Recession? Local news sites are hanging tough

Mary Morgan couldn’t have picked a more difficult time (the middle of a recession) and place (Michigan and double-digit unemployment) to start a new community Web site. So why is she smiling?

It’s because Ann Arbor Chronicle is coming up on its six-month anniversary, it’s meeting financial targets, and Morgan and husband/business partner Dave Askins are able to pay household bills out of revenue from the site. “When I was a business reporter, I used to laugh at firms that marked each anniversary,” said Morgan, who acts as publisher. “Now I know how they feel.”

With a deep and potentially long recession set in, I wanted to circle back with Morgan and some of the other for-profit news site owners I talked with last fall, and see how their mostly new operations were faring. The question has taken on more urgency in recent weeks. As economic conditions have worsened and newspapers have shown accelerating signs of stress, the health of these online-only news sources seems suddenly more critical.

The anecdotal answer from my small sample group is this: So far they’re hanging tough. Business hasn’t fallen much, if at all, and most are instituting expansion plans. If they’re a barometer, community news sites have some resiliency to them.

“We have seen some impact from the economy in terms of advertisers cutting spending or even going out of business,” said Jonathan Weber, who’s been running New West since 2005. “On the other hand, this kind of dislocation forces people to revisit how they are spending money, and rethink their marketing strategies overall, and that is actually very good for us.”

The group also answers affirmatively another fundamental question for what seems to be a growing number of people thinking about starting up a community news sites: Can you do this and make a living?

Local news sites come in all sizes and shapes. Some are non-profits. Some aren’t trying to live off the operation. But for those who are, some survivable wages are being earned.

Tracy Record and Patrick Sand, another husband/wife team who operate West Seattle Blog, are getting revenue in the high five figures. Debbie Galant, co-owner of Baristanet, earned more from the site than she did from her free-lance writing business last year. And Bob Gough, who runs Quincy News, pockets $1,000 a week in wages from his startup that serves an Illinois community of only 40,000.

Gough, fired from his TV news job in the fall of 2007, may be Exhibit A for the potential of independent news sites. A one-man band, Gough has mined 40 Quincy advertisers, writes about the heart of civic and political life in town and is now hoping to expand by hiring additional staff. His two original investors are also thinking growth, looking at the possibility of replicating the Quincy News model elsewhere.

Galant, at Baristanet, has even bigger expansion plans. The Montclair, N.J., site, established in 2004, will soon partner with another community site, Montclairkids, rebranding it as Baristakids. The idea, said Galant, is to expand Baristanet’s network in a way that expands reach and revenue for both partners.

With the help of new-media expert Jeff Jarvis, she also plans an incubator model offering turnkey services to news site aspirants. Baristanet’s servers, basic business model and consultation services would be available to new players, with Galant and co-owner Liz George taking a share of revenue.

Many of the news-site operators I spoke with see indications that local advertisers, while hammered by the recession, are still acclimating themselves to the possibilities of low-cost pitches on their sites. “In general, I think the online opportunity at the non-metro local level remains pretty untapped,” said Weber.

But many are also diversifying, as Weber has done for years with his New West conferences and indoor billboard advertising business. Nancy Peckenham, who runs the New York Cornwall-on-Hudson site, is heading in a different direction. She’s now able to receive contributions through a 501(c)3 sponsor and will start a fund drive this spring.

I also asked many of these new-media journalists about the burnout factor in a business that, at this juncture, is famously all-work, little pay.

Tracy Record, the ubiquitous poster at West Seattle Blog, and emblematic of the grit you see in this world, had this response: “You have to look at it like any small business. You kill yourself trying to get it off the ground. Stop whining about that. We have been dismissed by people saying, ‘You’re going to burn out.’ No, we’re not.”

Here’s a closer looking at some of the people who are making a go in the for-profit sector:

West Seattle Blog (Seattle)
Tracy Record and Patrick Sands don’t try to cover all of Seattle, much less all of greater Seattle. Their target is the 58,000 people who live in the West Seattle area. And they never seem to stop.

Patrick handles ad sales, Tracy is the incessant, 24/7 poster, and they use their knowledge of and passion for West Seattle to do everything from watchdog coverage to bake sales. Visiting fellow Jane Stevens at the University of Missouri did a great case study on their operation.

Here’s some of Tracy’s e-mail response to my question of how things are going in their three-year-old operation:

“I am adamant about the ‘hyper-local’ space being a place for local independents. I am sick to death of these national VC-funded operations (Patch, American Towns, whoever else) trying to swoop in and say, ‘Hey! We’re your plug-and-play hyperlocal news!’ No, you are NOT. Nor is a voiceless aggregator. Let’s not let this precious new type of coverage be poisoned the way the ‘big corporate media’ world evolved from local, independently owned tv/newspapers/whatever … It may happen eventually but don’t smother this industry from birth!

“Every community has different needs, and must be served by someone who tailors the service based on what they learn in interaction with their community. I WISH that the people throwing money around would share some with those of us who are bootstrapping, rather than yet ANOTHER aggregator, or sharing site, or whatever. THIS is where the action is happening and the future is being paved. But I can’t get a Whatever Grant to so much as give me the time of day. Just not considered sexy enough to be busting your butt uncovering and/or sharing information and news in real-time re: your community.

“Back to the community … it really is all about community. Someone wrote that out there in the “future of media” writing sphere this week. We really aren’t a news site so much as a community site. Some of what the community is interested in is the news we dig up or follow up on etc. Some is news they share. Some is what they post in the forum. Some is what we are all part of in our parallel Twitter and Facebook streams (and who KNOWS who’s next). Even our ads are perceived as more a community service … letting people know about businesses and services out there. And much of what we do community-wise never hits the site … half my day is spent answering e-mails, either resource questions or checking out rumors that don’t pan out but at least I write back ‘here’s what I found out.'”

New West (Missoula, Mont.)
Jonathan Weber’s vision of a Western regional Web site that anchors a highly entrepreneurial business remains a new-media icon. With a staff of nine, NewWest reports on issues that unite the West – the environment, wildlife, development, politics, water and the like.

But Weber has leveraged that core by sponsoring a series of conferences that focus on these issues. One next week is called “Designing the New West, Architecture and Landscape in the Mountain West,” and is sold out. He also layers on an editorial services arm, a display advertising business and an events-calendar product.

Web is a fierce advocate of the for-profit model for independent news sites, even to call foundation-funded models “unfair” competition. In a recent blog, he said the free market was the best guarantor of success for his company. “Here at NewWest.Net, we’re getting by with online advertising, a solid conference business, a few complimentary activities like online event calendars, and relentless effort to do a lot with a little,” he wrote… “And the happy fact is that the last three months have been our best ever on the business side, despite the economy and the general ad-market meltdown.”

Here’s how Weber responded when I asked him about business conditions:

“We have seen good growth in online ad sales over the past 4-5 months. Despite what the conventional wisdom in the business says about falling CPMs, we are in fact getting very healthy CPMs for our ads. I think we have done a much better job recently in offering good ad tools in areas like flash and video advertising, and generally positioning ourselves as the next-generation media partner for local businesses. Longevity also helps — we have been around four years now, lots of online publications come and go but I think people are now persuaded that we are here for the long run.

“We have seen some impact from the economy in terms of advertisers cutting spending or even going out of business. On the other hand, this kind of dislocation forces people to revisit how they are spending money, and rethink their marketing strategies overall, and that is actually very good for us. On the local level, most advertisers are not very far along in the transition to online, and I think the economic dislocations are actually helping to push that along. Some categories, notably real estate-related, are obviously very weak, but other sectors are more than picking up the slack.

“In general, I think the online opportunity at the non-metro local level remains pretty untapped. That’s why I think it’s way too early to give up on the idea that local journalism can be a business.”

Ann Arbor Chronicle (Ann Arbor, Mich.)
When Mary Morgan wrote me last fall about the new site that she and her husband had established in Ann Arbor, Mich., this is how she described its mission: “Ultra-local events within easy arm’s reach – whether it’s a pickup softball game, a client meeting in a coffee shop, a spontaneous political caucus, a school play – that’s the lens through which The Chronicle sees topics like entertainment, economic development, government, education.”

So far it’s worked. Here’s the update Morgan e-mailed me earlier this week:

“We’re coming up on our six-month anniversary (when I was a business reporter, I used to laugh at firms that marked each anniversary…now I know how they feel!) and we’re hitting our financial goals, which were admittedly modest. Without getting too specific, we’re now in a position to pay our household bills (mortgage, health insurance, etc.) with revenue from The Ann Arbor Chronicle.

“Aside from the initial investment in equipment (primarily laptops and digital cameras) and site design, we’ve kept our overhead costs fairly low. Our next goal will be to grow revenue to the point of being able to hire freelancers or even (gasp) part-time or full-time staff.

“Given the economy, especially in Michigan, I’m pleased with how things are going. Interesting to me is the number of non-business advertisers we’ve signed up: two local school systems, a school within the University of Michigan, the public library and some local government agencies, in addition to the retailers, banks and other business advertising I’d anticipated.

“Our readership is growing as well, which is crucial to our advertising, obviously. We had nearly 20,000 readers (measured by unique IPs) visit the site in January. We started out in our first month (September 2008) with about 4,000.

Quincy News (Quincy, Ill.)
Quincy hardly seemed like the right place to launch an independent news startup. It already had an established newspaper and, despite having just 40,000 residents, two local TV stations.

But then, Bob Gough had just lost his TV news job in the fall of 2007, and was firmly rooted in the western Illinois community. With the help of two investors, he launched Quincy News in 2008 and has quickly signed up enough advertisers to pay his $1,000-a-week salary, his $350-a-month rent and a few other operational costs.

But it’s still a tough go. “We’ve got an Internet connection and a cell phone but no land line and no fax,” said Gough. “And that’s hard because the city refuses to e-mail me its press releases.” Gough contends that’s part a city government tilt toward the Quincy Herald-Whig, which he says derives from the local daily’s “glowing, fawning coverage” of City Hall.

Gough figures his audience – roughly 9,000 unique monthly visitors – is already not much less than half the numbers of the Herald-Whig. But his dream of adding a staffer, or a part-timer, is still on hold. “I’m making enough to pay the bills,” he said. “But not enough to add a second person.”

Baristanet (Montclair, N.J.)
Montclair’s proximity to Broadway, just 15 miles away, may account for the sass that Debbie Galant and Liz George have baked into Baristanet.

“It’s important to have a personality-driven site,” said Galant, who was a novelist and free-lance writer before adding Web-site owner to her credentials. “It’s the news, yes, but it’s not just the steak that makes you successful. It’s also the sizzle.” Baristanet has almost 85,000 monthly unique visitors.

Galant is bullish about the upcoming addition of MontclairKids to the site. It’s Baristanet’s first partnership, and once live the material will be branded as Baristakids. Owners of the Montclair kids site will get a revenue share, said Galant.

Next up will be the Baristanet Incubator which will leverage the site’s infrastructure and expertise to help launch new Web site operators. Baristanet might charge an up-front fee of $5,000 and then take 25 percent of revenue and equity from the new business, Galant said.

“I think with these projects we are starting to get more involved in the idea of networks and networking,” she said.

Galant siad business tailed off a bit in January but had been running strong until that point. She said Baristanet’s nearly five years of experience in Montclair are beginning to pay dividends.

“This was a really a hard sell for us at the beginning,” she said. “What’s happening now, though, which is really fabulous for us, is that our readers and advertisers sell us. A new business opens and people ask them, ‘Have you been on Baristanet?'”

Some other notes from local news sites:

Cornwall-on-Hudson (Nancy Peckenham)
“Honestly, I am not seeing much of a recession impact on my advertisers. I have been running the site since mid-2006 and most of my advertisers are local businesses that are supportive of the site and appreciate being able to target the local community.

“The daily newspaper here serves three counties and a newspaper ad is a lot more costly than an ad on my site, which can be had for as little as $50 a month (up to $125). As a one-person band, I actually spend a very small percentage of my time actively selling ads. Most advertisers come to me because they see the value. I do have expansion plans, however, and am in the process of hiring a part-time content writer so that I can concentrate on the business side. I am optimistic about recruiting new advertisers because I do believe that in this climate small is beautiful and people are recognizing more than ever the importance of community to support each other.

“My readership has not dropped off, either. In 2008 I had 36,000 unique visitors and 140,000 visits — in a town of 13,000.”

Dagger Press (Steve James, Baltimore)
“Traffic is up slightly over the past six months, around 15 percent. Now that the Maryland General Assembly is in session, we tend to have more articles on a daily basis which will help as well.

“We’ve lost a few writers but have gained a few more, so it’s almost evened out. As for revenues, we still haven’t been able to carry out our advertising plans other than Google Adwords. We have made our advertising kit and determined preliminary prices, but haven’t taken the next step to start soliciting potential advertisers. That should
be coming in the near future.”

Black White Red (Steve Crozier, Dallas)
“Audience continues to grow at a rapid pace, roughly doubling each year. Our revenue has averaged a 10 percent increase month-over-month for the last 13 months.
We’d like to do better, and we can as our critical mass of readers grows. But we’re being careful not to sacrifice quality for growth.

“The recession hasn’t hit us too badly here in Dallas. However, the last 30 days has thrown some hints that things may slow down somewhat. Bucking the trend, our CPM remains very high: selling targeted local advertising to local readers is the answer.”

Note: The Knight Digital Media Center is hosting an entrepreneurial journalism workshop in May at the USC Annenberg School Journalism. More than 100 people have applied for the 12 slots.