By: Karim Mostafa
200 Markets Planned By Yearend For E-mail Publisher
A lot of Internet startups have promised to offer local news, but one
company is delivering with weekly e-mail newsletters covering 55 local
communities. With strong financial backing, Streetmail.com of North
Adams, Mass., is now expanding rapidly.
‘We’re launching in three to five markets per week,’ says Barbara
Johnson, Streetmail.com CEO. ‘By year’s end we’ll have at least 200
markets and the positive outlook is 400.’
A founding investor in the company is Bo Peabody, the Web guru who
founded Tripod. So far, the company has raised $7.25 million from
investors including Rho Management Co. Inc.
Streetmail has strong Web and publishing experience. Johnson is the
former COO of Yoyodyne, which was sold to Yahoo! in 1998, and the
former president of American Lawyer Media. Vice President of Sales Judy
Barry is the former managing director of The New York Times Magazine.
After publishing its first edition in Massachusetts’ Berkshire County
in 1998, Streetmail.com continues to look for towns and neighborhoods
that have been skipped by the dot-com craze by providing them with free
e-mail newsletters containing local content.
The formula is to find a local writer who will create a weekly
newsletter that combines news, views, listings, discussions, and
classifieds on each local market. Streetmail.com says they have more
than 115 Internet service providers (ISPs) and 660,000 subscribers
signed up for their newsletters.
Three factors are considered in looking at markets for Streetmail.com’s
newsletters: size, retail ad spending, and Internet access rates. So
far, the company has gone into markets with populations ranging from
50,000 to 150,000 people.
Most of these markets have been bypassed by major Internet networks,
according to Johnson. ‘We’re in markets where the people crave local
content,’ she says.
A recent poll conducted by Greenfield Online for Streetmail.com
confirms that 70% of users prefer locally produced content over content
created outside the covered community. The poll also found that 40% to
65% of rural and suburban Internet users stressed the importance of
using a local ISP over a national ISP, says Kara Berklich, vice
president of marketing at Streetmail.com.
Not competing with newspapers?
Streetmail.com is not a direct competitor to newspapers and their Web
sites, asserts Johnson. ‘We’re neither fish nor fowl to them,’ she
says. ‘We’re not as comprehensive as newspapers and we’re not as
constant as television.’
But like many dot coms, the company is hiring from newspapers.
Streetmail.com has advertised in local areas and made respondents do
test-issues. ‘It’s a fairly labor-intensive proceeding, as you can
imagine,’ says Johnson, who says they’ve been really fortunate thus
far. Most of the people hired have print journalism experience. For
example, a writer for a Wisconsin edition covered the Chicago Board of
Trade 20 years ago but is now a grain farmer.
Johnson doesn’t foresee becoming a daily news publisher either. Weekly
will suffice, she says. ‘Our goal is to be welcome in subscribers’
Initial distribution in a market is through ISPs who request a co-
branded edition of the newsletter to send their local customers.
Johnson says there was a high demand for such a product, but ISPs
didn’t know how to do it themselves. ISPs have benefited by increasing
their customer retention rate, as well as getting marketing
opportunities for free. Streetmail.com’s subscriber retention rate
since launching in April 1999 has been 95%, she says.
Independent subscriptions, separate from the ISPs, also have increased
via word-of-mouth, Berklich says.
So how is Streetmail.com making money? ‘It’s a three-pronged revenue
model,’ Johnson says. ‘Local advertising and classifieds, national
advertising, and e-commerce.’ National advertising will become a factor
in later stages, but right now the e-commerce has the ability to take
advantage of things like online garage sales.
AOL Digital City also sees green in the ‘Local Everywhere’ network
which it is expanding to 200 markets in the U.S., but it’s creating Web
sites not newsletters.
‘The recent announcement by AOL to partner with local content providers
has had a positive effect on our negotiations with a large cable
provider as a partner,’ says Gene Schumann, who is planning a network
of online-only newspapers. The two communities he’s targeting first are
Wilmington, N.C., and St. Augustine, Fla.
Schumann reports that he’s securing what he believes to be an adequate
level of funding from a venture capital firm. He says he approached USA
Today Publisher Thomas Curley about investing, but was turned down.
As to whether or not these networks succeed, Schumann says, ‘The
announced sale of the Thomson newspapers further galvanizes our belief
that a digital newspaper that saves trees is the future and it is our
intention to be a big part of it.’
Karim Mostafa (firstname.lastname@example.org) is assistant
editor of Editor & Publisher Online.
E&P e-letter (02/08/00)
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