-term commitment, definitely required when growing a digital news organization. This one had such good and growing traffic that it certainly had potential.

2. Ad sales done by WJLA staff. If you're making an investment in a digital operation, it has to be a complete investment, i.e., there has to be a robust digital sales staff, too.

3. In Paul Farhi's coverage, this: "One WJLA employee described the relationship between the TV station and the Web site's managers as "palpable resistance and mutual contempt."" Clark Gilbert, president and CEO of the Deseret News Publishing Company and Deseret Digital Media, will tell you that you have to separate digital from traditional, otherwise traditional will drag digital down culturally and operationally.

4. Not niche enough. The organization was still too mass-media oriented. Sports coverage? There's a blanket there already with existing local news organizations plus CBS, ESPN, and SBNation. Should that have been in the mix? I don't know how the traffic to the topics played out, but an assessment of what wasn't being covered well and building communities around those topics probably would have helped.

5. No commitment to community engagement. They pulled the plug on their efforts to build a community of bloggers, also showing that the cultural and organizational weight still resides in the traditional we-talk-you-listen TV news. Oh, my. That's so 1999.

5:07 AM  
Blogger kyle said...

Don't throw the baby out with the bathwater. Hyperlocal is working in Chicago suburbs with TribLocal.com expanding as STNG and other suburban operations fizzle away. Look at Dallas model with neighborsGO. One Needs a solid plan and knowledge of market as well as the desire to innovate on the fly.

6:19 AM  
Blogger Jay Rosen said...

A little bit to the side of the main issue. I find it hilarious how often people dump on the term "hyper local" and call it a buzzword and nothing but hype. It isn't that hard to figure out what it means. The metro dailies we're all familiar with define local news as news of the region. This is local at the level of sports teams, airports, regional weather, city hall, county executive, transit authority. Most efforts to be more local than that (remember zoned editions?) were mediocre or flops.

Hyperlocal is just a way of expressing the need for news that is more local, closer to the neighborhood or town level, than the metro daily ever could be. And of course it corresponds to a class of advertiser that was priced out of and ill served by the metro daily and TV stations.

Don't like buzzwords? Fine! Come up with a better term than hyper-local. I'd be happy to start using it. To me, the analytical distinction is clear.

8:03 AM  
Blogger Andrew Walkingshaw said...

You write: "In any event, eyeballs – and lots of them – are the essential ingredient for every media venture."

This is, admittedly, a tangent, but: that's not entirely true. Businesses like Datamonitor, or for that matter UBM or Incisive Media, does just fine with very few, very expensive eyeballs per piece. (It's true of news reporting, but it's emphatically not true of media in general, or the entire trade press'd have to pack up and go home).

Taking this in the local context, that means – orthogonal to the merits or otherwise of hyperlocal – there might be something interesting in local business press, if you can monetize through subscription and justify that by giving people content which directly affects their bottom line.

8:11 AM  
Blogger Oscar Martinez said...

I second Kyle’s point.

It's ironic, too, that TBD's "implosion" occurred on the same day that AJR's "Pay for Play" article appeared - especially since TBD's Steve Buttry is quoted extensively on several potential business models, including charging for news online.

"Hyperlocal" is dead, this post hints; "charging for news online is insane," the AJR article implies. Both are consistent with the negative "sky is falling" narrative that surrounds the newspaper industry: Big media just doesn't get it; information wants to be free; and the desperate search for a business model is doomed to fail.

As noted in previous comments, the only "hype," really, is in the buzzword attached to what, at the end of the day, is good old-fashioned community journalism.

Sharing authentic experiences will never go out of style, as many pro-am mash-ups around the country – including Kyle’s TribLocal.com and our
neighborsgo.com - have been proving for several years now.

Is Patch really pouring so much money into this effort out of the goodness of their heart? They’re after local ad dollars, plain and simple. If nothing else, their effort should be applauded because the competition will remind newspapers that there IS money on the table and, more important, there’s still time to go after it.

And I was about to venture into "The future of newspapers is" pronouncement territory, but I have no idea what the future is going to be like. I just know that I and my staff want to be a part of it.

8:13 AM  
OpenID Ruby said...

The problem isn't being hyperlocal, it's the dinosaur media model. Just because it doesn't ake money doesn't mean it's not informing and engaging people.

I founded a hyperlocal blog in North Carolina in 2003 and it's still going strong and as influential as ever. http://orangepolitics.org

We don't have any revenue. I still have a day job, and I like it that way. if anything I think the fact that all the bloggers are volunteers only increases our influence and credibility.

10:39 AM  
Blogger Acme News said...

I dunno, Alan. I think you're extrapolating way too much from what was ultimately a shortsighted decision.

http://geoffdougherty.tumblr.com/post/3507019154/did-tbd-com-deserve-an-extra-12-months

11:44 AM  
Blogger Brett said...

TBD was trying to treat an entire SMSA as though it was a homogeneous community. It isn't. Hyperlocal news is inside out—it starts with the way the viewer identifies his or her community of interest, not with the way a media entity tries to impose that scope of interest. That is why community weekly newspapers continue to succeed where dailies are failing. It's about what viewers need to know, not about what media types think the viewers ought to want to know.

6:53 AM  
Blogger Christopher Krug said...

It seems the name of Mutter's blog explains why he misunderstand the taxonomy.

8:39 AM  
Blogger Howard Owens said...

Alan, let's be honest here: You're actively rooting for "hyperlocal" (whatever that means) to fail.

How many posts have you done now about how "hyperlocal" will fail, should fail, deserves to fail, can't possibly succeed, is failing.

Meanwhile, those of us out there actually succeeding, you ignore. You never look at the successes, only the failures.

The other comments pretty much hit on the head how you've misinterpreted TDB's closure, so I won't rehash the arguments. Suffice it to say, what happened to TBD has nothing to do with what the rest of us are doing.

Howard Owens
Publisher,
The Batavian

1:03 PM  
OpenID westseattleblog said...

Though many have said it already, let me echo: TBD was not "hyperlocal."

My one experience with them as a news-seeker visiting DC, during the ONA convention last fall, did show they executed well on what "hyperlocal" news does best - as-it-happens coverage of events of note that "old media" would often turn up their nose at. My son and I entered a Metro station and couldn't find out why it was closed. Turned out to be a suicide (attempt). I used Twitter search and Google search to hunt for news via my iPhone and came across a TBD update with clear, simple, updated information (which we then relayed to everyone within earshot who wondered what the hell was going on).

Second: Here is the true scale of "hyperlocal." ONE COMMUNITY AT A TIME. This only proves my long-spouted belief that megacorporations have NO place in "hyperlocal." That was borne out by the way newspaper chains largely ruined community newspapers, but did anyone pay attention to that while applauding all these megacorporate (AOL et al) ventures? Oh, of course not.

We are profitable, we are small, we are professional, by most accounts we do a fairly good job, and we have a rather amazing market penetration. Corporate efforts are incapable of doing the things it takes to reach all of the above while running dozens or hundreds of sites.

P.S. to the guy from MonroviaNow - We need to talk. It seems few are brave enough to say what you've said, but it's the God's-honest truth. Among other legacy practices that need to be scrapped, fast. (editor@westseattleblog.com)

1:31 PM  
Blogger Tony Krickl said...

Here's another view. Why don't some of these local websites team up with local newspapers? I own a local newspaper and because of print advertising, legal ads and subscription sales, we can support a news staff that is larger than any blogger, or overworked Patch editor could handle. I'm not in it for the money, but to bring quality journalism to my community. We have a website too, but adding more content from other online sources only helps readers. It's easy to dump newspapers now, but in many smaller cities they provide an important service to the community. Oh yes, our print circulation is up 4% this year. Regardless of the medium, content is king.

Peter W

6:48 AM  
Blogger Anonymous said...

I absolutely guarantee that if TellPeoria.com got 1.5 million unique visitors a month, we could find a way to make a living doing it.

Successful hyperlocal news sites will not be handed down from on high. They will be mom and pop businesses, financed with a mortgages and savings.

2:52 PM  
Blogger Jean said...

I came across the following post about the fall of TBD:

http://scrippsjschool.org/blog/post.php?postID=247

He really hit it on the head. As a Logan Circle resident, I agree that TBD never felt like it was part of my community. I would read it occasionally to find out what was happening in parts of the DC region that I never visit or as an additional source of news if I read something interesting on one of the neighborhood blogs that I follow.

10:49 PM  
Blogger darrenh said...

Anonymous is right on. That's why the "scalable" argument about hyperlocal is hyper-irrelevant. Those going for scale are missing the point. The future for hyperlocal is in the mom and pops, just like it was in local newspapering way back when. Local businesses, run hands on by the owners. Then something else developed to create scale in print. Maybe that will happen in online local news too. I kind of hope not. I'm not sure in the end that the chaining of weekly newspapers was for the best for anyone but the corporations that gobbled them up.

7:06 AM  

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