"Why is a media titan like The New York Times Co. -- already stretched thin by the challenges of a faltering business model -- dabbling in community news, traditionally the bottom of the journalistic food chain? Call it the Google Effect. The search giant's model, described by author John Battelle as "a billion dollars, one nickel at a time," is a perfect description of how media companies hope to take tiny sources of local revenue and roll them up into big money."
I think the New York times is missing the point of how Google makes money and how their income model works. The reason Google makes obscene amounts of money even though they only make a nickel per customer is twofold: They have lots of customers, and their expenses per customer is less than a nickel.
While I agree that local advertising is a great potential untapped revenue stream that can be harnessed through local news I think they have a bad business model. It appears that they try to set up an old-fashioned news outfit complete with editors, journalists et al. This adds substantial cost to the venture, and all of a sudden you need to make more than a nickel per customer to cover your costs.
In short it looks like an old media empire misunderstanding online businessmodels, namely create a service that might cost you a lot in initial effort but will scale (almost) effortlessly to millions of users, thus making your cost per customer approach zero. An editor and a few journalists for every community isn't cheap and doesn't scale.
I agree that this business model has little in common with that of Google or other online businesses, but that doesn't necessarily mean it wouldn't work. I think a better analogy would be a Subway or a Starbucks in which you have a small staff at each ___location. By standardizing business processes and sharing expenses (advertising, accounting, etc) across many small locations, they can generally outcompete the local, independent operations and, in aggregate, generate a large amount of revenue.
Okay, how do they get from a nickel per customer [ed, they're claiming google style revenues of ~$0.05 per user], to hundred-billion dollars. Perhaps their hiring policy should include the ability to use a calculator. 6 billion x 0.05 /= $100 billion. Unless some fucktard divided instead of multiplied (hello, that's a grade #1 fuck up).
$100 billion dollars in local advertising assumes $16.6 per person on the planet, or over $333 per American citizen. I highly doubt someone did their math right, I'd guess more $100 million, not billion.
Hyperlocal is the most awful buzzword I've ever seen. Out of all of them, ever.
I was just reading some "Hyperlocal" news in a paper printed often enough that I see a new one each time I pick up dinner from the same restaurant. Just because "The Observer" isn't online with ajax 5.7 pushed heavily by a startup into a first round blah blah blah
The market is tapped already and anyone who cares is already getting their news. No one younger than 55 gives a shit about hyperlocal.
Honest question: is "hyperlocal news" such a novel idea that no one tried it in the .com/web 1.0 days? It's not as if local news and an advertising business model are new concepts.
The difference between now and then is that we didn't have so many out of work journalists then. Any "news startup" that uses actual journalists to do original reporting will get coverage from journalists for, um, obvious reasons.
The difference between now and then is that we didn't have so many out of work journalists then. Any "news startup" that uses actual journalists to do original reporting will get coverage from journalists for, um, obvious reasons.
I think the New York times is missing the point of how Google makes money and how their income model works. The reason Google makes obscene amounts of money even though they only make a nickel per customer is twofold: They have lots of customers, and their expenses per customer is less than a nickel.
While I agree that local advertising is a great potential untapped revenue stream that can be harnessed through local news I think they have a bad business model. It appears that they try to set up an old-fashioned news outfit complete with editors, journalists et al. This adds substantial cost to the venture, and all of a sudden you need to make more than a nickel per customer to cover your costs.
In short it looks like an old media empire misunderstanding online businessmodels, namely create a service that might cost you a lot in initial effort but will scale (almost) effortlessly to millions of users, thus making your cost per customer approach zero. An editor and a few journalists for every community isn't cheap and doesn't scale.