Entrepreneurship and the Community Web: Motherlode of ideas

One of the best takeaways came from afternoon keynoter Jonathan Weber, who runs NewWest in Missoula, Mont.  Weber has become known for the series of conferences he runs each year on topics his news site targets — issues like development, water, the environment. What was new to me is that he's been able to use these conferences to offer continuing-education credits in a variety of professions that require them — planning, real estate, engineering, etc.  That helps strengthen the base of people willing to pay the $300 or so registration fees — and gives him a conference profit margin of about 50 percent.

You couldn't help but be impressed — I couldn't anyway — by the range of ideas and approaches and geographies of the 15 site owners who told their stories on Friday.  That's true, of course, despite the fact that very few are doing little more than breaking even on their operations, if that.  But reading past the details, I'd be shocked if we don't see continued rapid expansion of the community news-site space.  And as veteran Barry Parr of Coastsider said, if you wait till the business-model problem is solved, it's too late.

Here's a smattering of highlights from my notes:

BIGGEST FINANCING: Amra Tareen of AllVoices, the Bay Area citizen journalism site, represented the best-financed operation — she recently completed a second $4.5 million round of funding.  And she reported new details on her business' attempt to monetize its 4 million monthly uniques.  Her 2010 revenue target is $2.2 million, and she's in the market to beef up her advertising effort. AllVoices uses algorithms and a community rating system to present 220,000 "citizen reporters" worldwide. Currently 40 percent of the contributors are from the United States.

BIG PICTURE: Morning keynoter Jarl Mohn (venture capitalist, formerly chief executive at MTV and E! Networks) offered participants some guideposts for how to think about entrepreneurship in their own lives. First, consider the 80-20 rule. Spend 80 percent of your time running the business but reserve 20 percent for getting away to brainstorm new ideas.  His own experience:  You have to physically get away to really make it work.  Second, think about content as a continuum from commodity to creative. Unless you can figure out how to replicate commodity content many times over, the creative side is where you want to be.

GOOD NEWS/BAD NEWS: Consultant Peter Krasilovsky forecast robust growth in the local online ad space, which is now a $30 billion-a-year business.  (Online represents 19 percent of local ad spending.)  The challenge: How to get at that money in a way that costs don't consume all the revenue.  Krasilovsky said that on average, most small businesses spend just $1,500 in advertising.  Self-serve approaches hold promise, he said, but they're not there yet.  (Jonathan Weber later noted that his approach at NewWest is to focus on a select group of high-volume advertisers that provide decent margins and quit trying to monetize smaller advertisers.)

AD NETWORK: Ben Ilfeld of SacPress.com previewed plans to announce a local advertising network of the many small news sites in Sacramento.  The announcement is to come this week, and will involve working with Adify. Ilfeld described what sounded like a complex but necessary step to achieve scale in a market with a multitude of tiny operations. One approach:  Each participant in the ad network can select a small list of Do-Not-Sell businesses that are off-limits to the overall network.

A NATIONWIDE COMMUNITY NETWORK: Chris Jennewein has big ambitions: a 50-city network of community news sites whose competitive advantage is centralized operations for tech, billing, SEO, analytics, etc.  So far he's launched two — San Diego News Network, the Southwest Riverside News Network — and expects to christen a third on Feb. 1 in Orange County.  The San Diego site has a staff of eight journalists and 12 business-side staffers, plus 30 contributing writers and editors.  The Riverside operation is much smaller, with an editor, reporter and ad salesperson.  The company's aims are $10 CPMs, which he says are occurring so far in San Diego and Riverside.  Jennewein's for-profit launched with $2 million in investment.

CONFERENCES AT NEWWEST: Jonathan Weber hosts three to four conferences a year, and they bring in $45,000 to $80,000 apiece.  His 50 percent margins have been achievable in part because of the year-to-year repetition that drives down costs.  In addition to the registration cost, each conference has sponsors that pay between $750 to $6,500.  (The sponsors, he noted, have no say in the conference program.) 

MORE FROM WEBER:  Reflecting other speakers, Weber said local advertising is a "tough, tough game... We haven't cracked that yet."  It's an extremely competitive environment, he said, and sales management represents a high barrier to success.  On other topics: Weber is narrowing the focus of his business, recently selling a small indoor-advertising component.  "We were getting to be a teeny-tiny media conglomerate."  On longevity:  NewWest, launched in 2005, is now a break-even company.  "We've gotten a lot of business in the last 18 months because we've been around."  On citizen journalism:  "We thought it was going to be a lot bigger."

THE VALUE OF PRE-LAUNCH COMMUNITY DISCUSSIONS:  Susan Mernit and Kwan Booth provided a snapshot of the newly launched OaklandLocal, which attempts to tap into the rich nonprofit ecosystem of the Bay Area.  (The site debuted with 35 nonprofit partners.)  Mernit said she and others spent four months talking to nonprofit organizations in Oakland, so on launch day the site had strong receptivity from many quarters.  She said the roughly 12,000 uniques in the first month was much higher than expected.  One concern is sustainability. One of Mernit's partners told her: "We're strip-mining people's goodwill."

THE KISS STRATEGY:  Barry Parr has tried all number of advertising approaches at his Coastsider site, which has been in operation for five-plus years.  His current strategy: Keep it as simple as possible.  "I don't talk about clicks," he said.  "It's totally about branding... I basically tell an advertiser you can be on every page of Coastsider for $300 per month."  The result, he said, is that he's getting the enviable CPM rate of $30.

VOLUNTARY SUBSCRIPTIONS:  We determined that Peter Sklar was the dean of the conference, his EdHat site in Santa Barbara having launched in 2003.  Sklar's innovation is voluntary paid subscriptions of $1 per week.  So far 450 people are contributors, yielding almost $25,000 a year.  (One of the perks of membership: You get to be identified on the site; non-contributors must remain anonymous.)

THE EXIT STRATEGY:  Julia Scott was a member of the first-ever Entrepreneurship Boot Camp earlier this year sponsored by the Knight Digital Media Center.  She now presides over the robust BargainBabe site, where she offers her readers tips about discounts, coupons, etc.  She was fresh off an appearance on Good Morning America where she offered her expert advice.  Scott is looking to sell her business in one to three years.  Why?  She wants to make BargainBabe merely the first of several businesses she wants to incubate.

Check out the video for additional presentations from Eric Richardson of BlogDowntown, Louis Freedberg of CaliforniaWatch, Anh Do of LA.Spot.us, Scott Flodin of Total Capitol, Jake Bayless of EmpireReport, Eddie North-Hager of LeimertParkBeat, Tara Leonard and Maria Gaura of SantaCruzWire -- plus Michael Overing and Ariel Fox on legal issues for bloggers.

Originally posted at USC Annenberg's Center on Communication Leadership & Policy site.

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Post by Peter Krasilovsky