Vouchification

The great debate about how to pay for the news media future has centered on advertising, foundation financing and subscriptions. But Chicago entrepreneurs Jeff Leitner and Brian Timpone think we should consider a fourth model; something they call "Private Label News".

In a YouTube video they produced called "The Big Idea", Leitner and Timpone pitch directly to potential clients. Who are they? "They tend to be organizations that are best in class and nobody knows it or have a unique take on the marketplace and nobody knows it," said Leitner to me in a phone conversation. "Organizations that need the market place to understand the issue more fully, so the public would know why our client is best suited to help them."

I think of it as being more like "Guiding Light", the long-running, recently-cancelled soap opera that was wholly sponsored by and owned by Proctor and Gamble for over fifty years. As a sponsored television show, P&G paid ABC for the airtime and put on their show. ABC acted as a conduit for the show, whatever the content might be, because P&G paid for it and produced it themselves.

But "Light" was a soap opera and this is news.

I know Leitner professionally, and some months ago he invited me one afternoon to meet Timpone to help them hash out their idea. Mostly we talked about various ways news media companies attempt to make money from their products. The word "journalism" never came up in our conversation. Instead the discussion was entirely focused on how to actually make money from news.

For that reason, there are many who will have a problem with Private Label News. There's also an inherent conflict of interest problem - if I am paying for the news coverage, there's a good chance it might be slanted in my favor. Italy, whose billionaire Prime Minister, Silvio Berlusconi, owns most of his country's news media, is struggling with this problem in a big way, but Berlusconi doesn't seem to have problem with it.

Unlike Berlusconi's Mediaset, Private Label News does not aim to cover the big stories of the day. Leitner and Timpone imagine it will be interesting to those who want the smaller stories of the day to get coverage. As the "Big Idea" video suggests, it would cover industries that have lost their coverage as a result of shrinking news budgets.

"Timpone has been doing this for years on behalf of the U.S Chamber of Commerce," said Leitner. "They want good coverage of the state Attorney Generals offices, [because] AG's are a real battleground on the issues for tort reform debate. That's a real good example of turning the lights on in the gym so people can draw their own conclusions."

The news service Leitner refers to is Legalnewsline.com. It works just like any other wire service, and plenty of local newspapers quote from it. It is hard news, covering a beat that nobody else wants to or has the resources to cover. It has a few small advertisers. The "About Us" page doesn't draw any connection to the U.S. Chamber of Commerce.

Frankly, as a reader, I am not quite sure what to think of this approach. It seems impartial, and I know Leitner well enough to know he is not hiding anything from me. But the average reader would not entirely know who is behind legalnewswire.com - so wouldn't knowing that information change how their news is received?

But then again, think of all the talking points fed to Glenn Beck and Keith Olberman by less than impartial sources. All the effort expended by various PR agencies to influence reporters - the junkets, the personal conversations.

When I first started working in politics, I helped put on a "frozen chicken bowling" event with famed chef Wolfgang Puck in the U.S. Capitol, so Congressmen and the national press would learn how chicken categorized as "fresh" are actually frozen, according to USDA rules. The event was a smash hit, with stories in papers and TV stations across the country. Soon after, the USDA changed the rule on what constituted as "fresh" chicken.

The event was sponsored by smaller local chicken producers that didn't have the resources to freeze their chickens and ship them across the country. My lobbying firm cast it as consumer issue, but for the local producers, it was a money issue.

None of the TV stations mentioned the appetizers handed to them personally by Puck, or that they got to bowl chickens with famous Senators. That must have impacted them, right?

Private Label News is on to something. I am just not sure where it will take us.

Since I co-launched a new hyperlocal news site last month, I now spend a lot of time thinking about hyperlocal business models and their relative merits. And like any trending buzz word, "hyperlocal" is beginning to take on a lot of different meanings. Here I hope to tease apart some the mashed up meaning and bring a little clarity to this little corner of the news media world.

But first a polemic: I am a strong believer in the long-tail theory. In that vein, I believe Hyperlocal is yet one more slice of the tail. It will never dominate news, but it will become a hard to ignore bit player, sort of like 12" club remix records.

There's a lot of talk about hyperlocal these days, because people are still assessing its ultimate value and trying to figure out how it fits in with the rest of the media mix. But in the end, I think the talk will die down and hyperlocal will become just one more part of everyone's daily media diet.

It appears that hyperlocal news is separating itself into three broad implementations I call:

• Aggregation;
• Augmentation; and
• Original Content

Aggregation is the easiest to implement, since it is merely grouping news stories by town, neighborhood or zip code. It is growing the fastest since a robust aggregation hyperlocal site merely needs a good news scraper/spider to pull original content from elsewhere. It also provides the least value. Quite a few Google Ad link farms are aggregation hyperlocal sites.

Examples: Outside.in, Patch.com

Original Content is on the other side of the extreme, where original content is generated by some mix of dedicated or freelance on-the-ground reporters. This is time-consuming and expensive since original reporting requires lots of legwork. It is also of high value to readers, since the site is providing content that is otherwise unavailable.

Examples: CenterSquareLedger.com, MyBallard.com, BaristaNet.com

Augmentation is not exactly a compromise between the two but it does take from both implementations. As the name suggests, it is always a part of some already existing news collection enterprise. The hyperlocal content can be either repurposed news from some existing publication, "directors' cut" versions of stories that didn't make it on TV or in print, a reporters' blog or other stories that were never intended to go on air or in print.

Examples: KOMOnews.com/communities, NY Times: The Local, Chicago Now

In my opinion, all of the above implementations qualify as "hyperlocal" news. There are many who would disagree with me, probably mostly those who run Original Content sites.

Also, while all of the above implementations use the name "hyperlocal", I think it is important to note that they are no more direct competitors than Digg.com and NYTimes.com are direct competitors.

To illustrate, let me compare hyperlocal local news to a more common example.

Aggregation = Aldi

Augmentation = Basic supermarket

Original Content = Boutique butcher shop

Aggregation is cheap and gives you no more value than the basics. Just like Aldi.

Augmentation is meant to be part of a broad offering of content. There's lots to choose from, but not all of it is targeted at your needs. Most of it is produced in a distant factory with little local flavor.

Original Content is made just for you, has lots of local flavor and is quirky. It doesn't always have the most professional methods, but you tend to look the other way because you feel like you have a personal relationship with the people making it.

I also believe that each of these implementations serve different groups of advertisers. Because of the audiences served by each implementation, it is hard for me to see how advertisers would benefit by moving between each group.

• Aggregation is almost a pure Google Ad play or for broad national ad campaigns.
• Augmentation would work well to extend national or regional ad campaigns looking to penetrate certain geographic areas.
• Original Content sites are mostly for regional or neighborhood-based advertisers.

I believe we should expect all of these implementations to grow and peacefully co-exist for some years to come. All are potential money-makers because all of them aim to serve a different audience and can carry different types of advertisers.

The Center Square Ledger has been officially publishing for three weeks now and I think we're starting to get the hang of things. After a frenetic publishing schedule to show new readers that we've got a lot going on, we slowed down a bit. The slower pace doesn't seem to have hurt our daily average readers, which has settled at about 350 a day.

This is a GREAT number from our perspective. Outside of flyering the neighborhood el stops on our first day and hitting the local blog scene, we've really been growing by word of mouth. 350 a day puts us just over 10k a month, which was the dream scenario Patrick and I had when we talked about our launch. This is a real number ­- five digits - that you can show people.

So while traffic is doing well and we seem to be publishing compelling content, revenues are not what we'd like.

Make no mistake, today's introduction of the iPad was a big deal for a lot of reasons. But for news media it was nothing less than earthshaking. As we swim through reviews from the technology press it may be hard to see the forest for the trees - especially since the iPad is missing Flash, a camera, a hard keyboard, whatever-floats-your-boat, etc. - but the reason why the iPad is important to news media has less to do with hardware and more to do with software we have yet to see.

Before I go further, a disclaimer.

Starting a new publication - and then discovering that real people actually read it - is more fun than I ever anticipated. This past week's launch of the Center Square Ledger has been hard work, stressful but tremendously rewarding. More than anything it has made me remember my college newspaper days - as well as the pitfalls and stresses of those days.

The most important lessons of the first week:

I haven't posted for a while because I've been busy. At last I'm ready to speak.

Sometimes you just have to put your money where your mouth is.

I've been ranting for months that there are all kinds of niches available in news for those who want to exploit them, so I'm starting a new site, www.CenterSquareLedger.com, "Your definitive neighborhood guide to Lincoln Square, North Center and Ravenswood Manor."

We're two neighborhood guys: me and Patrick Boylan (you might know him as Lou Grant) who want to keep track of what's going on in the area and tell the many stories about what's happening next door and just down the street.

It's a hyperlocal news site limited to our neighborhoods. Want to know about the CB2 moving out? That house fire last night? What about events or restaurants in the area?  The Center Square Ledger is your place.

We don't want to compete with the Tribune. We are covering "small j" journalism - the stuff the big boys ignore but people in your 'hood care about deeply.

We don't want to compete with Everyblock. We think there's value to folks in the neighborhood chiming on the restaurants in the area and sharing their pictures of the area - and hopefully we'll get some serious comment discussions going on in the articles.

Some details on getting things together:

•  I coded the site myself starting with Wordpress. It's taken a lot of time, but it wasn't as hard as I thought it would be.
• Our start-up costs are very, very low. We purchased the domains, we use MailChimp, and we'll print some cards to promote the site at El stops and stores, but for the most part, we're doing this volunteer until we start making money from advertising.
•  Yes, we will take advertising at very affordable rates. But for now we're not soliciting ads, we want to ramp up traffic first. (That doesn't mean that we won't place your ad though!)
• Yes, we are interested in strategic partnerships with other outlets.

So, come on over and check out the Ledger. And tell your friends!