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The newsonomics of Patch’s unquilting

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Too much of last week’s Patch news focused on CEO Tim Armstrong.

Sure, it was a memorably punk moment, one of those historic instants (recall that other AOL-related one when then-Time Warner CEO Jerry Levin awkwardly embraced AOL founder Steve Case? oh so 1999) when things just seem to change. As Patch itself was about to be cut in half — the news of that dribbling out over a week, filling the post-Bezos news-about-news cycle — Armstrong began to unravel, much like the Patch he has enthusiastically worked to build. He rambled, blaming Patch’s woes on “leadership,” a train of people he of course had appointed.

You can listen to Armstrong’s public, on-the-spot firing of Patch’s creative director. On Larry Mantle’s KPCC show last week on the topic of Patch and hyperlocal, a caller said she wasn’t surprised by Armstrong’s outburst. Her experience, and that of many of us, was that many digital media workplaces are volcanos of emotion. Armstrong’s humbling may give us a picture into tech-led media change itself at the moment, but our immediate question is: What does Patch tell us about the future of local news, about continued reliance on advertising, and about the value of technology?

Let’s see what sense we can make out of the move to close about 150-200 sites and pursue “partnerships” for about 150-200 others. AOL says it plans to keep open 400-500 sites, or about half of those around today. None of the surviving or suspended sites have yet been publicly named.

For starters, let’s acknowledge what’s clear here: Patch, as conceived, is in part a failure. Its army of national hyperlocal, arrayed across 20 states, is in retreat. It may be a strategic retreat. Just as likely, it’s the beginning of the end. Figure its life support now runs another 12-18 months.

If it is a failure, let’s also note it’s a partly noble one. AOL probably hired more journalists than any other American news organization in the 2011-2012 period. Hiring more than 900 journalists, to much bloggy uproar and sometimes misplaced rage, it defied the trend of local journalists being laid off by the thousands. Despite its sometimes unclear purpose, Patch’s role in paying journalists to do journalism has usually been undervalued. Now half of those Patch jobs appear gone or going, adding to the toll of 17,000 newsroom jobs lost in dailies in a decade. Any journalist’s joy at its half-demise is misplaced.

Patch’s journalism has always been, well, patchy. Early on, it sometimes seemed like more of a search engine optimization play than anything, learning how to outrank local newspaper stories in Google, even those that offered more depth. The sites are still spotty today, further hampered by the cutback of stringer budgets, which has winnowed the amount of reporting on the sites.

Still, Patches have been a net plus. A plus clearly for the journalists, but more importantly for the readers. Those lone editors, shorn of their early freelance/stringer budgets as times got tighter, have produced an astounding amount of news. Often working 50 to 80 hours a week, they’ve managed to find stories uncovered or undercovered by the dailies. Their readership seems to have peaked at 11 million monthly unique visitors. Part of that traffic stall can be blamed on technology execution. All the Patch sites are now on its 2.0 platform, which emphasizes community (free) contributions. It’s got its plusses and minuses, but in its painful rollout, content’s been lost and some contribution processes were made tougher. One major question Armstrong hasn’t quite answered: Will the surviving sites get more resources to add content to the site? Though criticized by Wall Street for spending too much (more than $125 million) on Patch, its inability to succeed is partly based on the fact that it didn’t invest enough to keep the readers it attracts.

Overall, Patches have proven out a truism: More news coverage is better than less news coverage. Patch has added content to the mix that its competitive dailies missed. Now many of those will be gone, along with all the uncountable coverage losses driven by the loss of those 17,000 largely local journalists. Let’s look at a few lesson from Patch.

Ad revenue isn’t enough.

The lesson now dawning on publishers worldwide is that their reliance on advertising as the major support of their news businesses is all but over. As print revenue’s decline has accelerated, growing digital ad revenue is increasingly tough as well. Programmatic buying combined with downward pricing pressure is turning digital advertising into a cutthroat, scale business. Even Patch parent AOL, the fifth-largest company in U.S. digital ad revenue, is struggling to keep up with Google’s and Facebook’s outsized growth, and Twitter may pass it next year.

With those 11 million unique visitors, it has insufficient scale to pay for the high human costs of newsgathering. Most Patch sites aren’t filled with local advertising, but rather pitches from Kayak and Reebok; those are national buys that probably fetch less-than-premium rates. There are exceptions (like the Wilton, Connecticut site, with more than a half dozen locals), and those may be the models that Tim Armstrong is trying to build on. Those local ads aren’t the super-targeted, hit-my-cellphone mass customization we’ve long anticipated. It’s coming — but it’s not here. Patch got too far ahead of that business and has paid the price.

On the business side, Patch has been CEO Tim Armstrong’s millstone. Without it, its media division, including AOL-branded properties, HuffPost, and TechCrunch, would have turned a decent profit for the first half of the year. Media revenue is up 10 percent, but the division as a whole is still in the red. The Patch cuts will push it into the black. Armstrong is halving his strategy, at least, giving in to investors.

Reader revenue may be an answer.

It didn’t make sense for Patch to charge readers. Too few of them would have paid and the sites would have gotten no traction. As newspapers are proving out the value of All-Access and digital subscriptions, to much financial success overall of circulation revenue growth of 5 percent annually, it is worth someone testing paid hyperlocal.

How might it work? Let’s take Chicago. Two big dailies, the Tribune and Sun-Times, each with paywalls. Could one of them try out an add-on local product, presumably digital-only but maybe not, that charges readers for access? Could the Tribune — now charging $150 a year for a Sunday print-plus-digital subscription — charge another $49 a year for deep news about my neighborhood? If it got 3,000 customers in an area of 25,000 households, it would have $150,000 to fund two reporters. Ad revenues would be a supplement.

The Tribune owns a precedent. Remember the old daily newspaper book section? It disappeared early on in the great newspaper cutbacks, across the country. The Chicago Tribune, though, now publishes Printers Row, complete with digital and events companions, and has gotten enough readers to pay it as much as $99 a year for it.

If a book supplement can work, why can’t a local supplement? It’s a test any newspaper with a paywall can try with minimal investment. For instance, there’s the ever-ambitious Orange County Register (“Nine Questions: Savior Bezos, a Long Beach Lunge, Chronicle Debacle, Patch Undone & More”). Larger than hyperlocal, but still local, the Register launches the Long Beach Register today, invading a neighboring area and taking square aim at MediaNews’ Long Beach Press-Telegram, a once-deeply-staffed daily that has had a wrecking ball taken to its newsroom. The Register’s push here is both print and digital, and it’s one to watch.

The alchemy of news and technology is an uncertain brew, whose recipe is still being tested.

Patch promised scale, and yet it has proven the limits of technology to create that scale. Certainly, its centralized content management system and templatized sites showed one way to reduce costs. Patch told me early on it could produce a local site at four percent of the cost of the local paper. The real cost in building the business that way has been largely human; meaningful local depth of sufficient takes humans, and those have proven too costly for about half the sites.

But this human/technology mix is being newly tested in a number of labs. Chicago, here, too promises the most interesting laboratory today. The Tribune is working with Journatic to help build out its local sites, a year after the faked byline brouhaha. Further, the Sun-Times, borrowing from the same playbook, just announced its own tech-plus-human hyperlocal push, Aggrego. The idea is the same: Use technology for 70-90 percent of the work of collecting and processing all the basic info (schools, churches, civic groups × 100) swirling in print and digital form in any community, and then put editors on top of it to manage and make sense and order of it for readers.

Don’t bet against noise.

No matter how good a news product you create, it’s brutally tough to change reader habits and get them to adopt new regular reading. A handful of top national brands — HuffPost, Slate, and The Atlantic, among them — have done that. Patch has stumbled, and, in truth, probably couldn’t do much about that.

Digital pioneer Mark Potts told me awhile back how hard it was to break through the noise of everyday habit when he started his hyperlocal Backfence: 16-hour days of meeting and greeting and reporting blurred together, just to get the word out. (Six-year-old lessons from Backfence at PBS MediaShift still resonate in today’s Patch news.) It’s retail marketing, much like local elections, and it can take years. That’s the advantage newspaper brands have here: They’re known quantities. Of course, the old newspaper package — combining local, regional, national, and global news — figured out a winning formula a long time ago. Disconnected, standalone hyperlocal can be tough going.

Whither Patch partnerships?

Tim Armstrong says AOL is trying to find partnerships to keep 150 or more of the to-be-cut sites alive. It’s tough to see what such a partnership would offer — and to whom. Patch has proven out a model of the mobile journalist, but other companies, like Digital First Media and now Advance, are doing likewise. Its platform is useful, but any chain could build something similar. Its mobile app, though late to market, offer a good experience and model, but again can be duplicated. Plainly, its ad efforts haven’t built a foundation worth buying into. Perhaps a news/tech company could be interested in essentially buying the traffic, reducing staff costs, and using aggregation to provide content.

Hyperlocal lives.

We shouldn’t lose sight that hyperlocal works. It’s how it works that needs more exploration. Seattle has been a more successful poster child, and we’ve seen that through the lens of the Seattle Times’ local blog network. LION, the newly formed local independent online news publishers, site has now passed 100 in its membership. LION now sports a “Getting Patched? Start your own news site” post, aimed at encouraging the hundreds laid off by Patch to start their own local businesses.

Michele McLellan’s Block by Block has provided good support and idea-sharing among the independents; Michele’s List is a good database. Many of these below-the-national radars produce a fair amount of useful local news. For most, it seems it’s as much a calling as a job, with some able to eke out livings.

Today, this local truth remains: Only a small percentage of the country is lucky enough to have a local reporter focusing on their own community. That was true in 1990 and it is still true today, through all the efforts, print and online. Maybe someone will get it right, sooner than later.

                                   
What to read next
Leonhardt
Caroline O'Donovan    April 23, 2014
“Is there a way to take some of the knowledge that people at The New York Times already have that ends up on the cutting room floor, and put it in front of readers?”
  • algonquinmatt

    The local Patch’s that i’m familiar with (Northwest suburbs of Chicago), do not add much on the news front, contrary to what this article suggests, and that is what makes it near useless to me as a consumer.

    Most of the local stories are basically one paragraph, second hand accounts from the local newspapers (Northwest Herald, Daily Herald). They add nothing.

    I remember a couple of years ago when there were a bunch of Democrats from Wisconsin who hid in Illinois so they wouldn’t have to take a tough vote on an issue…they were hiding near our town. Patch did not have anybody out there to report. They blew an opportunity to be linked on e.g., Drudge, etc..

    Instead, they put up a headline, wrote a paragraph and linked to a newspaper that could tell us who/what & where.

  • rogerwilson

    Ken, you forgot to mention that AOL bought out the original investors who included Armstrong. The rest was just cover with OPM (other peoples money). I always thought the concept was to create a high value demographic (rich suburb) audience for national advertising. But you can’t attract a high value audience with low value information; high value information is expensive to collect. The local press of old involved an entrepreneurial editor/publisher who could make or break politicians and both sold and wrote. I suspect LION has the better model although I have yet to study it.

  • Nickolas Nikolic

    Whereas in my area, just north of you in SE Wisconsin, it quite did add value and the value of the particular reporters views and frankly, discipline, can *not* be understated.

    FYI: There is a tool by which to evaluate churnalist work against original reporting. In order to evaluate content some method of measurable reference must be used.

    Some of these tools have been intimately reported here on this site.

    One, for instance, can be found by going to the Sunlight Foundation and navigating to the Churnalism browser extensions’ project or just searching directly for such similar projects.

  • West Seattle Blog

    *pulls out hair* We and other independent community-specific/community-based/community-collaborative news companies ARE getting it right. Why do you national pundits continue to end your stories with “Ah, someday, somewhere, someone will get it right” when there are more than a few of us who have made more money than AOL has at this game, engaging our communities organically without gimmicks and tricks, booking a decent amount of advertising WITHOUT A SHRED OF NATIONAL (we don’t seek it and don’t want it), and not only bringing in money but paying it out – investing in our businesses and in our communities (like other types of small businesses, we spend thousands each year on sponsorships for community festivals and benefits). Patch’s failure says nothing about what we we do, nor about community news in general, and really could have been completely avoided if they had listened to those of us who warned at the start that neighborhood news DOES NOT WORK WHEN CORPORATIZED AND TEMPLATIZED (and certainly not when aggregated and automated). – Tracy

  • SocraticGadfly

    Well, no, as a business model, hyperlocal doesn’t work in many cases. Ken, your last section is simply wrong, sadly. The implosion at many of Patch’s sites is simply a mirroring of the implosion of many suburban weeklies in the decade prior. You have to have suburbs, suburban areas, or districts/neighborhoods within a central city big enough to generate a core readership of size X and unique enough to generate local, non-national ads of $$ amount Y.

    West Seattle Blog may well meet that. So may some of the non-shuttered Patch sites. The shuttered Patch sites didn’t. As a commercial endeavor, contra West Seattle Blog, many non-corporatized hyperlocal sites don’t, either, I’m sure. Of course, if they’re non-corporatized, like those late suburban weeklies, they’re either dead by now, or else being run as hobbies not businesses.

  • Lisa Loving

    Block by Block died in June.

  • Stan47

    I’m astounded that AOL would keep alive any effort that is getting only 11 million unique visitors a month. Over a dozen years ago, I was part of a little (3 person) auto journalism site, and way back then, a million PAGE hits a month was the minimum requirement to get the attention of any national advertiser. Do a little math: say we assume that each unique visitor hits their patch site only once a day. That’s over 30 million page hits a month.

    It’s pretty obvious that Patch failed long ago, based on that figure of merit.

    Add to it the demonstrated snottiness of the man in charge, and you have to ask who would want to work for them anyway.

    The sooner this abortion disappears, the better. More bandwidth.

    I do feel badly for the one local Patch reporter I know personally, who has covered more unique stories than possibly the rest of them put together. But he is a veteran writer with good contacts in the county government here. Someone worthy of his efforts will come looking for him, with money in hand.

  • Denise Lockwood

    As a former Patcher, let me give you some insight…

    You: “Patch, as conceived, is in part a failure.”

    Me: I know I
    didn’t fail Patch, the data tells me that. I gave them the audience. Patch HQ failed us… the
    redesign=horrible. We lost a ton of our audience from that. Their constant gimmicks were a distraction. But I do think the sponsored content, the partnerships with Zillow and Careerbuilder were promising — they just shouldn’t have put it on us to do them because it took us away from our primary purpose.

    You: “No matter how good a news product you create, it’s brutally tough to
    change reader habits and get them to adopt new regular reading.”

    Me: My community has 25,000 people in it and about 22 percent are under the age of 18… and how big was my audience… consistently over 25,000. I know those readers habits changed. It can be done my friend.

    You: “It’s tough to see what such a partnership would offer — and to whom.”

    Me: Of course it would be tough for you to see value in a partnership with us, you don’t live here. Why is Patch constantly being compared to HuffPo, Slate and others? They are apples to oranges. One of the things we did in Milwaukee was partner with other news orgs, Channel 6 (Fox) and first and then with Channel 12, radio stations and blogs… they obviously saw value in us.

    You: “Most Patch sites aren’t filled with local advertising, but rather
    pitches from Kayak and Reebok; those are national buys that probably
    fetch less-than-premium rates.”

    Me: Perhaps that was because they hired one ad rep to handle 15 sites and she went after the regional stuff, and the second ad rep had been hired ohh… six weeks ago when they had promised that one would be hired a year and a half ago. One local business, who was a huge fan of ours, told me that Patch’s problem was that they sold themselves as “grassroots,” but failed to reflect that by not having boots on the ground to cultivate those relationships.

    You: “Often working 50 to 80 hours a week, they’ve managed to find stories uncovered or undercovered by the dailies.”

    Me: Amen brother, we did work hard. Before Patch came to the thriving metropolis of Caledonia and Mount
    Pleasant Wisconsin, the Racine Journal Times (owned by Lee) RARELY covered any news in
    our communities. Why do they do that now? Because we scooped them a ton
    and they started losing eyeballs. We’ve helped solve crimes, found lost
    children, covered a historic recall election, covered mass shootings,
    and broken a ton of news stories. There’s a ton of stuff that wasn’t being covered and we did it.

    In summary… this isn’t rocket science. If you put out quality content and have a strong sales person to back you up, it can be done. We had an obvious disconnect on the advertising side because I’m telling you… the audience was there.

  • Michael P Harrold

    Ken, this was a really good article; it’s definitely one of the best I’ve seen on the Patch subject lately.

    My name is Michael P Harrold, I work as the director of marketing for UNATION, we are an event-based social startup. I’d like to ask you, and your readers, for an opinion (hope that’s okay) on our partnership offer to Tim Armstrong and Patch.

    http://whyunation.com/

    You said it’s tough to see what a partnership would offer, but I’ve really connected with the vision of how our platform could integrate with Patch to help both enact change in the hyper-local space. I do however, realize that I’m partial – and that there are a slew of other who understand the true problems with Patch on a much deeper level than I do.

    I’m a marketer…so I’m going to just leave myself open if anyone would like to talk about our project further: mharrold@unation.com