ZING! It hurt like hell, but it was the truth. When news audiences receive free content, they no longer count as customers. They’re not dropping coin to keep the lights on or the servers running. They don’t pay for writers’ salaries. And even if they contribute “emotional” value to a news outlet through reader comments, that value doesn’t do jack for a business if it doesn’t translate into dollars and cents.

In my previous attempt at hyperlocal news, I placed the audience’s satisfaction ahead of business development. It was a colossal mistake. Readers loved my frank restaurant reviews as much as restaurant owners hated them, and that meant an enormous loss of potential advertising revenue from the neighborhood’s largest industry.

This time, I hope to develop my audience and customer base simultaneously without jeopardizing the quality of my publication’s content. Here’s how:

Extend services unrelated to my publication to residents and the business community. One of the revenue streams I plan to pursue is group-discount brokering (the Groupon model). To make it work, I need a mailing list of prospective shoppers (an audience) and business customers willing to offer these shoppers a discount. To build this mailing list, I plan to attend local meet-ups to learn what residents want or need from their community, and to gently introduce the idea of group discounts. Call it market research.

That information becomes leverage when approaching business customers for group discounts. It also brings together an otherwise non-paying audience with paying customers, without selling out a news outlet’s integrity.

Build my publication’s audience slooooooowly. Since setting up a beta site earlier this month, I’ve posted only two stories. But I’ve used Twitter to publicize my organization as a news source, mostly by retweeting neighborhood-specific stories from larger news outlets and by posting photos. So far, I have 13 followers, and that’s fine with me.

This modest following allows me to test different things, from writing style and voice, to website design. The publication’s slow, deliberate development also gives me the opportunity to educate customers (in this case, advertisers) on how my business operates, not as a quick hustle but as the next evolutionary step in advertising.

Those are my first two steps in building the business, though I should keep a few spare ideas in my pocket should neither of these approaches work.

Photo courtesy of Flickr user chillhiro.

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!