Why Hyperlocal is a Big-Media Fairytale

In my near-daily perusing of the web, I ran across this article on Newsweek about a new AOL enterprise called Patch which sets out to link up small hyperlocal news bloggers with the intent of generating large ad sales from many different, low-expense sites.  Now, farbeit for me to criticize someone interested in starting up an enterprise in this field, but I just don’t follow how exactly there’s big money to be made here.

I am a big believer that local news and information can be handled very effectively online, and that, at some point, there will be a means to make a legitimate return on all the work, but I just don’t see how the method currently being employed by large corporate media companies is going to work.

For one thing, as described in the article, the plan is to link together a network of hundreds or thousands of small, local blogs each run by, essentially a single editor, each bringing in something in the neighborhood of $200,000 (!!!!) per year.  Now, I understand large media’s interest in this method of news production.  Instead of paying a staff, you only pay one single editor, likely modestly, who in turn hunts down citizen contributions that are largely unpaid, with the technical site management and sales being done as a pool effort somewhere else, costs shared amongst many sites.  Problem is, that method doesn’t work.  If it did, print newspapers wouldn’t be in the state they’re currently in.

What I see in the current media flux is an almost complete denial that anything other than the bad economy (and, according to them,  parasitic web aggregators) is responsible for publishing’s woes.  There’s no realization, or admission that the process of consolidation the industry went through over the past twenty years or so was actually destructive, even as it led to obscene profits.  The problem today isn’t that newspapers can’t bring in enough revenue to cover the costs of production, its that they can’t bring in enough revenue to cover the costs of production, the hefty cut those in the corporate office pockets and the financial burden of all the debt that was incurred during the consolidation.  If most newspapers still existed as independent entities, we likely wouldn’t be seeing the industry-wide collapse and massive layoffs we have today, even with the nosedive in revenue.

To be an editor for a hyperlocal site requires , conservatively, 10 or 20 times the amount of time and effort being an editor for a daily newspaper incurs.  And these people are expected to do this all day, every day for a small fraction of what editor’s traditionally made?  All so their lords and masters on the top floors of the home office can skim off the lion’s share of the revenue generated from unpaid or modestly paid work?  This is a corporate office’s panacea, with no print or distribution expense, no unions, no staff members with associated payroll taxes, health care benefits, 401Ks and the like to deal with.  Just collect the money for doing absolutely nothing.  Well, as the old saying goes, you get what you pay for.

Where do I begin?  For starters, show me a hyperlocal news blog anywhere that’s making $200,000 a year in ad sales, let alone thousands of them.  And if these mythical beasts exist, why in the name of all things good and holy would the people operating them happily turn them over to large publishing companies in exchange for a (much) smaller salary, all the work and none of the profits?  Entrepreneurs are not generally stupid people, so if they are selling out, they are likely selling all the way out, pocketing a nice check and leaving the work to whatever desperate, out-of-work journalist is willing to take over the work load for relative peanuts.

In my experience, pool efforts in publishing lead to two things.  The first, and all the companies really care about, is an immediate drop in salary expenses.  The second, and most important, is a long-term decline in the quality of the work being produced, and the effort that goes into producing it.  And here’s an interesting sideline to this new hyperlocal effort.  At least when the hometown newspaper was bought out by the conglomerate, there was generally still a staff and an office operating that kept some of the money generated from the local advertising in the actual community it came from.  With this, only one person collecting a salary, almost all of the revenue is being whisked away from the community it was generated in.  This means that it can actually be counter-productive for small retail businesses to advertise with online efforts like this, with their dollars being essentially drained from the local economy that supports them.  Of course, that presumes the dollar figures attached are even possible to generate in web advertising  in small towns, which I don’t believe for an instant.

Secondly, and a point I may have made before, what’s the motivation to spend any significant money on web advertising when, for the same or possibly even less money, the businesses in question can have access to the exact same distribution channels on their own with virtually unlimited means of self-marketing?  If you’re charging $20 or something equally cheap for an online ad, you may sign them up, but any high-priced advertising options are going to be out of the question for most small businesses, and unrealistic for large businesses with real advertising budgets for a questionable means of promotion.  And it takes a whole lot of $20 ads to get to $200 K.

Hyperlocal may well work if done the same as it sounds; namely by dedicated people from the community, working with the community and becoming an actual part of the community with the revenue staying home.  Consolidating local sites under the banner of a major corporate publisher will ultimately prove about as effective as the print consolidation has; namely contributing to the collapse of a once thriving industry.

I, for one, beleieve that if journalism and publishing as a whole, are to have a real sustained future, it’s going to be in the hands of independent journalists and publishers to achieve that, not major media conglomerates.  They may not want to hear it, but the barriers for entry are virtually identical for you or I as they are for The New York Times.  People who genuinely care about the work they do, and see the community they represent as more than just a means to increase profitability will win out here.  The days of consolidation and top-heavy media organizations skimming the revenue cream from the top of virtually every newspaper in the country are coming to an end.

We continue to see it every day as publishers are still consolidating efforts, eliminating whole departments in some companies and dumping that workload into others.  I know of four people in the past two weeks alone who have seen their jobs downsized in favor of someone in another office under the same corporate banner hundreds of miles away.  From all of this “efficiency” we’ve seen modest drops in the rate of losses at most publishers, but we have yet to see the real affects these cutbacks will cause.  The quality of work will, and already has in most places, decline dramatically.  And from that, we will see even more losses in revenue as advertisers flex their newly acquired leverage over hurting publishers to get better rates, or just find other means of promotion more affordable, online or otherwise.  Readers, the core audience that makes publishing tick, will continue to drift away as newspapers and magazines continue to shrink, their products suffering a blight with the constant loss of creative talent in favor of maintaining management structure.

I’ll tell you one thing for sure, it’s a great time to be an advertiser.  It’s a buyer’s market out there, and most publishers can no longer afford to say no to whatever demands you may have.  It looks like what goes around comes around after all.

Published in: on October 7, 2009 at 3:01 pm  Leave a Comment  
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