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The Neighborhood Watch

Why do community news sites, once hailed as the future of journalism, so often flop?

Local businesses spend anywhere from $100 to $1,200 per month advertising on community news sites, according to sources, but most often lay out around $200. That’s not enough revenue to make them viable. Gordon Borrell, CEO of the research firm Borrell Associates, gives companies like Fisher props for experimenting in the space but points to the fact that hyperlocal revenue remains tiny. “I sit on top of a lot of information, from about 5,900 media companies, and it’s very clear that these hyperlocal news sites don’t generate that much money,” he says.

Some say the concept simply needs more time. “Companies like Datasphere have proven that getting the money and connecting with small business advertisers in local markets is not the problem,” says Adam Symson, chief digital officer at E.W. Scripps Co., which has dipped a toe in hyperlocal in markets like Phoenix. “The problem is making sure you’re providing an audience for those advertisers. You have to have content worth spending time with. We’re still looking for the right way to tackle it.”

Indeed, hyperlocal is not a monolith. The space is actually home to a variety of business models. Among the lower-cost operations is Phoenix’s AZCentral.com, launched by The Arizona Republic last May and encompassing 17 neighborhood sites. AZCentral has tapped around 650 citizen journalists and employs a so-called news curator to manage contributions, says Republic content partnership editor John Triplett. With that model, Triplett adds, AZCentral was profitable almost from the get-go.

Also operating on a shoestring is the hyperlocal experiment of The Seattle Times, which has partnered with some 50 local news sites, among them Julie Hall’s Inside Bainbridge. Those alliances were formed after the Times gave up on the idea of having its own journalists cover Seattle on a granular level.

“Without a dedicated editor who lived in those communities, it just didn’t work for us,” says Bob Payne, editor, partnerships and audience engagement at SeattleTimes.com. “So we killed those pages.”

The Times shares no ad revenue with its community-based partners, who instead benefit from traffic generated by the alliance.

More deep-pocketed operations include DNAinfo.com, whose New York operation and recently launched Chicago site each employ professional reporters (40 in New York, 20 in Chicago) and a dedicated sales team. “Our sales people know the neighborhoods as well as the reporters do, and that’s really the key to our success,” says Leela de Kretser, publisher and editorial director of DNAinfo.com, the brainchild of TD Ameritrade founder Joe Ricketts.

Then, there’s Patch. The overhaul of AOL’s much-vaunted community news venture was announced after it emerged that the operation lost a breathtaking $147 million in 2011 while generating just $13 million in ad revenue. As a result, expenses were slashed 30 percent, mostly through the elimination of “middle management” editors, according to Jon Brod, president of AOL Ventures and co-founder and CEO of Patch. Patch still largely follows a one-journalist-per-community-site formula, though about 18 months ago it started introducing content from an assortment of local bloggers, who now number some 30,000.

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