On a cold January day, reporter Ulrike Langer sipped her large cup of coffee and quickly went over her notes. Langer, a freelance digital media journalist, traveled all the way from Germany to New York in order to absorb the latest tricks of the trade from the movement toward hyperlocal coverage that is spreading to news outlets across the globe. Local, it seems, is everywhere.

The Street Fight Summit was a convergence of hyperlocal experts, interviews, panel discussions, and keynote speakers that took place in New York Jan. 15 and 16 (rescheduled from its original dates due to Hurricane Sandy). The summit was named for and hosted by Street Fight, the media, events, and research company focused on the business of hyperlocal content, commerce, and technology. The two-day event aimed to present and dissect the most successful ideas and latest trends in hyperlocal news coverage.

As Columbia Journalism Review’s Kira Goldenberg said, “success” is a very subjective term when discussing hyperlocal journalism. To her point, a panel titled Hyperlocal Publishing Models That Work featured representatives from three sites — The Daily Voice, DNAinfo.com, and GoLocal24 — that have yet to turn a profit.

In fact, panel moderator Lisa Skube, director of Journalism Accelerator, an online nonprofit that focuses on finding new sustainable journalism business models, opened the discussion by going through a list of hyperlocal failures — hardly a rousing start for eager disciples hoping to learn how to create a profitable local enterprise.

“(Hyperlocal journalism) has been fraught on four key points: small audience, big expenses, small revenue, and big losses,” Skube said, shifting gears to indicate that the Daily Voice, DNAinfo.com, and GoLocal24 are all examples of websites “finding great success with their networks.” Zohar Yardeni, chief executive officer of the Daily Voice, which runs 53 websites across Connecticut, Westchester County, N.Y., and central Massachusetts, said he measures the success of his websites by community penetration.

“We measure penetration by taking uniques and dividing it by population,” said Yardeni, who boasts that most of the sites in the Daily Voice’s network have a penetration rate either around or higher than 45 percent.

While not yet profitable, the Daily Voice is well on its way, Yardeni said. The network is certainly popular and relevant in the eyes of investors. To date, the Daily Voice has raised $18 million from investors.

Leela de Krester, publisher and editorial director of DNAinfo.com, said she agrees that penetration is part of the equation. But as any editor or owner of a hyperlocal website knows, at the end of the day you have to sell advertising, and you can only do that if you have a large-enough audience.

“The big problem for neighborhood and community blogs has been the size of that audience is very small,” said de Krester, who has leveraged DNAinfo.com’s community penetration with the large number of readers in its metro New York coverage area, a population most hyperlocal websites can only dream of.

DNAinfo.com is owned and funded by billionaire and Ameritrade founder Joe Ricketts, so his deep pockets have enabled the site to grow remarkably over the last couple of years. The site, which covers the New York City metro area, has recently expanded to Chicago.

“You’ve got to build a loyal audience, said Josh Fenton, chief executive officer of GoLocal24, which operates sites in Providence, R.I. and Worcester, Mass. “It’s no different from television or radio or anything else.”

Fenton said one of the ways his properties have gained both audience and penetration was by partnering with other local media, either by getting reports on local television or radio programs, or providing content to outlets with a much larger reach, such as Clear Channel, The New York Times, and The Associated Press.

The result has been a dramatic increase in both readers and interest. At golocalprov.com, the company’s Providence-based website, pageviews are up 500 percent over the last year, and uniques are up about 100 percent, according to Fenton.

Fenton attributes the success of his sites to their focus on old-school journalism, filling the void left by the fractured and difficult market many mainstream journalism organizations are currently facing.

“If you go by the truism that 70 to 80 percent of all fact-based journalism starts with newspapers, and they’re cutting back by leaps and bounds, we think that there’s an opportunity,” said Fenton, who added that he believes smart journalism will bring smart readers, making sites more attractive to advertisers.

The Patch Experiment
Since its founding in 2007, Patch has been a lightning rod for critics who have attacked the large hyperlocal organization, currently at 903 sites and counting, for overworking reporters and having unreasonable expectations for profitability.

In an interview by Forbes’ Jeff Bercovici, Patch president Warren Webster said he felt Patch got raked over the coals over the years, but he is proud of the organization’s growth and its current financial situation, and indicated that Patch is poised for profitability this year, despite falling substantially short of revenue goals in 2012 set by AOL chief executive officer Tim Armstrong.

Webster said the organization is up to 13.1 million unique visitors a month, a 30 percent increase over the last year. With that growth came an increase in profitability. About 100 of Patch’s properties are profitable, and Webster said he hopes the rest will be profitable by the end of the year.

The common denominator among successful Patch sites is tenure — those that have been around longer tend to be the most profitable. “It does take time to get to win the hearts and minds of not only residents of the community, but also small business owners,” Webster said.

One might assume Patch’s large national footprint would lend itself to national advertisers, but, according to Webster, less than 10 percent of Patch’s revenue comes from national advertisers, which he cites as an encouraging sign.

“The fact that 85-plus percent of the revenue is coming from (small businesses) and regional advertisers, to me, is incredibly encouraging,” Webster said. “It means we’re not pumping national dollars in where we can to try and support something that’s local. It’s really local supporting local.”

Webster also addressed criticism over Patch’s decision to merge certain sites and cut freelance budgets. (Interestingly, the morning of the interview Street Fight tweeted a link to a story from FishbowlLA along those same lines, alleging that local editors are stretched to the limit due to cutbacks and mergers.)

“Those decisions were made by people living in those markets,” Webster said, indicating that more information about staffing and geography, and not financial pressure, led Patch to merge about 25 percent of its sites. “We hired over 300 people in 2012,” Webster said adamantly. “That is not a company that is downsizing.”

Webster also said Patch will be evolving over the next year, as a new platform that shifts the focus from traditional journalism to more of a community hub becomes a “big part” of what Patch’s editors do.

Currently, five Patch sites in Long Island are testing the new platform, and despite a delay due to Hurricane Sandy, Webster said he thinks the increase in user involvement in those sites is promising.

“If we can get it perfectly right and tweak it to a point where it’s universally adopted across the country, it will be awesome,” Webster said.

Automation and data in hyperlocal journalism
The role of automation in journalism is a very polarizing issue. On the one hand, some feel automation is completely antithetical to the very spirit of journalism, especially hyperlocal journalism. On the other hand, automation can help lower costs and improve the processes to help hyperlocal outlets with a slim margin better position themselves for profitability in a difficult marketplace.

The role of automated or outsourced journalism is under more scrutiny than ever, especially in the wake of the scandal involving Journatic, a content-producing company employed by the Chicago Tribune and other news outlets, that was exposed as having produced stories under fake bylines containing plagiarized and fabricated information.

Sun-Times Media cut ties with Journatic quickly after news of the scandal broke, and senior vice president Jim Kirk said in a Street Fight panel discussion that he thinks any company needs to find a balance between outsourcing and automation, while still maintaining the checks and balances that good journalism requires.

“I don’t think anyone argues that there needs to be some automation in the process of publishing and journalism,” Kirk said. “It’s how that process works that’s most cost effective.”

Kirk pointed to the Washington, D.C.-based Homicide Watch as a website that successfully balances automation and the human element. The site, which was awarded the Knight Public Service Award by the Online News Association in 2012, mixes automation, social networking, and original reporting to cover violent crime and reveal the human story behind every crime in a way that pure data could never accomplish.

“People will stay with a case all the way through — they become engaged,” said Kirk, who has partnered with Homicide Watch to cover the exploding homicide rate in Chicago.

EveryBlock, the former network of hyperlocal sites, began with a focus on data and automation, aggregating local data including crime reports, building permits, and liquor licenses. But early on, president Brian Addison discovered the content only had niche appeal, and traffic quickly plateaued.

“It can be somewhat dry and also creepy to a certain extent,” Addison said about the network’s early focus on data. In 2011, a relaunched Every- Block appeared with a shift toward encouraging social interaction, a move that Addison said helped grow the site to a more attractive destination for both readers and advertisers.

Addison said it was easy for EveryBlock’s users to become comfortable with automated data, but getting them to take advantage of the community aspects of the site has proven difficult. Regardless, his experience shows the only way to encourage interactivity and build a community is to put a human layer between the data and the reader.

Underscoring the distinction between a successful hyperlocal website and a profitable one, EveryBlock was shut down by parent company NBC News just weeks after the Street Fight Summit. While EveryBlock attracted a large user base, the site relied on advertising revenue, and NBC News chief digital officer Vivian Schiller said EveryBlock’s financial losses “were considerable.”

Gary Cowan, senior vice president of product and marketing for DataSphere, said he thinks automation isn’t a black-and-white concept that should scare journalists. There are many components of journalism that are amenable to automation. For instance, real estate listings and home values have a direct appeal to homeowners, and leaving the delivery of that data to an automated process allows a journalist to devote more time to reporting stories that require a human touch.

“The proper analogy is a telescope,” Cowan said. “A telescope doesn’t do the seeing, but it allows the person who’s looking to see further.”

Learning to stack ‘digital dimes’
In a keynote address, self-proclaimed “old-school digital guy” and editor-in-chief of Digital First Media Jim Brady said any media company that wants to be successful in local journalism needs to be two things: a water cooler where people can gather to talk about the news, and an ATM where people can get relevant information about their neighborhood and the areas they care about.

“We’re good at the first one, and we stink at the other,” Brady said, noting that most newspaper companies don’t understand the power of data and have fumbled their approach to the Web, whether it’s slow development of new products or an aversion to risk.

At Digital First Media, a company with 75 daily local newspapers, 200 weeklies, and 60 million unique visitors a month, the challenge is trying to do local journalism at scale.

Brady has been the lead developer of Project Thunderdome, the company’s New York-based newsroom that creates all the national content for the company’s newspapers. By centralizing national content creation, such as international reporting and national politics, Brady said it saves upward of 15 to 20 percent of staff time at individual properties, allowing local newspapers to focus on local content creation.

“Nobody goes to the New Haven Register for their coverage of Afghanistan,” Brady said. “If they do, they’re woefully under-informed about the war in Afghanistan.”

Engagement is critical for Digital First Media, and that means doing more than just letting readers comment on stories.

“The only way we’re going to be profitable is high engagement,” Brady said. “If your local site only allows people to respond to things you’ve already done, you’re limiting your traffic growth.”

Brady said engagement can’t just be digital — it has to include human-to-human contact. Twenty-five newsrooms in the DFM chain have some form of open newsroom, opening the newspaper’s editorial schedules and editorial meetings themselves to the public. According to Brady, allowing readers to engage with the newsgathering operation directly builds loyalty and allows them to take part in not only determining coverage, but also interacting more directly with the property.

“If the public wants to come in and bitch about a story in the paper, they can come in and bitch about a story,” Brady said. “Real engagement is getting people in your building.”

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