I read a post yesterday about a profitable hyperlocal news site, and here's my summary: the owners hold down costs by paying freelancers to write articles. Their secret sauce, apparently, is that unlike similar hyperlocal formulas being pushed by Patch and The New York Times, The Alternative Press doesn't waste money on unnecessary expenses - you know, frivilous journalism stuff, like hiring editors.
Result? They've got their overhead down to a triumphant $0.28 per unique user.
“We're the only profitable hyperlocal here today and our business model works,” founder Michael Shapiro told an MIT enterprise forum late last month.
So, let's review.
Shapiro is in the advertising business, and that means he has to acquire content so he can package an audience to companies that want to sell things. But quality-controlled journalistic content is expensive, and the rates Shapiro can get on Web ads are so low that if he spent money on things like editing, his cost-per-unique-user might go up to something like a dollar or more (apparently this is along the lines Shapiro estimates for his competitors), and then his working business model wouldn't turn a profit anymore.
The squeakiest irony here is that Shapiro's websites have “teamed up” with the journalism school at Seton Hall. Got that? Shapiro is touting his business model to an industry desperate to escape a continuing vortex of decline, and that model includes “leveraging” journalism students to produce content for a publication that is only nominally journalistic, at rates so low that they're essentially undercutting the professional future to which these students aspire.
Let's also be clear why the industry notices stuff like this, and it's not because The Alternative Press is the first Web operation to make money via hyperlocal blogging. They're not even the first in New Jersey. To see a great example of how it can be done well, with heart and soul and personality and obvious concern for community (in this case, Montclair, N.J.), check out Baristanet.com. It's personable and talent-rich and unique, and that's its failure from an industry perspective. You can't commodify "unique."
Legacy media executives typically aren't looking for unique. They're looking for repeatable – an industry formula for hyperlocal that reliably produces predictable results. Plug in X dollars, apply the same approach to each new market regardless of quirks, collect X(y) dollars.
There's plenty of evidence that hyperlocal can pay its own affordable freight in a low-cost blog format (duh – how many years has Lisa Williams been keeping track of that story over at Placeblogger.com?). It's a safe bet that entrepreneurial local people will continue to earn working-class incomes by blogging about their communities, making most of their money via CPM advertising.
What concerns me today is this desire to turn hyperlocal into a franchise formula, because it speaks to the fatal flaw in our thinking about the future of media and journalism. The industry's insistence on short-term, repeatable profitability seems practical on first blush (of course we've got to make money to keep the lights on), but low-cost solutions tend to devolve into races to the bottom, and with Web ad rates as low as they are, this particular race will likely be swift.
At what point do we recognize that the years we've spent chasing lower overhead have done exactly nothing to make media companies more solvent, much less to secure any kind of meaningful future for journalism in American society? Shouldn't we take a cue from Google's attack on the content farmers and resign from our industry's embarrassing campaign to wring profit out of increasingly shoddy work? Is there anyone left out there who is happy with the thought that we've met the future, and it's $0.28 per unique visitor?
There is an alternative. We can start building a 21st century approach to journalism that turns reported information into data products that accrue in value over time. There's nothing intrinsic to the craft of journalism that limits us to consuming data, and with the right tools and techniques, we can become producers of robust, unique data -- data that will make our reporting better, but also data that will create tangible value independent of whatever stories we write.
When I stepped up my writing about these ideas in 2008 (see Section IV. The New Exotics), the ranks of journalists proposing a data-supported future for the profession were pretty thin. It's still not a mass movement, and we certainly don't all agree on every detail, but there are more people writing about these ideas, in more prominent places, than ever before. I'm hesitant to name them here, simply because I know how much I hate having my contributions overlooked and I would certainly overlook someone I admire in doing so. But here's the most recent signal (republished by Neiman two days ago) that our data-generating future is nearing mainstream acceptance: Newspapers must become hubs of trusted data in a market seeking (and valuing) trust (hat tip to Andy Rhinehart).
As Seth Godin says, ideas that spread, win. This idea -- the notion that there can be a healthier model for journalism, a more abundant future for the people who work in media, and a better media system for the communities we serve -- is spreading.
Now that media executives are realizing that paid content schemes are not likely to reverse their companies' failing fortunes, an opportunity is emerging for people to fund and build the first practical tools for this data-driven future. I propose we get moving on that, and just leave today's cheap vision of the future to anyone who chooses to live there.