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Hyperlocal Reporting Needs To Be Paid Through Hyperlocal Commerce. February 19, 2013

Posted by Bernard Lunn in Uncategorized.

The key to a sustainable Local News business is a great proposition for Local Merchants. Locals should sell to Locals and that should be 90% of revenue for Local News. Chains will pay $1 CPM via Ad Nets. That is Patch’s problem. Imagine a local community with 12,000 inhabitants. If you get 50% as regular readers you have “the market”. That is only 6,000 readers. How on earth do you meet payroll selling banners at $1 CPM? Fergeddaboutit as they say in Brooklyn. Writing one post about a celebrity is a far, far smarter business proposition. Nick Denton cracked that one.

Local merchants connecting to Local customers through a Local Newspaper is the Local Tollbooth that Warren Buffet loves and that has had entrepreneurs and VCs salivating about Daily Deals and Hyperlocal News for a decade or more. Both Daily Deals and Hyperlocal News are in the Slough Of Despond and that offers a great window of opportunity for those who like to zig while others zag.

Daily Deals aka Groupon works on the model of telemarketers in a distant call center. This is both expensive and unsustainable. The Internet giants eyeing this market like Google and Facebook have the opposite strategy, they assume that merchants will sign up online. Somewhere over the rainbow that may happen, but it does not seem like a match for today’s reality either.

Local Merchants want calls or feet through the door, not clicks. That is why Google tried to buy Groupon for $6 billion. But a business based only on coupons is not the answer.

Nobody has cracked this one yet. Somebody will. My bet is that news will be key – that commerce will pay for access to customers who come for news. That is back to the future. The last decade has decimated, commoditized and cheapened the news business, so I recognize that this is a contrarian bet.

The local commerce bit will also require a bit of back to the future thinking. Neither remote telemarketers nor self service alone will provide the answer. Somewhere in the mix will have to be locals talking to locals, old fashioned selling using shoe leather, pressing the flesh and breaking bread together. The mix of local schmoozing, call center and self service will crack this, bit the proportions of this cake mix are still not in any recipe book.



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