Patch is the news industry's problem, not its solution

Jack Shafer’s right: hyperlocal efforts are “a complete waste of time and resources” as he suggested this week in Slate.

Shafer missed one crucial qualifier in his hypothesis, though. Hyperlocal’s a waste of time and money for national corporations. What’s happening in the news industry today is not the Internet destroying the news industry by spreading free content. It’s the Internet destroying the national news chain by eliminating of the traditional economies of scale for the news industry.

Shafer bases his arguments on continued criticisms of AOL’s network. Hey, I teed off on Patch nearly a year ago, so I share the skepticism. But Shafer errs in not even mentioning locally-owned and operated hyperlocal news sites, much less contrasting them with the top-down, corporate-driven AOL/Patch model for hyperlocal coverage.

In Shafer’s piece, the alternative to Patch are sites such as Facebook, social networks where residents in a community can get what Shafer calls “social news” about their “interests,” as opposed to “hyperlocal news”: “the starving-artists exhibition at the farmer’s market, increasing parking-meter rates, the city budget, local real estate prices.”

But there’s an alternative to corporate news chains and corporate social networks: homegrown news communities run by local journalists. That’s a model we’re encouraging by training dozens of journalist/entrepreneurs in our annual KDMC News Entrepreneur Boot Camps. Freed from the burden of paying for a national management team and Wall Street expectations, local journalists can make hyperlocal pay in ways that big companies such as AOL simply can’t.

National news chains arose because the barriers of entry to printing, promoting and distributing a newspaper were so high. You needed printing presses, trucks, a telemarketing team, and an advertising and promotions budget. Oh yeah, you needed content, too, which meant hiring reporters and paying syndication fees for state, national and international news and features.

Corporations brought a load of capital to the table, and could leverage economies of scale in the purchase of newsprint, equipment and syndication deals. The could employ national sales staffs to sell ads across communities to regional and national chain retailers. And they could centralize telemarketing, IT support and even newspaper (and later website) design.

Over time, more and more locally owned papers sold out to the chains, as the chains amassed vast fortunes to buy out family-owned papers where the next generation decided to cash in rather than fight on alone in a consolidating industry.

But in the late 1990s, the Internet blew all those advantages away. One journalist could publish to an entire community, or the entire world, without having to pay for presses, trucks or newsprint. One journalist could link to all the state, national and international news and features his or her readers wanted, without having to pay for expensive syndication rights. One journalist could leverage social networks (even before Facebook and Twitter) to publicize his or her work, without having to pay for advertising or a promotion team. Open source and online instant publishing solutions allowed that individual journalist to create and manage interactive news without having to pay for huge IT and design teams. And national ad networks such as Google’s AdSense gave independent publishers who were savvy enough to make that system work access to lucrative national ad buys.

So corporate news chains have lost all the economies of scale that allowed them to pay for ever-more-expensive multiple layers of management, multi-million-dollar executive bonuses and Wall Street dividends and profit growth.

Is it any wonder then, why corporate news is struggling? isn’t the solution to the industry’s problems. It’s the manifestation of the industry’s problem – a top-down approach to an industry that now economically favors the bottom-up.

If the FCC wants to save local journalism, it ought to be pushing the Department of Justice and the Commerce Department to encourage news chains to break up and sell their publications to local owners.

And online journalists who want to stay in the business for the long haul ought to say no to Patch’s temporary lifeline of a few months’ paychecks and instead develop the entrepreneurial and publishing skills necessary to launch, grow and sustain an online news community.

We’ll talk more about those skills over the next weeks.

About Robert Niles

Robert Niles is the former editor of OJR, and no longer associated with the site. You may find him now at


  1. says:

    As the publisher of a local geo-targed news and entertainment website in New York I agree that a mass-market approach does not fit for the long haul. Sure it seems great now, a few extra bucks to a journalist in a tight economy but eventually, the big budgets shrink as aggregated content permeates the scene on Patch. In addition to Patch-esque sites, the concept of Internet advertisings “value” needs to change. The perception to the advertiser is that online advertising should be cheap, $100 or less, since there is no “production cost” or glossy cover. However, with a global reach the ad online is so much more valuable and the cost for the ad should reflect that, and it does not right now. Printed publications are audited to prove how many copies were made and that those copies were distributed. Some take it further and project sales. Though the advertiser will never know for certain how many people saw their ad or acted upon the ad in question. Websites are painfully scrutinized by the advertiser – click-through rates, impressions, and bounce rates are judged unfairly and often cause ad sales to slump to levels that do not support writers and a technical staff. How does it all work out? I suppose only time will tell.

  2. says:

    Hey Robert, my standard nut graf response. Patch is the media equivalent of Enron. It actually blows my mind how wrong the entire concept to execution is to the extent there must be other elements at work in this dynamic. I will be very curious to see how the shell game ends, whether it simply is stupidity or something more criminally/insanely liable. Either way, about $750 million down the drain later early 2012 will be pretty funny to see.

  3. says:

    THANK YOU – this is what those of us who are indeed succeeding as independent, authentically local online news publishers have been saying for a looong time. Me especially. Corporations, get the hell out, trying to squeeze a few bucks by hounding microbusinesses for cheap ads appearing on your little-viewed sites is UNCONSCIONABLE … go find some other way to save your stockholder-beholden rumps. – Tracy @ W. Seattle Blog

  4. I couldn’t agree with you more. Local journalism neither requires the economies of scale anymore and, importantly, it doesn’t scale in the way AOL is attempting.

    The local newspapers of the previous century also didn’t scale. What occurred was that local entrepreneurs created one or a handful of papers. Then Gannett, Newhouse and others came and wrapped them into big, national networks. The same thing might happen with local sites, but that could be well in the future.

    I wrote about this for Nieman Lab shortly after the AOL/HuffPo acquisition:

  5. Perry Gaskill says:

    Last week, Nicholas Carlson over at BusinessInsider posted some leaked Patch site traffic reports for Southern California, and if you add population numbers to the data and compare the 70 or so communities involved, it starts to paint an interesting picture.

    According to an NAA study done between 2004 and 2007, a typical newspaper will reach around 32 percent of online readers in a given area in a given month. Each reader (UV) will visit about seven or eight times per month and view slightly more than five pages, on average, each visit.

    Patch’s numbers show a different pattern. In general, the reach count is good. A typical Patch site in a given month has UV counts equal to about 41 percent of the local population. What’s not so good is that a typical reader visits a Patch site less than two times per month and views, on average, fewer than two pages. And those last numbers don’t seem to vary much from one Patch site to another in the Southern California sample. Nor do those numbers seem to vary much depending on whether the site has been around for a year or only a few months. The relative size of the community also seems to not be much of a factor.

    What this seems to indicate is that although Patch has been able to generate awareness of itself within each site’s local community, it hasn’t been able to generate much engagement.

  6. Shamelessly cross posting from the follow up as I think it’s relevant here, too.

    I just don’t know what to say. Frankly I’m speechless at this point. This isn’t a slight against Shafer so much as a general comment on the state of debate.

    Case: Not only is the conversation about what local media needs to be far off base (this article and its comments are pretty consistent with the overall conversation, the FCC report being as guilty as any), what’s worst is that it seems we can’t tell the difference between the new McClatchy of Local (that’s Patch) and the new dawn of the weekly local newspaper (that’s many of the “hyberlocal” sites talked about.)

    It’s a fairly 1:1 conversion of print-to-web models.

    If we can’t even see through that smoke screen, how far are we from the real conversations about what needs to happen?

    Hint: Efficiency, and death of the mega-publications blocking the sunlight from the forest floor.

  7. You said: “But there’s an alternative to corporate news chains and corporate social networks: homegrown news communities run by local journalists.”

    I respectfully disagree on a specific point: There is no alternative to corporate news chains if one is concerned about national and international news.

    Arguably, readers are concerned about both, what happened at the local city council and school board meetings and what happened in Washington D.C. and U.S. international relations.

    Hyperlocal has its place. The monetization of the hyperlocal interest appears to be the crux of the argument over AOL’s approach via Patch. Since no one has articulated AOL’s specific business model, outside of conjecture and innuendo, it’s premature to conclude at this juncture the top-down approach won’t work.

    The business of media has long escaped journalists who have been the tools in the business model’s toolkit. Today, the smart money is on entrepreneur-minded journalists. But when we put together our business plans, we better remain cognizant of the corporate competitor whose business model we’ve yet to figure out … even as we seek to figure out our own.

    The bottom line is journalists are new to this business game, despite our storytelling skills. And I might remind everyone that it was journalists laughing at bloggers early on and now crying foul on the success of the Huffington Post … while ignoring the vast landscape filled with HuffPo imitators, many of whom are doing quite well amid massive corporate media layoffs impacting the elite-minded journalists who scoff at the new business models that have lowered barriers to entry.

    It’s a new frontier with many opportunities for both the small guy and the big guy. I wouldn’t count anyone out at this point. It’s way too early.

  8. says:

    You are so right. And if you want a case study, check out the news site I founded with two partners in Berkeley CA nearly two years ago:

  9. says:

    Yay to all of us. Success will follow the passion we put into our sites, not the scale and WalMartization of McJournalism.

    Keep the faith.