Wanted: Experienced, passionate citizens for hyperlocal sites: Earn $$$ from your home!

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.

Big media vs. the grassroots: A status report

The extended drama surrounding Rupert Murdoch’s unsolicited $5 billion bid to take over family-owned Dow Jones media empire, along with the pending $8.2 billion sale of the Tribune Co. has brought renewed attention to the longstanding debate over media consolidation. While these two high-profile transactions have grabbed the spotlight, they are mere flashpoints in a much larger battle between free-market advocates and grass-roots media advocates over the role of government in ensuring equal access to the marketplace of ideas.

At this writing, it appears as if the Bancroft family, which owns controlling shares of stock in the Dow Jones conglomerate, may be close to directing its board to negotiate the price of a final sale. Meanwhile, mogul Sam Zell has been buttonholing members of Congress in his effort to get waivers from the Federal Communications Commission that would permit the ownership of newspaper and television properties within the same market.

Both pending sales have met with criticism from activists and observers concerned about media consolidation. The editors of the Columbia Journalism Review spoke for many in the industry when they likened Murdoch to a scorpion, and pleaded, “We hope [the Bancrofts] find a way to keep this American treasure away from Rupert Murdoch, who will smile even as he raises the stinger.” The United Church of Christ and a coalition of civil rights and other groups have petitioned the FCC to stop Zell from obtaining the waivers that would make the Tribune bid possible.

While these issues have grabbed the headlines, the battle lines over media consolidation spill into other regulatory skirmishes over such issues as Internet radio, cross-ownership rules and the Net Neutrality debate. The debate has further intensified with advent of digital television in 2009, because the FCC will be auctioning off the portions of the broadcast spectrum currently used for analog television.

OJR spoke with two experts on media policy who differ strongly on consolidation and a host of other issues.

Mark Fratrick is an economist who has worked on broadcast regulation issues at the Federal Trade Commission and the National Association of Broadcasters. He is currently vice-president of BIA Financial Networks, a Virginia-based consulting firm. Craig Aaron is the press liaison or Freepress.net, a non-partisan think tank on media issues. Here’s what they had to say about the Dow Jones sale and several other issues related to preserving competition in the media marketplace. Their contrasting views highlight the ways in which technological change is creating new competitive realities and reshaping old debates about the tension between the media’s public service responsibilities and the economic imperatives of capitalist enterprises.

Issue: Dow Jones sale

Fratrik thinks Murdoch won’t sacrifice the Wall Street Journal on the altar of either profit or his brand of politics because to do so would be bad business practice. “I don’t think that Mr. Murdoch would seriously alter the quality and integrity of the Wall Street Journal. That integrity, that quality, that brand name is what the Wall Street Journal is. And Mr. Murdoch buys assets in order to improve the value of those assets and the value of his holding company. I find it hard to believe he would put that in serious jeopardy by diminishing the quality of such a thing.”

Issue: Net Neutrality

FreePress.net is one of the key players in the Save the Internet coalition, proponents of “net neutrality.” Net neutrality advocates say broadband providers are looking for ways to force consumers to pay extra fees for high-speed internet access and other premium services. They want Internet access to be treated as a public resource, much as telephony was 100 years ago. In the early decades of the 20th century, industry leaders and public policy makers made universal telephone service a priority, leading to a chain of business moves and legal decisions that culminated in the Communications Act of 1934.

In 2006, the Communications Opportunity, Promotion, and Enhancement (COPE) Act (HR 5252), a bill that provided for some net neutrality protections passed the House but died in the Senate.

Aaron worries that without FCC action, consumers could find their internet access restricted in the same way that cell phones are limited now. “If you look at your cell phone plan, there are a lot of restrictions in place. Network neutrality is not allowed. They [wireless access providers] can interfere with who gets to you and what kind of information you can get. So we’re looking to ensure network neutrality.”

That argument doesn’t sit well with experts such as Fratrik, who describes himself as “very free market-oriented.” In fact, Fratrik exclained, “Net neutrality makes my hair hurt!” Fratrik echoes the industry-led “Hands Off the Internet” coalition, which argues that “Net Neutrality” is “expensive and unnecessary. Net neutrality opponents say that current laws already provide adequate protections for consumers. Further, they say, the changes that Neutrality advocates want would add expense without benefitting consumers.

It’s not easy to find analyses of the issue that don’t lean to one side or the other. Project Censored has accused the mainstream media of largely ignoring the net neutrality debate in 2005 and 2006, calling it the most censored story in its 2007 list. The issue may get more coverage as the 2008 Presidential election approaches, especially since several candidates have already declared themselves in favor of Net Neutrality.

Issue: Concentration of Media Ownership

The Telecommunications Act of 1996 loosened some of the rules on, for example, how many radio stations a company could own, both nationally and locally. To Fratrik, that regulatory relief was essential: “I think that the competitive environment that both radio and television stations now find themselves in… is incredibly remarkable. Without the deregulation of the ’96 Act, … broadcasters would be even in a worse position than they are now.”

The actual development and implementation of regulatory rules in the years since 1996 has been contentious. In a 2004 decision in the case Prometheus v. FCC, the Third Circuit Court of Appeals stopped plans announced by the FCC in 2003 to further loosen caps on the number of radio, newspaper and broadcast outlets that can be owned in one market. In 2006, the FCC announced that it was seeking public comment on how to respond to the order. In 2004, Rep. Maurice Hinchey (D-NY) introduced the Media Ownership Reform Act, which would roll back much of the deregulation of the last two decades, break up some media conglomerates, and re-introduce the Fairness Doctrine. So far, the bill has not made it out of committee.

The transition to digital television brings a new twist to the consolidation debate with the FCC’s forthcoming auction of the analog bandwidth that over-the-air television broadcasters won’t be using any more. Digital television, which will become standard in 2009, also promises to create a host of opportunities for new interactive media services. FreePress.net’s Craig Aaron is worried that, “the way the auction is taking shape, it very well could be that the same companies that already dominate our broadband market – the phone and cable companies. Phone companies, in particular, are in a position to swallow up this spectrum.”

FreePress.net and its allies are urging the FCC to follow “open access rules” that it says will lead to greater consumer access, more innovation, and more marketplace competition. Those rules include requiring licensees to make bandwidth available, at wholesale rates, setting aside a portion of the spectrum for unlicensed wireless services, and ensuring that customers will be able to connect to wireless services without having to purchase a device endorsed by their wireless carrier. They also support passage of the Wireless Innovation Act of 2007, which would turn these recommended rules into law.

Issue: Diversity of Media Ownership

One of the reasons, the Third Circuit ruled against the FCC in the Prometheus case is because it rejected the FCC’s claim that it could loosen ownership restrictions without further eroding the diversity of media ownership. That lack of diversity remains a serious issue.

Aaron and others point to the June 2007 report, “Off the Dial” as evidence of the the persistently low representation of women and people of color among the owners of the nation’s broadcast outlets. According to that report, African Americans, Latinos and Asians own only 7.7 percent of the nation’s full-power commercial broadcast stations, despite representing about one-third of the US population. An October, 2006 study, “Out of the Picture,” found people of color similarly scarce among commercial television station owners. Women constituted just under 5 percent of television station owners, despite the fact that just over half the US population is female.

Fratrik says diversity of ownership and opinion is “always a valid concern.” However, he adds, “how it should be handled is another question, insofar as how you may hamper the ability of certain stations to operate for not allowing groups to acquire properties, troubles me. I think it’s a very good concern; I think it’s an important part of a democracy. It’s also an important part of communications policy. I’m always fearful if that is the primary driver in some proposals.”

Fratrick added, “If you just look at over the air broadcasting as your group of outlets, then there may be not as much diversity as one would like, but on the other hand, I think the broader media environment should be the environment, what we refer to as the media ecosystem that one should look at. Given the thousands and really unlimited number of outlets that one has available, I think there’s a tremendous amount of diversity.

“I think the current regulatory scheme is fine, insofar as providing enough diversity in that broader media ecosystem, that broader marketplace. I’m thinking of satellite radio, I’m thinking of the Internet, I’m thinking of video-on-demand, cable systems, the hundreds of newspapers, blogs – every day there’s a new avenue.”

“Not everybody has a broadband connection to the Internet, and not everybody has cable, and certainly not everybody subscribes to satellite radio. But when I take a step back and ask, what’s available to the American consumer, and what’s available for free, what’s available for a fee, what’s available online, I’m just wondering, what else more can we be doing?”

Aaron has some ideas that he thinks will lead to more diversity among media owners. “Well, he says, “you could lower the ownership caps, for a start. You can create incentive systems for those properties to be sold to under-represented communities.”

The Outlook

While Fratrik doesn’t expect MORA any bill like it to surface any time soon, he adds, “I’m always concerned when Congress talks about this, because I’m always fearful that they may come back and re-regulate, and I think that would be an unwise decision.”

Freepress.net disagrees. Aaron maintains that whether it’s the Internet, the wireless spectrum, cable or satellite, “they’re all a part of the public airwaves. And it’s the FCC’s job to make sure these airwaves are used in the public interest. And the public interest is lower prices, more options, more space to get faster Internet service, to connect their devices and do different things. Unfortunately, the history of media policymaking has largely gone in a different direction, and that’s taken this great public resource and privatized it in a way that it doesn’t serve the interest of everybody, and it does serve the narrow interest of a few big companies.” Aaron insists that the policies he and his colleagues recommend will yield “benefits in terms of new services, new products new competition.”

Whatever your philosphical predisposition, one thing is clear: the decisions taken by the FCC in the coming weeks and months will go a long way toward shaping the media environment for both journalists and news consumers for years to come.

Put up or shut up: Newspapers aren't the only forum for great journalism

Plenty of commentators have expressed their anguish over Tribune Company’s management of the Los Angeles Times. The controversy over further cuts in the paper’s newsroom this month has cost the publisher his job. Several super-rich Californians have made overtures to buy the paper from Chicago-based Tribune. Yet in all the commotion, one question remains unaddressed:

Since when is the Los Angeles Times the only place anyone can do great journalism in L.A.?

Obviously, The Times has done its share. Over the past decade, the paper has distinguished itself with multiple Pulitzer Prizes, as well as engaging daily stories that expose injustices from crooked judges to L.A.’s pathetic Skid Row. Yet failure balances The Times’ recent triumph. Tribune-mandated cutbacks have reduced the newsroom from about 1,200 to a little more than 900. That’s led to the closure of most of The Times’ suburban bureaus and a massive reduction in neighborhood coverage.

Word from the newsroom reports that Tribune wants the newsroom even smaller, to about 800 or so. That’s sparked concern from local business leaders, who fear, along with most Times reporters, that a smaller Times newsroom won’t be able to properly cover Southern California. Times Publisher Jeffrey M. Johnson and Editor Dean Baquet have protested, too. Now, Johnson’s off the job.

One might think that business and government leaders would enjoy having fewer eyes looking into their affairs. Writing in Saturday’s Los Angeles Times, media critic Tim Rutten pointed out that an aggressive local press has helped communities grow, by exposing the inefficiencies of graft and corruption. Rutten correctly credited newspaper managers for helping enrich America, and themselves, over the past half century.

“The astonishing financial success of postwar American journalism rested on a recognition that an educated and increasingly urbanized readership demanded more sophisticated information on a broader range of topics than ever before and on newspaper managers’ willingness to invest in covering them.”

But established newspapers are not, and need not be, the only actors in the news industry. Rutten acknowledged that “the era into which we now are moving will involve new ways of distributing journalism — new combinations of print and online venues and, surely, avenues we cannot foresee.”

If the Tribune Company wishes to cut the Los Angeles Times’ newsroom into irrelevance, that ought to be the Tribune’s right as the LAT’s owner. Johnson and Baquet deserve credit for fighting for their newsroom. But there’s no need for those who have expressed interest in buying The Times to keep their money in their pockets, should Tribune continue to refuse to sell.

Want to protect and improve the quality of local journalism in Southern California? Great. Then go hire some of those folks that Tribune’s about to lay off and start up your own newsroom. Worried about the high cost of starting up a new print newspaper, in an era when print’s losing readers to the Web? Why bother? Simply start a Web newsroom instead. Worried about the loss of influence publishing online instead of in print? Um, didn’t we just say that print was losing readers to the Web?

Many local journalists already have made the switch to online publishing. Just scan the dozens listed on Kevin Roderick’s LAObserved.com, under the headings “Media In or About Los Angeles” and “Selected Blogs and Websites.” Contrary to the attitude of some within the Times building, many blogs and independent websites feature smart, original reporting. And many more would if they could cash a check from the likes of Eli Broad to support their efforts.

Take the $1 billion that analysts have estimated The Times could fetch, divvy it among the paper’s 900-some newsroom employees, and you’ve got a cool million-plus. Per employee. How many sharp, local investigative websites could be funded with that kind of cash? Heck, maybe a little competition might better get Tribune’s attention.

Don’t want to run a charity? Fine. Why not hire a few soon-to-be-out-of-work ad reps to go out and find advertisers for these existing and prospective local indie news websites? I’ve lost count of the number of journalists who want to start their own original reporting news websites but have not out of fear that they won’t be able to sell enough ads to support themselves. They shouldn’t have to. Let the ad folks sell the ads, and the reporters do the reporting. A smart, well-funded local ad network for indie websites, run by experienced local sales reps, could help sustain the quality of local reporting more effectively than any amount of op-ed handwringing will. And make a bundle of cash for its investors, too.

The point is, Los Angeles has a strong, entrepreneurial business community that shouldn’t have to beg to Chicago for tough, local news coverage. If the Tribune Company doesn’t want to fund that the way folks around here think it should, then fine. Now’s the time for Tribune’s critics to put up, or shut up.

The Web is waiting.

From the ONA conference…

MSNBC.com, Roanoke.com, The Center for Public Integrity and NOLA.com won the top categories in the annual Online Journalism Awards, presented Saturday night by the Online News Association and the USC Annenberg School for Communication. Longtime OJR contributor Staci Kramer writes up the ONA conference sessions at PaidContent.org.