The approximately one million people who live in the 13 communities in suburban Washington, D.C., Northwest Chicago and the Bay Area that Backfence tried, but failed, to serve spend about $13 billion annually shopping and dining out. That’s right – $13 billion. To reach them, local online advertisers spend $28 million, based on Borrell’s 2007 numbers. Of course, established Internet sites in those communities – particularly ones run by well-established metro and smaller newspapers – gobble up most of that $28 million. But what about the ad revenue crumbs that fall from the table?
Backfence shrewdly positioned itself amid all that affluence, but didn’t capitalize on it. But couldn’t a network of grassroots sites that actually connected with their communities pick up a small fraction of that $28 million by year two or three? How about 6 percent? That would be a little more than $1.6 million. Continuing my back-of-the-envelope math, that splits down to about $750,000 for Backfence’s seven communities in the Maryland and Northern Virginia suburbs of Washington, and $425,000 for the three communities in Northwest Chicago and the same for the three in the Bay Area.
By my estimates, the three clusters of sites could break even and maybe squeeze out a modest profit – about $100,000 – from $1.6 million ad revenue (display and paid search).
Here are the estimated expense numbers for each cluster:
- Publisher: $60,000
- Content manager, $50,000
- Two sales reps: $40,000 each (in base salary and commissions that would go higher with bonuses based on sales that top goals)
- Tech manager: $20,000 share of total cost
- Staff fringes and employer taxes: $40,000
- Citizen contributors: $110,000 or $250,000 for $1,000 monthly stipends, with the higher amount for the seven-community metro Washington cluster
- Office rent and expenses: Up to $25,000 (depending on cluster size)
- Computers: $10,000
- Other (including promotion, phones): Up to $50,000 (depending on cluster size)
All this, multiplied by three clusters, adds up to slightly less than $1.5 million. Green-eye-shade folks may argue with some of my cost estimates. I agree a content manager – a good one – is worth more than $50,000. But if the compensation included stock options, wouldn’t there be a lot of talented Internet editors – ones with a passion for building grassroots sites – who would be eager to take the plunge?
Success with even a modest budget would hinge on whether the sites succeeded in connecting with their communities and producing content that users found generally interesting, sometimes significant and occasionally indispensable.
It would also depend on a “feet-meet-the-street” advertising staff that could sell strong visitor/page-view numbers to local and regional advertisers who, for good reason, have been resistant to buying display space on grassroots sites.
The Backfence strategy – expecting its communities to deliver compelling content without any inspiration, mentoring or compensation – was doomed to fail. The result was stories and commentaries that rarely made anyone sit up and take notice. When Backfence announced its impending demise on its homepages on June 29, users, the few there were, paid almost no notice. Boring content meant weak traffic, and the most aggressive ad staff can’t sell that.
We shouldn’t beat up on Backfence too hard. It was doing what most other hyperlocal sites were doing, and continuing to do, which is why so many media opinion makers have turned negative on the prospects for hyperlocal
To succeed, grassroots sites need above all experienced and passionate editors collaborating with experienced and passionate citizens. Experienced citizens aren’t just soapbox ranters. Sometimes they become activists on issues – not as one-off loners but as part of a network of deliberative doers. Working with them, editors can help pinpoint the sometimes elusive themes that shape a community’s identity. Experienced citizens know why one neighborhood school is succeeding and another is failing or why one church or synagogue in particular has a thriving congregation, but mentoring editors can help them to be better communicators.
Backfence expected its contributors to work for nothing. Its founders piously maintained that financial compensation was the last thing contributors wanted or expected. Many people donate their time to their church or congregation, neighborhood school or library and charitable organizations. But why should they work free so a for-profit company can justify its business model and rake in more money?
I propose that regular citizen contributors – working, say, 40 or 50 hours a month – be paid a $1,000 monthly stipend. That comes to $20 to $25 an hour – not a lot, but not an insulting amount, either. If you’re a retiree, a stay-at-home mom (or dad) or somebody looking to close a household budget gap, $1,000 a month for a few hours here, a few hours there, may seem like a pretty good deal.
If Adam Smith and Ricardo were even half right, compensation is also likely to produce higher value content, especially if experienced, passionate editors and experienced, passionate contributors are working in sync finding out what makes their community tick, what makes it proud but also sometimes angry about various pieces of the hometown mosaic.
In his otherwise unpersuasive apologia, Backfence co-founder Mark Potts made the excellent suggestion that entrepreneurial grassroots sites try to hook up with major media companies. Newspapers, struggling to find their place in the Web world, are plunging into hyperlocal, but the results so far are journalistic Velveeta. The missing flavor – the tang – will not be delivered by the creators of Scripps’ YourHub, Tribune’s TribLocal or even the Washington Post’s snazzy new LoudounExtra, but by journalistic entrepreneurs who have the right instinct for connecting with the inner being of communities.
On July 17, Pegasus News, the hyperlocal that covers more than 120 neighborhoods in Dallas/Fort Worth with a sassy brand of “pro-am” user-tailored content, announced it had been acquired by the Seattle-based Fisher Communications, which owns 19 TV and eight radio stations in the Pacific Northwest. With his hands-on editorial strategy, Pegasus founder Mike Orren is 180-degrees opposite what Potts and his let-the-community-decide team stood for – a lesson, perhaps, for would-be hyperlocal entrepreneurs.
On Aug. 7-8, “Journalism That Matters: The DC Sessions,” will gather at George Washington University. High on the agenda will be this imperative: “Define the citizen/media connection. How will the public be involved?”
The Washington conference has attracted more than a hundred participants from academia, corporate boardrooms and, most importantly, the trenches of hyperlocal. I hope it will put aside the millennial rhetoric that thrust grassroots journalism in the media spotlight, but didn’t provide any follow-up support and counsel that proved useful. Instead, I hope the conference will help guide journalists – pro and am – on to a hyperlocal path that is realistic but creative, that balances bottom lines with soaring ambitions.