Sunday, September 28, 2008

Start-up death could foster hope for innovation in hyperlocal media

I'm sure that Jason Calacanis has certainly spooked a lot of start-up folks with his latest prediction (reprinted on Silicon Alley Insider) that 50-80% of start-ups will fail. Yet whenever I see this sort of thing, I have to wonder if it's something of a Chicken-Little prognostication, or just bad news for a lot of iterative app and widget builders...but not for online communities and hyperlocal bloggers as a whole... (Update: apparently, as of sometime Sunday evening, the SAI re-print, along w/comments, has been pulled. Good thing this post does not rely on it to make my point..)

From where I sit in community and hyperlocal circles, I still see a great deal of untapped potential roaming around on the Internet. Certain types of Internet business that are banking on community (in the broadest sense), though, will indeed take a huge hit. Alan Patrick notes that businesses based on "FreeConomic principles" (those that use other people's money rather freely)will need to mature into real businesses with solid business models if they're going to stay afloat. That is, unless they've tapped the deep pockets that haven't been impacted by the financial mess.

The "short runway" of limited funds might finally slow the development of all those little social networking sites that don't appear to promise me all that much other than another way of keeping up with contacts I've already kept up with on other sites (and then won't allow me to delete my account later when their network dies.) It might stop the wide-eyed app builders who see their first million made $1 at a time through ephemerial tchochkies or by spamming our friends. Perhaps with a slowdown in development, Open ID will catch up/catch on and we won't have to continually create new profiles when a new social network or community opens up.

That "short runway" may also have an impact on how much grant money is given for a variety of experimental journalism projects. Lots of the folks I know, who are working on grants and fellowships to develop new strategies for journalism are probably safe for the moment, as long as the foundations didn't take too much of a hit in their endowments. New grants may be harder to come by in the future, depending on the endowments.

Marketing folks, on the other hand, may be a little harder hit, depending on the client and the degree of panic the client feels about the economy. Social media might become an even harder sell in these tough times, depending on the reputation of the agency, and the understanding of social media they can impart on their clients.

Stowe Boyd (who I had the pleasure of meeting up with again at BlogWorld) came to a similar conclusion about not really needing so many more social networking apps/widgets/communities. Yet Stowe looks beyond Calacanis with his examination Tom Freidman's call for a need to re-trench and re-invest in America's future, not just clean up its present disaster. From Friedman:
We need a buildup. We need to get back to making stuff, based on real engineering not just financial engineering. We need to get back to a world where people are able to realize the American Dream — a house with a yard — because they have built something with their hands, not because they got a “liar loan” from an under regulated bank with no money down and nothing to pay for two years. The American Dream is an aspiration, not an entitlement.

Stowe believes the smartest entrepreneurs will move into green technologies for everyday life, but that the "green fields" won't be in media. I have to agree that green technologies will need to grow if we're going to make the world we live in clean, healthy, and sustainable. But we've still got media. It won't go away....

So, what might happen in media? As our economic world gets smaller, local media companies, being pinched, will look more at hyperlocal content producers and online communities. A strategic battle between local TV affiliates and the local newspaper may develop. Whomever will be able to build the best relationship between the independent hyperlocal content producers and their tv affiliate or newspaper will be the one who gets the bigger, and better slice of local eyeballs (and local advertising revenue.) I'm thinking in terms of "media outlets" because we no longer have just "newspapers" and "television stations"-- regardless of their presence in the offline world, online tv and newspaper sites contain all different kinds of media and information. People surfing these sites don't care whether they're going to the TV station's website or the newspaper's website. They're just looking for information about their communities....

Whoever has the best community info, and the best relationship with community, will win.

Personally, I don't care exactly which one it is--tv or newspaper. I care more about how they treat the community and they hyperlocal media producers. The independent hyperlocal producers will need to receive fair treatment--not the "harvesting" of their content with nothing more than the promise of traffic. The conversational communities (forums, comments sections) will need better moderation. The current adversarial attitude of those at media outlets towards online communities will have to stop, but can only be stopped thru investment in people to interact and moderate community fairly and justly. If there is no cultivation of both community and hyperlocal content producers, there's a chance that, in some regions independent hyperlocal outlets --because they can manage their communities well and are trusted sources of information--may grow to replace the name-brand media outlets.

So, how can these media outlets pay for the people to moderate? Well, they can work with IT folks to use open source platforms, rather than shovelling huge amounts of money into costly proprietary back ends. They can do things to help businesses in their communities understand how advertising on the web might help their business better than standard yellow pages or print. Media outlets can come to fair, polite aggregation agreements with hyperlocal content providers. And there are probably interactions between hyperlocal and established media that the folks on the inside would know better about...

We may be heading into rough economic times, but no one seems to be cancelling their broadband--and may even be spending more time online. Online life, hyperlocal content, and our desire for community in this space isn't going away any time soon.

In the meantime, as Bette Davis once said "Fasten your seatbelts folks, we're in for a bumpy night."

Further Reading Steve Rubel has some great suggestions on how to Recession Proof Your Job With Web Based Tools.


TR @ WSB said...

Nobody else ever seems to dare to say this but I won't be heartbroken if all this slows down, either. Certainly we wouldn't have today's Internet without the bravery and brilliance of some startup types. But right now, there indeed are too many who are doing little more than living off the content we hyperlocal newsies kill ourselves to produce -- sometimes aggregated in ways that make search engines recognize their scraped version to the exclusion of our original version, with nominal linkbacks at best. And they get the VC, while we are trying to sell local ads in our "spare time" to pay the bills. My request is that aggregators stop being called "entries in the hyperlocal space" as they are too often. Whatever you aggregate, you're still an aggregator, not a content producer. And the only real innovator I've seen in that space so far is EveryBlock - going the extra mile to find every last database and info source and offer it to you in an easily searchable way - but treating the original sources respectfully. (Although in the end, what you still have is a stack of links, without any interpretation as to which matter and which don't - that's where "we" come in.)

Tish Grier said...

excellent point, TR about a lot of aggregators out there (disclosure: I work for an aggregator, but we don't carry ads.)

If there's going to be anything other than "polite aggegation" of a small snippet of content (200 characters a la Google) and if there is income being generated from aggregation, then there should be some sort of reciprocal arrangement with the aggregator. That includes local tv affiliates and newspapers that like to "steal" content produced by hyperlocal sources (that really bugs me)

and another very good point about EveryBlock. It's great raw data, but it needs interpretation for it to make sense to the quick-reader.

The focus has to shift to people--and away from bright shiny objects and stealing. Let's see what happens :-)