What We Know About the Business of Digital Journalism

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Columbia Journalism School | Tow Center for Digital Journalismsponsorship of more than $75,000 that his sales team planned to pitch to a localcar dealership. WJLA intervened, arguing that it would damage a valuable relationshipbetween the dealer and the TV station, Brady says.“When I was at the Post, we were routinely doing six-figure online deals,”Brady says. “If the sales force itself doesn’t believe digital is worth it, how are theygoing to sell it? To just assume nobody would ever spend that much online isinsecurity with your own inventory.”Just as revealing as what went wrong is the list of things TBD seemed to havegoing for it, which help to clarify the intense interest local online news ventureshave drawn for the last five years. Most important was its association with sistersite Politico.com, another well-funded, generously staffed Allbritton venture ledby high-profile news veterans. Like Politico, TBD promised to be not just on theWeb but “of the Web,” in Brady’s phrase, meaning that it would link abundantly,deploy social media aggressively and engage closely with users. And like Politico,TBD promised to deliver to its advertisers a well-defined audience—not justgeneric news consumers, but people intensely interested in the particular news ithad to offer. (Still, it is worth keeping in mind that at least through 2009, Politicoearned more than half its revenue from its free, ad-supported print edition, 4 witha circulation of about 32,000. 5 )TBD also sought to strike a balance between focus and scale: Visitors wouldbe drawn in by news about their immediate environs or interests, but behind thescenes the operation could reap the “efficiencies” of serving a large metropolitanarea. (Brady insists “hyperlocal” is the wrong word for what was really a regionalsite with a neighborhood interface.) Likewise, the site would include a mix ofaggregation and firsthand reporting. To describe the site, Robert Allbritton hasused the analogy of a supermarket bringing together items that previously couldnot be found in one place. Before TBD, he declared when the site launched, findinglocal news online was “like trying to buy groceries in the old country. Firstyou went to the fishmonger, then to the baker, then to the grocer, and so on.” 6Other hyperlocal ventures have tried to apply versions of that idea on a nationalscale. A good recent example is Main Street Connect, a “national communitynews company” that went live in 2009 and consists, so far, of 10 sites servingtowns in Fairfield County, Conn. The separate sites share editorial resourcesLocal and Niche Sites: The Advantages of Being Small 39
The Story So Far: What We Know About the Business of Digital Journalism(neighboring communities see many of the same articles), technology infrastructureand an ad sales team. “We’ll soon be bringing our vision to other groups oftowns,” Main Street’s web site promises. “Watch for us.” 7By far the grandest of the new hyperlocal journalism ventures is the nationwidePatch network, which was bought by a struggling AOL in 2009. With sitesin 700 communities and counting as of March 2011, each led by a local editormaking $40,000 to $50,000 a year, Patch has turned AOL into one of the biggestsources of new journalism jobs in the country. Visitors to a local Patch sitesee news and information about a specific community, written and curated bypeople in that community, whether it’s Dublin, Calif., or Dunedin, Fla. (In March2011, AOL also bought Outside.in, a hyperlocal network that automatically aggregatesnews, blog posts, police reports and other public data, and says it is in57,830 neighborhoods. Reports suggest AOL was interested in the underlyingtechnology more than the business itself. 8 )To run all of those Patch sites, AOL can count on centralized resources likea massive in-house ad network, a sales force with ties to national brands, andsophisticated search engine optimization technology for maximizing the meaningfullifespan—and thus the economic return—of every piece of content itproduces. Like McDonald’s, AOL uses sophisticated market research to assess thecommercial potential of the communities where it is considering planting thePatch flag. (According to a New Yorker profile of AOL chief executive officerTim Armstrong, the Patch formula considers 59 factors, from average incomesto voter turnout. 9 )The same infrastructure supports AOL’s growing stable of niche or “vertical”content sites, anchored by acquisitions such as the martial-arts blog MMAFighting.com,the tech-industry site TechCrunch and the sprawling Huffington Post,which AOL bought for $315 million in 2011. It’s no exaggeration to say thatAOL, whose original business model (providing dial-up access to the Internet) isbadly out of date, has staked its declining fortunes on local and niche journalism.Why? The underlying logic is the same at AOL as it was at TBD: In a worldwhere much of the daily news has become commodified, only news that peoplecan’t find elsewhere will command a loyal audience. This is hardly a novel insight40
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