Several players in the U.S. are currently working on building
national networks of citJ Web sites, utilizing economies of scale to
create a network of sites that can share infrastructure, advertising
sales, editing functions and other efficiencies.
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CitJ BUSINESS MODELS:
ARTICLES IN THIS PACKAGE
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So far, it looks to be a race between entrepreneurs, eyeing
citizen media as an eventual profit center, and traditional media
companies, recognizing that citJ will eventually be an important
component of their businesses.
A start-up company working on the citJ national-network model that's gotten a lot of press in the last year is Virginia-based Backfence.
Late last year, the company secured $3 million in funding from venture
capitalists, and it's currently ramping up to spread its brand of
citJ "hyper-local news" Web sites across the U.S. At this writing,
Backfence has only four sites operational, serving communities in the
Washington, D.C., area: McLean, Arlington and Reston in Virginia and Bethesda, Md.
To hear Backfence CEO Susan DeFife tell it, the company is
deploying a business model that's fairly routine for local online
publishers. Local ad sales will be at the heart of it; the company is currently
in the process of hiring salespeople to work in the D.C.
market and sell to local merchants and businesses. DeFife says that
even before Backfence began hiring sales staff, some advertiser
inquiries came in on their own. As the network grows, of course, there
will be
opportunities for regional or national ad buys, as well.
Backfence also offers free classified ads at its local sites,
making money off upsells for things like photos ($10 a month) to
accompany the ads. Because classified placements are done online, costs
can be kept low and therefore giving away ads is feasible.
A lucrative revenue source has turned out to be Backfence's
business directory. Text listings in the directory (basically an online
Yellow Pages for a community) are free, but only include the name of
the business, address and phone number. For $120 a year, an extended
listing gets a business a description, a link to its Web site and a
logo. Display ads that the business purchases on Backfence can
click through to the business-directory listing.
DeFife says the business-directory revenues have been a "nice
surprise." And early advertiser contact seems to point to local
businesses that are looking for inexpensive advertising opportunities.
Backfence will primarily be a network of independent citJ Web sites, not affiliated with traditional media brands in
the markets it enters. Co-founder Mark Potts, who was one of the
original employees of The Washington Post's online operation a decade
ago, says that he's talking to news companies about possible
partnerships in some cities -- where there'd be co-branding between the
news organization and Backfence -- but no deals have been made yet.
The company will be hiring people to run future sites in other
U.S. cities. The exact nature of some of the sites could differ from
the models represented by the D.C.-area Backfence sites, and will depend on
the individuals and organizations that the company hooks up with. Future community sites do not necessarily have to fit in the
one-size-fits-all model.
New kid on the block finds and seeks partners
Slightly behind Backfence -- and not as well-funded -- is Pegasus News,
a Dallas-based start-up that also has visions of building a national
citJ network of local news sites. But where Backfence seems to be
focusing on small communities around urban centers, Pegasus is starting
out with a major urban center, Dallas.
The small company's first site launched recently. Called TexasGigs.com,
the Web site is a spin-off -- or perhaps I should describe it as a major
revamping -- of an existing blog with the same name that focused on
the Dallas entertainment scene. Founded in 2002 by Cindy Chaffin, who
operated the blog as more of a hobby than a career, TexasGigs became part of
Pegasus News last year. Pegasus launched in the Dallas market with a
beefed-up version of Chaffin's old blog, but that's just part of what
will be a larger city news and entertainment Web site, as the Pegasus
model is rolled out to cover facets of the community other than just
entertainment.
TexasGigs and future Pegasus News Web sites will follow the
model of mixed content -- some from professional staff journalists and
freelancers, and much from citizen contributors. And, of course, the
sites will be highly interactive, promoting user comment and discussion
as well as content submissions.
According to Pegasus News founder Mike Orren, once the company
demonstrates its model in Dallas, the plan is to repeat it in other
U.S. cities. But it's not likely to go just anywhere. The ideal market
for Pegasus News
to move into wouldn't already have an established citJ-oriented Web
site, and would have local bloggers like Chaffin who could be convinced
to partner. In most major cities, there are already bloggers
competently covering entertainment and sports -- not making much money,
but doing it more for the love of it -- who could be convinced to
partner with Pegasus News.
Orren is also looking to assemble a more formalized news staff
to cover local stories, which will be added to content from citizen
reporters and local bloggers. He also wants to partner with small and
niche local media outlets: He envisions a black or Latino weekly
newspaper agreeing to have its content published on a Pegasus News
site, or a small chain of local neighborhood papers or small local
magazines to do the same.
In terms of revenue, Orren is looking at a pay-for-performance
ad model, in which local businesses can run ads on the site for no
charge,
and pay based on tracked business resulting from the ads. Otherwise,
it's a fairly conventional Web site model, utilizing ad networks and
pay-per-click contextual advertising from Google's AdSense program, and
participating in affiliate programs to sell books and music
from Amazon.com and Apple's iTunes.
For now, at least, an important part of the business model is
keeping costs very low. Orren says he's trying to recruit and hire lots
of young people fresh out of journalism school and others who are looking for
clips and experience -- not lots of money. With that approach, and an
emphasis on citizen reporting, the idea is to go a long way without using
much gas.
Rocky Mountain News seizes an opportunity
Another citJ network that's starting to build is YourHub, which
started as a citJ-driven series of neighborhood Web sites and print
editions produced by Scripps' Rocky Mountain News and the Denver Newspaper Agency.
YourHub.com was originally
conceived by the Rocky as a citJ experiment for the Denver market. The model was to
create a separate citizen-news operation staffed by about a dozen
editors and writers, who would manage neighborhood- and city-specific
"Hubs" of citizen reporters. (The staff has more than doubled and it's now operated by the Newspaper Agency.) The
idea, like that of most hyper-local news sites, was to get people to submit
news that is important to them, whether gardening-club or
little-league news or something more meaty. The output was in the form
of a network of more than 40 Web sites, covering all of the metro Denver
area, and 15 zoned print editions -- all featuring a combination of
citizen-contributed content and material from staff members.
Print editions feature staff content and the best citizen submissions -- not all of them.
What's happened with YourHub is that the model has been
deployed by several Scripps properties elsewhere around the U.S.:
Knoxville, Tenn.; Anderson, S.C.; and on Florida's Treasure Coast. And between Scripps and MediaNews Group (which owns the Rocky
Mountain News' joint-operating-agreement partner, the Denver Post), some 20 newspapers
have signed on to use the citJ platform.
According to Fran Wills, who heads up the interactive business initiative
for the Newspaper Agency, the company also is talking to other media
companies who may use the YourHub solution to create their own citJ
operations. Assuming that it's successful, a national YourHub network
might support national advertising, in which affiliates share in the
revenues.
Wills says that while the concept seems to fit well with
newspapers, there's no reason that it can't extend to other types of
media properties -- TV, radio, magazines or even Web sites interested
in capturing user content.
The Agency has taken all the work that went into
developing the first YourHub in Denver and has created a publishing
platform that others
can license
-- including not only the
technology, but all the business intelligence, editorial guidelines,
advertising rate cards and so on. The idea for that project arose when
other newspapers started calling with questions about how YourHub was
created and asked if they could use the software and systems that the
Newspaper Agency had developed.
As for the business model behind YourHub, Wills describes it as
not much different from the model that supports newspapers' traditional
Web sites: selling ads to local retailers based on neighborhoods and
cities; traditional banner-ad sales; bundled ad opportunities; etc. "We
haven't discovered the gold mine in community journalism yet," she
says.
One interesting possibility exists for those newspapers that
already publish weekly zoned print editions previously staffed with
suburban reporters and stringers. A printed weekly YourHub edition
(that is, add YourHub branding to the existing publication) can revamp
those old zoned editions. Instead of content comprised mostly of writing
from bureau and freelance staff and rewritten community press releases,
the zoned papers can be filled heavily with citizen-contributed
content. Staffing needs would then change, as there would be a greater need for editing the
citizen content, and less of a need for local staff reporting of lesser
local news.
Coming soon?
There are other citJ networks in place or in the offing. A Florida
company that calls itself a "developer of interactive assets,"
Multichannel Ventures, is constructing an online operation called CitizenReporter.com.
In its early stages, with a debut targeted at mid-2006, the Web site
will serve as a national citJ network that will work with traditional
media entities, providing supplementary and complementary
citizen-contributed news.
Multichannel Ventures president Michael Gerrity describes what
he's shooting for as a single-brand global site that works with other
media entities for content distribution. He's planning to launch it on a
city-by-city basis, focusing on building citizen content for each
community that it targets -- which sounds a bit similar to the model of
Backfence.com's network.
To be sure, other citJ networks will appear. Gerrity thinks
that the market is big enough for at least a couple of citJ players to
be successful in each major market, just as U.S. hardware retailers Home
Depot and Lowe's are both able to do well in many cities with stores
located not far from each other.
The importance of a national network isn't clear yet. Some
independent citJ Web sites that have found some level of success are
considering regional expansion, and launching citJ sites in surrounding
areas. For a discussion of the phenomenon of independent citJ sites
growing into regional networks, see the companion article to this one, "Independent CitJ: Web sites and Networks."
And, certainly, there's the prospect of both the national and
smaller regional citJ networks gobbling up independent sites.
Organizations like Backfence could partner with existing
single-proprietor citJ sites, bringing them into their networks -- or
even acquiring them. Independent citJ sites also may join forces with
nearby mainstream news organizations like newspapers and TV stations,
foregoing joining a citJ network.
