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May 25, 2010, 2 p.m.

Borrowing from burgers: franchise-model startup wants to make community news sites profitable

Launching a community news site is tough. You’ve got editorial decisions, like putting together a team of reporters and editors, plus technical hurdles like finding the right CMS and hosting service, and then there is the job of setting up and carrying out a successful business model. It’s a complicated set of factors that could defeat even a sharp journalist with a good idea for a local news site. A new startup called Main Street Connect aims to make it easier for entrepreneurial journalists to get their sites off the ground, keep them going, and make money. And it aims to do so via a model familiar to anyone who’s gotten the same McDonald’s burger in California as in Maine: franchising.

Main Street Connect launched this year under Carll Tucker, the founder of Trader Publications, a community news company he sold to Gannett in 1999. In watching the decline of community news in the last few years, Tucker, who is passionate about hyper-local news, wondered if he could come up with a model that would translate the revenue structure he enjoyed in the 1990s-era boom times to the web today. Display advertising doesn’t come close to the kind of money community newspapers once made. Ten years ago, Tucker said, he would pull in $20 to $25 per reader on advertising. If he could come close to the golden days of print in terms of revenue, he thought, he would see profits soar because the costs involved in publishing online are much less than printing news on paper. Tucker now believes he’s come up with something that could make money, and he’s got enough venture capital private equity investment behind him to help get 3,000 sites off the ground in the next few years to test it out.

“The idea is to provide a local entrepreneur with all the tools he or she might need to start a prosperous — that is, profitable — high-quality site or group of sites,” Tucker told me in a phone conversation.

Tucker’s program is essentially a franchise model. A local team assembles the journalists who will cover a community, then Main Street Connect provides the framework for everything else, including the technical setup (and ongoing support), plus an underlying business strategy. In the long run, Main Street Connect hopes the network of independent local sites across the country will reach a sizable audience in the aggregate (comprised, Tucker hopes, of suburban moms who make household spending decisions), making the sites attractive to national brands. In the short term, publishers of local sites get the infrastructure help, plus the ongoing benefit from the collective insight of many sites working side by side. Main Street Connect also publishes five sites in Connecticut, and plans to launch more, which will act as incubators to test revenue-generating strategies. In exchange for that assistance, Main Street Connect takes 17 percent off the top of whatever a site pulls in. There is no initial start-up fee.

The idea is a balance between the individual sites’ needs and the MSC franchise: Local site publishers handle the nitty-gritty of cultivating connections, but they employ the Main Street Connect strategy. Tucker wants small business owners investing in sites on a weekly, monthly or yearly basis, he says, rather than based on ad impressions. He also expects to charge advertisers upwards of $700 a week, a price tag that dwarfs a typical online ad on a small news site. When we spoke, Tucker had just wrapped up a deal worth $57,000 for the year for his sites in Connecticut. He was in talks with a hospital about another deal that could be worth $100,000.

Tucker’s approach takes into account the problem of fragmented media consumption. In the last few years, local businesses have had to buy more types of advertising to reach their audience (cable TV, radio, direct mail, etc.). There’s no single place to reach customers in their community. That’s where a Main Street Connect site comes in. If the community site can become an addictive place for heads of households, it can serve as an invaluable place for local businesses to be, as well.

And, so far, Tucker’s Connecticut sites are proving there is an appetite for community news online. His first site launched, the Daily Norwalk, attracted 11,000 pageviews and an average of four clicks per visit (in a city with a population of 83,000), with more than half of all readers returning at least one more time that month. Tucker tells businesses to think of the decision to invest in the site as joining the virtual “town green” as a true community member. In return, the business gets traditional ad space, its employees featured in a “neighbors” portion of the site, and — the biggest departure from traditional ad/editorial divisions — a guaranteed number of stories written about it in the Features section of the site. (The sites are broken up into different verticals, with stories about local business sponsors running in the Feature sections of the site, not the main news vertical. Those stories will look like other features a staff writer would produce.)

“We support those who support us,” Tucker explained.

It’s a good deal for the business, but what about the site’s responsibility to keep readers accurately informed? Tucker gave me this hypothetical. Say a local grocery store is embroiled in a tax scandal. The news section of the site will cover the scandal in the main news section, regardless of whether the store supports the site. The store would still get its feature-section piece, which would not link to the scandal coverage.

Tucker was quick to say that this model works for community news, but not necessarily regional, national or international news. Community news is about supporting your neighbors, he explained. The local site wants local businesses to succeed, and vice versa. It’s a symbiotic relationship. “The old paradigm — church, state, advertising and editorial — when you get to community news…becomes much murkier.”

Update: Soon after this story appeared, Main Street Connect’s SEC filings revealed they’d raised a $3.97 million first round.

Photo courtesy of Copakavanagh under a Creative Commons license.

POSTED     May 25, 2010, 2 p.m.
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