So it was with brainy interest that I spoke recently with Terry (whose real name I’ve obfuscated for privacy’s sake). Terry’s fighting the good fight, running a nonprofit investigative-news site in her state capital. But grants are tough to score and corporate donations have the potential to taint her organization’s objectivity, she told me. On top of that, the nature of investigative news calls for long-form and serial writing, not exactly page-view generators.

Terry has considered hosting meet-and-greet events to generate revenue, charging cover fees (or “suggested donations” in nonprofit parlance) for participants to nosh with influential people. Unfortunately, the costs to organize, advertise and cater such events take a serious bite of whatever slim profit is possible, she worried.

My suggestion: Turn these events into a double-whammy volume business.

First, the volume part. Instead of holding cozy meet-and-greets in restaurants and charging higher fees to cover food costs, it might benefit Terry’s organization to host panel discussions in large spaces. A college or private company might be willing to donate use of a lecture hall or conference room, and a local caterer can donate light refreshments (though food always makes post-event cleanup a pain). On top of that, politicos and corporate spokespeople are usually willing to spout their agendas for free when given the opportunity to serve as panelists.

Such a setup allows Terry to suggest small, palatable donations at the door from a larger audience. It also reduces her overhead: So far in this scenario, Terry’s organization has spent zero dollars on space, food and speakers, and has gained a per-capita cover charge. Sweet, huh?

Here’s the double whammy. Terry can record such panel events for later broadcast on her organization’s website, for download as a free podcast, or as audio or video content for paid syndication. Delaying a broadcast gives value to attending panel discussions in real time, but it also allows those not in attendance to benefit from the information presented.

Most of all, delayed broadcasts can drive page views (read: advertising dollars) to a site, especially if a discussion topic or panelist sparks heightened interest between the live event and the recorded show. That kind of action also increases a program’s syndication value.

One event, two sources of revenue. BAM! BAM! A double whammy.

For-profit news organizations can duplicate this, though it might be harder to find donated space and food. Still, I predict a private college would be glad to host an event in exchange for sponsor status and the appearance of an esteemed professor on the panel.

I hope Terry and her organization can reap some revenue from producing these or similar events, as they would benefit the host and audience members alike. For more information on keeping investigative journalism afloat, check out American University’s iLab. Keep running the good race, Terry!

Photo courtesy of Flickr user Stacie Joy for CTTC.

That’s when his eyes glazed over. “What’s Twitter?” he asked.

I tried my best to explain it: 140-character squirts of information broadcast to followers, who then might rebroadcast (or retweet) that information to their followers, and so on. My advertiser didn’t see its value; admittedly, I didn’t do a good job illustrating it to him. It just seemed like a lot of work that he didn’t really need.

He was right. Digital marketing can be a full-time job, or at least a labor-intensive one for a small, neighborhood business. Mom and Pop Shopkeeper can’t spare their first-born child to tweet daily specials or post notes on a Facebook wall. That kid needs to be at the register or on a bicycle making deliveries.

The Tribune Company stepped into this tough sell earlier this week and Gannett started in late May. But they’re onto something: Digital-marketing services are certainly a revenue stream that allows online hyperlocalists to leverage social-networking skills they already have (or at least should have).

Making this work means first educating small business owners on the value of Facebook and Twitter (I’ll toss in Foursquare while I’m at it). That can be done one-on-one during a sales call, or in a free presentation to the chamber of commerce or other local business groups. The goal is to introduce business owners to the concepts of social networking and not to instruct them on exactly how to use it. They won’t buy the cow if they can get the milk for free.

Next, it might mean scaling a digital-marketing campaign to fit a business’s needs and budget. A restaurant might have plenty of information to post on its Twitter and Facebook feeds, and such a business can use (and afford) the help of an online hyperlocalist to set up those accounts or create content.

Conversely, a corner convenience store might not have much to say, but one inexpensive “sponsored” tweet on a hyperlocalist’s Twitter feed can extend its services to an online audience.

I’ve had some success offering digital-marketing services to small businesses: I ghost-tweeted text and photos for a local crafts fair using that business’s Twitter account, and transmitted teaser tweets through my news site’s feed. I also convinced the restaurateur mentioned above to purchase tweet time on my feed, though as part of a larger display-ad package.

In the interest of transparency, each tweet appearing on my feed was labeled “sponsored.” Likewise, any mention of the crafts fair or that restaurant in the website’s content included some mention of them as sponsors or advertisers.

Digital marketing is a professional service and revenue stream that online hyperlocalists should consider, especially since Facebook, Twitter and Foursquare are well adapted to mobile devices. It’s an easy way to break into mobile monetization with existing technology.

Photos courtesy of Flickr user Jeremy Keith and Tommaso Sorchiotti.

I still think this model sucked, but it wasn’t just a bad business model. It was the wrong business model for that area. Here’s why.

To keep the New Jersey Local running, The Times would have needed a large pool of unpaid student interns. They have that for their New York hyperlocal sites, with more than 480,000 students in the City University system, which includes a J-school and at least two colleges with strong writing programs. CUNY’s J-school already mans the Brooklyn Local, while students from New York University’s journalism program will work the upcoming East Village Local in Manhattan.

The Local didn’t have that in its New Jersey beat, which covered Maplewood, Millburn and South Orange in Essex County. Seton Hall University sits in the middle of South Orange but has an enrollment of only 10,000 students. Nearby Montclair State University has 18,000 students, and the Newark campus of Rutgers University has 11,500 students. There wasn’t enough wiggle room for error or missed partnerships.

The take-home lesson from the New Jersey Local experiment is this: Hyperlocal business models aren’t always about scale. What works in a large market won’t necessarily shrink to fit a small market. Instead, hyperlocalists must put attention into their beats’ microeconomies. If a neighborhood can’t support a news outlet’s business  model, then that model needs revision.

For example, my former hyperlocal site’s business model relied on advertising revenue. However, my coverage area was underdeveloped as far as businesses and services go — advertisers didn’t exist, and The Great Recession didn’t help. On the flip side (and contrary to what was happening across the larger region), the neighborhood had plenty of homeowners’ associations unaffected by the mortgage crisis and very active in civic affairs.

My for-profit company spent three years trying to tap blood from the advertising stone. It would have been better off as a nonprofit funded through donations from those homeowners’ associations. Woulda, coulda, shoulda.

Scale does not equal sustainability or solvency. That goes for The New York Times and independent hyperlocal outlets. But an appreciation for what a neighborhood can support will go a long way.

Photo courtesy of Flickr user pillowhead designs.

Thus it was with both sadness and schadenfreude that I learned Wednesday of the demise of its hyperlocal project “The Local” in northern New Jersey. Just like that, The Times pulled the plug on The Local’s coverage of Maplewood, Millburn and South Orange and dumped its archive on hyperlocal pioneer BaristaNet, Business Insider reported.

Why did The Times’ “experiment” fail in New Jersey when it’s met some success in Brooklyn and is expanding into Manhattan’s East Village? What happened?

The way I see it, the New Jersey Local was hit with a one-two punch as it swaggered out of its corner. First, the news site saw editorial turnover in December, twelve months into what would eventually be a 15-month run. It can’t be easy for any news enterprise to recover from that kind of blow so early in its operations.

More troublesome (to me, anyway) was its business plan. The website’s goal was to rely on volunteer writers and unpaid student interns for its content. The Times already leans on students from CUNY’s J-school and New York University to fuel its Local sites in New York, yet it couldn’t ink a deal with Seton Hall University, which sits smack in the middle of what was the New Jersey Local’s South Orange beat.

In the end, “it couldn’t find the right partnership,” Times associate managing editor Jim Schachter told Business Insider. On top of that, the Jersey website didn’t have the resources to hire a full-time reporter, Schachter added.

Of course it didn’t have the resources to pay a reporter. The Local had no intentions of paying its other contributors or student interns, and an unpaid labor force means no overhead and no need to create sustainable revenue streams. It never anticipated the need to hire someone when the volunteer pool ran dry and the student interns never materialized.

One might also make the argument that The Times left too heavy an editorial imprint on the Jersey Local. The Old Gray Lady has an uptight, institutional voice that works on Park Avenue but not necessarily on South Orange Avenue. Conversely, BaristaNet’s tone is more engaging and, arguably, better suited to local and hyperlocal coverage.

But don’t blame the Jersey Local’s demise on competition from AOL’s Patch affiliate. According to Compete.com, the Jersey Local had 19,635 unique visitors in May, compared with 7,745 for Patch’s South Orange site.

Image courtesy of Flickr user Zooomabooma.

Let’s say a neighborhood restaurant offers a prix fixe meal for $10 (obviously not a restaurant in New York City). Two hypothetical dollars go towards the actual cost of ingredients and food preparation, while the remaining $8 is profit.

But what if that restaurant wants to draw more customers on a slow night during the week, or perhaps over a holiday weekend? It can partner with a hyperlocal news outlet, which will promote a discounted price and broker its sale to a limited number of readers (or viewers or listeners). For that, the hyperlocalist earns a modest fee.

There are three important thing to remember: The number of discounted meals must be limited; the discount should be valid only for a limited time or on a specific date; and customers must pay for the discounted meals in advance. Promoting the discount can happen through the usual channels (online, in print or on air), or through an emailing list or Twitter feed. The hyperlocal news outlet also can use an e-commerce service such as PayPal to facilitate sales.

In this example, the hyperlocalist must broker four times the number of discounted transactions to match the restaurant’s net profit at the regular retail price. But the beauty of this revenue model is that there is very little work involved. That means a nice piece of change for the hyperlocalist with only a smidgeon of effort.

For the Twin Cities (Minn) Daily Planet, revenues from deal brokering actually surpassed traditional advertising sales in the first two weeks of its “Deal of the Day” program, the Knight Citizen News Network reported last week. My former news site also had success with a brokering program, though the cost of printing coupons eventually erased most of the profit. (Unfortunately, my program launched before Facebook and Twitter gained mainstream momentum, before the iPhone was born, back in the Stone Age.)

The numbers above are for illustrative purposes only. In fact, the Nieman Journalism Lab and Knight Citizen News Network articles recommend bigger paydays for deal brokers, and brokering services can be sold to retail businesses other than restaurants. Now go make money!

Most importantly, I learned that traditional journalists have a lot to learn about new media, and new media has a lot to learn about traditional journalism. It’s easy to chalk up this mutual repugnance to arrogance, the “my medium is better than yours” argument. But it’s more complicated than that.

Traditional journalists (those in print and broadcast) turn up their noses at new media because they deem the quality of online content to be sub-par. They’re kinda right. Some producers of online content have displayed a lack of journalistic skill and editorial judgment, an inability to dig up original sources, and a sole purpose to drive page views and thus advertising rates. It’s embarrassing.

At the same time, those in new media brush off traditional journalists for their seemingly backwards view of how information should be presented and consumed. This too has some validity. Too many traditional news outlets have shown they don’t get concepts like transparency through linking, distribution and interaction through online social networks, and constructive discourse through moderated comments. It’s pathetic.

What traditional journalists and new-media producers share is panic over the news industry’s decaying orbit, as well as frustration in their hunt for a working business model.

My solution to this discord and angst is a swift smack to the back of the head. Responsible journalism is doable in the New World Order. Quality reporting has monetary value, but it will take creativity — not complacency or a reliance on the tired, failing advertising model — to cook up sustainable revenue. The public wants and deserves more than entertainment. Twitter and Facebook aren’t disposable time sucks.

Everyone’s got a dog in this race. The problem is, they don’t realize it’s the same damn dog scowling at its own reflection.

As always, the goal of this blog is to explore ways to make that dog stronger, smarter and faster without beating it into the ground or doping it with steroids. I’ll continue those explorations this week and throughout the summer.

Photo courtesy of Flickr user Daniel Hoherd.

For those who won’t be in attendance, here’s the abridged version of what I have to say: Entrepreneurial journalists must be entrepreneurs first, journalists second. Period.

That’s not to say that hyperlocalists and other journopreneurs must toss out the separation of church and state, that quality content and good reporting should fall victim to greed. I’m a big advocate for the “emotional value” of hyperlocal journalism. As I’ve written previously:

They [news consumers] assign value to it, they incorporate the information into their decision making, they allow it to influence their lives. That kind of quality far outweighs a website’s page views, a newspaper’s circulation or a broadcast outlet’s audience numbers.

But keeping a newsroom in that high gear requires money. Writers’ salaries must be paid. Equipment must be maintained. Transportation to and from news events must be covered. Even the most altruistic volunteer would find it difficult to run a news organization full time without an income to pay the rent or mortgage, or at least some compensation for expenses incurred.

The news business is just that — a business. It’s how big-box operations like AOL and Yahoo! News approach things, and hyperlocalists should do the same. Hyperlocalists are likely to leverage that emotional value to earn sponsors and donors, whereas the big boxes rely on volume to drive page views and advertising revenue.

But the goal — to generate profit or at least revenue — is the same, regardless of the news organization’s size or even its nonprofit status. (Yes, nonprofits need money too. They just reinvest it into their core missions, instead of distributing it to investors.)

It’s a bitter pill. Choke it down.

Photo courtesy of Flickr user Micah Taylor.

Recently I spoke with one hyperlocalist whom I’ll call Loretta for privacy’s sake. Loretta operates a popular hyperlocal website and was invited to join a regional network that shares advertising revenue with its members while collecting a cut for itself. Currently, the network doesn’t have an umbrella site for aggregating its members’ content or directing readers to its members’ respective websites.

Despite that, there are definite advantages to Loretta’s participation in the network. First, this particular network carries name recognition, though it’s still too fresh out of the box to call it a brand. (Details of its business practices couldn’t be confirmed, so it shall remain nameless in this post.) Next, it stretches across an entire region, which should help reel in large advertisers and their large ad budgets. Last, there’s the notion that all boats will rise with the revenue tide, even those that aren’t as seaworthy as the rest of the fleet.

There’s only one thing about this arrangement that makes me leery. Revenue sharing assumes revenue, and when talking about advertising, that usually means page views. This network is so brand-spanking new that it doesn’t yet have an audience of its own and is relying on Loretta’s site and others to drive traffic. In other words, it can’t deliver page views to Loretta’s site. Instead, Loretta’s site will deliver page views to the network, which will then take its cut of the ad revenue.

The way I see it, if Loretta and other hyperlocalists are doing all the work to drive traffic, then they should reap most of the revenue. The network still deserves a cut for using its name and relative size to leverage ad sales, but the fact is, those ad sales won’t happen without the hyperlocalists’ hard-earned page views.

I don’t know the numbers of Loretta’s revenue-sharing arrangement, but I hope she gets her fair share of the deal. Best of luck, Loretta!

Photo courtesy of Flickr user enggul.

I finally saw the concept come together last weekend, marching down the avenue like a big parade — the neighborhood’s 18th annual gay-pride parade, to be exact. Thousands of people lined the street to see politicians wave at the crowds, drag queens dance to Miley Cyrus, and leather mamas prowl on motorcycles. It was a good gig.

My original game plan for the parade was to photograph the hell out of it, with the intent of building a marketable stockpile for other publications to use (for a fee, of course). But I also took note of what spectators were doing on the sidelines. Some of them were noshing on breakfast, many others were on their cell phones, calling or texting friends for a post-parade lunch. Still others were buying souvenir flags and buttons.

That’s when I had my epiphany. Everything these spectators did represented revenue-raising opportunities for a hyperlocal news outlet. Hungry crowds would have spelled jackpot for local restaurants and the hyperlocalist selling discounted meal tickets in advance. (For more information on this revenue-sharing stream, check out this brilliant post from the Nieman Journalism Lab. It’s a goody.) Advanced souvenir sales using the same method could have added to the profits.

A hyperlocal news outfit also could have hosted a pre- or post-parade event, driving revenue either through a cover charge, advanced ticket sales or event-planning services. Of course, selling ads to parade participants, retailers along the parade route, and even those marching politicians up for re-election would have been another juicy revenue stream.

Admittedly, these ideas have nothing to do with how editorial content is created. Instead, they’re about diversifying the money flow without guessing when or how that flow happens. And if an editorial calendar can help a hyperlocalist do that, then why not use it.

Photo courtesy of Flickr user ennuipoet.

First, the Federal Trade Commission (FTC) unleashed its draft policy recommendation “to support the reinvention of journalism.” While the document suggests the IRS recognize novel small-business structures for nonprofit tax breaks, it also pitches ideas that would keep small media outlets from doing their thang.

A tax on large broadcasters would relieve them of obligations to provide “public-interest programming,” like the kind a hyperlocalist would produce. A 2-percent tax on advertising sales would add a layer of meshugas to a small content producer’s books, as well as add an extra charge on local advertisers. Increased postal subsidies and a tax on accessing the mobile web would favor large print publications over hyperlocal newspapers and websites.

These proposed taxes would go towards establishing a national local-news fund, doling out university grants for investigative journalism, and tax breaks for hiring salaried journalists. Personally, I oppose government money in the media piggybank, and while a tax credit for hiring journalists is nice, hyperlocalists generally rely on freelance or volunteer contributors. The FTC document doesn’t do enough for small media.

And then there’s what Apple CEO Steve Jobs had to say at The Wall Street Journal’s D8 conference. The appointed messiah of media told conference participants, “I don’t want to see us descend to a nation of bloggers myself. I think we need editorial more than ever right now,” PaidContent.org reported Wednesday.

One might quip that Jobs’ disdain for blogs stems from the Gizmodo iPhone fiasco, but I think there’s another reason. While bloggers (and the online hyperlocalists who have that title hanging over their heads) create oodles of content, they probably don’t have the financial resources or tech savvy to distribute that content through an iPhone or iPad app. That’s money out of Jobs’ pocket and control out of his hands.

According to PaidContent, Jobs followed his swipe at bloggers with: “Anything that we can do to help The New York Times, The Washington Post and other news-gathering organizations find new ways of expression so they can afford to get paid so they can keep their news gathering and editorial operations intact, I’m all for it.”

Sadly, Jobs doesn’t recognize the original news gathering that hyperlocalists and bloggers do, and how some of those large media outlets base their “reporting” on a smaller outlet’s original stories. Again, I suspect this elitism stems from the lost potential of app sales: The iTunes store sells iPhone apps for The Times and The Post, as well as a Times app for the iPad.

Where is the love for hyperlocalists? When did innovation and imagination (the kind that Apple touts in its advertising) fall victim to monopolies? Instead of encouraging new voices and new investment, the FTC stifled them to preserve the industry’s collapsing status quo. And instead of lending Apple’s devices to new experiences with content, Jobs whittled them down to technological troughs for whatever iTunes’ gatekeepers deem worthy of consumption.

My advice to the FTC and Jobs: Beware of false profits.

Images courtesy of Flickr users 1Happysnapper (photography) and reelsinmotion.