Hyper-local news: a $300 million bust?

By Christopher B. Daly

Now comes word that AOL’s CEO, Tim Armstrong, is putting the finishing touches on the finale of Patch.com, the online local news sites. In his column today, NYTimes‘ David Carr reports that Armstrong is throwing in the towel on what used to be his baby. Too bad it didn’t work out.

There was a time when Patch looked like it might be an important part of the journalistic future. It was based on a key insight: more people were getting their news and information online, so why not local news? (Plus, there are a lot of local pizza parlors and nail salons that might advertise in such a site but would not be bothered advertising on a bigger site, because they would be paying to reach a lot of people who would never wander into their shops.)

While it lasted, Patch was a source of entry-level jobs for our journalism students, and I am worried about what will replace it.

Here’s Carr’s take:

 

The theory was that Patch would use a single news person and a single advertising person, at least initially, to create a digital maypole in hundreds of communities at a cost of about $100,000 annually per site. Patch sites popped up across the country, like Calabasas, Calif., and Nashua, N.H., covering high school sports, city elections and other local fare.

The execution risk was large — Patch was all moving parts, many undermanaged. At its peak, some 900 sites employed 1,400 people. Much of the journalism was pedestrian, while some of it, especially during Hurricane Sandy, was deeply important, but the decision to start at such a large scale was crippling. And all local efforts, digital or not, confront the tyranny of small numbers. Both the journalism and the ad sales were hand-to-hand, a retail effort that required spending a lot of money to go after pretty small revenue.

In August, it was clear that the math would not work. More than 350 people at Patch were laid off and hundreds of sites were shuttered.

What strikes me is the amount of money Armstrong was able to shovel into it — $300 million. Even for corporate moguls, that’s not nothing. Maybe that’s what was wrong all along: if you want to live online, keep your costs down.

I look forward to the experiment in this space that gets it right.

 

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1 Comment

Filed under business, Journalism, publishing

One response to “Hyper-local news: a $300 million bust?

  1. David

    Has any group of alleged geniuses ever fallen as far and as fast as the AOL crew? When will the media stop thinking of people like Steve Case as being equal to Steve Jobs, instead of people who simply cashed in on the internet bubble through media hype and Wall Street greed that was closer to a Ponzi scheme than true breakthroughs?

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