Sunday, January 07, 2007 suffers downsizing--cites low revenue

Much interesting commentary is emerging about the downsizing at Perhaps some of Backfence's revenue trouble could be atttributed to the reliance on a single, spotty advertising revenue stream rather than developing multiple revenue streams...let me explain:

One small bit of internet hubris that I'm learning much about is that sufficient income for a project can be generated simply from advertising. After all, there's no huge overhead like printing presses--and there's certainly no pay for most citizen reporters.

There seems to be a mode of thinking that because there's no huge overhead for printing and paying reporters, that the ad revenue generated from local readers will be sufficient enough to sustain a citizen site. Yet even if a town is very much online, there are a finite number of folks who will be interested in the publication, even if the content is super-great. This is something many non-cit j bloggers already figured out. Few I know look to ad programs to provide them with anything more than slighly above coffee money.

Think about it: there is, perhaps, in the landscape of the 'net, a parallel between the narrow-focused personal blogger and the hyperlocal citizen jornalism site in that both cater to particular niches in this vast landscape. A large number of weekly readers--say, in the thousands--still might not be sufficient enough to create sustainable income through advertising alone. And there are perhaps a finite number of people who will be interested in what the neighborhood has to say, the same way there's a finite number of folks who are interested in the stories about kids, or lovers, or other life misadventures...

There's more to it: A few months back I had coffee with the online ad sales rep of a local TV affiliate, who informed me of the difficulty not just in selling online ads in this particular geographic area, but also getting the ads to pay off.

There are three reasons I see for this: one is that local businesses don't believe their customers are online. That's a narrow-worldview problem (seen it, heard it, and so did the rep.) The second is that if there isn't anything to keep attention (not eyeballs) focused on a site, the ads won't get clicked. No interaction, less clicks. The third reason is bad site design--which also leads to loss of attention.

Interactive features, though, are no guarantee that people will interact. Recent figures noted that only 1 in 10 web readers are web commenters.

So, if people are checking a site the same way they might check a hyperlocal paper--only for the stuff about school lunches and what's happening at the Senior Center--and there is little interest in spending time and interacting, there may end up being not much in the way of ad clicking.

Now, I also started to wonder about how all those small-town free newspapers I always see are able to keep printing. The local Easthampton paper, The Summitt, is supported by th Daily Hampshire Gazette which took a cue from the Wall St. Journal and put all its online content behind a paid-subscription wall. This has worked: I know friends who now subscribe only to the online version and have ditched the print. I'm not sure if it's increased the revenue of the Gazette, but I'm pretty sure it's part of what helps keep The Summit a free local paper.

In Chicopee, the town I used to live in, there were several different free hyperlocal papers--the Chicopee Herald and the Chicopee Town Register are the two that come to mind. It's a bit difficult to gather up the various revenue streams besides web design that are offered by the Herald's parent company Reminder Publications. However, the Town Register's parent company, Turley Publications, lists a number of different revenue sources besides selling advertising, most of them connected to printing--which one would think as a natural revenue generators for a news printer.

So, if small-town hyperlocal publications need additional revenue, it would stand to reason that hyperlocal online publications (whose circulations and levels of interest might be even less than print) would also need additional revenue streams beyond ads.

Yet for many there seems to be little strategic thinking about online products. There's sort of an "if you build it, they will come" Field-of-Dreams type of thinking. And while Field-of-Dreams may have been a great book, outside the confines of fiction, its philosophy is somewhat akin to building castles in the sand.

Update 1/16: Mark Potts Responds: "You are completely correct in saying in your blog posting that "if
you build it, they will come" is no way to build hyperlocal citizens'
media sites--and completely incorrect in saying that Backfence used
such a strategy. We have extensive community outreach programs in all
of our communities, and the sites are managed by editors that
interact with the community daily. Proof of our philosophy is easily
seen in the enthusiastic participation we've gotten from local
community groups, politicians and activists.
Mark also noted in a separate email on the economic model: the California sites are operating at least as well as the DC sites did at the same point in their lives. These thing don't happen overnight... good point to bring up on the corresponding time frames. I thank Mark for contacting me directly on the matter.

Additional: I left a comment on Mathew Ingram's blog re my thoughts on additional revenue streams. Mat responded with the belief that a good community and content can still work. A few months back Steve Yelvington on his blog discussed the matter of small papers developing proprietary software (although I can't find the post on his blog) and Jay Small suggested doing some ad design work (that was for newspapers, but could also work for citizen journalism sites as well.)

Basically, great content alone can't save hyperlocal citizen journalism any more than it can sustain small hyperlocal papers. Hyperlocal sites can't be TechCrunch any more than hyperlocal papers can be the Washington Post.

Note: if look at the "blogs that link here" section, please DO NOT click the second blog. It's a splog that stole the entire content of the post at Poynter's E-Media Tidbits about Backfence.

UpdateWaPo on Backfence's woes..msm doesn't get cit j. Vin Crosbie sez: Realistically, it's going to take close to 10 years for the business models to be there and for there to be enough advertisers willing to give money to hyperlocal start-ups...Backfence's problem is that it was too early." Possibly. or was it that worked well in Metro VA and MD just didn't fly in the Bay Area?

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Jonathan Trenn said...


You're quite right in that there will be a limited amount of people who will have enough of an interest in contributing a story or to place a comment on one that already exists.

And the concept of bringing in local advertisers as the main revenue source, is, at this point in time, way too soon. A lot of local businesses either won't have a website or won't have one that is functional as a marketing vehicle.

But to the first point, a successful venture in this space needs to have, at the very least, semi-professional contributors who can write about issues that would be compelling enough to a sizable amount of people. And then the entity itself must then be more proactive in it's marketing. It must make the community part of the marketing plan as opposed to simply the end targets of a campaign.

Tish Grier said...


very good points, too.

re local advertisers: you're very right, and this is something I found from talking with local business owners at various local functions. These are places you won't see a lot of internet consultants. Most internet consultants are hanging out with C-level execs trying to convince *them* of the merits of social media.

Few people are talking to the local small business owners--I have, and it's tought to get them to see and understand the reach of the internet within their local communities.

So, banking on their advertising on a big site like a Backfence is way too early...

And, with all the self-publishing stuff out there, what's the incentive for an individual to publish on a big corporate hosted site? This isn't Korea--where OhMyNews has a pretty good number of contributors.

Then again, OhMyNews used editors and pays contributors roughly $17 per entry that they use. OhMyNews' model works for Korea, but Korea's a vastly different country than the U.S. (where every state is like its own little country...)