Resilient journalists are reinventing local coverage and pioneering sustainable business models in the wake of disappearing local newspapers and the implosion of Patch, AOL’s attempt to create a national hyperlocal network.
By Carol Wolfe
Despite the Patch meltdown that hit journalists with a new shock wave of layoffs, local online news sites are making steady gains in readership, financial stability and impact.
Patch, founded in 2007 by AOL chief executive Tim Armstrong, reached its pinnacle with more than 900 sites serving individual communities, Farhi reported. In 2013, after losing more than $200 million per year, AOL laid off hundreds of Patch employees and sold Patch to Hale Global.
Some have questioned the long-term viability of online hyperlocal news, citing Patch as a cautionary tale.
Yet many entrepreneurial journalists are beginning to find success on a smaller scale. They are testing new business models and taking on the challenges common to many small businesses. Their value proposition lies in a new form of news coverage that ranges from personally engaging the community through catalyzing change at local, state and even national levels.
Scott Brodbeck is one of the entrepreneurial journalists who is proving that local independent online news can thrive. Brodbeck was working in local TV news when he decided that the internet was a superior medium for local news. He started ArlNow in 2010 to serve his own community in Arlington, Va.
ArlNow quickly flourished. “I knew I wanted to go beyond serving one community,” Brodbeck said. “I wanted to find a new sustainable model for local news.”
Brodbeck replicated his model, adding BethesdaNow in 2012 and RestonNow in 2013.
He employs three other journalists and an advertising sales person and is looking into options for expansion in other communities in the Washington region. The company, already in the black according to Brodbeck, is reinvesting profits to better serve readers and advertisers.
Brodbeck’s sites are among a growing number that are making slow but steady gains. Pew Research identified 438 operating digital news startups that created 1,900 jobs in the U.S. Slightly over half are registered nonprofits, a status requiring any surplus be returned to operations. The rest operate as commercial businesses.
Still that estimate may be low. “The Pew study underestimated the number of people involved in entrepreneurial startups,” said Jan Schaffer, executive director of J-Lab at American University. No one has a fully accurate count, according to Schaffer.
Hyperlocals are beginning to replace community newspapers, according to Mark Potts, a co-founder of WashingtonPost.com who has focused on the hyperlocal space for 30 years. It costs at least $800,000 per year to publish a weekly newspaper and their advertising revenue is half of what it used to be. “An online hyperlocal news site can cut the costs by 80 percent,” Potts said.
The Alternative Press is a thriving hyperlocal network that is leveraging the economies of internet access by using a franchise model to expand, Potts said. Founded by Michael and Lauryn Shapiro in 2008, The Alternative Press serves several New Jersey communities and reports 1.8 million readers.
Michael Shapiro announced in March that Melissa Treacy, former Patch regional editor, franchised the Alternative Press model to run the Lower Providence site in Pennsylvania. Further expansion followed in April with the launch of North Penn, franchised by veteran journalist and former Patch Editor Tony DiDomizio.
A franchiser can launch and own a community news site using The Alternative Press platform, reported Michele McLellan, senior program consultant for the Knight Digital Media Center and founder of the Block by Block Community News Summit. The Alternative Press receives an annual fee and a percentage of revenue. In exchange, the franchiser receives significant technology, business and editorial support. Franchise publishers “own their business and have the right, eventually, to sell it. They are building equity as they build their businesses” McLellan reported, quoting Shapiro.
The picture is different for many solo local news publishers. Ned Berke launched SheepsheadBites in 2008 to serve the Brooklyn community, Sheeps Head Bay. By January 2013, Berke had built his readership to 150,000 monthly page views through valiant reporting and tireless focus on managing the business. He hired two writers and drew a salary.
Hurricane Sandy took a toll on small businesses and Berke’s advertising revenue, forcing Berke to scale back for a while.
“Right now the site is a one-man band,” Berke said. Monthly page views are now up to about 200,000, according to Berke, compared to 135,000 when Sandy struck in October 2012. Berke is looking ahead to bringing back a part-time writer.
Berke serves on the board of directors of LION Publishers an association of local independent online news publishers. He believes that hyperlocal sites have a flourishing future.
“Right now, we are going back to the agrarian model of journalism after being in the industrial age,” Berke said. “That will evolve into an industrial model at some point, but for right now I’m happy to be a farmer.”
The limited data available suggest that Berke’s experience is more prevalent than that of Brodbeck or the Shapiros.
Michele McLellan surveyed publishers of independent local online news startups in 2013. She found that 30 percent of respondents had a steady flow of revenue and turned a profit in 2011. Another 33 percent had a steady flow of revenue, but were not yet profitable. The remaining 28 percent had not yet nailed down a model to reach profitability, including 11 percent that relied on grants to break even.
Publishers drawing a full salary represented slightly more than a third of respondents, with 32 percent drawing a full salary and 32 percent drawing no salary.
McLellan released new data in April that show some gains in profitability and revenue development. More than 60 percent of publishers responding reported higher revenue than the previous year and half of those reported doubling their revenue.
“Each community is different. We talk to each other,” said Brodbeck who also serves on LION Publishers’ board of directors. “You will hear that no one’s finding a way to make it pay. A hundred people have figured it out.”
Hyperlocal news sites are like startups in any industry. While many slog their way toward profitability, some strike it rich. Alaska Dispatch, an online news site, announced this month that it would pay $34 million to purchase the McClatchy Company’s newspaper, the Anchorage Daily News.
Alaska Dispatch was started by Tony Hopfinger, Amanda Coyne and Todd Hopfinger in 2008. Alice Rogoff, former chief financial officer of U.S. News and World Report, joined as majority owner in 2009. The Alaska Dispatch’s readership and advertising have both doubled every year since it was launched, according to the company’s post on Michele’s List, McLellan’s directory of online local news publishers that are aiming for serious revenue streams.
Ken Doctor speculates on the significance of the digital-only Alaska Dispatch purchasing a legacy newspaper in a Nieman Journalism Lab post. To temper the David and Goliath analogy, Doctor notes that Rogoff is married to David Rubenstein whose estimated net worth is $3.1 billion. Brodbeck cautions against reading too much into the purchase. “The money is coming from a wealthy benefactor,” Brodbeck said.
Front Lines of Journalism
The well-healed and financially-strapped local online sites share a common mission. They are driven to fill a vacuum in their communities left by other media outlets.
“It’s not just local news,” said Danna Walker, former Patch editorial director and an American University adjunct associate professor, “It’s a movement toward communities taking ownership of their news.”
Hyperlocal sites are taking a watch tower view of municipal governance, according to Schaffer. “They are adding coverage that did not exist before,” she said.
ArlNow is an example of a hyperlocal news site showing its teeth as a community watchdog. The site recently broke a story on a Columbia Pike bus stop that cost $1 million to build. That story resulted in Arlington County launching an independent review of the Super Stop before rolling out the model to 23 other planned Super Stops, Brodbeck explained.
Local sites are also the primary sources of many stories taken up by the national media, Brodbeck said.
ArlNow also broke the story about Jeff Krusinski, an Air Force officer charged with sexual assault who was removed from his position as chief of the military’s Sexual Assault Prevention and Response Office. This local story catalyzed renewed national attention to combating sexual assaults in the military.
“We are on the front lines of journalism,” Brodbeck said.
Many hyperlocal news sites are responding to a disrupted industry by successfully pioneering new models of journalism and financial sustainability.
“If writers choose to do so they can liberate themselves from editors and publishers,” Berke said. “You can take charge of your own work again, you can experiment. It’s a hard time, but a very exciting time for journalists.”